6. Provision of IntraLATA Toll Service

6.1. Background

IntraLATA toll service is currently jointly provided by the Small LECs and Pacific. At the present time, intraLATA presubscription (ILP) has not been implemented in the territories of 12 of the Small LEC applicants of this proceeding12 so IXCs are not authorized to provide presubscribed or "One Plus" intraLATA toll service in the Small LEC territories.

On March 23, 1999, the Federal Communications Commission (FCC) released an order setting an implementation schedule for intraLATA dialing parity.13 According to the FCC order, all LECs were required to submit a dialing parity implementation plan to the appropriate state commission by April 22, 1999. The FCC order set a deadline of June 22, 1999, by which time the Commission was to have approved each of the small telephone company filings.

Twelve of the parties to the instant proceeding concluded that the timing of the FCC order could create customer confusion and complicate revenue flows between Pacific and the small telephone companies. In June 1999, the 12 Small LECs filed applications, A.99-06-004/A.99-06-009 seeking additional time in which to implement intraLATA equal access. In D.00-01-004, the Commission granted a temporary suspension of the Small LECs' dialing parity requirement for intraLATA toll calls. The date for compliance with the dialing parity requirement was set for 30 days after the Commission's decision in the instant proceeding.

6.2. Small LECs' Position

Paragraph 2 of each of the STAs provides that neither Pacific nor the Small LEC is to be responsible for the provision of intraLATA toll services upon approval of the STAs. The parties agreed to this provision because they realized that intraLATA equal access would soon be required in all of the service areas of the Small LECs, and they anticipated that there would be many carriers interested in providing intraLATA toll services in those areas. 14 The Small LECs took this position because most of them are not well situated to provide these services in a competitive market. The Small LECs assert that most of them do not have the necessary facilities and administrative and customer service support in place. Those companies that want to provide these services to their customers (e.g., Sierra and Kerman at this time) have established Commission-certificated long distance affiliates to do so. Other Small LECs may choose to do so in the future, but most of the other Small LECs are reluctant to offer intraLATA toll services and perceive problems associated with the provision of such services.

Despite the position of the Small LECs in this regard, they are cognizant of the concern expressed in the Assigned Commissioner's Scoping Memo and Ruling that customers of the Small LECs not be left without intraLATA toll service. While the Small LECs believe that such an eventuality is unlikely in view of the interest that other carriers have expressed in providing intraLATA toll services in their service areas, they recognize that it would be an unacceptable regulatory outcome. Therefore, the Small LECs have modified their position on this issue in order to address the Assigned Commissioner's stated concerns. Their position is now that they are willing to do the following:

This revised position is described in Exh. 3 and in Bishop's further direct testimony at the hearing, 1 R.T. 9-10.

The Small LECs emphasize that the Commission should not require them to provide service where there are other carriers willing to do so. Thus, they should not be named as "default carrier" in an intraLATA equal access balloting or any other carrier selection process, even though they are willing to accept carrier of last resort (COLR) responsibilities for intraLATA toll. There is a difference between a default carrier and a COLR, as explained by Small LEC witness Bishop.15 A "default" carrier is the carrier designated to serve customers who do not respond to a notice or ballot giving them the opportunity to select from among a list of interested carriers. A COLR is the carrier designated to provide a service because there are no other carriers willing to provide that service. Obviously, if service is required to be provided by a COLR, there is no notice or balloting, because there are no interested carriers willing to provide the service on a voluntary basis.

If a Small LEC is required to offer intraLATA toll service as a stand-alone service, the result will likely be high toll rates for end users and the risk of losses that will be part of its fully-regulated costs of operation. For rate-base regulated carriers such as the Small LECs, such losses would be borne directly by ratepayers. If there are other carriers willing to serve, exposing ratepayers to this risk is completely unnecessary.

