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INDIANA UTILITY REGULATORY COMMISSION IN THE MATTER OF THE INVESTIGATION ON THE COMMISSION’S OWN MOTION INTO ANY AND ALL MATTERS RELATING TO LOCAL TELEPHONE EXCHANGE COMPETITION WITHIN THE STATE OF INDIANA CASE NO. 39983 TELECOMMUNICATIONS RESELLERS ASSOCIATION The Telecommunications Resellers Association (“TRA”) , on behalf of its members and pursuant to the Indiana Utility Regulatory Commission’s (“Commission”) April 28, 1999 Order Reopening Cause for Limited Consideration of Proposed Streamlined Regulatory and Administrative Procedures and associated Notice in the captioned proceeding, hereby comments on the Commission’s proposed streamlined regulatory and administrative procedures for competitive local exchange carriers (“CLECs”). TRA comments specifically on the Commission’s Straw Man Proposal for Streamlined Regulatory and Administrative Procedures, which TRA believes sets forth a simplified yet effective framework governing initial Certificate of Territorial Authority (“CTA”) application requirements and tariff approval procedures, appropriate to CLECs in Indiana’s emergingly competitive local marketplace. I. INTRODUCTION More than three years since the enactment of the Telecommunications Act of 1996 (the “Act”), local market competition throughout the nation remains in its infancy. Despite new entrants’ best efforts to challenge an entrenched dominant incumbent carrier, virtually no CLEC has been able to make meaningful competitive in-roads. Given the incumbent’s market dominance and its demonstrated recalcitrance in meeting its statutory obligations to competitors, the Commission plays a particularly crucial role in establishing an environment conducive to the development of meaningful local competition. This is certainly the case in the establishment of streamlined regulatory and administrative procedures, such as those being proposed by the Commission. By streamlining the initial certification and tariffing process for new competitive entrants, the Commission will eliminate what could be considered a regulatory entry barrier, particularly for smaller CLECs, such as many of TRA’s members. Such a barrier is created not only by the certification process but, as the Commission aptly suggests, by the processing delays associated with more complex procedures. New entrants already face a daunting challenge competing with the incumbent. They should not also be subject to unnecessary regulation which itself may represent a challenge to market entry. Many emerging CLECs must carefully weigh entry costs, including the cost of regulation, against the potential which Indiana’s local market may offer. A competitors decision to enter the market should not be forestalled by unnecessary regulation or delay. The streamlining of initial certification and tariffing procedures should prove a valuable incentive for CLECs entry in Indiana’s local market. Moreover, a streamlined certification and initial tariffing process in no way dilutes or undermines the Commission’s effectiveness in overseeing the operations of new competitive entrants or the Commission’s ability to protect the public. The proposed streamlined regulatory and administrative procedures simply serve to eliminate requirements no longer applicable or necessary for new competitive entrants. Adoption of streamlined procedures is a commendable step toward promoting the development of a competitive local market under Indiana’s pro-competitive policies. TRA urges the Commission to adopt the proposed streamlined regulatory and administrative procedures consistent with TRA’s comments herein II. THE PROPOSED VERIFIED PETITION FOR A CERTIFICATE OF TERRITORIAL AUTHORITY TO RESELL BUNDLED LOCAL EXCHANGE TELEPHONE SERVICES WITHIN THE STATE OF INDIANA AND RELATED PROCEDURES OFFER A SIMPLIFIED, ATTRACTIVE, AND EQUALLY EFFECTIVE ALTERNATIVE TO TODAY’S MORE FORMALIZED CTA PETITION PROCESS. The Commission’s proposed Verified Petition for a Certificate of Territorial Authority to Resell Bundled Local Exchange Telephone Services Within Indiana (“Verified Petition”) is an attractive alternative to the current CTA petition not only in terms of its simplicity, but in terms of the resulting ease of its preparation and processing. The proposed two page Verified Petition is a simple, straightforward document. As the Commission notes, the document provides for all such information as is reasonably needed by the Commission to make a complete assessment of the applicant’s financial, managerial, and technical ability to provide service, the nature of the service proposed to be offered, as well as the public interest considerations associated with the applicant’s proposed service, pursuant to the Commission’s July 1, 