VII. G.O. 133-B Service Quality Data Produced, Retained or Controlled by Carrier's Parents, Subsidiaries, Affiliates or Unregulated Third Parties

We intend to enforce our service quality rules, even where carriers assert that G.O. 133-B service quality information is not available because the services to which the information relates is provided by an unregulated parent, subsidiary, affiliate or third party (including underlying wholesale carriers).

We seek comment on whether there are circumstances where carriers should be exempt from some or all service quality rules when unaffiliated third parties perform activities affecting a regulated carrier's service quality.

A. Service Quality Data Produced, Retained or Controlled by Unregulated Third Parties

It is an increasingly common practice for carriers to subcontract certain activities or functions, such as directory assistance services, to affiliates and third party providers. Some carriers have reported to staff that third parties providing services for them do not collect the data needed to produce service quality measures like DAOAT.

We remind carriers that utilities under our jurisdiction are responsible for the conduct and performance of unaffiliated third parties involved in activities affecting a telephone carrier's service quality or the activities necessary to produce information concerning the carrier's service quality.⁸⁷ We expect carriers to take whatever steps are necessary to ensure that unregulated entities performing activities on the carriers' behalf that affect carriers' service quality or the activities necessary to produce carriers' service quality information are able to adequately support carriers' obligations under our rules.

B. Service Quality Data Produced, Retained or Controlled by Carrier's Unregulated Parents, Subsidiaries or Affiliates

Cox California Telcom (Cox), one of California's largest competitive local exchange carriers, challenged staff's request for service quality data, contending that some of the requested service quality information pertained to, and was produced, retained or otherwise controlled by affiliates not subject to the jurisdiction of this Commission. Cox asserts that certain information concerning telephone service quality can not be segregated from that of its unregulated affiliates, and that it would be improper to require it to submit confidential and proprietary information of its unregulated affiliates.

With respect to parents, affiliates and subsidiaries, we remind carriers that "the Commission, each Commissioner, and each officer and person employed by the Commission may, at any time, inspect the accounts, books, papers, and documents of any public utility", and that our authority "also applies to inspections of the accounts, books, papers, and documents of any business which is a subsidiary or affiliate of, or a corporation which holds a controlling interest in, an electrical, gas, or telephone corporation with respect to any transaction between the electrical, gas, or telephone corporation and the subsidiary, affiliate, or holding corporation on any matter that might adversely affect the interests of the ratepayers of the electrical, gas, or telephone corporation." ⁸⁸

The Commission could not fulfill its responsibilities with respect to service quality were it to not require carriers to provide certain service quality data because that data is not segregated from the data of carriers' unregulated affiliates. Moreover, were the Commission to take such a position, carriers could easily evade this Commission's service quality requirements merely by commingling regulated and unregulated data. This concern is as applicable to incumbent carriers and their unregulated affiliates (with respect to DSL service, for example) as it is to competitive carriers.

Therefore, entities other than regulated carriers that are involved in activities affecting a carrier's service quality or the activities necessary to the production of information concerning the quality of the regulated carrier's telephone service which is required by this Commission in the exercise of its jurisdiction may be indirectly subject to our service quality rules. Moreover, the law is explicit with respect this Commission's authority concerning, among other things, the service quality of cable companies or their affiliates providing telephone service.

"If the local exchange corporation is subject to the Commission's standards for the interconnection of networks, network unbundling, and service quality, the cable television corporation or its affiliates may be subject to the Commission's standards for the interconnection of networks, network unbundling, and service quality, for that portion of their network dedicated to intraexchange telecommunications service. In addition, all corporations offering intraexchange telecommunications service shall be subject to the Commission's consumer protection regulations." ⁸⁹ (Emphasis Added).

Thus, this Commission could choose to assert its jurisdiction directly over cable companies and their parents or affiliates that are performing functions supporting local exchange telephone service relating to service quality, or the activities necessary to produce information needed to comply with our service quality rules. Although the Commission could exercise direct authority over cable companies or other unregulated entities involved in providing or supporting the provision of regulated telecommunications services, it is unnecessary to do so at this time. This is because we believe we have sufficient authority over regulated carriers to achieve our objectives.

We presently require NRF utilities to provide service quality information similar to that which Cox states it can not provide because the information is not within its possession or control.⁹⁰ These NRF carriers are able to provide this information, even though they, too, operate under corporate structures that include unregulated affiliates. Therefore, we intend to hold all of the carriers under our jurisdiction responsible for the performance of their unregulated parents, subsidiaries, affiliates, unaffiliated third parties and/or other entities with respect to activities affecting or relating to a carrier's service quality or the activities necessary to produce the service quality information needed to comply with our rules. We seek comment on whether there are circumstances where carriers should be exempt from some or all service quality rules when unregulated parents, subsidiaries, affiliates, unaffiliated third parties and/or other entities perform activities affecting a regulated carrier's service quality.

C. Service Quality Data Produced, Retained or Controlled by Unaffiliated Third Party Carriers

Staff reports that carriers providing telephone services on a resale basis are not able to produce service quality information required by the Commission under G.O. 133-B. At least one underlying incumbent wholesale carrier refuses to provide to the resale carrier the service quality information that only the underlying wholesale carrier possesses or is able to produce.

Several resale carriers provided staff with Pacific's response to their request for service quality data concerning the activities performed by Pacific as the underlying wholesale carrier. Pacific's response states that Pacific "does not track information [the Commission] requested that relates to [the resale carriers'] retail operations", and that "it would be inappropriate for Pacific to provide [information relating to the resale carriers' service quality] because [the Commission] seeks information from [the resale carrier], not Pacific."⁹¹

Important service quality information would be unavailable, were resellers exempt from or otherwise not required to comply with our information reporting requirements. We find such an arrangement unacceptable, and will require all carriers, resale or facilities-based, to comply with our service quality rules.

All telephone utilities are subject to existing G.O. 133-B rules, and are presently obligated to monitor and report service quality measures. However, many carriers, both facilities-based and resale, obtain functions like directory assistance services from affiliates or third party providers. Likewise, resale carriers providing services to end users are largely, if not entirely, dependent on the performance of their underlying wholesale carrier.

We recognize that, if an agent, affiliate or underlying wholesale carrier does not furnish adequate service or provide a carrier with required service quality information, the carrier is exposed to potential violations of our rules. However, where a carrier is unable to comply with our rules due to the failures on the part of a third party, we believe that the filing of a complaint alleging violations of P.U. Codes §§ 2110 and/or 2111 may provide adequate recourse.

Nevertheless, we seek comment on how carriers using third parties to perform telecommunications-related functions presently monitor the service quality measures required under G.O. 133-B, and what processes these carriers use to obtain required information from their agents, affiliates or underlying wholesale carriers. We assume good management practices require such information systems. We also seek comment as to whether existing Commission procedure (i.e., filing a complaint) is adequate for ensuring carriers are able to obtain data needed to monitor and report required service quality information, or if additional steps should be taken to enhance carriers' ability to comply with our rules.