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COM/CRC/tcg Date of Issuance 9/12/2007
Decision 07-09-019 September 6, 2007
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking on the Commission's Own Motion to Assess and Revise the Regulation of Telecommunications Utilities.
(Filed April 7, 2005)
Order Instituting Rulemaking for the Purposes of Revising General Order 96-A Regarding Informal Filings at the Commission.
(Filed July 23, 1998)
OPINION ADOPTING TELECOMMUNICATIONS INDUSTRY RULES
TABLE OF CONTENTS
Appendix A - Telecommunications Industry Rules
Appendix B - Telecommunications Industry Rules Showing Revisions to 2001 Draft Rules
Appendix C - Parties Filing Comments in 2001 (in response to 2001 Draft Rules)
OPINION ADOPTING TELECOMMUNICATIONS INDUSTRY RULES
In today's decision, we adopt Telecommunications Industry Rules for General Order (GO) 96-B. This decision accompanies and reflects the changes that we have made to rules governing telecommunications carriers in our Uniform Regulatory Framework (URF) rulemaking (R.05-04-005), in both Phase I and today in Phase II. As we discuss in the accompanying URF Phase II decision that we adopt today, we have made changes and adopted rules governing URF advice letters and detariffing of services. The Telecommunications Industry Rules incorporate these URF rules. The new Telecommunications Industry Rules will apply to all telecommunications advice letters submitted 30 days from the effective date of today's order or thereafter.
We note in the accompanying URF Phase II decision that we have consolidated our GO 96-B rulemaking (R.98-07-038) with the URF proceeding, so that we may coordinate overlapping issues and rely on the combined record. R.98-07-038 concerns GO 96 and procedures for the handling of advice letter filings at the Commission. Advice letters are subject to review and approval or rejection.1 Advice letters are also the mechanism by which utilities submit tariff revisions to the Commission; consequently, in updating GO 96, we have comprehensively revised the rules for advice letter review and disposition for all utilities that file tariffs. See Decision (D.) 07-01-024. In January of this year, we adopted General Rules that apply to all utilities and Industry Rules that apply to specific utility industries (Energy and Water Industry Rules) in D.07-01-024. We also noted that we planned to adopt Telecommunications Industry Rules later that would reflect changes made in the URF proceeding. Id., Ordering Paragraph 6.
In today's decision, we take the last step in completing GO 96-B by adopting Telecommunications Industry Rules. See Appendix A. These rules govern the filing, review, and disposition of advice letters and information-only filings submitted by regulated carriers. These rules also incorporate requirements for URF carriers seeking to detariff their services and modifications to the URF advice letter filing procedures, as discussed in the URF Phase II decision adopted today.
The Telecommunications Industry Rules that we adopt today in this decision can be traced to the February 2001 draft decision of the administrative law judge (ALJ) assigned to the GO 96-B rulemaking (the "2001 draft rules"). The 2001 draft rules were published for comment in that 2001 draft decision by the assigned ALJ. At that time, the 2001 draft rules reflected the "New Regulatory Framework" then in effect for the telecommunications industry. The stated intent of the 2001 draft rules was not to change that framework, but to propose some procedural reforms where existing procedures appeared to make distinctions resulting from piecemeal regulatory development rather than consistent policy considerations.2
The 2001 draft rules set forth the broad structure that the Commission ultimately adopted in GO 96-B, including the proposed tiers; what has since changed is our regulatory framework for telecommunications. Much of the subject matter in the 2001 draft rules concerned our New Regulatory Framework. URF has since supplanted the New Regulatory Framework, but the GO 96-B tier structure can accommodate either framework, as discussed in today's decision.
Between the February 2001 draft ALJ decision and today, the Commission adopted four interim decisions in the GO 96-B rulemaking. The second of these decisions (D.02-01-038) was entirely concerned with telecommunications. In that decision, we adopted customer notice requirements regarding proposed transfers, withdrawal of service, and higher rates or charges. In the other three interim decisions, we adopted parts of the February 2001 draft ALJ decision that applied broadly to all stationary utilities (water and energy as well as telecommunications). But as it became clear that we were about to reform the New Regulatory Framework to reflect significant changes in the telecommunications marketplace, we determined to set aside the 2001 draft rules to await the outcome of that reform effort.