1996 Interim Procedural Order in this proceeding. The Verified Petition further holds the applicant responsible for compliance with all applicable statutes, rules, and Commission orders with out the need for further assurances by the applicant. Through adoption of the proposed Verified Petition form, applicants will no longer be burdened by a more formal CTA petition and certification process. Preparation of formalized CTA petitions has historically been relegated to outside counsel or regulatory consultants typically because the applicant has had by necessity to defer to counsel’s or a consultant’s experience with the application process. The Verified Petition form and streamlined certification process, will now enable many applicants to complete the certification process pro se and avoid both cost and the added delays associated with engaging outside resources. This has been evident in the State of Oregon where an estimated one half of all local and interexchange applications received by Oregon Public Utility Commission under a similar streamlined Application for Certificate of Authority to Provide Telecommunications Service form are completed by an applicant’s in-house staff. The Verified Petition form will also accomplish the Commission’s stated goal of expediting staff review and thereby expedite the processing of applications generally. Because of the standardized nature of the Verified Petition form, it will be readily evident whether the information provided by applicants is complete or whether additional information will be needed through an initial cursory review. Such standardization by itself should profoundly simplify the processing of new applications and minimize unnecessary delays for new entrants. The Verified Petition form will play an integral part in the Commission’s efforts to streamline the initial certification and tariffing process and should be adopted along with related streamlined processing procedures. III. ADOPTION OF PORTIONS OF ANOTHER CLEC’S TARIFF OR ADOPTION OF THE INCUMBENT’S TARIFF SHOULD BE AUTHORIZED. TRA generally supports the Commission’s proposed tariff adoption option in those instances when a CLEC is capable of adopting another CLEC’s service rates, terms, and conditions without amendment. Wholesale adoption of another entity’s tariff will mitigate the administrative burden associated with developing an entirely new tariff when a CLEC’s service rates, terms, and conditions exactly match those of a competitor. Yet the proposed wholesale tariff adoption proposal should be but one option for mitigating the administrative burdens associated with tariff submissions available to CLECs. TRA urges the Commission to consider an extension of the tariff adoption proposal to include two additional options that would allow CLEC resellers to 1) adopt and incorporate portions of a CLEC’s tariff, or 2) Adopt an incumbent’s tariff, or portions thereof, within their own tariffs. Such an extension of the Commission’s tariff adoption proposal would greatly facilitate and expedite the tariff approval process consistent with the Commission’s streamlining objectives and competitive market realities. A. Adoption of Discrete Sections of a CLEC’s Tariff Should be Authorized When a CLEC reseller offers local services in the same manner as a competitor, the CLEC may certainly benefit from the ability to adopt a competitor’s entire tariff by reference. When a CLEC reseller’s services are similar, but not equivalent to, a competitor’s service, as more commonly occurs, however, the CLEC will have no other alternative but to prepare and submit its own tariff under the Commission’s current proposal. Any benefit associated with the tariff adoption process will be lost to most CLECs as few, if any, CLEC resellers will likely exactly mirror, or want to mirror, a competitor’s service rates, terms, and conditions. Yet these CLECs should not be precluded from the benefits associated with a tariff adoption option altogether. The very nature of a competitive environment demands that competitors differentiate themselves in the mind of consumers. It is highly unlikely that a CLEC would wish accept the provisions of a competitor in their entirety and moreover, be inextricably tied to the competitor’s future practices and rates by virtue of its wholesale adoption of a competitor’s tariff. Under the proposed tariff adoption option, CLEC resellers are presented with an “all or nothing” approach. CLECs would either adopt a competitor’s tariff in its entirety or submit their own. TRA believes that a third hybrid option allowing partial adoption of another’s tariff would be equally effective in expediting the tariff approval process while allowing CLECs to maintain greater flexibility in how their