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Regulatory Analysis rorm(1) Agency
Pennsylvania Public Utility Commission
(2) LD. Number (Governor's Office Use)
L-00940095/57-209
Harbison
RECEIVED1999 MOV 2 9 AM 1 0 : 2 0
INDEPENDENT REGULATORYREVIEW C0MHISSI0N
IRRC Number: ^ l i .(3) Short Title
Updating and Revising Existing Filing Requirement Regulations for Telecommunication Utilities
(4) PA Code Cite
52 Pa. Code Sections 53.57-53.60
(5) Agency Contacts & Telephone Numbers
Primary Contact: Carl Hisiro, Law Bureau, 717-783-2812 (legal)
Secondary intact: Gary Wagner, Bureau of Fixed UtilityServices, 717 I§-6175 (technical)
(6) Type of Rulemaking (check one)
[3 Proposed Rulemaking• Final Order Adopting Regulation• Final Order, Proposed Rulemaking Omitted
( ) Is a 120-Day Emergency Certification Attached?
E|No• Yes: By the Attorney General• Yes: By the Governor
(8) Briefly explain the regulation in clear and nontechnical language.
The proposed rulemaking amends the Commission's existing tariff filing regulations to lessen the regulatoryburdens on all telecommunications providers, thereby promoting competition. The streamlined requirementsgenerally allow competitive local exchange carriers' tariffs to become effective on 1-day's notice and without costsupport data unless the CLEC proposes rates that are higher than the corresponding rates of the incumbentcarrier, in which case the review period is 30 days. Incumbent carriers also benefit from the streamlinedrequirements. Incumbent carriers receive a 10-day review period when their proposed rates represent ratereductions and a 30-day review period when their proposed rates represent rate increases. The regulations alsostreamline filing requirements for intraLATA toll rates, bundled service packages, and promotional offerings.
(9) State the statutory authority for the regulation and any relevant state or federal court decisions.
66 Pa. C.S. Sections 501 and 1308
Page 1 of 8
Regulatory Analysis Form(10) Is the regulation mandated by any federal or state law or court order, or federal regulation? If
yes, cite the specific law, case or regulation, and any deadlines for action.
Yes. 66 Pa. C.S. Section 1308.
(11) Explain the compelling public interest that justifies the regulation. What is the problem itaddresses?
With enactment of Chapter 30 of the Public Utility Code and the federal Telecommunications Act of1996, the Commission is responsible for adopting more flexible "market entry" procedures fortelecommunications carriers operating in Pennsylvania. The proposed streamlined tariff filingrequirements will better able all telecommunications providers in the state to compete effectively, includingproviding them with the ability to respond more quickly to rate changes made by their competitors.
(12) State the public health, safety, environmental or general welfare risks associated withnonregulation.
None.
(13) Describe who will benefit from the regulation. (Quantify the benefits as completely as possibleand approximate the number of people who will benefit.)
All customers of telecommunications services will benefit from this proposed rulemaking because itwill increase competition for these services, resulting in decreased prices and/or greater service offeringsover time. All telecommunications providers will also benefit because it will lessen the regulatory burdensplaced on them for their tariff filings.
Page 2 of 8
Regulatory Analysis Form(14) Describe who will be adversely affected by the regulation. (Quantify the adverse effects as
completely as possible and approximate the number of people who will be adversely affected.)
No person or entity will be adversely affected by this regulation.
(15) List the persons, groups or entities that will be required to comply with the regulation.(Approximate the number of people who will be required to comply.)
All telecommunications providers under the Commission's jurisdiction will be required to complywith the regulation. There are currently hundreds of interexchange carriers and competitive andincumbent local exchange carriers licensed to do business in Pennsylvania that will be subject to thisrulemaking.
(16) Describe the communications with and input from the public in the development and drafting ofthe regulation. List the persons and/or groups who were involved, if applicable.
The rulemaking went through three advance notices published in the Pennsylvania Bulletin andreceived comments and reply comments from a number of parties. These parties included Bell Atlantic- Pennsylvania, Inc.; AT&T Communications of Pennsylvania, Inc.; MCI Metro Access TransmissioiiServices, Inc.; Sprint Communications Company L.P. and United Telephone Company of Pennsylvania;the Pennsylvania Telephone Association; the Telecommunications Resellers Association; TeleportCommunications Group; GTE North Inc.; and Office of Trial Staff.
(17) Provide a specific estimate of the costs and/or savings to the regulated community associatedwith compliance, including any legal, accounting or consulting procedures which may berequired.
Since the proposed rulemaking will substantially reduce many of the reporting requirements,especially for competitive local exchange carriers, some undetermined amount of savings will berealized for these companies.
Page 3 of 8
Regulatory Analysis Form(18) Provide a specific estimate of the costs and/or savings to local governments associated with
compliance, including any legal, accounting or consulting procedures which may be required.
Not applicable.
(19) Provide a specific estimate of the costs and/or savings to state government associated with theimplementation of the regulation, including any legal, accounting, or consulting procedures whichmay be required.
Commission staff will continue to review the tariffs submitted. The time spent, especially onfilings made by competitive local exchange carriers, is expected to be reduced.
Page 4 of 8
Regulatory Analysis Form(20) In the table below, provide an estimate of the fiscal savings and costs associated with
implementation and compliance for the regulated community, local government, and stolegovernment for the current year and five subsequent years.
SAVINGS:Mfgw'^tf^ CommunityLocal GovernmentSt&t§ GovernmentTotal SavingsCOSTS!ll^gfii^titfi CommunityLocal GovernipeijtState GovernmentTotal C f̂tfREVENUE BOSSES;Regulated CommunityLocal GovernmentState Governnnmt_fA#o1 QovAnnii f /»««[__
Current FYYear
$
FY+1Year
$
FY+2Year
$
FY+3Year
FY+4Year
$
FY+5Year
(20a) Explain how the cost estimates listed above were derived.
Not measurable at this time.
Page 5 of 8
Regulatory Analysis Form(20b) Provide the past three year expenditure history for programs affected by the regulation.
Program
Not applicable.
FY-3 FY-2 FY-1 Current FY
(21) Using the cost-benefit information provided above, explain how the benefits of the regulationoutweigh the adverse effects and costs.
See response to No. 17 above. As already discussed, there should be no additional costsassociated with the streamlined filing requirements, only savings.
(22) Describe the nonregulatory alternatives considered and the costs associated with thosealternatives. Provide the reasons for their dismissal.
Not applicable.
(23) Describe alternative regulatory schemes considered and the costs associated with those schemes.Provide the reasons for their dismissal.
Not applicable.
Page 6 of 8
Regulatory Analysis Form(24) Are there any provisions that are more stringent than federal standards? If yes, identify the
specific provisions and the compelling Pennsylvania interest that demands stronger regulation.
No.
(25) How does this regulation compare with those of other states? Will the regulation putPennsylvania at a competitive disadvantage with other states?
Comparison with other states was not directly made. However, the proposed rulemaking should beadvantageous to Pennsylvania telecommunications carriers and, therefore, should not put Pennsylvania ata competitive disadvantage with other states.
(26) Will the regulation affect existing or proposed regulations of the promulgating agency or otherstate agencies? If yes, explain and provide specific citations.
The proposed rulemaking will amend existing regulations at 52 Pa. Code Sections 53.52 and 53.53by reducing the filing requirements of telecommunications companies.
(27) Will any public hearings or informational meetings be scheduled? Please provide the dates,times, and locations, if available.
No.
Page 7 of 8
Regulatory Analysis Form(28) Will the regulation change existing reporting, record keeping, or other paperwork requirements?
Describe the changes and attach copies of forms or reports which will be required as a result ofimplementation, if available.
Yes. Cost support data will no longer be required from competitive local exchange carriers except insome cases when their rates are being increased. Forms used for filing tariffs will not be changed; thecompany will simply leave certain sections blank if they are no longer applicable.
(29) Please list any special provisions which have been developed to meet the particular needs ofaffected groups or persons including, but not limited to, minorities, elderly, small businesses, andfarmers.
Not applicable.
(30) What is the anticipated effective date of the regulation; the date by which compliance with theregulation will be required; and the date by which any required permits, licenses or otherapprovals must be obtained?
The regulation will become effective upon publication in the Pennsylvania Bulletin following reviewby the standing committees and the Independent Regulatory Review Commission.
(31) Provide the schedule for continual review of the regulation.
The regulation will be reviewed on an ongoing basis after it becomes effective.
Page 8 of 8
CDL-1
FACE SHEETFOR FILING DOCUMENTS
WITH THE LEGISLATIVE REFERENCE BUREAU
(Pursuant to Commonwealth Documents Law)
•*^©-7r
!£^eoiNQ£P *
i«SS»y*$&%»
DO NOT WRITE IN THIS SPACE
;. Copy below is hereby approved as to form andlegality. Attorney General. f
BY.IEJ^«6ERA]
1/(DEPUTY ATTORN: «ERAL)
8 1999,DATE OF APPROVAL
a Check.I applicableCopy not approved. Objections attached
Copy below is hereby certified to be true andcorrect copy of a document Issued, prescribed orpromulgated by:
Pennsylvania Public Utility Commission(AGENCY)
Copy below is hereby approved as toform and legality. Executive orindependent Agencies. , j *
ij^tfi^Y, / 'BY
Bohdan R. PankiwChief Counsel
DOCUMENT/FISCAL NOTE NO. L-00940095/57-209
DATE OF ADOPTION September 30, 1999
^ James J. McNulty *BY
TITLE ( SECRETARY)
DATE OF APPROVAL
D Check if applicable. No Attorney Generalapproval or objection within 30 days aftersubmission.
L-00940095/57-209Proposed Rulemaking
Updating and Revising Existing FilingRequirement Regulations52 Pa. Code, Chapter 53
The Pennsylvania Public Utility Commission on September 30, 1999, adopted a proposed rulemaking orderamending existing regulations to lessen the regulatory burdens on all jurisdictional telecommunications providersthereby promoting competition. The contact persons are Carl Hisiro, Law Bureau, (717) 783-2812, and Gary WagnerBureau of Fixed Utility Services, (717) 783-6175.
EXECUTIVE SUMMARY
L-00940095/57-209Proposed Rulemaking
Re: Updating and Revising ExistingFiling Requirement Regulationsfor Telecommunication Utilities
52 Pa. Code, Chapter 53
In 1994, the Commission entered an order that initiated a rulemaking
proceeding to revise and streamline existing filing requirements for all
telecommunications providers so as to lessen their regulatory burden and promote
competition. Since then, many significant events have occurred to effectuate the
deregulation of the telecommunications industry and the promotion of competition
in its stead, including the enactment of the federal Telecommunications Act of
1996.
The rulemaking went through three advance notices published in the
Pennsylvania Bulletin, and the Commission received comments from a number of
parties. This rulemaking was then subsequently included in the proceeding to
consider global resolution of telecommunications issues at P-00991648 and
P-00991649. In the global proceeding, all participating incumbent and competitive
local exchange carriers and interexchange carriers supported the same set of
proposed regulations that are now being proposed in this rulemaking.
