III. CONCLUSION

After careful consideration of the applications for rehearing, we shall grant limited rehearing on the issues regarding Ordering Paragraph 21 and asymmetric disclosure, marketing, and administrative processes, as discussed above. We shall also modify the Decision for clarification purposes in accordance with the discussion above. In all other respects, the rehearing applications shall be denied.

Therefore IT IS ORDERED that:

1. D.06-08-030 shall be modified as follows:

a. Add a new ordering paragraph to state:

The Commission shall eliminate all NRF-specific monitoring reports for the affected ILECS and instead require FCC ARMIS data.

b. Add a new ordering paragraph to state:

In Phase II of this proceeding (R.05-04-005) the Commission shall determine what additional information and reports are necessary to meet the Commission's needs in the new competitive environment.

c. Page 209, second to last sentence shall be modified to state:

Consistent with our conclusion in Section XIV of this Decision, we eliminate all NRF-specific monitoring reports including those related to service quality. We otherwise defer all service quality issues to the Service Quality OIR, including consideration of any proposals by parties for service quality related information and reports that can best meet Commission needs in the new competitive environment.

d. Page 218, shall be modified to add the following sentence to the end of the first full paragraph:

As previously indicated, proposals regarding service quality-related monitoring report requirements should be addressed and considered in the Service Quality OIR, R.02-12-004, along with other service quality issues.

e. Page 278, conclusion of law number 50 shall be modified to state:

Service quality issues, including any related monitoring report requirements, should be reviewed in the proceeding already opened to consider this issue, R.02-12-004.

f. Page 278, conclusion of law number 52 shall be modified to state:

The Commission should defer all service quality issues, including consideration of proposals for related monitoring report requirements, to the Service Quality OIR, R.02-12-004.

g. Page 217, first two sentences of last paragraph shall be modified to state:

Consistent with the policy we adopt today to eliminate the NRF regulatory regime for the affected carriers, we eliminate all NRF-specific monitoring reports and choose to rely on and require reporting of FCC ARMIS data. Our experience over the last several years indicates that in the ever growing competitive marketplace related to the services and carriers subject to our Decision today, the NRF-specific detailed reports have had diminishing value.

h. Page 156, second full paragraph shall be modified to state:

With respect to the regulation of prices for any of the services "associated" with basic residential service, we find it is consistent with current ULTS program parameters to extend the rate cap to those "associated" services which are included in the subsidized basic residential service package. These include: flat and measured local usage; Zum Zone 1 & 2 local calls; EAS; non-recurring installation; toll blocking; and conversion. However, our discussion of the statutes and market conditions makes it clear that it is not necessary to continue price regulation for "associated" services if they are not included in a subsidized basic residential service package. The rate cap will thus not apply to non-subsidized: local usage; ZUM; EAS; recurring and non-recurring charges; Caller ID; call trace; 976 service; 900/976 call blocking; non-published and unlisted telephone numbers; white pages listings; busy line verification and interrupt services; and inside wire maintenance plans.

i. Page 255, shall be modified to delete the following paragraph:

Concerning DRA's request for clarification of which particular rates we cap, we clarify that we cap the residential flat rate and residential measured service offered by the different ILECs, as well as the LifeLine residential service (including the LifeLine installation rate). No other rates are capped. Similarly, since we now cap all residential basic rates for two years and reject marketing restrictions on bundles offered in areas receiving CHCF-B funds, we believe that the scope of our decision is now clear, and no further clarification is warranted. We add that the Commission has existing processes, such as the petition process, that can provide any further clarification that DRA or any other parties require.

h. Page 155, first paragraph, second full sentence shall be modified to state:

These price changes in regulated services may be offset either with revenue-neutral price increases in basic service, revenue-neutral price decreases (not to fall below the established price floor), or revenue-neutral surcharges applying to all services.

i. Add a new finding of fact to state:

Issues relating to telecommunications services and the disabled community, including LifeLine and the DDTP, are currently being reviewed in the public purpose program rulemaking, R.06-05-028.

j. Add a new conclusion of law to state:

The Commission should defer all issues relating to telecommunications services and the disabled community, including LifeLine and the DDTP, to the public purpose program rulemaking, R.06-05-028.

k. Add a new ordering paragraph to state:

Issues relating to telecommunications services and the disabled community, including LifeLine and the DDTP raised in this proceeding, shall be addressed, as appropriate, in R.06-05-028.

l. Page 268, finding of fact 78 shall be modified to state:

Because ILECs lack market power in voice communications markets, it is reasonable to permit all tariffs to go into effect on a one-day filing, but it is also reasonable to require that any tariffs that impose price increases or service restrictions provide a thirty-day advance notice to all affected customers.

m. Page 186, first full paragraph shall be modified to state:

Since parties did not address the detariffing issue in their briefs, we will permit parties, in a separate comment cycle, to address the legal and implementation issues that the Commission should consider before ordering detariffing of telecommunications services. Opening comments are due thirty days from the effective date of this decision, with reply comments to follow in fourteen days. It is our intention to decide whether to order detariffing before the end of the year. We note that should we order detariffing, all the tariffing filing requirements, including the one-day filing provisions adopted herein, would end. Detariffing would affect all services other than basic exchange service.

n. Page 277, conclusion of law 36 shall be modified to state:

Public Utilities Code § 495.7 authorizes the Commission to eliminate tariffing for all services, with the exception of basic exchange service, as long as certain criteria are met.

o. Page 281, ordering paragraph 10 shall be modified to state:

We shall permit parties, in a separate comment cycle, to address legal and implementation issues that the Commission should consider before ordering detariffing of telecommunications services. Opening comments are due thirty days from the effective date of this decision, with reply comments to follow in fourteen days.

p. Page 281, add a new sentence at the end of ordering paragraph 9 to state:

Protests to advice letters authorized to go into effect on a one-day filing may be filed within 20 days of the filing of the advice letter, as provided in General Order 96-A, as revised by D.05-01-032, Appendix § 4 ("Advice Letter Review and Disposition"). However, advice letters that properly fall within the category of advice letters authorized by this Decision to go into effect on a one-day filing shall remain in effect pending further action of the Commission.

2. The effectiveness of Ordering Paragraph 21, as well as associated language in the Decision (including page 210, first full paragraph (beginning with the sentence "Finally, we eliminate all asymmetric requirements concerning marketing, disclosure, or administrative processes."); page 251, last paragraph, second sentence stating "We clarify that pricing freedoms that we grant today extend to marketing rules and scripts, disclosure requirements, and administrative practices"; page 203, second full paragraph which states: "Marketing rules are unrelated to service quality. These rules are squarely before us in this proceeding"; page 269, finding of fact 83; page 271, finding of fact 110; and page 278, conclusion of law 53) shall be suspended prospectively from the effective date of this Order, pending the outcome of rehearing of these issues in Phase II of this proceeding.

This order is effective today.

Dated December 14, 2006, at San Francisco, California.

MICHAEL R. PEEVEY

President
GEOFFREY F. BROWN

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

Commissioners