Under alternative 2 in the Small LECs' proposal above, the Small LECs have also proposed to default non-responding customers to each customer's participating interLATA carrier. They believe that this proposal is most likely to coincide with customer preference. After all, the customer has already chosen that carrier to provide interLATA service. It is difficult to imagine customer objection to being assigned to the same carrier for intraLATA toll service. Customers of non-participating carriers would be required to choose a new carrier, just as all new customers are required to choose their IXC or IXCs in the service area of any LEC offering equal access.

In their Reply Brief, the Small LECs rebut ORA's contention that the Small LECs have offered insufficient assurances that adequate intraLATA toll service will be available to customers of the Small LECs under their ILP proposal described in Exh. 3. According to the Small LECs, ORA's argument fails to acknowledge the Commission's clear statement of the ILP issue in the Scoping Memo for this proceeding:

    Before authorizing the proposed discontinuance of toll service, the Commission must be assured that customers of the Small LECs will continue to receive intraLATA toll service from one or more certificated carriers. (Scoping Memo, p. 6.)

The Small LECs assert they have provided the assurance required by the Commission by stating their unequivocal willingness to become the COLR for intraLATA toll service if there are no other carriers willing to provide the service on a one-plus basis.16 The record further contains convincing evidence that there will be IXCs willing to serve Small LEC customers.

The Small LECs rebut ORA's hypothetical scenario that the only IXC willing to serve a Small LEC's customers might charge those customers an intraLATA toll rate of 25 cents per minute. This possibility was suggested by ORA during the cross-examination of the Small LECs' witness Bishop. On redirect, however, Bishop testified that the Commission's policy on statewide rate averaging requires an IXC to offer the Small LEC customers the same rates that are applied to that IXC's customers in the urban areas of the states. The policies of this Commission expressly prohibit a 25-cent "Small LEC only" rate. No carrier could charge 25 cents per minute across the state and be competitive. Therefore, the Commission's policies effectively guarantee that no customer will face 25 cent per minute toll rates as the only option anywhere in the state.

ORA's response to the requirement of statewide rate averaging is to suggest that there might possibly be an IXC which was planning to provide intraLATA toll service only in Small LEC territories instead of statewide. Neither ORA nor any other party has presented any evidence that such a hypothetical carrier actually exists.

In their Reply Brief, the Small LECs indicate that while they cannot guarantee IXC participation in their future ILP process, the evidence in the record strongly supports the conclusion that multiple IXC participation will, in fact, occur. The only evidence in the record of a carrier that might not participate in the ILP process in California comes from AT&T, which says it has not yet determined whether it will provide the service. (2 R.T. 139, Reardon for Sprint.) Sprint admits that its tariffs do not permit it to decline to serve specific areas of the state (3 R.T. 242.) Further, Sprint has participated in every intraLATA presubscription opportunity presented to it across the country. (Id. at 239.)

In addition, the Small LECs state that ORA's Opening Brief ignores Exhibits 16 and 17, which are Access Service Requests (ASRs) submitted by IXCs to Calaveras and Evans, including orders by AT&T, Sprint, and WorldCom. These orders are evidence of strong interest on the part of many IXCs in serving the territories of these two Small LECs. Significantly, Calaveras is one of the smallest LECs in California. If such a large number of carriers are interested in serving Calaveras' customers, it strongly indicates that there will be keen interest in serving the customers of the other Small LECs.

In their Reply Brief, the Small LECs point out that ORA's brief also makes a confusing reference to 10XXX17 dialing which is based on a misconstruction of Bishop's testimony. At page 4 of ORA's Opening Brief, Bishop's testimony at 1 R.T. at 33 is cited in support of ORA's claim that Small LEC customers might have to resort to 10XXX dialing in order to obtain intraLATA toll service. Bishop made no such statement. In fact, the Small LEC position on ILP guarantees that all customers will have available to them one-plus presubscribed intraLATA toll service, either from an IXC or from the Small LEC. What Bishop actually said when asked by ORA about 10XXX service was that under the FCC's rules, a new customer signing up for local service with the LEC must choose a toll carrier and may not be assigned by a LEC to itself or an affiliate or to any IXC. Thus, a new customer must either affirmatively choose a toll carrier or rely on 10 XXX dialing for toll calls.