The proposed regulations streamline filing requirements by reducing the
review period from 60 days to either 30,10, or 1 day, depending generally on
whether the filing is made by an incumbent or competitive local exchange carrier
and on whether the proposed rates represent increases or decreases from existing
rates. The proposed regulations also streamline filing requirements for intraLATA
toll rates, bundled service packages, and promotional offerings.
The contact persons are Carl S. Hisiro, Law Bureau (717) 783-2812, and
Gary Wagner, Fixed Utility Services (717) 783-6175.
PENNSYLVANIAPUBLIC UTILITY COMMISSION
Harrisburg, PA 17105-3265
Public Meeting held September 30,1999
Commissioners Present:
John ML Quain, ChairmanRobert K. Bloom, Vice ChairmanDavid W.RolkaNora Mead BrownellAaron Wilson, Jr.
Rulemaking Re Updating and Revising Docket No. L-00940095Existing Filing Requirement Regulations52 Pa. Code | | 53.52-53.53 ~Telecommunication Utilities
52 Pa. Code | | 53.52-53.53 - Docket No. L-00940095F0002Telecommunication Utilities -Interim Guidelines
PROPOSED RULEMAKING ORDERAND FINAL INTERIM GUIDELINES
BY THE COMMISSION:
This docket was created in 1994 to review existing Commission regulations
and to amend the regulations so as to lessen the regulatory burdens on all
jurisdictional telecommunications providers, thereby promoting competition, to the
extent consistent with die public interest and the doctrine of regulatory parity.
Since then, many significant events have occurred to effectuate the deregulation of
the telecommunications industry and the promotion of competition in its stead.
The most significant of these events was the enactment of the federal
Telecommunications Act of 1996 ("TA-96"), 47 U.S.C. U 251-276TA-96.
A. PROCEDURAL HISTORY
1. Advance Notice of Proposed Rulemaking Order
On October 18,1994, this Commission entered an Order at Docket No.
L-00940095 to initiate a rulemaking proceeding for the telecommunications
industry to revise and streamline existing filing requirements at 52 Pa, Code
| 53.53 for general rate increases in excess of $1 million. Comments from
interested parties were solicited and Staff convened two technical conferences*
Since the time of this earlier order, the telecommunications industry has
been undergoing dramatic change throughout the country and within Pennsylvania.
TA-96 was enacted into law on February 8,1996. TA-96's primary goal is to
promote competition in virtually all segments of the broadly defined
communications industry, including local and long-distance telephone services.
This Commission has proceeded to implement various directives of TA-96,
including die adoption of more flexible "market entry" procedures for
telecommunications carriers under our jurisdiction. We have also adjudicated
various proceedings related to numerous issues of competition and interconnection
in the local exchange services markets. In addition, we have issued orders in other
proceedings that address the implementation of TA-96. See, e.g.. Lire
Implementation of the Telecommunications Act of 1996. Docket No. M-00960799
(Order entered June 3,1996; Order on Reconsideration entered September 9,
1996).
Even prior to enactment of TA-96, this Commission was taking concrete
steps to introduce local exchange competition in Pennsylvania. For example, on
October 4,1995, we certified the first four competitive local exchange carriers
("CLECs") in Application of MFS Intelenet of Pennsylvania, Inc.. et aL Docket
Nos. A-310203F0002, et al (Order entered October 4,1995).
With the passage of TA-96 and the entry of the CLECs in Pennsylvania's
market for local exchange telecommunications services, it became clear that other
portions of the Commission's regulatory oversight mechanisms beyond rate
increases in excess of $1 million needed to be revisited as well. For instance,
while CLEC tariff filings are typically addressed by this Commission in a routine
fashion, certain problems periodically arise in evaluating such filings. In addition,
CLEC tariff filings have often become the subject of formal complaints by
incumbent local exchange carriers ("ILECs"). See, e j ^ Pa. P.U.C. v. Eastern
TeleLogic Corp.. Docket No. R-00973881 (Order entered March 27,1997); Bell
Atlantic-Pennsylvania. Inc. v. TCG Pennsylvania, Docket No. C-00967719 (Order
entered February 28, 1997). Notwithstanding our use of the alternative dispute
resolution process at 52 Pa. Code SS 69.391-69.395, such cases are time and
resource consuming, suggesting the need for revised and streamlined regulations.
2. Second Advance Notice of Proposed Rulemaking Order
By motion at the June 12, 1997 Public Meeting, the rulemaking in the
above-captioned docket at L-00940095 was expanded to include the filing
requirements at 52 Pa. Code {53.52 for all other tariff changes that are proposed
by local exchange telecommunications service providers. Thereafter, this
Commission entered an Order on August 1, 1997, issuing the Second Advance
Notice of Proposed Rulemaking. The purpose of this Notice was to provide the
CLECs, ILECs, and all other interested parties an opportunity to provide
comments, including proposed language, on the issue of what filing requirements
should govern tariff changes pursuant to section 1308(a) and (b) of the Public
Utility Code, 66 Pa. Code 113O8(a) and (b), and to assist the Commission in
designing requirements that appropriately address the issue of "regulatory parity."1
In particular, this Commission requested comments on the following issues:
tariff filing support documentation, cost support documentation, CLEC services
and rates, local exchange carrier intraLATA toll rates, tariff filings for service
"packages" and supporting documentation, and promotional offering tariff filings*
We also ordered that, upon receipt of comments by interested parties, one or more
informal technical conferences be convened by Staff to discuss further the issues
raised by the rulemaking.
1 The printiple of "regulatory parity" simply msuch as the local exchange telecommunications industiy are applied equally regardless of the marketpower thai may exist with any individual company within that industiy.
On or about September 30, 1997, the Commission received initial
comments from Bell Atlantic-Pennsylvania, Inc. ("BA-PA"); AT&T
Communications of Pennsylvania, Inc. ("AT&T'); MCI Metro Access
Transmission Services, Inc. ("MCI Metro"); Sprint Communications Company
L.P. ("Sprint") and the United Telephone Company of Pennsylvania ("United");
the Pennsylvania Telephone Association ("PTA"); and the Telecommunications
Resellers Association ("TRA"). In addition, informal technical conferences were
held on October 6, and November 5,1997, between interested parties and the
Commission's Staff.
The October 6,1997 Informal Technical Conference was attended by
BA-PA, AT&T, MCI Metro and MCI Telecommunications Corporation ("MCF),
Teleport Communications Group ("TCG"), Sprint, United, the Office of Consumer
Advocate ("OCA"), and the Office of Trial Staff ("OTS"). During the October 6
conference, a number of issues were discussed relating to the potential revision of
Commission regulations governing the tariff filings of CLECs and ILECs under
52 Pa. Code | | 53.52-53.53, and the interested parties made summary
presentations of their written comments.
The purpose of the November 5,1997 Informal Technical Conference was
to follow up certain issues raised at the earlier conference. This second
conference was attended by BA-PA, AT&T, MCI, Sprint, TCG, PTA, GTE North
Incorporated, and OTS. To help focus the discussion at this second conference,
Commission Staff sent a letter on November 3, 1997, setting forth a number of
issues to be addressed revolving around the concept of "market power/' as well as
its connection with the principle of "regulatory parity" as applied to CLECs and
ILECs. This second technical conference generated significant debate on these
issues among the parties in attendance and resulted in the Commission Staff asking
for additional written comments by November 18,1997, which date was
subsequently extended to December 8,1997. Written comments were thereafter
filed on these market power issues on or about December 8, 1997, by BA-PA,
MCI, Sprint, PTA, and OTS, and on December 15, 1997, by TCG.
The major commenting parties in December 1997 to the current proposed
rulemaking were BA-PA and MCI/MCI Metro. Their comments, as well as the
comments of other interested parties, are discussed in die "Comments and
Responses Document" attached to this Order as Appendix A. In summary, all of
the parties filing comments at that time, except BA-PA and PTA, recommended
that the Commission recognize the current market dominance of the ILECs by not
applying the concept of "regulatory parity." Instead, they argued for asymmetrical
regulation (i.e., regulating dominant and non-dominant carriers differently) so as to
facilitate the transition to a competitive local exchange market where ILECs no
longer possess market power. BA-PA and PTA, on the other hand, urged the
Commission to apply the "regulatory parity" principle in deciding what filing
requirements should continue to be imposed.
3. Third Advance Notice of Proposed Rulemaking Order and ProposedInterim Guidelines
Following this initial comment period, the Commission considered Staff
recommendations for certain substantive changes in the existing tariff filing
regulations for telecommunication utilities and the adoption of proposed Interim
Guidelines that would incorporate the proposed regulatory changes and remain in
effect until a final rulemaking order was approved through the formal regulatory
process.
By motion adopted at the April 9,1998 Public Meeting, a separate docket
folder was opened so that the proposed Interim Guidelines could be reviewed and
an opportunity to be heard provided to all interested parties. Specifically, we
directed that one or more technical conferences should be conducted on-the-
record, affording the parties the opportunity to discuss all aspects of the filing
standards incorporated in the proposed Interim Guidelines. Further, the motion
provided that any comment period must provide for reply comments. The motion
also required the process to be expedited, with a final Staff recommendation on die
Interim Guidelines to be presented to the Commission for consideration within six
months of the motion. In addition, at this same Public Meeting, we issued the
Third Advance Notice of Proposed Rulemaking Order in Docket No.
L-00940095.2
2 The Third Advance Notice of Proposed Rulemaking Order was entered on May 12,1998, with acorrected version being entered one day later on May 13,1998.
Subsequently, on or about May 27, 1998, the Commission received
comments on the proposed Interim Guidelines from BA-PA, AT&T, MCI, TCG,
Splint and United, PTA, GTE North Incorporated and GTE Communications
Corporation (collectively, "GTE"), and joint comments from Commonwealth
Telecommunications Services, Inc.; Focal Communications Corporation of
Pennsylvania; Hyperion Telecommunications of Pennsylvania, Inc.; RCN
Telecommunications Services of Pennsylvania, Inc.; and ATX
Telecommunications Services, Ltd. (collectively, the "Joint Commenters")- In
addition, reply comments were filed on or about June 11,1998, by BA-PA, PTA,
MCI, TCG, GTE, TRA, Sprint and United, the Joint Commenters, and OTS. An
on-the-record technical conference was held on June 26,1998, with Chief
Administrative Law Judge Robert Christianson presiding and six parties offering
witnesses.3 Following the technical conference, final comments to the Interim
Guidelines were submitted on or about July 15,1998, by BA-PA, MCI, TCG,
Sprint and United, and PTA. Finally, on or about July 21,1998, separate
comments were provided to the same interim guideline proposals that were also
being offered as a proposed rulemaking pursuant to the Corrected Third Advance
3 The following parties and their witnesses who offered testimony at the technical conference were:(1) BA-PA: Catherine Eichenlaub, Director -Line of Business Regulatory Support for BeU Atlantic -Network Sendees, Inc.; (2) TCG: Chris Nurse, Manager of Regulatoiy and External Affairs of theEastern Region; (3) MCI: Don Laiib, Senior Policy Analyst for State Regulatory and Government Affairs,Mid-Atlantic Region; (4) GTE: John Dudley, Assistant Vice President-Regulatory & GovernmentalAffairs; (5) Sprint and United: John Short, Director Regulatory Affairs; and (6) PTA: James Kail, ChiefFinancial Officer with the Bentleyvillc Telephone Company.
