2. Procedural History
The URF Rulemaking (R.) 05-04-005 is the latest of a series of proceedings in which the Commission has overhauled its regulation of the telecommunications industry. The goal of the current rulemaking is, to the highest degree possible, to establish a Uniform Regulatory Framework compatible with today's richly competitive marketplace for advanced telecommunications services.
In D.06-08-030, which concluded Phase I of the URF Rulemaking (the URF Phase I decision ), we granted carriers broad pricing freedoms concerning many telecommunications services, new telecommunications products, bundles of services, promotion, and contracts. We made contracts effective when executed, and ended the necessity of post-signing reviews by this Commission. With few restrictions, we permitted carriers to add services to "bundles" and target services to specific geographic markets.
We also capped the price of basic residential service until January 1, 2009 and froze rates of basic residential services receiving a California High Cost Fund-B (CHCF-B) subsidy at a level equal to the current rate pending the outcome of R. 06-06-028.
We reduced and eliminated many of the vestiges of rate-of-return regulation, such as "accounting adjustments" and other rules that cause regulatory accounts to diverge from financial accounts, electing to base our requirements on Generally Accepted Accounting Principles (GAAP) accounting standards and FCC accounting rules. We eliminated the price cap index, price cap filings, earnings "sharing," and gain-on-sale distributions.
With the exception of conditions relating to basic residential rates, pursuant to Ordering Paragraph 21 we eliminated all asymmetric requirements concerning marketing, disclosure, or administrative procedures.11
Although we required all carriers to provide a thirty-day notice to customers of any price increase or more restrictive term or condition, we simplified all tariff procedures and made tariffs effective one day after filing.12 We eliminated all monitoring reports tied to the supplanted New Regulatory Framework (NRF) and standardized our reporting requirements to make them consistent with comprehensive reports provided by all carriers to the FCC.
We set Phase II for determining what reports we should require carriers to file under URF and we asked parties to recommend reports that will assist us in carrying out our statutory duties and exercising regulatory oversight.13
We also ordered a separate briefing cycle to consider whether we should altogether detariff telecommunications services other than basic residential service and left the decision of that question to this Phase.14 We referred all service quality issues to R.02-12-004, the Service Quality rulemaking, and issues relating to the Deaf and Disabled Telecommunications Program to R.06-05-028, our Universal Service rulemaking on public policy programs. We deferred the consideration of special access pricing to Phase II.
On September 25, 2006, nine parties filed opening briefs limited to detariffing issues.15 On October 13, 2006, eight parties filed reply briefs.16
On September 11, 2006, soon after the issuance of the URF Phase I decision and relying on Ordering Paragraph 21 of D.06-08-030, AT&T filed Advice Letter 28800 that eliminated many of the disclosure requirements that we had imposed on it through a 2001 decision17 in an enforcement case in C.98-04-004 as corrective actions and as remedy for certain marketing abuses.18 Protests were filed to this advice letter by DRA, TURN, the Utility Consumers' Action Network ("UCAN"), Latino Issues Forum ("LIF"), and Centro La Familia, and subsequently on October 23, 2006, AT&T filed Advice Letter 28982, which added back some but not all of the preexisting disclosure language to Rule 12 of its tariffs. The basis for AT&T's filing of these advice letters was the company's determination that such corrective actions were "asymmetric requirements" of the type eliminated by Ordering Paragraph 21 of the URF Phase I decision. Protests were also filed to AT&T's Advice Letter 28982. In response to protests to those advice letters, we issued Resolution No. L-339 in November 2006, which ordered that AT&T's tariff changes in these advice letters shall remain in effect, pending resolution of the issues raised in the protests.19 We also stated in Resolution No. L-339 that we would address issues raised by the protests to AT&T's advice letters in Phase II of the URF proceeding and served this resolution on all parties in the URF proceeding and parties in the consolidated complaint case (C.98-04-004).