6.3. Pacific's Position

The Small LECs modified their original proposal and expressed a willingness to serve as the COLR for intraLATA toll services in the event that no IXC is willing to provide such services to their customers. This modification removes the risk that there will be no carriers willing to serve in the Small LECs' territories. Pacific asserts that the willingness of the Small LECs to carry this traffic also renders moot many of the objections raised by intervenors. It completely negates any argument that Pacific be designated a COLR in the Small LEC territories. Additionally, the modification complies with the universal service order requiring incumbent LECs to assume the role of COLR.18

In its Reply Brief, Pacific asserts that AT&T's request that Pacific be the COLR in the Small LECs' service areas is inconsistent with previous Commission decisions stating that the incumbent LEC should be the COLR. According to Pacific, AT&T relies on incorrect factual assumptions to buttress its arguments that Pacific be the COLR. For example, AT&T claims that Pacific is a carrier of intraLATA toll service throughout the entire state,19 even though Pacific is not providing intraLATA toll service in Verizon California, Inc.'s (formerly GTEC) or any other independent company's service territory, except on a very limited basis through its CLEC operations. Also, AT&T attempts to establish that Pacific has existing physical facilities in the Small LECs' service areas to provide intraLATA toll service. AT&T contends that Pacific is a COLR in the Small LECs' service areas by stating, " because Pacific is now and has always been the COLR for intraLATA toll service, it is best equipped to continue providing those services, having its lines and system in place..." (IXCs' Opening Brief, p. 24.) Pacific asserts that it jointly provides intraLATA toll service and access service with all of the LECs in California and many of the CLECs. It does not own all the facilities to provide such services.

In any event, Pacific asserts that AT&T's request to have Pacific assume COLR status is not even necessary. The Small LECs have agreed that they will be the COLR for intraLATA toll in their service areas. This complies with ORA's position that the Small LECs have been, by previous Commission order, designated to be the COLR for intraLATA toll.

6.4. ORA's Position

As part of this application, the Small LECs are seeking Commission authorization to decline to offer intraLATA toll service if there is at least one IXC willing to provide intraLATA toll service in their respective territories. While the Small LECs have offered assurances that such services will be offered, both AT&T and Sprint have been unwilling to guarantee that they will offer such services in the Small LECs' service territories.20 According to AT&T, the decision on whether AT&T will be willing to offer intraLATA toll service on a statewide basis will depend upon the costs and the effective rates customers pay. Sprint similarly states in its direct testimony that it is unable to commit to becoming a presubscribed intraLATA carrier in the service territories of the Small LECs under the terms they have proposed in their application. (Exh. 18 at 7.)

Further, ORA states, there is no requirement that a prospective IXC that is willing to provide intraLATA toll service in the service territories of the Small LECs must be willing to offer this service on a statewide basis or even be available on a continuing basis in a Small LEC's service territory. According to ORA, the sole guarantee the Small LECs are offering to their customers is that as long as one IXC is willing to provide service (at whatever price) the Small LECs would no longer be the COLR for intraLATA toll. Given the importance of telephone service in rural areas, and the relatively small service territories of the Small LECs, access to reasonably priced intraLATA toll service is of vital importance to these rural areas because many of the calls are predominately toll-related.

ORA has determined that none of the existing IXCs are under any legal requirement to participate in equal access balloting in any part of the state (according to the Commission's Telecommunications Division and both AT&T and Sprint). Given this situation, what the Small LECs propose is unacceptable to ORA. The risk of having no reasonably priced intraLATA toll service available to Small LEC customers is simply too great.

Another important concern is the possibility is that customers of the Small LECs might have to resort to 10XXX dialing to obtain intraLATA toll service, something that even the Small LECs acknowledge is not the same quality of service that currently exists in their service territories. (1 R.T. 33, Bishop for Small LECs.) Absent some express Commission determination to the contrary, the customers of the Small LECs run a distinct risk of having to resort to 10XXX dialing to obtain intraLATA toll service if the Small LECs are allowed to abandon their former role as default providers.