8
Notice of Proposed Rulemaking Order by BA-PA, GTE, MCI, TCG,
Sprint/United, and PTA.4
In the May 27,1998 and July 15, 1998 comments, AT&T, MCI, Sprint and
United, TCG, GTE, the Joint Commenters, and OTS supported the adoption of
Interim Guidelines to remove some of the regulatory burdens currently faced by
CLECs as a good first step to making die telecommunications market in
Pennsylvania more competitive. Most of these parties argued, however, that the
Commission did not go far enough in its streamlining efforts and offered
suggestions for further streamlining.
Both BA-PA and PTA, however, continued to assert that the Commission
should be guided by the doctrine of "regulatory parity9' in developing its tariff
filing streamlining rules. BA-PA Comments of May 27,1998, at 9-11; PTA
Comments of May 27,1998, at 1-2. The PTA urged against the adoption of
"blanket' solutions" in determining which carriers have market power. PTA
Comments of May 27,1998, at 2. The PTA's concern was that the originally
proposed Interim Guidelines created "a bias which assumes only ILECs c a n . . .
possess market power." PTA Reply Comments of June 11,1998, at 1.
4 The July 21,1998 comments of MCI, TCG, Sprint/United and PTA simply incorporated by referencetheir earlier comments in this proceeding.
4. Proceeding To Consider Global Resolutionof Telecommunications Issues
Following receipt of the filed comments to the proposed Interim Guidelines
but before we were ready to enter an order, the two instant dockets were
incorporated into the Commission's Global Telecommunications Settlement
Conference. Docket No. M-00981185, and stayed. This latter docket was opened
at the Commission's Public Meeting of September 3,1998, for the purpose of
trying to forge a global settlement which would amicably resolve various
significant and complicated telecommunications proceedings, including the instant
dockets, men pending before us.
Unfortunately, the sought-after global settlement could not be reached by
all the parties by the Commission-imposed deadline of March 29,1999, and we
thereafter closed the Global Telecommunications Settlement Conference
proceeding. In the same order closing this proceeding, we agreed to consider two
competing petitions that seek to resolve virtually the same telecommunications
issues that were attempted to be addressed at Docket No. M-00981185. Joint
Petition of Nextiink Pennsylvania. Inc.. et al. for Adoption of Partial Settlement
Resolving Pending Telecommunications Issues. Docket No. P-00991648; and Joint
Petition of Bell Atlantic - Pennsylvania. Inc.. et al. for Global Resolution of
Telecommunications Vmrj^Am^i Docket No. P-00991649 (Order entered April 2,
1999Xhereinafter jointly referred to as "Joint Petitions for Global Resolution"1).
10
The two joint petitions were both filed on March 18,1999. The Joint Petition at
Docket No. P-00991648 was filed by Nextlink Pennsylvania, Inc. ("Nexflink");
State Senators Vincent J. Fumo, Roger A. Madigan, and Mary Jo White; die
Pennsylvania Cable and Telecommunications Association; and six other CLECs.5
The Joint Petition at Docket No. P-00991649 was filed by BA-PA; Conectiv
Communications, Inc.; Network Access Solutions; and the Rural Telephone
Company Coalition.
Bom proposed settlements contain virtually identical language for
streamlining and revising the existing tariff filing requirements for
telecommunication utilities, and both are closely modeled after the proposed
Interim Guidelines that the Commission released at its April 9,1998 Public
Meeting for public comment. The only difference between the two proposals is
that the Nextlink proposal does not include the requirements contained in section
53.59(c) and (d) of the BA-PA proposal mat all consumers subject to rate
increases shall receive individual notice of such rate increases, and that the
company must serve such rate filings on the OCA, OTS, and the Office of Small
Business Advocate ("OSB A") in person. Written testimony supporting these two
proposals were submitted by BA-PA, Sprint and United, and AT&T. In addition,
in their Preheating Statement of Position submitted in the Joint Petitions for
5 The six CLECs are RCN Telecommunications Services of Pennsylvania, Inc.; HyperionTelecommunications, Inc.; ATX Telecommunications Services, Ltd.; CTSL Inc.; MCI WorldCom, thenewly merged parent of MCI Metro and MCI; and AT&T.
11
Global Resolution, the Consumer Parties, which includes the OCA, OSBA, and
OTS, stated that they have no objection to the proposed filing requirements
contained in the two proposals, including the additional above-referenced
requirements offered by BA-PA.
By motion adopted at the August 26,1999 Public Meeting, the Interim
Guidelines contained in the BA-PA proposal were adopted by this Commission.
B. DISCUSSION
We find significant the fact that in this proceeding, initially opened in 1994,
DLECs, CLECs and DCCs are now supporting virtually the same set of proposed
regulations that are modeled closely after the Interim Guidelines we submitted for
comment last year. These proposed regulations will help promote the competition
that is now expected in the telecommunications industry. Given this apparent
unanimity of support from the telecommunications industry, we have incorporated
in the instant proposed regulations the changes reflected in the Nextlink and BA-
PA proposals, including the additional BA-PA notice and in-person service
requirements noted above. Our proposed regulations, as so amended, are
contained in Annex A attached to mis Order.
The proposed regulations at section 53.58(a) and (c) provide that whenever
a telecommunications service is determined to be "competitive" under Chapter 30
of the Public Utility Code, whether by a filing by an ILEC or a CLEC, all
competing providers in the relevant market offering this same service will receive
12
the deregulated status contemplated in 66 Pa. C.S. J 3005, and, in effect, be treated
the same. Also, cognizant of the PTA's concern that any rulemaking should avoid
creating a bias that only ILECs can possess market power, we propose in section
53.58(e) that a reclassification of a "competitive service5* to a "noncompetitive
service" can be made as to an ELEC or a CLEC pursuant to section 3005(d) of the
Public Utility Code. The proposed regulations also contain a list of factors that the
Commission will consider when reviewing whether a specific service should be
reclassified as noncompetitive.6
Moreover, until there is a formal finding by this Commission that a
particular service is "competitive," the tariff filing regulations should be
streamlined so that a CLEC will be relieved from any obligation to provide cost
support documentation whenever the rate is at or below the rate charged by the
ILEC for the same service.7 As proposed in section 53.59(a), cost support
documentation will not be necessary from a CLEC and its tariff filing will be
6 This list of factors is similar to the list of factors contained in 52 Pa. Code 163.106 that the Commissionuses to determine whether to reclassify intercxchange sendees defined as either a competitive ornoncompetitive service.
7 In adopting this asymmetrical approach to streamlining our tariff filing requirements, the Commissionaccepts the recommendation of most of the parties in this proceeding that "regulatory parity" with respectto iate regulation between ILECs and CLECs is not appropriate until the playing field for specific servicesor business activities becomes more competitive/level. In determining when regulatory parity shouldapply in the future wherever the proposed regulations contain asymmetrical terms, the Commission willutilize the same criteria contained in section 3005(a)(l) of the Public Utility Code for determiningwhether or not a telecommunications service should be declared "competitive. In reaching thisdetermination, however, the Commission does not agree with the view espoused by some of thecommenters that we must define "market powei^ and hold separate evi(tentiary hearings to determinewhich carriers have market power if we adopt an asymmetrical regulatory approach. We believe the"competitive classification" procedures contained in Chapter 30 of the Public Utility Code ate sufficientfor this purpose.
13
effective on 1-day's notice where its rates are the same as or lower than
previously-approved ILEC rates, because it can be presumed that, without market
power, the CLECs rates are "just and reasonable."
Where the CLECs rates are higher than the ILEC's rates or where the
CLECs rates are for new services, the proposed regulations at section 53.59(c)
oblige the CLEC to provide certain additional summary documentation for the
affected services. Moreover, the Commission at section 53.59(d) retains the
ability to request relevant documentary support, including cost support
documentation, from CLECs for their tariff filings relating to new services and for
proposed rate changes where their rates are higher than the ILEC's and there is a
concern consumers may be harmed by the higher rates. Consistent with the BA-
PA proposal, CLEC tariff filings for new services or higher rates will become
effective 30 days from the date when all consumers subject to the rate increase
shall have received individual notice of the increase, and will be required to be
served in person upon the OCA, OSBA, and OTS. The 30-day period may be
extended for an additional 30 days by the Commission upon notice to the OCA,
OSBA, OTS, and the CLECg
8 The proposed regulations at section 53.59(e) also contain parallel provisions for rate changes by anELEC, except that rate reductions will become dSixtive on a 10-day notice ̂the Commission fails to take any action. We also note at this point that in order to keep the tariff filingprovisions relating to CLECs together, we have moved and renumbered section 53.5 9(c), (d) and (c) of theBA-PA proposal as section 53.59(e), (c), and (d), respectively, in our proposed regulations.
14
We recognize that the proposed regulations, if finally adopted, provide a
certain degree of regulatory flexibility that had been previously denied through one
of our past decisions in this area.9 This change, however, reflects a
re-interpretation of Chapter 30 in conjunction with our mandate to implement
TA-96. Both Chapter 30 and TA-96 are intended to promote the provision of
telecommunications services in a competitive environment. Indeed, in Chapter 30
the General Assembly made the legislative finding and declared that it is the
Commonwealth's policy to:
(7) Promote and encourage the provision of competitiveservices by a variety of service providers on equalterms throughout all geographic areas of thisCommonwealth.
(8) Encourage the competitive supply of any service in anyregion where there is market demand.
66 Pa. CS. 13001(7) & (8).
In the instant Order, we are advocating the adoption of the principle that the
services which have been classified as competitive for an ILEC or CLEC under
Chapter 30 can also be offered by other CLECs or an ILEC, as the case may be, as
competitive services without a prior competitive determination and classification
by this Commission for each CLEC or ILEC on a case-by-case basis. The offering
Under Chapter 30 of the Public Utility O3de. Docket No. P-00950998 (Order entered March 29,1996) (indenying TCG's petition seeking competitive designation for its Centrex service and High Capacity privateline services. Commission stated that Chapter 30 requirements applied equally to new entrants as well asILECs).
15
of such services by a CLEC or ILEC on a competitive basis will be limited to the
areas the CLEC or ILEC has been certified to serve and to the service territory of
die respective ILEC or CLEC that has obtained the competitive classification for
these services under a Chapter 30 proceeding.
We believe that die adoption of the above principle through the proposed
regulations is consistent with the policies espoused by Chapter 30 and TA-96.
The proposed regulations formulate a flexible approach for the regulation of ILEC
and CLEC operations within the Commonwealth in order to promote competition
within the telecommunications industry.
Moreover, we do not believe that the proposed regulations contradict the
statutory requirements of Chapter 30. Indeed, notwithstanding our prior holding in
In re Petition of TCG Pittsburgh, the absence of an alternative or streamlined
regulation plan for a new entrant CLEC does not in any way damage the public
interest. In reality, CLEC operations are not currently regulated on the basis of a
rate base/rate-of-retum method. More often than not, the upper bounds of CLEC
service prices are defined by the prices for the corresponding ILEC services. The
lower bounds of CLEC service prices are largely defined by the interconnection
rates and/or wholesale resale rates that exist in the relevant agreements between
CLECs and ELECs.10 Thus, the filing of a Chapter 30 alternative or streamlined
"There are CLECs which offer services in certain niche markets and charge rates that arc higher than thecorresponding ILEC services. The tariff filing regulations for these CLECs arc addressed in a separatepart of this Order and in section 53.59(c) and (d) of Annex A.