Nonetheless, we received many comments on the 2001 draft rules that were not linked to the New Regulatory Framework.3 To that extent, these comments remain relevant to today's decision. Incumbent and competitive carriers differed sharply on the reforms, and on whether they might be undertaken without hearings.4
This debate over telecommunications reforms was not limited to the GO 96-B rulemaking. The debate there and in many other forums ultimately gave rise to R.05-04-005 and the adoption of URF, in light of which the 2001 draft rules and the comments filed on the draft rules in 2001 are moot to the extent they deal only with the New Regulatory Framework. Given the changes to the regulatory framework made in the URF Phase I decision and the issues regarding URF advice letters, we asked parties in January of this year when we issued D.07-01-024 to comment in URF Phase II on what changes should be made to the Telecommunications Industry Rules in GO 96-B.5
In their March 2007 filings, parties in URF Phase II have referred both to the adopted parts of GO 96-B and to the 2001 draft rules in commenting on how to coordinate URF with the GO 96-B advice letter procedures already adopted or contemplated. The parties referred to the 2001 draft rules as providing a possible procedural template for advice letters under URF, irrespective of the fact that, when published in 2001, the rules embodied a different and now superseded regulatory framework for telecommunications.
A set of procedures, if robust, should be readily adaptable to changes in substantive regulation. From this standpoint, we are heartened to see that the structure of the 2001 draft rules appears to require no change for purposes of URF. Further, the Telecommunications Industry Rules we adopt today are more streamlined than the 2001 draft rules, as a result of the elimination of many regulatory distinctions that have become unnecessary or counter-productive with the growth of competition and technological advances in the telecommunications industry.
We acknowledge that the response to comments in today's decision is based on our judgment about what comments remain relevant. To list every comment that is now moot or was responded to elsewhere would likely have doubled the length of the opinion for the sole purpose of explaining matters no longer of concern.
We summarize below the major changes to the 2001 draft rules. We have also made various corrections and stylistic changes intended to improve the rules' clarity and consistency. Persons wishing to track all changes to the 2001 draft rules may review the redlined version of the adopted Telecommunications Industry Rules in Appendix B to today's decision.
2.1. Shift to Uniform Regulatory Framework
The change in regulatory framework for the telecommunications industry has the greatest impact on the rules. Concepts peculiar to the New Regulatory Framework are deleted from the definitions; a definition for "URF Carrier" is added. (Industry Rule 1.14.)
The rules on detariffed service have been revised and expanded, in part to address URF Carriers. See Industry Rules 5-5.5. In keeping with the Uniform Regulatory Framework, URF Carriers are no longer required to cost-justify their contracts (under the 2001 draft rules, cost justification was required to show that contracts for tariffed services were above cost).
The advice letter tiers and rules on specific types of advice letters have been modified to delete provisions relating to "NRF-LECs." Tier 1 now includes changes by an URF Carrier to a "rate, charge, term, or condition of a regulated service other than Basic Service."6 Industry Rule 7.1(5). Tier 1 also includes changes to an URF Carrier's Resale Service if the changes are related to a corresponding approved rate, charge, term, or condition of the URF Carrier's tariffed service. See Industry Rule 7.1(6).
Our intent in these Tier 1 procedures is to comprehensively allow changes to tariffed services covered under URF to be made by Tier 1 advice letter. Also, consistent with the URF Phase I decision, an URF Carrier may introduce a New Service by Tier 1 advice letter. Under the URF Phase I decision, an URF Carrier may enter into a contract effective upon signing, and we provide for the contract to be submitted by Tier 1 advice letter.
2.2. Resale Service
The 2001 draft rules defined Wholesale Service. Many commenters objected to this definition at the time as imprecise, and upon further consideration, we believe that Resale Service more closely describes the concept. In fact, we had used the term "resale" to define "Wholesale Service." Accordingly, Industry Rule 1.10 now defines Resale Service as a tariffed service that a carrier offers another carrier for resale.
2.3. Date of Filing and Filing Procedures
In the 2001 draft rules, an advice letter's date of filing was defined as the date the advice letter was reported in the Commission's Daily Calendar. Subsequent decisions in the GO 96-B rulemaking have completely revised this practice. Now, an advice letter is filed on the day it is received by the Industry Division reviewing the advice letter; the utility submitting the advice letter must at the same time serve it on the utility's advice letter service list.7 This change is reflected in Industry Rules 3 and 6. The date of filing is critical, because it is the date from which the protest period runs.