ORA expresses concern that if the Commission does not require the Small LECs to continue to serve as default providers, some LEC customers may have only extremely high priced service available. ORA raised the hypothetical situation of a carrier which charged 25 cent per minute rates in the Small LEC territories. Not only does the Small LECs' and Pacific's application represent poor public policy, states ORA, it also runs contrary to the express provisions of Decision (D.) 97-04-083 and the Scoping Memo in this proceeding. Both of these documents reiterate the Commission's interest in having assurances that customers of the Small LECs must be able to access both intraLATA and interLATA toll services. According to ORA, nothing has been presented in this proceeding to justify modification of D.97-04-083 to allow the Small LECs to abandon their role as default provider.

In its Reply Brief, ORA rebuts Pacific's contention that during cross examination AT&T's witness committed the company to providing intraLATA toll service in the Small LECs' service territories. According to ORA, Pacific is distorting the actual testimony of AT&T's witness who stated that "AT&T hasn't made its mind up yet." (Kong, AT&T, 2 R.T. 139.) AT&T's witness later clarified his statement saying that AT&T's marketing department would have to undergo a complex evaluation to determine if it would offer intraLATA toll service in the Small LECs' service territories. (Id. 139-140.)

Despite Pacific's contention to the contrary, Sprint similarly did not make a specific commitment to provide intraLATA toll service in the Small LECs' service territories. Instead, Sprint's witness merely stated that Sprint has historically participated in all intraLATA presubscription opportunities in the past. (3 R.T. 240, Rearden for Sprint.)

ORA criticizes Exhibits 16 and 17 which Pacific offered in support of its contention that many IXCs have offered to provide intraLATA toll service in the Small LECs' service territories. According to ORA, the two exhibits include copies of ASRs that are over a year old. While these agreements purport to show a willingness on the part of several IXCs to provide intraLATA toll service in the Small LECs' service areas, they are generally not current and were based on the intraLATA access rates in effect at the time they were submitted, which are far lower than the rates the Small LECs propose. Neither of these exhibits has any probative value in predicting how these same IXCs would react to the Small LECs proposed access rates. Because these documents are not timely and because they reflect an entirely different access regime than what the Small LECs propose, they should be disregarded.

6.5. The IXCs' Position

The IXCs assert that the COLR proposals in the application are confusing and fail to protect the public interest. Both the Small LECs and Pacific originally proposed to withdraw from the provision of intraLATA toll service in the Small LECs' territories. However, the Small LECs modified their position with a complicated proposal, which the IXCs find to be somewhat unclear. (Exh. 3.)

The IXCs state that the applicants' proposal to reduce their responsibility as COLR is not in the public interest. The applicants presented no support for modifying previous Commission decisions designating the ILEC as the COLR. Furthermore, any concern that customers of Small LECs lack intraLATA toll alternatives stems from the access rate levels and rate design proposed by the Small LECs themselves.

According to the IXCs, Pacific's refusal to provide intraLATA toll service in the Small LECs' territories is further evidence of the flaws in the Small LECs' access proposal. As a carrier of intraLATA toll service throughout the entire state, Pacific must charge statewide uniform rates. That is, it must charge the same toll rates in the Small LECs' territories as in its own exchanges. Applicants admit that Pacific physically provides intraLATA toll service in the Small LECs' territories jointly with each Small LEC. (1 R.T. 20.) Pacific's proposal to withdraw from exchanges where it currently provides service is evidence that Pacific does not believe it can profitably serve the Small LECs' territories with statewide uniform toll rates and National Exchange Carrier Association (NECA) level access rates. The IXCs face fundamentally the same situation. It is completely unreasonable for Pacific and the Small LECs to fashion an application that, in effect, transfers an unprofitable service and subsidy burden to IXCs.