16
regulation plan by a CLEC would simply formalize existing regulatory parameters,
albeit at a rather high administrative cost for the CLEC concerned and for mis
Commission.
We believe that the proposed regulations are competitively neutral between
potentially competing carriers. If an ILEC (or a specific CLEC) has attained
competitive service classification for its services under its respective Chapter 30
plan and associated subsequent Chapter 30 petitions, then CLECs (or the
applicable ELEC) should be free to compete in the relevant services markets. A
competitive inequity would ensue if CLECs would have to file their own Chapter
30 plans in order to classify as competitive the same services mat have already
been classified as competitive for ILECs with Chapter 30 plans in place. This
competitive inequity would manifest itself not only in the 9-month statutory period
that is usually required for the disposition of a Chapter 30 petition and plan, but
also because a CLEC would be attempting at the same time to establish itself as a
viable competitive supplier of services in the local exchange markets that are the
traditional domain of ILECs.
Further, the proposed regulations do not modify our prior directives
regarding the interconnection obligations of certain ILECs under TA-96. See
generally Petition of Rural and Small Incumbent Local Exchange Carriers for
Commission Action Pursuant to Section 251(fM2) fl"d 253fb) of the Telcco*"**111-
nications Act of 1996, Docket Nos. P-00971177, et al. (Orders entered July 10,
17
1997, and November 24,1997). In addition, we believe that our approach contains
substantial benefits in terms of administrative efficiency both for this Commission
and for the regulated telecommunications industry. Through the directives that we
are proposing here, we will avoid the adjudication of numerous Chapter 30
proceedings that are not likely to result in any substantial benefits for die broader
public interest This approach will result in immediate benefits for end-user
consumers since it will facilitate the development of competition in the local
exchange telecommunications services markets.
As stated above, the proposed regulations will no longer require the filing
of cost support information for CLEC tariff filings where the CLEC proposes to
offer noncompetitive services at or below the rates and charges of the
corresponding services offered by the ILEC. Further, in such cases, the CLECs
tariff filings will become effective on 1-day's notice.
The proposed regulations will still require, however, the filing of certain
information by CLECs that propose tariff changes with rates that exceed those for
the corresponding ILEC services, and in certain cases would allow us to require
cost support documentation. Our interest in requiring such information is
centered on protecting end-user consumers. It has come to our attention that
certain CLECs certified to operate in Pennsylvania are offering their services to
targeted end-user customers with poor credit histories at rates that are higher than
those charged by ELECs and other CLECs for the same services. See generally
18
Application of Blue Ribbon Rentals IL Inc., d/b/a Talk One America. Docket No.
A-310442 (Corrected Order entered August 4, 1997). However, such "high-risk"
residential end-user customers who may be unable to ordinarily obtain basic
telephone service because of their past credit histories may also be economically
disadvantage^ Thus, although we have permitted this type of CLEC to enter
freely Pennsylvania's markets, we believe that its tariff charges should be
subjected to an additional degree of scrutiny in order to afford die necessary
protection for its "high-risk" end-user customers. We believe that the additional
documentation requirements that we hereby impose will serve this purpose.
Turning to the concern expressed originally by two commenters that CLEC
services and rates should cover the costs of providing the tariffed service so as to
prevent cross-subsidization, we find that this argument is not legally supportable.
Below-cost pricing of services and cross-subsidization are only anticompetitive
problems when engaged in by an entity that has market power.11 See, e.g.,
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.. 509 U.S. 209,224
(1993) ("[t]hat below-cost pricing may impose painful losses on its target is of no
moment to the antitrust laws if competition is not injured"). In fact, the antitrust
1' This concept is at least implicitly recognized in Chapter 30 f s section 3005 (gX2), where it declares thatlocal exchange carriers "may not use revenues eanied or expenses i n a i n ^ in conjunction withmmcompetitive service to subside ^ By its very terms, the statutedoes not prohibit the use of revenues earned in cx)nhinction with competitive services to subsidize orsupport other competitive services. The dear intent ofthis provision is to prohibit cross-subsidizationonly where a LEC has market power in the noncompetitive services market Any other constructionwould run counter to clear antitrust precedent and may be interpreted as a barrier to entry under section253 of TA-96.
19
laws view price cutting, even "below-cosf * selling for a short period of time, by a
new entrant or other competitor as a pro-competitive act designed to make the
consuming public aware of the entity and increase its market share. See, e.g..
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574, 594 (1986)
("cutting prices in order to increase business often is the very essence of
competition"). In short, price cutting allows the new entrant the opportunity to
get a "foothold" in a market that it may not otherwise be able to penetrate because
of the entrenched players already in that market.12
Both the BA-PA and Nextlink proposals adopt the suggestion offered by
most of the commenters that the notice requirement for noncompetitive service
offerings should be reduced to 30 days or less so as to decrease the regulator/
burdens placed on all local exchange carriers. These reduced notice requirements
are incorporated in the proposed regulations.
As already discussed above, for filings by ILECs for noncompetitive service
offerings when their rates are lower than the corresponding rates of the CLECs, a
12 In order for price cutting to be found to be predatory, and therefore unlawful under the antitrust laws,one must show that below-cost selling occurred and that the price cutter has the ability to recoup itsinvestment in below-cost prices after its competitors are driven from the market Brooke Group. 509 U.S.at 222-24. As a matter of law, those entities with little or no market share, even if they have substantialfinancial resources, have been found by the courts to be too small to confer market power, thus makingrecoupment impossible. Li at 232^3 (12% market share was found, as a matter oflaw, to be too smaU toconfer market power, recoupment therefore was impossible).
We ftififl take administrative notice that Bell Atlantic itself ^afo a similar argument last year in relationto its petition to the FCC for TA-96 section 276 relief. Petition of Bell Atlantic Corporation for Relief'ftywp "Pfrriers to Deploy™**1*rf Advftmse TelccoTT|m"nic?tiorifc Services. CCB Dockftt No 9SU11 In itspetition, BA-PA's parent company argued for deregulatory treatment over its provision of advanced high-speed broadband sendees as a "new entranr to enccmrage"^competition in, this new technology. Bell Atlantic's Petition at 4 and 17.
20
10-day notice period is proposed.13 For filings by BLECs and CLECs for
noncompetitive services when their rates are higher than the corresponding rates of
the CLECs or ILECs, respectively, a 30-day notice period is proposed. Both the
10-day and 30-day notice periods are subject to an automatic extension of up to an
additional 30 days if requested by the Commission and notice is provided to all
appropriate parties. To help implement this reduced notice period, we will
develop internal procedures that will streamline our own internal review and
approval process of these tariff filings.14 CLEC rate filings at or below those of
the corresponding ILEC will become effective on a 1-day's notice. However,
adoption of these reduced notice requirements does not affect in any way this
Commission's ability to investigate a given tariff after it becomes effective if we
discover, through our own review or a complaint filed by a third party, a legitimate
reason to open an investigation.
In regard to the last three rulemaking issues raised in our August 1,1997
Second Advance Notice of Proposed Rulemaking Order — local exchange carrier
intraLATA toll rates, tariff filings for service packages, and promotional offering
13 While below-cost pricing and cross-subsidization comsnis may arise when an E^C has the abiUty tolower prices in response to competitive pressures from a new-entrant CLEC, we do not believe theproposed regulations will result in any increase in (his type of activity tyl^allow us to take additional time to review a proposed tariff if we receive a complaint thai the tariff willcreate an anticompetitive problem. In addition, existing Commission complaint procedures, including useof applicable dispute resolution procedures, are available to address these types of concerns as well.
14 To successfully effectuate these reduced notice periods and otherwise ensure full compliance with theproposed regulations, we anticipate and expect that the industry will engage in self-policing efforts.
21
tariff filings ~ the proposed regulations adopt the identical language offered in the
BA-PA and Nextlink proposals.
With respect to the intraLATA toll markets, this Commission's April 29,
1997 Order at Docket Nos. L-0O940099 and M-00930496 affirmed our willingness
to provide flexibility to ILEC tariff filings in this market once intraLATA toll "l+w
dialing parity is implemented (which occurred on July 31,1997).15 The proposed
regulations adopt the same type of flexibility for ILECs that the Commission's
April 29,1997 Order provides interexchange carriers operating in the intra and
interLATA toll markets. Specifically, the regulations propose, consistent with
52 Pa. Code IS 63.103-63.104, that both ILECs and CLECs would be permitted to
file tariffs with changes in their rates and charges for existing noncompetra've toll
services alone mat would become effective with a 1-day notice period and a
16-day notice period for new services.
In relation to both joint/bundled service packages and promotional
offerings, the proposed regulations will relieve ILECs and CLECs from any
automatic obligation to provide cost support documentation for tariff filings. The
Commission, however, retains authority to request relevant documentary support
for tariff filings involving bundled or promotional offerings. Additionally, no
filing requirements will exist for either bundled or promotional offerings
15 In re: Interexehpfigc Carrier Regulation Under Charter 30 of the Public Utility Code. Docket Nos.L-00940099 and M-00930496, at 10 (Final Rulemaking Order entered April 29,1997).
22
consisting entirely of competitive services.16 Finally, consistent with prior
Commission action and policy in approving promotional offerings, the proposed
regulations prohibit the use of negative option provisions; requiring instead that a
customer affirmatively respond to the company if he or she wants to continue the
service beyond the original promotional period.
In conclusion, we believe that the tariff filing changes proposed in this
Order are critically important in promoting competition in the telecommunications
industry consistent with Chapter 30 of the Public Utility Code and TA-96. As all
interested parties have already had an opportunity to provide public comment on
the proposed Interim Guidelines incorporating these regulatory changes, we hereby
adopt the proposed Guidelines and offer them on an optional basis to jurisdictional
utilities to provide guidance on appropriate tariff filing requirements until the
proposed regulations receive final approval. We note that this approach of
adopting interim guidelines until final regulations have been promulgated has
previously been used by this Commission in a number of other instances to
implement telephone and electric reform legislation. See, e.g.. Interim Guidelines
for Standardizing Local Exchange Comply Responses to Customer Contacts
Alleeine Unauthorized Changes to the Customer's Telecommunications Service
16 Recognizing that tdecommimications providers are e x ^ ^provide their customers, the Commission seeks comment on whether "joint or bundled service packages"for purposes of the proposed regulations should be defined to include "nonregulated services," includingbut not limited to Internet, cable, cellular, and electric generation services, as well as "noncompetitive andcompetitive services."
23
Provider and Unauthorized Charges Added to the Customer's Bill. Docket No.
M-00981063 (Tentative Order entered June 5,1998); Chapter 28 Electric
Generation Customer Choice and Competition Act — Customer Information -
Interim Requirements. Docket No. M-00960890F0008 (Order entered July 11,
1997); Re: Licensing Requirements for Electric Generation Suppliers - Interim
Licensing Procedures. M-00960890F0004 (Order entered February 13,1997).
