Regulation Briefs, September 2005

A practicing CLEC law office provides key updates on regulation across the U.S.

by Kristopher Twomey and Andrew Ganz of The Law Office of Kristopher E. Twomey, P.C. [October 7, 2005]

Here for the first time we reprint a portion of the LoKT newsletter providing updates on key legal issues. The Law Office of Kristopher E. Twomey, P.C. serves ISP, CLEC, corporate, long distance carrier, and other clients.

State Briefs

Arizona: In a 3-year regulation plan proposed by the Corporation Commission (Case T-0105- 1B-03- 0454), Qwest would be allowed to increase its AZ rates for many of its services. The increases could total $31.3 million the first year and $12 million the 2nd. The proposal does not alter the retail price capping program that was adopted 3 years ago. In that proceeding, the Commission froze rates for basic exchange service, allowed for significant pricing flexibility for competitive services and allowed so-called "semi-competitive" services to be raised up to 25 percent per year.

Arkansas: The PSC has approved a rate settlement concerning network elements between SBC, Alltel, PSC staff and the Attorney General's. The settlement relates to unbundled analog and 2-wire digital loops. As part of the settlement, SBC and Alltel's rates for 2-wire analog loops will be set for 3 years at $16.00 per month in urban zones, $18.70 per month in suburban zones and $22.02 per month in rural zones. Further information about the rates set under the settlement, as well as a new report containing all state UNE rates can be found on the firm's website.

California: After a decade-long fight to protect the 310 area code in Beverly Hills and W. Los Angeles, the PUC finally recognized the reality of number exhaustion by ordering California's first ever all-service overlay (with 11-digit local dialing), to go into effect next year. The Commission says that number demand simply made it impossible to spare the area code from the overlay.

Also in California, the PUC said that it will continue to allow SureWest Communications to receive an annual $11.5 million subsidy from the state's high-cost fund. The Commission did insist, however, that SureWest (formerly Roseville Telephone) to complete a cost study for setting a permanent draw by Aug. 2006 (the current subsidy has been provided on an interim basis to SureWest since 2001).

Colorado: An administrative law judge ("ALJ") at the Colorado PUC wants the Commission to impose sanctions against Western Wireless for failure to comply with universal service requirements. Specifically, the judge (Case 04F- 474T) said the company (which does business as Cellular One) failed to advertise and promote a $14.99 basic monthly service plan. This, according to the ALJ, violated the terms of their universal service fund subsidy.

Connecticut: It appears that the mega-mergers between SBC-AT&T and Verizon-MCI will not be challenged in Connecticut. Officials at the Department of Public Utility Control ("DPUC") tentatively reaffirmed their July ruling that disclaimed jurisdiction over the mergers (Case 05-04-11). This, despite motions by the CT Attorney General and the Office of Consumer Counsel ("OCC") asking the DPUC to reconsider their July ruling. The basis for the DPUC decision to disclaim jurisdiction was that the merger is technically between the respective holding companies, and that the subsequently formed operating companies in the state would be distinct entities.

Illinois: On September 7, the Illinois Commerce Commission (Docket 05-0204) amended the requirements for its "Digital Divide Elimination Infrastructure Fund." The amendments list specific guidelines and requirements for grant proposals by entities who wish to receive a grant out of the fund. A copy of the Order and Appendix is available by searching under the docket number here.

Also in Illinois this month, Governor Rod Blagojevich (D) signed an Act (HB-2853) that will require wireless carriers to provide a contact number and brief service description for all third party services included on a customer's bill. The law applies in cases where the wireless carrier is unable to provide adjustments, refunds, or credits because it is only the billing agent.

Iowa: A federal court sitting in Iowa dismissed a group of rural carriers' challenge of a 2003 Iowa Utilities Board ("IUB") ruling that wireless carriers were not liable for access charges to landline telcos that relayed or terminated wireless calls originating and terminating within a major trading area ("MTA"). This was the second round in the bout between the parties; the group first challenged the ruling in late 2003. That suit resulted in a dismissal and then appeal by the rural carriers. An appeals court in St. Louis remanded the case back to the district court with so that they could decide if the state agency correctly interpreted federal law.

Kansas: The Kansas Corporation Commission ("KCC") rejected SBC's request to reconsider parts of its June order for retail rate deregulation in Kansas City, Wichita and Topeka. The order allowed rate deregulation of bundled services in the 3 markets and of multiline business services in Wichita, but SBC sought reconsideration of the definition of "bundle" and of the decision against rate deregulation for optional vertical services for consumers and small businesses. The commission (Case 05-SWBT-997-PDR) said SBC's proposed definition of a bundle would cover any purchase with an access line of an optional vertical service at tariffed list price. The KCC also fined SBC for violating timely-repair standards the 2nd half of 2004, but made the fine relatively tiny, after finding extenuating circumstances. The commission (Case 95-GIMT-047-GIT) acted on a staff memo noting SBC had violated a KS state standard requiring completion of repairs within 30 hours, on average. SBC was fined $100 for each of four listed violations instead of the $3,000 each the staff had recommended.

Kentucky: The PSC has decided that hearings in a proceeding on BellSouth's network unbundling obligations will take place this fall, and also set the schedule for testimony filings. The case is intended to decide if BellSouth's network unbundling obligations under Sec. 271 require it to provide Ky. CLECs with certain unbundled network elements ("UNEs") delisted from Sec. 251 by FCC Triennial Review actions.

Louisiana: PSC staff has decided to not to include provisions from proposed rules to ensure fair competition between the Lafayette Utilities System's ("LUS") new broadband telecom venture and private broadband providers and prevent improper cross-subsidies between the city's electric and telecom businesses. The change appears to have been a result of Comments submitted in reaction to the proposed rules, were apparently grossly in opposition to the provisions.