The IXCs assert that the Small LECs' complicated proposal is similar to that created in other states when the incumbent LECs withdrew from the intraLATA toll markets in those states. Under this arrangement, IXCs that participate in intraLATA equal access balloting would serve as default providers for some of their customers, while other Small LEC customers would have to dial around to receive service. (Exh. 3.) The IXCs assert the Small LECs' revised proposal still places inappropriate obligations on IXCs and fails to guarantee an adequate level of service quality for consumers.

The Commission can approve a solution that is equitable to consumers, IXCs, and applicants alike. First, the Commission should approve an efficient access rate structure that will promote competition in the intraLATA toll market in the Small LECs' territories.21 An efficient rate structure will encourage IXCs to participate in the intraLATA toll markets in the Small LECs' territories and to compete actively for customers, thereby minimizing the number of customers who will default to the incumbent LECs in their capacity as COLRs.

Second, the Commission should reject applicants' de facto request to modify the provisions of D.97-04-083 and require them to continue to serve as COLRs, as set forth in that decision. The active competition of IXCs described above will minimize the burden on the incumbent LECs that are serving as COLRs. Conversely, the requirement for these LECs to serve as COLRs will provide the Commission with the assurance it seeks to have a guaranteed intraLATA toll service provider and a high level of service quality for Small LEC customers.

6.6. Discussion

      6.6.1. Provision of intraLATA Toll Service

Before we rule on how intraLATA toll service should be provided in the Small LEC service territories, we need to address ORA's three major concerns: (1) Small LEC customers could be subject to 25 cent intraLATA toll rates, (2) Small LEC customers could have to dial extra digits to make an intraLATA toll telephone call, and (3) IXCs may discontinue intraLATA toll service in Small LEC territories. ORA raises valid concerns so we will evaluate each in detail, as we are not willing to have Small LEC customers subjected to inferior intraLATA service.

First, we address the potential problem of Small LEC customers paying 25 cent rates. In previous Commission orders, we found that carriers cannot charge lower rates in the competitive urban areas, and higher rates in the less competitive rural areas. That policy precludes a carrier from charging Small LEC customers 25 cent rates, while charging lower rates to its urban customers.

We have reiterated this policy in Commission orders as far back as 1984, when we first addressed the issue of interLATA competition. In that decision we found as follows:

      Another issue that stimulated substantial discussion is the problem of deaveraged rates. The notion is that `cream skimming' will force down rates in competitive markets and force up rates on noncompetitive routes. We find there is no foreseeable danger that deaveraging will occur spontaneously in the near future, in light of the access charges that we adopted; however, in order to further diminish the probability, we will require that each applicant file rates that are uniform on a distance basis. (D. 84-06-113, 15CPUC2d, 426, 474.)

The issue of deaveraged rates was raised in a subsequent rulemaking, as the Commission established tariff filing rules for nondominant interexchange carriers (NDIECs). We decided to leave the current requirement for average rates in place, pending further investigation. We concluded as follows: "NDIEC rates should remain uniform on a distance basis until the Commission considers this issue in Phase III of I.87-11-033." (D.90-08-032, Conclusion of Law 8, 37 CPUC2d, 130, 157.)

In Phase III of our New Regulatory Framework (NRF) investigation, we looked at the issue of statewide average toll rates in conjunction with our efforts to open the intraLATA market to competition. We found there was no economically sound reason to adopt a different structure for Message Telecommunications Service (MTS) intraLATA calls than exists for interLATA toll calls. While we allowed different carriers to adopt their own intraLATA toll rates, we required that those rates be effective throughout the carrier's service territory. We concluded as follows: "All individual LECs and IECs should ... be required to maintain uniform MTS rate schedules within their respective service areas." (D.91-07-044, CoL 23, 41 CPUC2d, 1, 35-36.)

The mandate in D.91-07-044 remains in effect today. That means that an IXC that provides service in various parts of California cannot decide to charge different rates in Small LEC territories than it charges in urban areas. Thus, there is no danger of those carriers offering a 25 cent rate in the Small LEC territories because they would then have to offer that rate statewide, and at 25 cents per minute, those carriers would not be able to compete against carriers charging far less than 25 cents per minute.