Accordingly, under sections 501 and 1501 of the Public Utility Code,
66 Pa. C.S. i! 501, 1501; sections 201 and 202 of the Act of July 31,1968,
P. L. 769 No. 240,45 P.S. | | 1201-1202, and the regulations promulgated
thereunder at 1 Pa. Code | | 7.1,7.2 and 7.5; section 204(b) of the Commonwealth
Attorneys Act, 71 P.S. 732.204(b); section 745.5 of the Regulatory Review Act,
71 P.S. 1745.5; and section 612 of The Administrative Code of 1929, 71 P.S.
S 232, and the regulations promulgated thereunder at 4 Pa. Code SS 7.251-7.235,
we find that the regulations governing tariff filing requirements for the
telecommunications industry at 52 Pa. Code!! 53.52-53.53 should be modified as
set forth in Annex A, attached hereto; THEREFORE,
IT IS ORDERED:
1. That the proposed rulemaking at Docket No. L-00940095 will consider
the regulations set forth in Annex A.
24
2. That the Secretary shall submit this Order, Annex A, and Appendix A to
the Office of Attorney General for review as to form and legality and to the
Governor's Budget Office for review of fiscal impact.
3. That the Secretary shall submit mis Order, Annex A, and Appendix A
for review and comment to the Independent Regulatory Review Commission and
the Legislative Standing Committees.
4. That the Secretary shall certify mis Order and Annex A, and deposit
them with the Legislative Reference Bureau to be published in the Pennsylvania
Bulletin.
5. That an original and 15 copies of any comments referencing the docket
number of the proposed regulations be submitted within 30 days of publication in
the Pennsylvania Bulletin to the Pennsylvania Public Utility Commission, Attn.:
Secretary, P. O. Box 3265, Harrisburg, PA 17105-3265. The Secretary shall
specify publication of the Order in accordance with 45 Pa. C.S. 1727.
6. That the proposed regulations attached as Annex A are hereby adopted
as final Interim Guidelines at Docket No. L-00940095F0002 and can be used by
jurisdictional utilities to provide guidance as to appropriate tariff filing
requirements until such time as final regulations are approved at Docket No.
L-00940095.
25
7. That a copy of this Order, Annex A, and Appendix A shall be filed in
the Joint Petitions for Global Resolution proceeding at Docket Nos. P-00991648
andP-00991649.
8. That the contact persons for this rulemaking are Gary Wagner, Bureau
of Fixed Utility Services, 717-783-6175 (technical), and Carl S. Hisiro, Assistant
Counsel, Law Bureau 717-783-2812 0egal).
9. That a copy of this Order, Annex A, and Appendix A shall be served
upon the Pennsylvania Telephone Association, all jurisdictional
telecommunication utilities, the Office of Trial Staffs the Office of Consumer
Advocate, and the Small Business Advocate.
BY THE COMMISSION,
(SEAL)
ORDER ADOPTED: September 30, 1999
ORDERENTERED: GCT * 7 1999
James J. McNultySecretary
26
ANNEX ATITLE 52. PUBLIC UIXLITIES
PARTI. PUBLIC UTILITY COMMISSIONSUBPARTC. FIXED SERVICE UTILITIES
CHAPTER 53. TARIFFS FOR NONCOMMON CARRIERS
TARIFF FILING REQUIREMENTS FORINCUMBENT LOCAL EXCHANGE CARRIERS
ANDCOMPETITIVE LOCAL EXCHANGE CARRIERS
§53.57. Definitions.
The following words and terms, when used in this subpart, have the
following meanings, unless the context clearly indicates otherwise:
Competitive local exchange carrier (CLEC)— A telecommunications
company that has been certificated by the Commission as a competitive local
exchange carrier under the Commission's procedures implementing the federal
Telecommunications Act of 1996, or under the relevant provisions at 66 Pa. C.S.
§ 3009(a).
Competitive service — A service or business activity offered by an
incumbent or competitive local exchange carrier mat has been classified as
competitive by the Commission under the relevant provisions of 66 Pa. C.S.
§3005.
Incumbent local exchange carrier (ILEC) — A telecommunications
company deemed to be an incumbent local exchange carrier pursuant to § 251(h)
of the federal Telecommunications Act of 1996,47 U.S.C. § 251(h).
Joint or bundled service packages — Service packages that may be
composed by one or more distinct categories of noncompetitive and competitive
services and service options or features, inclusive of toll services, where such
service packages are offered by CLECs and ILECs under a single rate or charge
and a unified set of terms and conditions for service as defined in a tariff approved
by the Commission. This definition shall not include ILEC or CLEC tariff filings
that involve simultaneous changes in rates and charges for noncompetitive services
in a revenue neutral manner.
Lifeline Plan — A tariffed service offering, approved by the Commission,
which provides telecommunications services to qualified low-income end-user
consumers at reduced rates and charges in accordance with applicable directives
and guidelines of the Commission and of the Federal Communications
Commission.
New service — Any service that is not substantially the same or functionally
equivalent with existing competitive or noncompetitive services.
Noncompetitive service ~ Any protected telephone service as defined in
66 Pa. C.S. § 3002 or a service that has been determined by the Commission as not
a competitive service.
Promotional service offerings — Noncompetitive services offered by
CLECs and ILECs, under rates, charges, applicable discounts, terms, conditions
and duration governed by an appropriate tariff approved by the Commission.
Promotional service offerings will not have a duration of longer than 6 months in
any rolling 12-month period which commences as of the effective date of the filed
promotion.
§53.58. Offering of competitive services.
(a) ILEC services that have been classified as competitive under die
relevant provisions of 66 Pa. C.S. § 3005, can also be offered by CLECs as
competitive services without prior competitive determination and classification by
the Commission subject to the provisions in this subpart.
(b) Subject to § 53.59, nothing prohibits a CLEC from offering services
classified as noncompetitive in an ILEC service territory where the CLEC has
been certificated to offer service.
(c) When the Commission approves a CLEC petition under die relevant
provisions of 66 Pa. C.S. § 3005 for classification of a noncompetitive service to
a competitive service, the ILEC serving that petitioning CLECs service
tenitoiy and other certificated CLECs within the petitioning CLECs service
territory may offer the service approved by the Commission as a competitive
»
service subject to the provisions of this subpart.
(d) CLECs and ILECs offering services classified by the Commission as
competitive must file with the Commission appropriate informational tariffs and
price lists.
(e) The Commission may initiate a proceeding for the potential
reclassification from competitive to noncompetitive a service that is offered by
either or both an BLEC and CLECs in a specific service territory under die
relevant provisions of 66 Pa. C.S. § 3005(d). The Commission will decide which
ILEC or CLEC has demonstrated that level of dominant market power to
warrant reclassification of a competitive service to noncompetitive status. The
Commission will provide an opportunity to participate in such proceeding to the
ILEC and to those CLECs that offer substantially the same or functionally
equivalent competitive service within the service territory of the ILEC or specific
CLEC demonstrating dominant market power. The Commission will separately
determine whether the substantially same or functionally equivalent service that is
offered by the ILEC or by CLECs not demonstrating dominant market power in
the relevant sendee territory will continue to be classified as a competitive service.
When reviewing whether a service should be reclassified, the Commission will
consider the following factors:
(1) The case of entry by potential competitors into the market for
the specific service at issue.
(2) The presence of other existing telecommunications carriers in
the market for the specific services at issue.
(3) The ability of other telecommunications carriers to offer the
service at competitive prices, terms and conditions.
(4) The availability of like or substitute service alternatives in the
relevant geographic area for the service at issue.
(5) Whether the service is provided under conditions that do not
constitute unfair competition.
(6) Whether the service, including its availability for resale under
the relevant provisions of the federal Telecommunications Act of 1996, is
provided on a nondiscriminatory basis.
(7) Other factors deemed relevant by die Commission.
§ 53.59. Cost support requirements and effective filing dates for tariff filingsof noncompetitive services.
(a) A CLEC that offers services that are substantially the same or
functionally equivalent with noncompetitive services by an DLEC in the service
territory of die ILEC, at rates and charges that are at or below the level of the
corresponding rates and charges of the ILEC for these services, is relieved from
any obligation to provide cost support for tariff filings and rate changes involving
these services. These tariff filings will be effective on 1-day's notice if:
(1) The CLEC offers these services in the same service territory as
thelLEC;
(2) The CLEC tariff filing does not contain any material changes in
the CLECs tariff rules, terms, or conditions;
(3) The CLEC specifically states in its accompanying cover letter
that the filing is being made on 1-day's notice in accordance with this
subsection, and that the tariff filing does not contain any material changes
in the CLEC tariff rules, terms, or conditions;
(4) The CLEC provides copies of the ILEC's effective tariffs
designating the corresponding rates and charges of the same or
functionally equivalent noncompetitive services.
(b) When a CLEC offers services in the service territories of more than
one ILEC, and the rates and charges for these services satisfy the criteria of
§ 53.59(a) above, then the CLEC may file separate tariff schedules where the rates
and charges for these services correspond to the rates and charges of the different
DLECs in their respective service territories.
(c) CLEC tariff filings for services that are substantially the same or
functionally equivalent with noncompetitive services offered by an ILEC in the
same service territory of the ILEC, at rates and charges that are higher than the
corresponding rates and charges of the ILEC, or for new services, will become
effective as filed if the Commission does not take any action within 30 days from
the date when all consumers subject to the rate increase shall have received notice
to each individual customer. Such rate filings shall be served in person on the date
of filing upon the Office of Consumer Advocate, the Office of Small Business
Advocate, and the Commission's Office of Trial Staff.
The Commission may extend the review period by up to an additional 30
days upon notice to the Office of Consumer Advocate, the Office of Small
Business Advocate, the Commission's Office of Trial Staff, and the CLEC. The
CLEC shall include the following summary documentation for tariff filings
involving such services:
(1) A brief statement indicating whether the CLEC offers these
services solely on the basis of resale of an ILEC's retail services, through
its own facilities, or a combination of both.
(2) A brief statement indicating whether the tariff filing represents
an increase or decrease in existing rates and charges.
(3) A summary justification of the tariff filing, including an
explanation of whether the proposed changes have been caused by a
corresponding change in rates and charges of the resold services of the
underlying ILEC.
(d) Where new or revised CLEC rates for service are higher than those of
the ILEC in that ILEC's service territory, the Commission may request relevant
documentary support, including cost support and a statement of compliance with
all applicable guidelines. Such requests can be made either before or after the
rates become effective, and will only occur where it is necessary to protect
consumers such as, without limitation, where the service is targeted to the
economically disadvantaged or customers with poor credit histories.
(e) ILEC tariff filings for noncompetitive services that represent rate
reductions from current rates and charges of that ILEC, will become effective as
filed if the Commission does not take any action within a 10-day notice and review
period. To obtain the 10-day notice and review period, the ILEC must provide
copies of its current tariff for the noncompetitive service for which it seeks a rate
reduction. ILEC tariff filings for noncompetitive services that represent rate
increases from current rates and charges of that ILEC, will become effective as
filed if the Commission does not take any action within 30 days from the date
when all consumers subject to the rate increase shall have received notice to each
individual customer. Such rate filings shall be served in person on the date of
filing upon the Office of Consumer Advocate, the Office of Small Business
Advocate, and the Commission's Office of Trial Staff.