In the 2001 draft rules, filing was still envisioned as a paper process. The Commission is now in a successful transition to electronic filing. The transition will continue for some time, and during this period we believe the best accommodation is to publish current filing instructions at the Communications Division's area of our Internet site (www.cpuc.ca.gov). We have modified Industry Rule 2 accordingly. We expect that we will continue to expand our ability to file documents in electronic formats but will make appropriate provision for paper filings for the foreseeable future.
Consistent with the Energy and Water Industry Rules already adopted, we have determined not to include sample forms in the adopted Telecommunications Industry Rules. Instead, staff will publish illustrative materials at the Communications Division's area of our Internet site.
2.4. Notice to Affected Customers
The 2001 draft rules required 25 days notice to each affected customer before the requested effective date of an advice letter requesting approval of a transfer, withdrawal of service, higher rates or charges, or more restrictive terms or conditions. The Commission has already increased this minimum notice period to 30 days under both GO 96-B and URF. See D.07-01-024, General Rule 4.2; D.06-08-030, Ordering Paragraphs 9, 12. Industry Rule 3.0 has been modified accordingly.
2.5. Detariffed and Non-tariffed Service
We have modified Industry Rules 4 and 5 to clarify the use of contracts and, in general, the provision of service under arrangements other than tariffed service. Industry Rule 5 now provides that URF Carriers may file an advice letter to detariff their services, with the exception of certain services as specified in the rule. Most of the specified exceptions, such as Basic Service, are not subject to detariffing at all. However, a tariff condition imposed by the Commission in an enforcement, complaint, or merger proceeding, is subject to modification or cancellation, but the URF Carrier must file an application or a petition to modify the decision in which the Commission imposed the condition that the URF Carrier seeks to cancel.
We have also added to Industry Rule 5 the concept of services never offered under tariff ("non-tariffed"). For a carrier that has detariffed, we require only an information-only filing when this carrier provides a New Service offering eligible to be offered on a detariffed basis.
We have also adopted Industry Rules 5.2 and 5.3 that satisfy the requirements of Pub. Util. Code § 495.7(c)(1) and (2) regarding information available to consumers from their carrier after it detariffs. See also the discussion of detariffing in today's accompanying URF Phase II decision.
2.6. Revisions to Advice Letter Tiers
We have already noted the revisions needed to remove references to supplanted regulations and to implement URF within the GO 96-B procedures. The remaining issue for tier revision concerns those carriers not within URF but still subject to our regulation, namely, the incumbent local exchange carriers we refer to as GRC-LECs because they continue to operate under cost-of-service regulation. The GRC-LECs tend to be small utilities serving rural areas.
Regarding the GRC-LECs, we see no reason to alter the distribution of subject matter among the tiers from the 2001 draft rules. There has been no fundamental shift in policy regarding this group of utilities; thus, the revisions we have made are intended to allow the GRC-LECs roughly the same use of Tier 1 and Tier 2 advice letters they would have had under the 2001 draft rules. For the same reason, we will continue to require a Tier 3 advice letter for purposes of these small utilities' requests to change rates or withdraw service. Such an advice letter may not be deemed approved and becomes effective only after review and approval via Commission resolution.
Besides the description of types of advice letters within the respective tiers, each tier rule begins with a paragraph setting forth the applicable customer notice requirements. The 2001 draft rules say that "if an advice letter accepted for filing is found not to have been noticed in compliance with these requirements, Staff will reject the advice letter." We have clarified this statement to indicate that the rejection will be without prejudice. See Industry Rules 7.1, 7.2, 7.3.
2.7. Service During Emergencies
In D.07-01-024, the Commission adopted General Rule 8.2.3, which in relevant part allows a Utility that is a telephone corporation, under emergency conditions and without prior Commission approval, to provide free or reduced cost service to the public or to a government agency. However, the Utility must "promptly" file an advice letter describing its provision of service under these conditions, and the advice letter is subject to disposition by resolution (that is, by the Commission itself, not by Staff).8
In discussing General Rule 8.2.3, we indicated that we might modify it in light of "superseding Commission decisions concerning the telecommunications industry." D.07-01-024, mimeo., p. 56. Based on URF, we conclude that a Tier 1 advice letter, which is subject to Staff disposition, is appropriate for purposes of review of tariffed services provided by URF Carriers in natural disasters and similar emergency circumstances. Although GRC-LECs continue to be under cost-of-service regulation, we find that a Tier 1 advice letter would also be appropriate for them under these circumstances.9 We modify General Rule 8.2.3 accordingly.