The only instances where Small LEC customers would be subjected to a 25 cent rate would be in one of two cases: (a) An IXC with 25 cent intraLATA toll rates elects to serve only Small LEC customers, or (b) the Small LEC serves as COLR in its service territory because no IXC indicates an interest in providing service there. We will address each instance in turn.

It is not likely that an IXC will chose to serve only Small LEC territories, when the state's urban areas provide more lucrative areas to serve. We conclude that ORA's first issue does not have merit, because they have raised an eventuality that is unlikely to occur.

However, ORA's concern raises a companion issue, namely, since the Small LECs do not want to provide intraLATA toll service, there is nothing in the record of this proceeding to indicate what intraLATA toll rates they would charge if they were required to offer the service. However, each Small LEC did agree to be the COLR, if no IXC were to choose to provide service in its territory. In that case, the Small LEC would presumably be the monopoly provider of intraLATA toll service. In the event that a Small LEC does offer intraLATA toll service in its area as a result of this decision, that Small LEC shall, at least initially, charge rates no higher than Pacific's intraLATA toll rates (the ceiling rates for residential intraLATA toll and the maximum rates for business intraLATA toll service). Also, the Small LECs should continue to offer any toll discount plans which they currently offer today. That will ensure that Small LEC customers are not paying high rates as a result of having only a single provider. Any Small LEC which serves as COLR for intraLATA toll service may apply to the Commission to increase its intraLATA toll rates in its next GRC.

Second, we address ORA's concern that Small LEC customers will have to dial extra digits to make intraLATA toll calls. While this issue will be discussed further below, we state unequivocally that we intend to provide Small LEC customers with presubscribed intraLATA toll service. That does not mean that a Small LEC customer would never have to dial 10XXX or 101XXXX to reach an intraLATA carrier, but 101XXXX dialing will not be the only option available to Small LEC customers.

Third, ORA expresses concern that IXCs may discontinue offering intraLATA toll service in the Small LECs' territories. Here we offer the protections afforded by General Order 96-A. Once an IXC begins to offer service in a Small LEC's territory, it cannot withdraw from service without Commission approval. General Order 96-A which governs the filing and posting of rate schedules for various types of public utilities includes a section relating to withdrawal of service.

      Section XIV. Withdrawal of Service: No public utility of a class specified herein shall, unless authority has been obtained from the Commission, either withdraw entirely from public service or withdraw from public service in any portion of the territory served.

This requirement for Commission approval prior to withdrawal of service alleviates ORA's concern that an IXC which begins to offer service in a Small LEC's territory might not be available on a continuing basis. We will closely scrutinize any requests for withdrawal of intraLATA toll service in the Small LEC territories to assure ourselves that the ongoing interests of Small LEC customers are preserved.

The next issue relates to whether Pacific and the Small LECs should be authorized to discontinue provisioning intraLATA toll service, as requested by the applicants. Service is currently jointly provided, with each carrier using its own facilities. The Small LECs assert they are not well-situated to provide intraLATA toll services in a competitive market, since most of them do not have the necessary facilities and administrative customer service support in place.

AT&T asks that Pacific continue to be the COLR in the Small LEC territories. However, as Pacific correctly states, previous Commission decisions (D.96-10-066, D. 97-01-020 and D.97-04-083) require the incumbent LEC to be the COLR, and Pacific is not incumbent LEC in the Small LEC territories, and there is no reason why Pacific should be required to perform the role of COLR. Contrary to the IXCs' allegation in their Brief, Pacific is not the COLR for intraLATA toll service in the Small LEC service territories, and currently provides service jointly with each Small LEC. Pacific does not own all of the facilities used to provide those services. We conclude that Pacific should not be required to serve as COLR outside of its own service territory, and therefore will not be required to serve as COLR for intraLATA toll service in the Small LEC territories.