The Commission may extend the review period for either type of tariff
filing by up to an additional 30 days upon notice to die Office of Consumer
Advocate, the Office of Small Business Advocate, the Commission's Office of
Trial Staff, and the ILEC Nothing in this subpart will affect the type of
documentary support, including cost support and a statement of compliance with
all applicable guidelines, that will be necessary for an ILEC to file with the
Commission for approval of tariff filings involving noncompetitive service
(f) ILECs and CLECs that file tariff filings in accordance with § 53.59(c)
or § 53.59(e) must file an executive overview summarizing the reason for the
filing. The executive overview shall include relevant information regarding the
safety, adequacy, reliability, and privacy considerations related to the proposed or
revised service.
(g) Where a CLEC proposes increases in rates and charges for any of
its basic local exchange services, the CLEC shall also state whether it has
implemented a Lifeline Plan that has been approved by the Commission.
§ 53.60 Supporting documentation for promotional offerings, joint orbundled service packages, and toll services.
(a) Promotional offerings. CLECs and ILECs do not have an automatic
obligation to provide cost support for tariff filings involving a promotional service
offering so long as the promotional offering does not result in any type of price
increase to customers.
(1) ELEC and CLEC tariff filings involving a promotional service
offering will become effective with a 1-day's notice. ILECs and CLECs
shall provide a 10-day advance notice to any resellers that purchase the
promotional service offering from the ILEC or CLEC making the tariff
filing.
(2) The Commission may request relevant documentary support,
including cost support and a statement of compliance with applicable
guidelines, for tariff filings involving promotional service offerings.
(3) No filing requirements exist for promotional offerings involving
competitive services.
(4) CLECs and ILECs that file promotional offerings under this
subsection must confirm in their filing that subscribers to the promotional
offerings will be required to respond affirmatively at any time the
promotional service is being offered if they wish to continue the service
beyond the promotional period.
(b) Joint or bundled service packages. CLECs and ILECs are relieved
from an automatic obligation to provide cost support for tariff filings involving the
offering of joint or bundled service packages.
(1) Whan ILEC joint or bundled service packages include both
competitive and noncompetitive services, such service packages shall meet
all applicable guidelines that have been issued by the Commission in the
10
form of regulations, orders or other directives regarding cost justification,
discrimination, and unfair pricing in joint or bundled service package
offerings, and their component competitive and noncompetitive services.
(2) The Commission may request relevant documentary support,
including cost support and a statement of compliance with applicable
guidelines, for tariff filings involving joint or bundled services.
(3) No filing requirements exist for the offering of joint or bundled
service packages composed entirely of competitive services.
(c) Toll services. CLECs and DLECs are permitted to file tariffs with
changes in their rates and charges for existing noncompetitive toll services
alone that can become effective with a 1-day's notice; a 16-day
notice period is required for the filing of a new toll service or the specific
noncompetitive services defined in 66 Pa. C.S. § 3008(a). For tariff filings and
rate changes involving noncompetitive toll services, the Commission may
request relevant documentary support, including cost support and a
statement of compliance with applicable guidelines.
n
APPENDIX A
Rulemaking Re Updating and Revising Docket No. L-00940095Existing Filing Requirement Regulations52 Pa. Code if 53.52-53.53 -Telecommunication Utilities
52 Pa. Code IS 53.52-53.53 - Docket No. L-00940095.F0002Telecommunication Utilities -Voluntary Interim Guidelines
COMMENTS AND RESPONSES DOCUMENT
A. Comments to Second Advance Notice and November 5,1997 TechnicalConference
The major commenting parties in September 1997 to the Second Advance
Notice of Proposed Rulemaking and in December 1997 to the November 5,1997
Informal Technical Conference were Bell-Atlantic-Pennsylvania, Inc. ("BA-PA"),
MCI Telecommunications Corporation ("MCI"), and MCI Metro Access
Transmission Services, lac. ("MCI Metro"). Their comments, as well as the
comments of the other interested parties, are discussed below by topic area
presented in mis rulemaking. In summary, all of the parties filing comments,
except BA-PA and the Pennsylvania Telephone Association ("PTA"),
recommended that the Commission recognize the current market dominance of the
ILECs by not applying the concept of "regulatory parity." Instead, they argue for
asymmetrical regulation (i.e., regulating dominant and non-dominant carriers
differently) to facilitate the transition to a competitive local exchange market until
the ILECs no longer possess market power. BA-PA and the PTA, on the other
hand, urge the Commission to apply the "regulatory parity" principle in deciding
what filing requirements should continue to be imposed.
1. Market Power and Regulatory Parity
According to BA-PA, an examination of "the possession of market power
by CLECs or ILECs. . . has no place in mis proceeding." BA-PA Comments of
December 8, 1997, at 2. BA-PA argues mat prior Commission orders clearly
establish regulatory parity as the appropriate standard to apply. Id. Further,
BA-PA states that "there is nothing in Chapter 30, TA-96, or the prior decisions of
this Commission mat supports using some new theoretical marketplace construct
to determine the appropriate tariff filing requirements for ILECs and CLECs." Id.
at 3. Finally, BA-PA asserts:
Using the ambiguous concept of "market power" as the basisfor imposing disparate levels of regulation on ILECs andCLECs and the resulting imposition of traditional antitrustdoctrine to tariff filings would not help the Commission to"achieve the goals of flexibility and streamlining of CLEC andILEC tariff filings on an equal basis." Moreover, this is thetype of information that typically calls for expert economictestimony that requires weeks to develop and should bethoroughly tested by the adversarial process, includingdiscovery and cross-examination of witnesses under oath. Asaresult, to the extent that the Commission tries to explore the useof "market power" criteria, a formal rulemaking would be required.
Id. at 4-5 (footnote omitted).
Similarly, the PTA "strongly opposes proposals that would base CLEC and
ILEC tariff and other filing requirements and the submission of associated
supporting documentation on the relative existence of 'market power* between
competitors in the local exchange markets." PTA Comments of December 8,
1997, at 2. The PTA argues that "the concept of 'market power' is ambiguous and
difficult to define. . . [t]here is no objective way to ascertain the possession of
'market power* by market participants.** Id. The PTA believes "mat to the extent
reporting requirements are necessary, they should be applied uniformly regardless
of the service provider's designation." ML at 3.
MCI Metro/MCI's position, on the other hand, is that regulatory parity or
"symmetrical regulation" is not mandated by TA-96 and should not be
implemented until there is a level playing field between the new competitive
providers and the incumbent monopoly providers. MCI Metro Comments of
September 30,1997, at 1-5 and MCI Comments of December 8,1997, at 3-13.
MCI Metro contends mat "CLECs should not be subject to the same requirements
as incumbents as long as mere is a marked difference in the market share between
the CLEC and BLEC." MCI Metro Comments of September 30,1997, at 4.
Otherwise, according to MCI Metro, "[i]f CLECs are required to be held to the
same standard as the ILEC, mis creates a competitive disadvantage to the CLEC
and in some cases create an insurmountable barrier to entry." Id.
MCI Metro also points out mat "the Commission itself has traditionally
drawn distinctions between utilities of varying status." Id. For example,
"streamlined provisions for alternative regulation were made available to those
providers with less than 50,000 access lines" and rate cases under "$1 million do
not require the same supporting data as larger rate cases." Id (citation omitted).
In the same vein, MCI points out that "[s]mall rural ILECs have been given special
consideration relative to unbundling requirements in recognition of their
limitations given their current positioa" MCI Comments of December 8,1997, at
14. MCI then asks "[i]f there is no parity between ILECs, why must there be
'parity' between a CLEC and an DLEC given their disparate positions?" Id.
Similarly, according to MCI, the Federal Communications Commission
("FCC") has recognized that regulations in a deregulatory environment should not
be the same for ILECs and CLECs if there is to be effective competition. Id. at 9.
The FCC has stated that this conclusion is consistent with TA-96, which provides
in Section 25 l(c) for different regulatory treatment for incumbent and non-
incumbent local exchange providers. Id. Finally, MCI states that it has been
unable to find any other state or federal agency that has adopted regulatory parity
when ILECs still retain market power, thereafter citing to a number of state
commissions that have adopted asymmetrical regulatory schemes to facilitate the
transition to effective competition in the local exchange market IdL at 6*13.
AT&T Communications of Pennsylvania, Inc. ("AT&T*), Sprint
Communications Company L.P. ("Sprint"), the United Telephone Company of
Pennsylvania ("United"), and the Telecommunications Resellers Association
OTRA") g ^ ^ ^ ^ o MCI/MCI Metro's comments. In determining whether a
local exchange provider possesses market power, Sprint recommends mat the
Commission "focus on certain well-established market features, including market
share, supply elasticity of the market, demand elasticity of [a] carrier's customers,
the cost structure, size or resources of the firm, and control of bottleneck
facilities." Sprint Comments of December 8,1997, at 2. Sprint also recommends
the adoption of a "presumption that CLECs are non-dominant unless it can be
shown mat a CLEC exercises market power in their service area, and mat "[a]n
ILEC should be deemed as non-dominant only after the Commission finds that the
ILEC no longer possesses market power." Id. Sprint points out that the FCC
established a similar "comprehensive framework for determining whether carriers
are dominant or non-dominant" in its Competitive Carrier Proceeding (Indie
Matter of Access Charge Reform. CC Docket No. 96-262, First Report and Order
at Tf 359 (released May 16,1997)). Sprint Comments of December 8,1997, at 6-7.
Teleport Communications Group ("TCG") expressly supported the
comments filed by MCI and urged "the Commission to apply Chapter 30 of the
Pennsylvania Public Utility Code in a manner that promotes and encourages the
development of competition by designating those services offered by competitive
local exchange carriers... as competitive services." TCG Comments of
December 15,1997, at 1. TCG asserts mat the principles of competitive neutrality
and regulatory parity are met when "similarly situated carriers... [are] regulated
on a similar basis." Id. At present, TCG concludes, CLECs, which by definition
lack market power, are regulated as if they have die same market power as ILECs.
Id at 3.
Finally, the Office of Trial Staff ("OTS") offers the following comments on
the market power/regulatory parity issue:
At this time, there does not appear to be any significant localexchange competition and therefore, all [ILECs] should be deemedto possess "market power" for local exchange services within theirrespective service areas.
In OTS's view, "regulatory parity" with respect to rateregulation between ILECs and competitors (CLECs) should notbe required until the ELEC no longer possesses market power.While "regulatory parity" has been previously espoused by thePa. P.U.C.. . . its use in the absence of a competitive local exchangemarket raises "barrier to entry" concerns due to passage of theTelecommunications Act of 1996. . . which preempts State...regulations... which prohibit or have the effect of prohibiting theability of any entity to provide any interstate or intrastatetelecommunications service.
The criteria which could be utilized to ascertain, in the future,whether or not "market power" remains for the ILEC . . . are similarto those contained in Section 3005(aXl) of the Public Utility Code,66 Pa. C.S. |3OO5(aXl), with respect to whether or not an ILECservice should be declared "competitive." In fact, if an ILEC is abledemonstrate a loss of "market power" with respect to its localexchange services, the ILEC may also be able to prove that its localexchange services are "competitive" and rate regulation of theseservices would therefore cease. . . .
The "market power" analysis should not be applied to qualityof service requirements....
OTS Comments of December 8,1997, at 2-3.