services are to be competitively, and uniquely, provisioned and priced. Under such an approach, CLECs could adopt specific, stand-alone provisions of a competitor’s tariffs that would be mirrored in their entirety while maintaining their own unique provisions. For example, a CLEC could adopt all or some of a competitor’s service terms and conditions, but not its rates. This could be accomplished through the submission of an abbreviated CLEC tariff with references to the section or sections of the competitor’s tariff being adopted, but with a separate rate section reflecting the CLEC’s unique rate structure. CLECs could still be required to at a minimum reference the company whose tariff sections are to be adopted, specific page numbers, sections or schedule numbers, and paragraph of the sections being adopted within their own tariffs, as opposed to reference through an affidavit. By allowing CLECs to incorporate specific sections of a competitor’s tariff in their own, both the Commission and CLECs will realize many of the significant administrative efficiencies envisioned under the proposed tariff adoption option. Yet the majority of CLECs whose services do not fully mirror those of a competitor will not be precluded from realizing the benefits of the proposed tariff adoption process altogether. B. Adoption of Incumbent Tariff Provisions Should be Authorized. TRA notes with interest that the tariff adoption proposal is limited to adoption of CLEC tariffs. It is unclear why the proposed tariff adoption option should not be extended yet further to allow the adoption of incumbent local exchange carrier (“ILEC”) tariff provisions as well. Virtually all CLEC resellers will for now and the foreseeable future resell incumbent local exchange carrier local services. By necessity, most CLEC resellers will be inextricably tied to the incumbent’s terms and conditions, if not its rates. Any immediate benefit associated with the tariff adoption proposal would more likely be realized by the CLEC, and the Commission, if CLECs were authorized to adopt applicable portions of an incumbent’s tariff. As most CLEC resellers remain dependent on the incumbent and its services, they will rely heavily on the incumbent’s retail tariff(s) in developing their own. Incumbent tariffs are voluminous documents, developed over decades, as the Commission is well aware. Under the limited tariff adoption proposal, most CLEC resellers would still have to prepare and submit similarly voluminous tariffs which would largely reflect provisions already contained in the incumbent’s Commission-approved tariffs. A limited proposal that would not relieve most CLEC resellers from preparing voluminous tariffs seems inconsistent with the intent of the Commission’s tariff adoption proposal to streamline the tariffing process. As proposed, the tariff adoption option offers virtually no realistic benefit to the majority of CLEC resellers who resell the incumbent’s services. CLEC resellers should be spared the considerable cost and effort of replicating lengthy incumbent tariff provisions and references in their own tariffs. The Commission should also be spared from further review of those ILEC provisions that have already received Commission approval. If the tariff adoption proposal is to be truly effective in meeting its intended objective of streamlining the tariffing process for CLECs and the Commission, this option should be expanded to allow adoption of specific provisions contained in other CLEC or ILEC tariffs. IV. CLEC TARIFFS SHOULD BE PRESUMED LAWFUL OR RECEIVE INTERIM APPROVAL WITHIN LESS THAN 30 DAYS NOTICE. The Commission proposes granting interim CLEC tariff approval thirty days after a CLEC tariff is filed. TRA believes that a thirty-day approval period constitutes an unnecessarily lengthy delay for CLECs. The Commission should consider CLEC tariffs to be presumptively lawful upon filing, subject to potential subsequent suspension or rejection. Alternatively the tariff approval period should be shortened. A primary purpose of the tariff review process is to ensure that the public will not be exposed to unlawful or unfair practices. A conventional tariff review process is intended identify and reject potentially unlawful or abusive provisions before they become effective or to ensure that such provisions are brought into compliance with Commission rules. The necessity of maintaining a conventional tariff review process in an emergingly competitive local market, however, must be weighed against the potential risk associated with streamlining the process as envisioned by the Commission. The potential for CLECs to engage in abusive or unlawful practices is virtually eliminated by the competitive realities of today’s local market. CLECs must