Next we address whether a Small LEC should be authorized to discontinue providing intraLATA toll service if at least one IXC is offering presubscribed intraLATA toll service in its territory. We have assured ourselves that Small LEC customers will have at least one presubscribed intraLATA toll carrier-either the LEC itself or an IXC. Also, our requirement for statewide average rates will ensure that Small LEC customers will not be subject to extremely high intraLATA toll rates. This negates many of the objections raised by intervenors. While the IXCs claim that the Small LEC proposal places an unfair service burden on them, that claim does not have merit. We do not require that IXCs provide intraLATA toll service, so it is unclear that any obligation or burden is being placed on the IXCs. Each IXC will make its own determination, without Commission intervention, as to whether it will provide intraLATA toll service in each Small LEC's service territory.

At this point, we do not know whether IXCs will step forward to participate in presubscription balloting, or not. The intraLATA toll market in California is competitive, and IXCs cannot be required to provide that service in the Small LEC territories. ORA indicates that it has confirmed that existing IXCs are not under any legal requirement to participate in equal access balloting in any part of the state. As ORA points out, the ASRs in Exh. 16 and 17 are over a year old, and may not indicate various IXCs' willingness to provide intraLATA toll service pursuant to the access rates, and other policies adopted in this decision. Each IXC will make that business decision after analyzing the access charges adopted in this decision and other factors which could affect its business plan.

Even if no IXC steps forward to provide intraLATA toll service in a particular Small LEC's service territory, the LECs themselves have expressed willingness to serve as COLR. This will ensure that Small LEC customers have intraLATA service on a presubscribed or "1+" basis at reasonable rates. We have indicated that for the present time, any Small LEC which serves as COLR shall charge no more than Pacific's current intraLATA toll rates (the ceiling rates for residential service and the maximum rates for business service). Any proposed increases in those toll rates should be raised by the small company in its next GRC. Therefore, we conclude that the Small LECs will be required to provide intraLATA toll service as COLR, only if no IXC provides presubscribed service in its service territory. Once an IXC provides the service, the LEC is not required to continue to provide service, since under the terms of GO 96-A, the IXC will not be allowed to suspend service without Commission approval.

We adopt the Small LEC proposal for provision of intraLATA service cited above as Exh. 3, with some modifications. Item 1 provides that the Small LEC which has an IXC affiliate will transition its toll service to the affiliate in connection with implementation of ILP. The Small LECs also propose that the IXC affiliate will serve as the default provider for non-responding customers. That is satisfactory only if no other IXC offers service in the Small LEC's territory. If other IXCs are offering service in competition with the Small LEC's affiliate, the affiliate cannot serve as default provider. Rather, the IXC affiliate must be treated the same as any other IXC.

Under Section 2, the LEC is relieved of its obligation to provide intraLATA service if at least one IXC is willing to provide the service. Item 2 indicates the LECs will "notify" customers of available toll carriers. Mere notification is not adequate, since the Small LEC is not going to serve as default provider of intraLATA toll service. The Small LECs must conduct balloting to determine customer preferences, if customers have more than one choice for intraLATA toll provider.

The Small LEC proposal includes a policy for those customers which do not respond to the balloting. We agree that non-responding customers should be assigned to their interLATA carrier, as long as that carrier is participating in ILP for the Small LEC. If the interLATA carrier is not participating in ILP, those customers which do not make an affirmative choice will be required to utilize 101XXXX dialing for intraLATA toll calls. We reiterate that this option applies only to those customers who decline to make a selection of intraLATA toll provider.

      6.6.2. Implementation of IntraLATA Presubscription

The policies adopted above will require the 12 Small LECs to implement intraLATA equal access in a different way than the larger LECs in the state. The Small LECs will need to ascertain the interest of IXCs to participate in intraLATA presubscription balloting. Since the Small LECs will not serve as default provider of intraLATA toll service, if at least one IXC expresses interest in providing service, the Small LEC will have to conduct balloting. The following schedule will be adopted for implementation of intraLATA equal access. All dates are based on the date of approval of this decision.

