VII. Comments on the Draft Alternate Decision
The Draft Alternate Decision of President Michael R. Peevey in this matter was mailed to the parties in accordance with Section 311(g)(3) of the Pub. Util. Code and Rule 77.7 of the Rules of Practice and Procedure on April 8, 2004. Comments were filed on _____________, and reply comments were filed on _____________.
1. SBC submitted an initial revised DALIS cost study on April 17, 2003, and an update to its revised DALIS cost study on June 6, 2003.
2. SBC's proposed DALIS prices incorporate a floor set at its estimated total service long-run incremental cost (TSLRIC) with actual prices based on SBC's estimation of market value of the DALIS service.
3. The DALIS prices proposed by SBC are equivalent to the prices for similar services approved by the Federal Communications Commission (FCC) in the X2A Agreements in SBC's 271 applications in the states of Missouri, Oklahoma, Kansas, Arkansas, and Texas.
4. Although SBC characterizes its proposed DALIS prices as "market-based," SBC has not presented a comparison of what prices competing marketers charge for DA service within California, nor a comparison of the quality, timeliness, or comprehensiveness of DA service offered by California DA competitors.
5. Given the dominant position that SBC continues to enjoy through its legacy as a former monopoly provider of local exchange service and absent affirmative evidence of a fully competitive market, there is no basis to conclude that the market for DA services within California is fully competitive.
6. Given the lack of a fully competitive market for DA services within California, SBC's proposal to rely on prices charged by SBC affiliates in other jurisdictions would not lead to a competitive or nondiscriminatory price.
7. A pricing methodology based on forward-looking economic costs, as reflected in the "Total Element Long-Hour-Run Incremental Cost" (TELRIC) methodology, reasonably represents the conditions of a competitive market, and reduces the ability of an incumbent LEC to price in an anticompetitive manner.
8. SBC's cost study is based upon the activities and related resource times identified for the tasks presumed to be required to provide DALIS, and applies related unit costs to derive recurring and nonrecurring costs.
9. In deriving DALIS prices on a TELRIC basis, SBC applies a "wholesale-only" standard that assumes its entire retail operation and all related outputs do not exist.
10. By creating a hypothetical construct of costs based on an assumption that SBC retail operations did not exist, SBC ignores economies of scale and scope between its retail and wholesale DALIS operations.
11. TELRIC pricing applicable to DALIS includes a provision for return on SBC's economic costs, as reflected in the 21% shared-and-common-cost markup currently set by the Commission as adopted in D.02-09-004.
12. DALIS pricing proposed by SBC does not distinguish the cost of listings acquired from other incumbents versus those that SBC obtains from its own subscribers.
13. SBC's "data acquisition" costs are based on a "weighted average" cost per record for initial load and for additional listings multiplied by the total listings for both SBC and non-SBC ILECs.
14. SBC's "data storage" costs are predicated on the cost of mid-range computers which would not be the least-cost choice for a company that uses computers for tasks other than processing DALIS data.
15. Joint Parties propose to assign zero computer costs for data storage.
16. SBC assumes that two dozen full-time employees would be required to manage a wholesale-only DALIS product.
17. Joint Parties propose a 25% reduction to SBC's labor costs.
18. SBC's assumed cost of computer processing time valued at $500 per hour is based on outdated information from an "AT&T Bill Collection" study completed in the late 1980s.
19. Joint Parties recommend a $100 per hour computer processing time amount.
20. While SBC provides about 514,000 DALIS records per month to each DALIS customer based on its currently configured system, SBC assumes that about 1.3 million updated records would be required to keep the DALIS product current assuming wholesale-only operations.
21. SBC includes the cost of manually processing physical tapes for each DALIS customer, even though such customers can also obtain the data electronically.
1. The FCC UNE Remand Order determined that the obligation of all LECs to provide nondiscriminatory access to DALIS already existed in Section 251(b)(3) of the 1996 Act, and declined to include DALIS in the definition of a UNE.
2. Even though DALIS is not defined as a UNE, TELRIC is still an appropriate standard to use for DALIS pricing.
3. Adopting a pricing methodology for DALIS based on forward-looking economic TELRIC replicates, to the extent possible, the conditions of a competitive market.
4. SBC has failed to show that its proposed DALIS prices satisfy the "nondiscriminary pricing" standard required by the FCC or that they reflect prices that would prevail in a fully competitive California market for DALIS.
5. SBC may not use its market power to set DALIS at a price that would unfairly discriminate against competitors in comparison to SBC's own affiliates.
6. SBC'S pricing standard underlying its proposed DALIS prices results in charges that exceed the reasonable costs required to provide DALIS and violates the nondiscrimination requirements of the Act and the FCC's orders.
7. SBC should be required to implement DALIS pricing consistent with the TELRIC-based components as set forth in the order below.
8. Joint Parties have provided sufficient evidence to demonstrate why SBC's cost estimate should not be adopted. Joint Parties did not provide sufficient support for its modifications to the cost estimate and therefore those modifications should not be adopted.
9. The TELRIC-based prices, as set forth below, should be adopted for SBC DALIS pricing purposes.
IT IS ORDERED that:
1. Pacific Bell Telephone Company doing business as SBC Pacific (SBC) is hereby directed to file amended tariffs for Directory Assistance Listing Information Service (DALIS) in accordance with General Order 96-A within 20 business days to reflect the adopted pricing elements set forth as follows:
Rate Element |
Units |
Price |
Recurring (Update Listing Files) |
Per Listing |
$0.00059 |
Optional Tape Delivery |
Per Tape |
$16.12 |
Non-Recurring (Base File) |
Per Listing |
$0.00010 |
2. SBC is directed to perform the necessary calculations to determine the appropriate true up of DALIS customer billings for past periods in accordance with Decision 98-01-022, based on the billing amounts adopted herein. SBC shall incorporate appropriate measures in its filed tariff versions to implement any necessary billing adjustments as a result of the true up.
This order is effective today.
Dated _____________________, at San Francisco, California.
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of the original attached Commissioner Peevey's Alternate Draft Decision on all parties of record in this proceeding or their attorneys of record.
Dated April 8, 2004, at San Francisco, California.
/s/ Sally Cuaresma |
Sally Cuaresma |
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