2. Tariff Filing Support Documentation
BA-PA's position is that "[a]s with all of the filing requirements, parity
should be both the goal and practice." BA-PA Comments of September 30,1997,
at 2. BA-Pa's main complaint appears to be that the CLECs are not consistently
adhering to the requirements contained in Section 53.52, and that they should be
required to do so. In seeking parity, however, BA-PA argues mat the Commission
"should reduce the regulatory burden on ILECs rather than increase the CLECs'
responsibilities." Id. BA-PA concludes, therefore, that if me Commission decides
that the CLECs do not have to abide by all the requirements of Section 53.52,
"then BA-PA should be permitted the same freedom." Id.
According to PTA, the tariff filing requirements for CLECs and ILECs
should be identical in order to maintain competitive neutrality. PTA Comments of
September 30,1997, at 3.
Bom MCI Metro and AT&T argue that the filing requirements contained in
Section 53.52 should not be applicable to CLECs. MCI Metro Comments of
September 30, 1997, at 5-6 and AT&T Comments of September 29,1997, at 5-7.
They contend that the tariff documentation requirements are intended for the
regulation of monopoly local exchange services to protect consumers from utilities
that misuse their monopoly position to improperly raise rates. They state mat such
documentation requirements should not be required from CLECs, because, by
definition, the services provided by CLECs are competitive in nature.
Sprint and United's position is similar to MCI Metro and AT&T's, asserting
that "[supporting documentation for CLEC tariff filings should be minimal.''
Sprint and United Comments of September 29,1997, at 6. These two carriers
suggest mat "the Commission allow CLECs the same flexibility it recently adopted
for DCC[s] under Chapter 30 for their tariff filings." Id, at 7 (footnote omitted).
Under this proposal, the Commission would follow the guidelines set out in 52 Pa.
Code S 63.103 for existing CLEC services and 52 Pa. Code 163.104 for new
CLEC services.
TRA contends that the tariff review process as it now exists can be a time
consuming and expensive proposition for the CLECs. TRA Comments of October
1,1997, at 5-6. TRA maintains that "[t]his works only to the advantage of the
ILEC, while harming the citizens and businesses of this Commonwealth and doing
violence to national competition policies." Id at 6. TRA concludes that 'the tariff
review process . . . [has become] a roadblock and not a safety checkpoint" and that
true local exchange competition will lag until CLECs "are able to implement their
business plans as expeditiously as possible." Id.
3. Cost Support Documentation
BA-PA recommends mat "the Commission should require that any filing
methodology which is applied to CLECs include the provision of documentation
that demonstrates the new rates are cost-justified." BA-PA Comments of
September 30, 1997, at 3. BA-PA maintains that regulatory parity in mis
requirement "is crucial to avoid cross-subsidization among or between CLEC
services" as some of the new entrants in this market are subsidiaries of or partners
with large multinational corporations. Id. Finally, BA-PA asserts that "the
Commission should require that all support utilize a Total Service Long Run
Incremental Cost (TSLRIC) or other forward-looking methodology, as opposed to
an embedded cost approach.*' W.
According to PTA, "[a]ll telecommunications providers should be subject to
the same requirements for the filing of cost support documentation." PTA
Comments of December 8,1997, at 4. "The primary concern in a competitive
environment," PTA argues, "should be focused on ensuring mat rates cover costs
so that competition is not thwarted through cross-subsidization." PTA Comments
of September 30,1997, at 3. PTA concludes mat "rather than requiring extensive
cost support from CLECs, the Commission should acknowledge mat requiring
extensive cost support from ELECs creates a competitive disadvantage" to the
ILECs. Id.
AT&T, Sprint, United, and MCI each contend that cost justification for
services offered by CLECs is completely unnecessary. AT&T Comments of
September 29,1997, at 7-10; Sprint and United Comments of September 29,1997,
at 8-9; and MCI Comments of December 8,1997, at 15-21. The primary rationale
for requiring such documentation - to ensure that the traditional monopoly
provider is not engaged in predatory pricing - does not apply to new market
entrants with little or no market share. A CLECs prices will always be
constrained by the incumbent monopolist's regulated prices.
AT&T further argues that "[t]his is particularly true for new entrants
seeking to compete against the incumbent through either resale of the incumbent's
retail services or the purchase of the incumbent's unbundled network elements."
AT&T Comments of September 29, 1997, at 7-8. AT&T continues:
In both cases the methodologies used to develop thewholesale rate and the UNE [("unbundled network element")]rates include a return on the incumbent LEC's investment. Thus,a CLEC that attempts to price below its marginal cost will losemoney while the DLEC continues to make a profit When the CLECultimately raises its prices, there will be nothing to stop theincumbent LEC from regaining its lost customer, or another CLECfrom gaining the business.
Moreover,... the fact that new entrants may attemptto compete through either the resale of the incumbent's retailofferings or through the purchase of the incumbent'sunbundled network elements further calls into question theneed for CLEC cost support. In both cases the "cost support"is already well known - it's the ILEC's tariffed retail ratesminus the wholesale discount, or it's the ILEC's negotiatedor arbitrated UNE rates. Because the Commission alreadyhas been involved in the determination of both of those rates,there is no apparent need for further inquiry into costsunderlying the CLECs own retail offerings.
Id at 8.
Assuming that the Commission concludes it does require cost information
from the CLECs, both AT&T and MCI Metro argue that the Commission should
not require that CLECs use the Uniform System of Accounts ("USOA") for their
filings. AT&T Comments of September 29,1997, at 9*10; MCI Metro Comments
10
of September 30,1997, at 6-7. According to AT&T, the USOA was established
years ago by the FCC to provide uniformity in reporting procedures for the
traditional monopoly franchised telephone carrier; and, as such, "it has little
applicability to CLECs" which have no ability to cross-subsidize their competitive
services. AT&T Comments of September 29,1997, at 9-10.
OTS's position is similar to that of the interexchange carriers' ("IXCs") on
this issue:
Cost studies should not be required for CLEC tarifffilings with rates or rate changes that reflect me resale ofcorresponding ILEC retail services or approximate the levelof BLEC retail service rates. However,... it would not beinordinately burdensome to require CLECs to provide copiesof the corresponding ILEC retail service rate with the CLECtariff filing
In addition, cost studies should not be required for CLECtariff filings with rates or rate changes that are lower than thosefor corresponding ILEC retail services
OTS also does not see the necessity for CLEC cost studieswhen the CLEC files rates or rate change at levels that are higherthan those for corresponding ILEC retail services Since theend-user would have the option of staying with or returning to theILEC for these services at a lower price, the necessity for regu-latory cost scrutiny would appear to be minimized.
OTS Comments of December 8,1997, at 3-4 (emphasis in original).
4. CLEC Services and Rates
While BA-PA concedes that "there may not be a need for 'extensive cost
support' for CLEC services mat are based on ILEC retail service rates, CLECs,
u
nevertheless, "should be required to demonstrate that their proposed rates cover
the costs of providing the tariffed service." BA-PA Comments of September 30,
1997, at 3. To prevent cross-subsidization, BA-PA believes that an ILEC's
"wholesale rates should be considered as the price floor and the CLEC rate must
also cover.. . any other related CLEC costs (i.e., CLEC customer billing,
advertising or marketing costs)." Id.
AT&T, MCI Metro, Sprint, and United argue mat the same rationale they
raised for the cost support documentation issue above applies with equal force to
this issue as well. AT&T Comments of September 29,1997, at 7-10; MCI Metro
Comments of September 30, 1997, at 7-8; Sprint and United Comments of
September 29,1997, at 9-10. They argue mat cost justification for CLEC prices
are not necessary as CLECs have no ability to extract monopoly prices from
consumers or to cross subsidize its local rates with revenues generated in the long
distance market.
5. Local Exchange Carrier IntraLATA Toll Rate
BA-PA argues that "[rjegulatory parity is especially important in the newly-
presubscribed intraLATA toll market... [and that] BA-PA should not be
subjected to requirements not imposed on its toll competitors." BA-PA Comments
of September 30, 1997, at 4. BA-PA asserts mat it "should be permitted the same
type of flexibility that the Commission's recent Order [in hire: Interexchanee
Carrier Regulation Under Chapter 30 of the Public Utility Code. Docket Nos.
12
L-0094009 and M-00930496, Final Rulemaking Order, entered April 29, 1997]
provides IXCs operating in the intraLATA toll market." Id.
AT&T contends, on the other hand, that the Commission cannot yet apply
"uniform guidelines" to the ILECs and IXCs for intraLATA toll offerings because
of one critical difference between ILECs and IXCs — carrier access charges.
AT&T Comments of September 29,1997, at 10-11. According to AT&T, a[t]he
primary difference in the regulatory oversight is in the need for an imputation
requirement to be applied to the ILECs' intraLATA toll offerings." Id at 10. The
comments filed by MCI Metro, Sprint, and United generally support AT&T's
position on this issue. MCI Metro Comments of September 30,1997, at 9-12;
Sprint and United Comments of September 29,1997, at 10-11.
6. Tariff Filings for Service "Packages" and Supporting Documentation
BA-PA asserts mat "all companies providing 'bundled' or 'packaged'
services should be required to provide cost support which demonstrates mat there
is no cross-subsidization.'' BA-PA Comments of September 30,1997, at 5.
Relying on prior Commission decisions, BA-PA states that it "should be provided
the ability to bundle competitive with non-competitive services, under the same
requirements imposed on its competitors.'' Id at 6. Where the services in
question are regulated (i.e., deemed non-competitive) by the Commission, BA-PA
recommends that the existing tariff requirements apply. Id.
13
The PTA's position is that "[i]t is essential that the Commission allow
ILECs to joint market/package services in order to compete effectively with die
CLECs entering the ILECs local exchange market" PTA Comments of
September 30, 1997, at 4.
MCI Metro argues that supporting cost documentation for service packages
need only be filed by dominant carriers to show that the dominant carrier has
covered its costs, that is, the costs it would have "to pay were it to purchase the
services from itself if those services are unavailable elsewhere." MCI Metro
Comments of September 30, 1997, at 12. Because the prices of CLEC services are
market driven, according to MCI Metro, there is no need for supporting
documentation. IcL at 13. MCI Metro states that "[a]ll joint marketing proposals
by all providers should be accompanied by documentation that shows that a
consumer purchasing the package is, on average, paying no more for the services
as a package than they would if priced separately by that provider/9 Id.
AT&T argues that "there should be no special documentary support
requirements for CLEC service "packages," but that "ILEC packages at a
minimum should be subject to all normal documentation requirements applicable
to tariff filings today." AT&T Comments of September 29,1997, at 1L Sprint
and United contend that "[t]he Commission should not expand the joint marketing
restrictions already established by the [federal] Act or the FCC [and that]
14
support documentation requirements should be minimal." Sprint and United
Comments of September 29,1997, at 12.
7. Promotional Offering Tariff Filings
BA-PA recommends mat the Commission require for ILECs, CLECs, IXCs,
and resellers that "copies of the promotional filing be either posted on available
company internet websites or provided to the Commission for posting on the
Commission's website." BA-PA Comments of September 30,1997, at 6.
Moreover, BA-PA states that regulatory parity requires that "all carriers should
comply with the consumer and competitor safeguards the Commission approved in
Docket No. R-943008, when it considered BA-PA's Promotional Offerings
Tariff." Id at 6-7.