This action requires us to modify prior Commission orders. Our intraLATA presubscription decision D.97-04-083 set the basic ground rules for implementing intraLATA equal access, and among other things, established that each LEC would be the default provider of intraLATA toll service. However, in the Scoping Memo to this proceeding we indicated that we might need to make changes to that decision, and we served the ruling on the service list for the intraLATA presubscription proceeding so interested parties were given notice, pursuant to Public Utilities Code Section 1708, of the potential change in a Commission order.

Several Ordering Paragraphs adopted in D.97-04-083 shall be modified for the 12 Small LEC parties to this proceeding which have not yet implemented ILP, to reflect the following changes which result from this decision:

      a. OP 2: Balloting of subscribers will be required if more than one IXC expresses interest in providing intraLATA service;

      b. OP 3: The "full 2-PIC methodology" which permits a customer to presubscribe to different carriers for interLATA and intraLATA service will be modified to eliminate the requirement that the customer's LEC be one of the options for intraLATA service, unless the Small LEC serves as COLR.

      c. OP 5: The Small LEC will not be required to provide intraLATA service as long at least one IXC offers presubscribed service. Therefore, we eliminate the requirement that existing customers who do not elect to change their intraLATA toll provide shall continue to receive intraLATA toll service from their LEC.

      d. OP 8: The notification timeframes are modified as a result of the balloting required by this decision. We retain the requirement that all proposed customer notices (including ballots) be submitted to the Telecommunications Division for review.

      e. OP 13(a): The neutral business office procedures do not apply to the extent that the LEC itself will not be offering intraLATA toll service if at least one IXC is willing to offer the service.

      f. OP 14: The review of scripts is only required if one of the options for intraLATA toll service is service provided by an affiliate of the LEC.

      g. OP 17: Small LECs will be required to use direct mail to notify customers as to their options for intraLATA toll service, and for balloting purposes.

One other Commission decision is impacted by the policies adopted above, D.00-01-004. Such letter shall include a reason shy 30 days is not sufficient. That decision, which grants a temporary suspension of the dialing parity requirement for 12 of the Small LECs which are parties to this proceeding (excluding Sierra which has already implemented ILP), set a date for compliance with the dialing parity requirement for 30 days after the Commission's decision in this proceeding. (D.00-01-004 at 6, OP 1.)

However, if parties to proceeding A.99-06-004/A.99-06-009 believe that 30 days is not enough time to perform all the steps ordered in this PD, they should send a letter to the Executive Director requesting an extension of time under Rule 48(b) to comply with the implementation of dialing parity requirements beyond the 30 days established in D.00-01-004. In any event, any extension granted will be no longer than the implementation schedule adopted in this decision. If parties believe the 30-day deadline is realistic, they should include that statement in their comments on this PD, along with a proposed 30-day implementation schedule, based on the balloting process adopted in this decision. This PD will be mailed to the service list for A.99-06/004/A.99-06-009 to ensure that all interested parties are aware of the implementation schedule in this PD and its impact on D.00-01-004.

12 Sierra Telephone Company, Inc. (Sierra) has already implemented intraLATA presubscription effective May 4, 1999. 13 Implementation of Local Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98, FCC 99-54 (released March 23, 1999). 14 The Small LECs point to Exh. 16 and 17, which are intraLATA Access Service Requests (ASRs). These include requests by AT&T, Sprint, and WorldCom, and there is no evidence that any of these requests has been withdrawn. 15 1 R.T. 32. 16 "Presubscription" or "One Plus" dialing means that once a customer selects a carrier for intraLATA or interLATA toll, that information is stored in the switch that serves the customer. When the customer picks up the phone to make a toll call, the switch automatically routes the customer's call to the customer's pre-selected carrier. 17 10XXX or 101XXXX dialing means that the customer has to dial an access code to reach a carrier to make a toll call. 18 D.97-01-020 [70Cal. PUC2d] 588, 596, Appendix A, O.P. 11(e). 19 IXCs' Opening Brief, p. 9. 20 2 R.T. 139-140, Kong for AT&T. 21 Parties' specific proposals regarding access charges are discussed in the following section.

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