1 Other informal filings, such as financial or accident reports, are submitted solely on an informational basis. Advice letters are distinguished from formal filings, notably applications. In general, any matter that may go to evidentiary hearing should be filed by application. Utilities where rate regulation prevails, such as gas, electric, and water companies, must apply for changes in rates, but may use advice letters for implementation of rate changes previously authorized by the Commission. As competition displaces rate regulation within a utility industry, the scope of potential subject matter for advice letters expands. We will discuss this point at greater length later in today's decision when we deal with the Telecommunications Industry Rules.
2 As competition developed in the telecommunications industry in the past 25 years, the Commission addressed many carriers and many services individually, often through resolutions adopted in response to advice letters filed by individual carriers. One could say that we thus preferred responsiveness to uniformity. The unintended consequence was that it became increasingly hard to determine what procedures were in effect, what exceptions to them had been granted, and whether the procedures and exceptions made for coherent Commission policy. We believe that this type of piecemeal policymaking does not serve the public interest, and makes it harder for our staff to know what our policies are, and to enforce our policies fairly and reasonably. Further, given the increased competitiveness of the telecommunications marketplace, we believe policymaking in such a piecemeal manner does not serve the interests of competitors or consumers.
3 The comments were voluminous. In all, we received four rounds of comments on the February 2001 ALJ draft decision. Opening Comments and Reply Comments on the entire ALJ draft decision were filed on March 23 and April 6, 2001, respectively. In addition, the assigned ALJ provided two opportunities for comment focusing on specific aspects of the Telecommunications Industry Rules. First, in comments due June 14, 2001 (later rescheduled to June 29), parties were requested to identify any existing telecommunications advice letter procedure that would change under the General Rules or Telecommunications Industry Rules, and (where applicable) to indicate why they preferred the existing procedure. Second, in comments due July 16, 2001, parties could make policy arguments regarding the Communications Division's authority to suspend Tier 2 advice letters.
A complete list of parties submitting comments on the 2001 draft rules is attached as Appendix C. The list also shows the abbreviation by which the party is identified in our response to comments. All segments of the telecommunications industry and consumer representatives took advantage of these opportunities, often through jointly-submitted comments. We identify some of the groupings in the appendix, but we note that in some instances the membership varied from comment to comment. Also, we identify the commenters by the name under which they submitted their comments; many of them now do business under different names.
4 The 2001 draft rules were part of a complete proposed GO 96-B. The Commission has since adopted GO 96-B in its entirety, with the sole exception of the Telecommunications Industry Rules, here coordinated with the outcome of the URF rulemaking, R.05-04-005. For earlier GO 96-B adoption orders, see D.01-07-026, D.02-01-038, D.05-01-032, and D.07-01-024.
5 D.07-01-024, Ordering Paragraph 6.
6 Although Basic Service rates are capped until January 1, 2009, they may be increased to reflect inflation. The Commission will address Basic Service rates in R.06-06-028, and in that rulemaking may also consider advice letter tiers appropriate for review of a request to increase a Basic Service rate.
7 See D.07-01-024, GO 96-B, General Rules 3.2 (defining "Date of Filing"), 4.3, 4.4 (rules regarding advice letter service lists and service by Internet). Under General Rule 4.4, the utility must serve its advice letter by e-mail on anyone that provides the utility an e-mail address for this purpose. The utility must serve the advice letter no later than the date of filing. (General Rule 4.3.)
8 The relevant part of General Rule 8.2.3 is the first paragraph which reads in full as follows:
Under emergency conditions, such as war, terrorist attack, and natural disasters, a utility that is a telephone corporation as defined in the Public Utilities Code may provide service to a government agency or to the public for free, or at reduced rates and charges, or under terms and conditions otherwise deviating from its tariffs then in effect. The utility may begin such service without prior Commission approval, but the utility shall promptly submit an advice letter to the Telecommunications Division to notify the Commission of the utility's provision of emergency service and of the rates, charges, terms, and conditions under which the service is provided. Although the advice letter may be effective pending disposition, it shall be subject to disposition under General Rule 7.6.2. The Commission may determine, in an appropriate proceeding, the reasonableness of such service.
9 We certainly encourage all utilities to assist disaster recovery efforts. A concern during those efforts is that price caps for Basic Service be observed. Our review of these advice letters will ensure such observance, and will keep us informed of the success of telecommunications utilities in disaster recovery efforts generally.