On September 29, 2006, TURN and DRA had filed a Joint Application for Rehearing of D.06-08-030, alleging multiple instances of legal error. After careful consideration of the TURN/DRA application, we issued D.06-12-044, which granted limited rehearing on the issues regarding Ordering Paragraph 21 and its elimination of asymmetric marketing, disclosure, and administrative requirements. In D.06-12-044, we prospectively suspended the effectiveness of Ordering Paragraph 21 pending resolution of those issues in Phase II of this proceeding. We noted that we would include in this phase an examination of whether company-specific disclosure and marketing requirements imposed as a penalty or corrective action in a complaint or investigation should be continued, or whether, in light of changed market conditions, they may be lifted in response to the filing of an advice letter.20 We also noted that we had included in this phase resolution of those issues raised by the protests to AT&T's advice letters 28800 and 28892. 21
Furthermore, at our November 2006 prehearing conference in Phase II of the URF rulemaking, a key issue raised for consideration was the appropriate timeframe (and rules) for protests to and suspension of advice letters authorized in URF Phase I. TURN and DRA specifically questioned whether the protest process relating to one-day effective advice letter requires more specificity for the staff to implement.22 We acknowledged that parties may need further guidance on the issue.23 We sought comment on the relationship between one-day effective advice letters and the notice and protest requirements of GO 96-A and the Public Utilities Code and prior Commission decisions.24
On December 21, 2006, the Assigned Commissioner issued a revised Scoping Memo seeking comment on among other things, the issues highlighted above, and a proposed schedule for this phase of the proceeding. Pursuant to the Scoping Memo, the assigned ALJ held a Workshop on February 16, 2007 to discuss whether the Commission should require any new or reinstated reports in place of the NRF-specific reports eliminated in Phase I or whether we could rely entirely on the FCC ARMIS reports. On March 2, 2007, parties submitted opening comments on Phase II issues other than detariffing, and on March 30, 2007, they submitted reply comments.
We have bifurcated this Phase II decision into the present decision, addressing advice letter procedures, detariffing, and asymmetric obligations, and will address the remainder of the Phase II issues identified in the Scoping Memo in a decision to be issued later this year.
11 D.06-08-030, at Ordering Para. 21.
12 However, we modify below in this decision the one-day effective filing for URF Carriers' advice letters that we adopted in D.06-08-030.
13 See Assigned Commissioner's Ruling and Revised Scoping Memo (dated December 21, 2006) at 3-5.
14 D.06-08-030, Ordering Para. 10 Assigned Commissioner Ruling and Revised Scoping Memo (Dec. 21, 2006) at 3.
15 AT&T, Verizon, SureWest, Frontier, Cox, DRA, TURN, Sprint/Nextel, and Time Warner filed opening comments. Some parties like Verizon submitted "briefs" while others like Pacific Bell submitted "comments." TURN (see "Positions of the Parties," below) argues that the evidentiary record lacks the findings necessary to support detariffing under Section 495.7 and this insufficiency is worsened by requesting briefs instead of comments on the issue of detariffing in the Phase I decision. As we stated in D.06-12-044, the URF Phase 1 decision uses the terms "briefs" and "comments" interchangeably, but our use of the term "brief" did not mean that we would not consider the filings as part of the entire record. We clarified in D.06-12-044 that the briefs would be treated as comments. D.06-12-044 at Ordering Para. 1.m. We further noted in the Phase I decision that we would consider "whether we should altogether detariff telecommunications services other than basic residential service" and a separate cycle was established precisely to give parties the opportunity to comment on this issue. D.06-08-030 at 3. Accordingly, we reject parties' arguments that the "briefing cycle" was insufficient.
16 These parties were AT&T, Verizon, SureWest, Frontier, Cox, DRA, TURN, and Department of Defense.
17 D.01-09-058.
18 See Resolution No. L-339 (discussing AT&T's Advice Letters 28800 and 28982). The Commission was not informed that AT&T's Advice Letter 28800 removed language from AT&T's Tariff Rule 12 resulting from an enforcement case when Advice Letter 28800 was filed.
19 See Resolution L-399 Ordering Paras. 1 and 2.
20 D.06-12-044 at Ordering Para. 2.
21 D.06-12-044 at 30.
22 TURN Opening Brief at 2, and DRA Reply Brief at 9.
23 D.06-12-044, at 31.
24 Assigned Commissioner's Ruling and Revised Scoping Memo (December 21, 2006) at 4.
