XIV. Draft Decision Comments
The principal hearing officer's proposed decision on this matter was filed and served pursuant to Pub. Util. Code Section 311(g) and Rule 77.1 of the Commission's Rules. Comments to the proposed decision were timely filed by Pacific Bell and ORA. Reply comments to the proposed decision were timely filed by Pacific Bell, ORA, and jointly by AT&T, MCI WorldCom, and CCTA.
Rule 77.3 specifically requires that written comments on the proposed decision focus on factual, legal, or technical errors in the proposed decision, and in citing such errors, requires the party to make specific references to the record. Comments that merely reargue positions taken in briefs will be accorded no weight and are not to be filed. Rule 77.4 requires that comments proposing specific changes to the proposed decision include supporting findings of fact and conclusions of law.
The comments and reply comments filed by the parties to this proceeding have been carefully reviewed and considered. To the extent that such comments required discussion or changes to the proposed decision, the discussion or changes have been incorporated into the body of this order.
1. Pacific Bell is a public utility telephone corporation, as defined in Pub. Util. Code ยง 234, subject to the jurisdiction of this Commission.
2. Pacific Bell filed its applications for authority to re-categorize certain Centrex, Toll-Free (8XX), and Business Local Toll services from Category II to Category III services, pursuant to D.89-10-031 and Rule 42 of the Commission's Rules.
3. Telecommunication services are classified into three distinct categories: Category I for services deemed to be basic monopoly services; Category II for discretionary or partially competitive services; and, Category III for fully competitive services.
4. Pursuant to D.89-10-031, for Category II services to be re-categorized to Category III Pacific Bell must demonstrate that it has or is expected to have insignificant market power for each of the services it seeks to re-categorize.
5. There were approximately twenty comments submitted in opposition to Pacific Bell's Centrex requests by way of letters and electronic mail.
6. This consolidated proceeding was submitted upon receipt of the August 5, 1999 reply briefs.
7. D.89-10-031 directed Pacific Bell to propose criteria for assessing market power at the time it seeks to re-categorize a service to Category III.
8. We did not require that all data regarding the market power criteria addressed in D.89-10-031 and D.90-04-031 be addressed in each and every request to place a service in Category III.
9. Centrex features have been classified as a Category II service since 1989.
10. Basic Centrex Line service was reclassified from Category I to Category II in 1994.
11. Centrex, PBX, and Key Systems services require access to the public switched network through a LEC loop or trunk.
12. Centrex service's relevant market includes alternative CLEC services and business systems such as PBX and Key Set Systems.
13. The costs for Centrex, PBX, and Key Systems are comparable.
14. Pacific Bell began providing Centrex service in 1962.
15. Pacific Bell has not provided PBX or Key System services since 1982.
16. Most PBX and Key System manufacturers operate in national and international markets.
17. Centrex, PBX, and Key System are similar services that perform similar functions.
18. Centrex and other telecommunications equipment, such as PBXs, are dependent on the use of access lines through a Centrex loop or a PBX trunk, and both require the use of local switching capability.
19. Pacific Bell's participation in the Centrex relevant market is limited to only Centrex services.
20. Customers have the ability to change to alternative Centrex services or to competitive PBX and Key System services.
21. Pacific Bell requested that the maximum ceiling rate be set at 100% above the present rates for Centrex service.
22. The cumulative change in the inflation index from 1995 to 1998 was 10%.
23. There was no objection to continue treating those Category II services being moved to Category III on an above-the-line basis for ratemaking purposes.
24. Toll-Free service was classified as a Category I service in 1989 and moved to Category II in 1994.
25. The relevant market for Pacific Bell's Toll-Free and Business Local Toll services includes all IECs and CLECs that offer both intraLATA and interLATA toll service.
26. IEC carriers do not need to build their own network to offer a competitive Toll-Free or Business Local Toll service.
27. IECs were first permitted to offer intraLATA Toll-Free services in 1996.
28. PBX and Key Systems can be programmed to route local toll calls to an IEC.
29. Pacific Bell's Toll-Free and Business Local Toll service costs were based on its OANAD Phase II cost studies.
30. Pacific Bell does not propose any change in its currently authorized ceiling rates for Toll-Free and Business Local Toll services.
31. Pacific Bell is precluded from providing interLATA toll and Toll-Free services until Pacific Bell has met the Section 271 checklist and related requirements.
32. The relevant market for Pacific Bell's Toll-Free and Business Local Toll services encompasses those types of calls, or services, placed between two stations within a local service area.
33. Toll-Free and Business Local Toll services are offered in the relevant market by Pacific Bell, IECs, and CLECs.
34. The Commission has implemented a streamlined process for IEC certification.
35. There are 27 pages of certificated IECs listed on the Commission's web site.
36. AT&T confirmed that Pacific Bell's Toll-Free and Business Local Toll market study results were reasonable.
37. IntraLATA pre-subscription was implemented pursuant to D.99-04-071.
38. Pacific Bell reduced its Flat Rate Plus for Business, Value Promise Plus and Advantage 25 calling plan rates without any offsetting revenues.