MCI Metro asserts that tariffs for promotional offerings serve two purposes:
protecting consumers and avoiding anticompetitive conduct. MCI Metro
Comments of September 30,1997, at IS. MCI Metro argues that restrictions on
promotional offerings designed to protect consumers should apply to all providers,
but because CLECs have no market power, there is no need to ensure that their
promotions are not anticompetitive. Id at 14-15. For the reasons discussed
previously, MCI Metro states that CLECs should not be required to provide cost
justification support documentation. Id at 16.
Because promotional offerings are important marketing tools, Sprint and
United argue that the Commission should attempt to minimize any distortions from
15
what would occur in a competitive market with no regulatory review process in
place. Sprint and United Comments of September 29, 1997, at 12-13. In this
regard, they recommend that the Commission streamline its process, including
adopting short advance notice provisions and keeping support documentation
requirements to a minimum. Id at 13.
B. Comments to Voluntary Interim Guidelines and Third Advance Notice
On or about May 27,1998, the Commission received initial comments on
the proposed Voluntary Interim Guidelines from BA-PA, AT&T, MCI, TCG,
Sprint and United, PTA, GTE North Incorporated and GTE Communications
Corporation (collectively, "GTE"), and joint comments from Commonwealth
Telecom Services, Inc., Focal Communications Corporation of Pennsylvania,
Hyperion Telecommunications of Pennsylvania, Inc., RCN Telecom Services of
Pennsylvania, Inc., and ATX Telecommunications Services, Ltd. (collectively, the
"Joint Commenters"). In addition, reply comments were filed on or about June 11,
1998, by BA-PA, PTA, MCI, TCG, GTE, TRA, Sprint and United, the Joint
Commenters, and OTS. An on-the-record technical conference was held on June
26,1998, with Chief Administrative Law Judge Robert Christianson presiding and
six parties offering witnesses.1 Following the technical conference, final
1 The following parties and their witnesses who offered testimony at die technical conference were:(1) BA-PA: Catherine Eichenlaub, Director - Line of Business Regulatory SiqiportforBeU Atlantic-Network Services, Inc.; (2) TCG: Chris Nurse, Manager of Regulatory and External Affairs of theEastern Region; (3) MCI: Don Laub, Senior Policy Analyst for State Regulatory and Government Affairs,Mid-Atlantic Region; (4) GTE: John Dudley, Assistant Vice President-Regnlatory A Governmental
16
comments to the Interim Guidelines were submitted on or about July 15,1998, by
BA-PA, MCI, TCG, Sprint and United, and PTA. Finally, on or about July 21,
1998, comments were provided to the same streamlining proposals as a proposed
rulemaking pursuant to the Corrected Third Advance Notice of Proposed
Rulemaking Order by BA-PA, GTE, MCI, TCG, Sprint/United, and me PTA.2
Generally, AT&T, MCI, Sprint and United, TCG, GTE, the Joint
Commentcrs, and OTS support the adoption of Voluntary Interim Guidelines to
remove some of the regulatory burdens currently faced by CLECs as a good first
step to making the telecommunications market in Pennsylvania more competitive.
Most of these parties argue, however, mat the Commission has not gone far
enough in streamlining its tariff filing requirements for CLECs and offer a number
of suggestions for further streamlining.
For example, MCI and TCG state that the guidelines should recognize and
classify all services provided by a CLEC as competitive. MCI Comments of May
27,1998, at 17; TCG Comments of May 26,1998, at 1. AT&T, MCI, GTE, the
Joint Commenters, and TCG each argue that the Commission should not adopt any
cost support requirements for CLEC tariff filings. AT&T Comments of May 27,
1998, at 4, 7-8; MCI Comments of May 27,1998, at 20; GTE Comments of May
27,1998, at 7; Joint Commenters Comments of May 27,1998, at 10; TCG
Affairs; (5) Sprint and United: John Short, Director Regulatory Affiurs; and (6) PTA: James Kail, ChiefFinancial Officer with the Bentleyville Telephone Company.2 The Jury 21,1998 comments of MCI, TCG, Sprint/United and the PTA simply incorporated by refertheir earlier comments in this proceeding.
17
Comments of May 26, 1998, at 6, 9-11. Some of these same parties also argue
that CLEC filing requirements should not be tied to ILEC rates and local calling
areas as there is no public policy justification for this condition and it will stifle
innovation. See, ejk, TCG Comments of May. 26,1998, at 7-9; Joint Commenters
Comments of May 27,1998, at 12.
On the issue of shortening notice requirements for non-competitive tariff
filings, several of these Commenters suggest that the 60-day notice requirement
should be shortened to 30 days or less, all the way down to just one day. AT&T
Comments of May 27,1998, at 6-7; MCI Comments of May 27,1998, at 24-25;
Sprint/United Comments of May 27,1998, at 7. BA-PA also supports reducing
me notice requirement from 60 days to 30 days for all tariff filings for both ELECs
and CLECs. BA-PA Final Comments of July 15, 1998, at 5-6. Further, several of
the Commenters point out that the notice requirement for toll services in ^ F. 1 is
inconsistent with the Commission's existing regulations at 52 Pa. Code SI 63.103-
63.104, and at least two, GTE and the PTA, recommend that the guidelines should
be amended to remove this inconsistency. GTE Comments of May 27,1998, at 8-
9; PTA Comments of May 27,1998, at 6.
Some of the CLEC Commenters also argue that as to ELECs, the Voluntary
Interim Guidelines appear to relieve die ELEC from any automatic obligation to
provide supporting documentation demonstrating that its toll service offerings,
promotional service offerings, and joint service packages pass an imputation test
18
They advocate that the Voluntary Interim Guidelines should be amended to require
ILECs to submit such supporting documentation. AT&T Comments of May 27,
1998, at 4, 7-9; Joint Commenters Comments of May 27,1998, at 13-15.
Finally, in response to a Commission Staff question at the June 26,1998
technical conference, none of the CLECs who filed final comments supported the
creation of a "safe harbor" rule as a way of delineating when CLECs would be
exempt from certain filing requirements, such as cost justification documentation
to support tariff prices.3 MCI Final Comments of July 15, 1998, at 1-4;
Sprint/United Final Comments of July 15, 1998, at 6-7; TCG Final Comments of
July 14, 1998, at 4-7. To properly implement an asymmetrical regulatory scheme,
however, at least two of the Commenters, GTE and Sprint/United, suggest that a
market power test must be devised and evaluated in a separate proceeding through
which all interested parties would have an opportunity to participate. GTE
Comments of May 27, 1998, at 2-3; Sprint/United Final Comments of July 15,
1998, at 2-5.
In responding to the proposed Voluntary Interim Guidelines, both BA-PA
and the PTA continue to assert that the Commission should be guided by the
doctrine of "regulatory parity" in developing its tariff filing streamlining rules/
BA-PA Comments of May 27,1998, at 9-11; PTA Comments of May 27,1998, at
3 BA-PA also argues against creating a"regulatory complexity.9* BA-PA Final Comments of July 15,1998, at 1. PTA was the only party thatexpressed any support for a "safe hart»r"nile in to ̂ PTA Final Comments of July 15,1998, at 4.
19 j
1-2. BA-PA in particular argues that the Interim Guidelines, as proposed, would
violate state law because the guidelines would create a "binding norm" without
going through the regulatory rulemaking process. BA-PA Comments of May 27,
1998, at 9-10 and BA-PA Final Comments of July 15,1998, at 9. BA-PA asserts
that the "filing burdens" can be resolved for all ILECs and CLECs by simply: (1)
relieving all carriers from automatic riling of cost support and cost justification for
tariff filings, subject to the Commission's ability to ask for such supporting
documentation if necessary to protect consumers or competition; (2) reducing the
notice requirement for all noncompetitive tariff filings for all carriers to 30 days or
less; and (3) where any LEC has obtained "competitive" status under Chapter 30
for a service or business activity, reduce the notice requirement for tariff filings for
all LECs for the same service or business activity in the same area to one day.
The PTA urges against the adoption of "'blanket' solutions" in determining
which carriers have market power. PTA Comments of May 27,1998, at 2. The
PTA's concern is that the Voluntary Interim Guidelines, as originally proposed,
create "a bias which assumes only ILECs can currently possess market power."
PTA Reply Comments of June 11,1998, at 1.
20
PENNSYLVANIA PUBLIC UTILITY COMMISSION
COMMONWEALTH OF PENNSYLVANIA
HARRISBURG, PENNSYLVANIA
THE CHAIRMAN November 2 9 , 1999
The Honorable John R. McGinley, Jr.ChairmanIndependent Regulatory Review Commission14th Floor, Harristown II333 Market StreetHarrisburg, PA 17101
Re: L-940095/57-209Proposed RulemakingUpdating and Revising ExistingFiling Requirement Regulations52 Pa. Code, Chapter 53
Dear Chairman McGinley:
Enclosed please find one (1) copy of the proposed rulemakingand the Regulatory Analysis Form prepared in compliance with ExecutiveOrder 1996-1, "Regulatory Review and Promulgation." Pursuant to Section5(a) of the Regulatory Review Act of June 30, 1989 (P.L. 73, No. 19) (71PS. §§745.1-745.15) the Commission is submitting today a copy of theproposed rulemaking and Regulatory Analysis Form to the Chairman of theHouse Committee on Consumer Affairs and to the Chairman of the SenateCommittee on Consumer Protection and Professional Licensure.
The purpose of this proposal is to amend existing regulations tolessen the regulatory burden on all jurisdictional telecommunicationsproviders thereby promoting competition. The contact persons are Gary
Wagner, Fixed Utility Services, telephone (717) 783-6175 and Carl Hisiro,Law Bureau, telephone (717) 783-2812.
The proposal has been deposited for publication with theLegislative Reference Bureau.
/ xily yours,
^ d A _John M. QuainChairman
Enclosures
cc: The Honorable Clarence D. BellThe Honorable Lisa BoscolaThe Honorable Chris R. WoganThe Honorable Keith McCallLegislative Affairs Director McDonaldChief Counsel PankiwAssistant Counsel HisiroRegulatory Coordinator DelBiondoMr. WagnerMr. Zogby
ID Number:
Subject:
TRANSMITTAL SHEET FOR REGULATIONS SUB JEC'fr, y r r\TO THE REGULATORY REVIEW ACT K f c v * t t T C.U
L-940095/57-2091999NOV 2 9 AM 10- 2 0
ULATORVVINDEPtKuLNJ K|;OUUH
REVIEW COHMtSSIOUpdating and Revising Existing Filing RequirementRegulations
Pennsylvania Public Utility Commission
TYPE OF REGULATION
Proposed Regulation
Final Regulation with Notice of Proposed RulemakingOmitted.
Final Regulation
12 0-day Emergency Certification of the AttorneyGeneral
120-day Emergency Certification of the Governor
FILING OF REPORT
Signature
1 liAyft ^Jnij^ywtjj (jb/>/*t>c
Designation
HOUSE COMMITTEE
Consumer Affairs
SENATE COMMITTEE
Consumer Protection andProfessional Licensure
Independent RegulatoryReview Commission
Attorney General
Legislative ReferenceBureau
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