Michigan: State Attorney General Mike Cox (R) has filed a suit in a Michigan state court seeking to have an August PSC ruling overturned. The ruling by the PSC deregulated all retail telecom service rates in the state's 30 largest cities, including Detroit, Grand Rapids, Lansing and Flint. Cox claims the Commission lacked enough evidence to act and that SBC had failed to show that true competition currently exists.

Also in Michigan, it was reported that a contractor installing signs at a high school severed an SBC fiber cable, knocking out phone service to thousands of customers in for an entire afternoon and evening. Not only was phone service unavailable throughout downtown Albion, MI, but the 911 dispatch center and police dept for also offline. SBC has claimed that the contractor didn't ask to have the work site marked (as is proper practice) before digging. SBC has suggested that this oversight could subject the contractor to legal action.

New Hampshire: The PUC will be holding a technical conference on October 5 in a proceeding to decide if any wire centers in the state meet the FCC's criteria for continuing mandatory cost-based provision of high-capacity digital loops and transport facilities (Case DT 05-083). Under the FCC's Triennial Review Remand Order ("TRRO"), Verizon must provide CLECs with cost-based DS-1 and DS-3 loops and dedicated high capacity transport in wire centers with insufficient alternative sources of supply. Parties have until Sept. 20 to respond to discovery questions.

New Mexico: With the state price-cap system set to expire on March 2006, Valor Telecom has asked the Public Regulation Commission ("PRC") to make changes to the caps. Valor's proposal for a revised system would allow it to set basic service rates anywhere between current rates and a set minimum without prior approval from the PRC.

Also in New Mexico, the PRC has set a September 14 hearing on major ILECs' proposals to impose local service surcharges to offset revenue impacts of state-mandated cuts in intrastate access charges. Qwest, for example, has proposed a $1.50 monthly surcharge, while Valor Telecom proposes $2.73. A coalition of rural telephone cooperatives have proposed a uniform $5.00 charge for members. The surcharges would begin April 2006, to coincide with the access charge cuts to interstate levels.

New York: A federal court in N.Y. threw out all but one claim in a suit by prison inmate families against the state Dept. of Correctional Services and MCI that challenged the state's exclusive contract with MCI for collect call services at inmate payphones. The court dismissed all claims against MCI, saying they amounted to a rate discrimination claim and not a constitutional violation.

Also in New York, Governor George Pataki (R) signed an act to eliminate an exemption in the state's no-call telemarketing law permitting calls to consumers to schedule appointments for face-to-face sales pitches.

Ohio: In Comments filed with the PUC (Case 05-0269-TP-ACO) municipal interests this month urged the PUC to approve the proposed SBC-AT&T merger. The parties say the merger will bring more low-income customers onto Ohio's phone network while encouraging competition, innovation and improving customer service.

South Carolina: Time Warner asked a SC court to overturn a May PSC order denying Time Warner Cable Information Services intervenor status in an interconnection dispute between MCI and 4 rural incumbent telcos. In March, MCI petitioned the PSC to arbitrate a dispute with Farmers Telephone Co-op, Home Telephone, PBT Telecom and Hargray Telephone, alleging that the 4 telcos refused to interconnect with MCI for completion of VoIP calls originating with Time Warner customers. Time Warner sought to intervene on grounds it's a state-authorized competitive carrier providing IP-based phone services in Hargray territory and plans to extend its services into markets the other 3 telcos serve. The PSC, MCI and the 4 telcos in Case 2005-67-C agreed to work through this week on an attempt to negotiate a settlement.

Washington: The Washington Utilities & Transportation Commission ("WUTC") denied a motion by Verizon to dismiss an interconnection complaint by Integra Telecom alleging Verizon provided wholesale facilities and services inferior to retail equivalents it provided its own customers. Verizon sought dismissal by the WUTC on grounds that federal law preempts state jurisdiction over Integra's claims. The WUTC disagreed, saying that state action is not preempted in this case (UT-053038) because Integra alleges violations of state law independent of provisions in the interconnection agreement, and that the agreement doesn't specifically prohibit the parties from seeking state as well as federal relief. The WUTC set a settlement conference Nov. 29 and hearings Dec. 20.

Federal Brief

As reported in previous issues of the LoKT Newsletter, the Telecom Act of 1996 is in the early stages of what promises to be a significant revision. Senator Ensign's bill has been followed by a draft House bill. The draft categorizes all IP-based services as "broadband Internet transmission services ("BITS"), which would put services such as cable, DSL, satellite, and wireless broadband services in the same regulatory category. Other interesting pieces of the draft legislation include:

• Language on "network neutrality," in which broadband providers are restricted from blocking or degrading subscriber access to competing content streams.
• FCC would be given authority to determine that VoIP can be required to contribute to the Universal Service Fund.
• Creation of a national franchise for broadband video providers, but applies many of the current requirements of cable video providers.
• Allowance for municipalities to develop and deploy BITS, VoIP, and broadband video services (municipalities can't provide preferential treatment for these services and must comply with all regulations governing private-sector providers). The bill also piles on with 911 requiring that VoIP subscribers have access to 911 services. Although the various interested parties to the revision have voiced concern over certain portions, the reaction has been generally positive. Many believe that this draft is a good compromise with a reasonable chance of acting as the starting point for future negotiations.

Copyright 2005 The Law Office of Kristopher E. Twomey, P.C.
An exceprt from the LOKT Newsletter is reprinted with permission.

To download the LOKT newsletter in .pdf format and to peruse back issues, visit the publications section of the LOKT website. The LOKT newsletter is available to LOKT clients and friends before the excerpt is published on the ISP-Planet website.

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