39. Pacific Bell does not propose any change in its Toll-Free and Business Local Toll ceiling rates.
40. Upon request, Pacific Bell provides its tariff pricing and price floor supports for its business toll contracts to the Commission.
41. There is no proposed change to the imputation requirement before us.
1. Pacific Bell's applications were consolidated pursuant to Rule 55 of the Commission's Rules, because they involve related issues of law or fact.
2. Pacific Bell's use of the Merger Guidelines and the market power criteria in D.89-10-031 and D.90-04-031 that it deemed relevant, complies with the Commission's market power criteria and may be used to determine whether it has insignificant market power in the services it wants moved to Category III.
3. All data placed under seal should remain under seal.
4. Pacific Bell should be authorized to move its Basic Centrex Line, Centrex Basic Features, Optional Station Features, and Optional System Features from Category II to Category III.
5. The maximum ceiling rate for all Centrex feature components should be limited to 10% above the current tariff price.
6. Those Category II services being moved to Category III should continue to be treated as above-the-line items for ratemaking purposes.
7. The Commission's IEC streamlined certification process, the 27-page list of certificated IECs, and the low start-up cost needed for IECs to offer resold relevant market services from any facilities-based carrier demonstrate the ease of entry and exit for Toll-Free and Business Local Toll services.
8. Toll-Free and Business Local Toll services should be moved from Category II to Category III.
9. The currently effective Toll-Free and Business Local Toll ceiling rates should not be changed at this time.
10. Pacific Bell should continue to provide tariff pricing and price floor support for its business toll contracts to the Commission upon request.
11. Pacific Bell should continue to conform to the Commission's current reporting requirements.
12. The burden of proof is on Pacific Bell to substantiate that it has or is expected to have insignificant market power for the services it wants re-classified to Category III.
13. The critical test for determining whether Pacific Bell has insignificant market power is whether Pacific Bell could retain its market share in the wake of any attempt to raise its prices above-competitive levels.
IT IS ORDERED that:
1. All data placed under seal in the proceeding shall remain sealed for a period of one year from the date of this order. The sealed data shall not be made accessible or disclosed to anyone other than Commission staff during the one year time period. However, the sealed data may be disclosed upon the execution of a mutually acceptable nondisclosure agreement or on further order or ruling of the Commission or the Administrative Law Judge then designated as the Law and Motion Judge.
2. Pacific Bell is authorized to re-categorize its Basic Centrex Line, Centrex Basic Features, Optional Station Features, and Optional System Features services from Category II to Category III and is authorized to increase its ceiling rate for these Centrex services by 10%. Upon re-categorization of its services to a Category III service, such services shall continue to be treated as above-the-line services for ratemaking purposes.
3. Pacific Bell is authorized to re-categorize its Toll-Free and Business MTS Intra-Local Access and Transport Area (intraLATA) Toll services from Category II to Category III. The ceiling rate for these services shall remain at their
currently effective rate and the services shall continue to be treated as above-the-line services for ratemaking purposes.
4. Pacific Bell is authorized to file revised tariffs with the Commission's Telecommunications Division for the re-categorization of its Basic Centrex Line, Centrex Basic Features, Centrex Optional Station Features, Centrex Optional System Features, Toll-Free, and Business MTS IntraLATA Toll services consistent with this order. The revised tariffs shall become effective when authorized by
the Commission's Telecommunications Division, but not less than five days after filing, and shall apply after the effective date of this order.
5. The applications are granted to the extent set forth above.
6. Application (A.) 98-07-020 and A.98-07-029 are closed.
This order is effective today.
Dated May 4, 2000, at San Francisco, California.
HENRY M. DUQUE
JOSIAH L. NEEPER
RICHARD A. BILAS
Commissioners
I dissent.
/s/ LORETTA M. LYNCH
Commissioner
I dissent.
/s/ CARL W. WOOD
Commissioner
APPENDIX A
TABLE OF ACRONYMS AND ABBREVIATIONS
ALJ Administrative Law Judge
Applicant Pacific Bell
AT&T-C AT&T Communication
Business Local Toll Business MTS IntraLATA Toll
CACD Commission's Advisory and Compliance Division
CCTA California Cable Television Association
CLEC Competitive Local Exchange Carrier
Rules Rules of Practice and Procedure
D. Decision
IEC Interexchange Carrier
InterLATA Inter-Local Access and Transport Area
IntraLATA Intra-Local Access and Transport Area
IRD Implementation Rate Design
LATAs Local Access Transport Areas
LECs Local Exchange Carriers
LRIC Long Run Incremental Cost
MCI WorldCom MCI Telecommunications
Merger Guidelines 1992 Horizontal Merger Guidelines of the U.S. Department
of Justice and the Federal Trade Commission
MTS Message Toll Service
OANAD Open Access and Network Architecture Development
ORA Office of Ratepayer Advocates
PBX Private Branch Exchange
PHC Prehearing Conference
TSLRIC Total Service Long Run Incremental Cost
UNE Unbundled Network Elements
ZUM Zone Usage Measurement
(END OF APPENDIX A)