compete against a dominant carrier who retains control of virtually 100 percent of the local market. CLECs must strive to attract and retain subscribers. CLEC services, rates, and policies must be inherently equal to or better than those of the incumbent if CLECs are to remain competitive and be successful in serving new local markets. Competitive market pressure is a strong motivating factor for CLECs to serve the public responsibly. Nevertheless, under a streamlined tariffing process the Commission would retain its authority to suspend or reject tariffs discovered to be inconsistent with Commission rules and orders. The Commission’s enforcement authority would remain unaffected as well. Given market realities and the retention of Commission authority over regulated CLECs, the necessity for maintaining a conventional tariff review process is unclear. A conventional tariff review process in any event offers little guarantee that an unscrupulous carrier will not engage in unfair or abusive practices however “lawful” its tariff appears. CLEC tariffs should be presumed lawful and allowed to become effective upon one day’s notice. By eliminating the formal CLEC tariff review process, CLECs will receive needed flexibility to respond to market demands quickly and with a minimum of regulatory delay, both crucial capabilities in a competitive market. Such an approach would not prevent the Commission from making ad hoc reviews of incoming tariffs and suspending or rejecting tariffs found to be in non-compliance with Commission rules and orders. Should the Commission continue to maintain that each CLEC tariff must be reviewed, the tariff review process should alternatively be shortened considerably. Review of CLEC tariffs should be more cursory in nature, requiring far less scrutiny than required under a conventional tariff review process. TRA believes that under such an expedited tariff review process, tariffs should become effective in no more than ten days’ notice. The proposed streamlined thirty-day interim tariff approval process effectively offers little improvement over a conventional tariff review process and will continue to subject competitive service providers to unnecessary regulatory delays. Market pressure coupled with a retention of Commission enforcement authority and reseller’s dependence on its underlying carrier, mitigate any risks that could exist under a more streamlined tariff approval process. The Commission’s objective to streamline the “procedures so as to allow competitors to enter the market more quickly” will be truly accomplished if CLEC tariffs are presumed lawful and allowed to become effective on one day’s notice. V. CLECS SHOULD BE GIVEN THE OPTION OF FILING TARIFFS WITH CTA APPLICATIONS. Under the Commission’s Straw Man proposal, CLEC resellers would no longer be required to submit tariffs with CTA petition but rather would be required to submit a proposed tariff for review and approval after the CTA is granted. Notwithstanding concerns over maintaining a formal tariff review and approval process, TRA believes CLECs should be accorded the option of submitting tariffs with CTA petitions or submitting tariffs after the CTA is granted. Some CTA applicants may be prepared to begin offering service almost immediately after the CTA petition is granted. Those applicants should not be subjected to the potential regulatory delays that would be incurred were all applicants forced to await CTA petition approval before submitting a tariff. It would be far more expedient and less cumbersome to allow CLECs who are prepared to begin offering service upon the grant of a CTA to do so without requiring them to experience added delays. Yet CTA applicants who are in the process of finalizing their service offerings would also benefit from filing tariffs after the granting of a CTA as the Commission proposes. Because of the advantages offered by both procedures, CLECs should be have the option of utilizing either procedure. VI. CONCLUSION The Commission’s proposal to streamline regulatory and administrative procedures associated with the CTA and tariffing process is consistent with the Commission’s pro- competitive policies and market realities. The Commission’s proposed application and tariffing procedures go far in eliminating unnecessary regulatory obstacles in an increasingly competitive local market and creating a regulatory environment conducive to the development of local competition. To be entirely consistent with the Commission’s streamlining objectives, TRA believes that the proposed tariff procedures should be broadened to allow CLEC adoption of discrete sections of another CLEC's tariffs as well as portions of the incumbent’s tairffs. This step alone will relieve much of the unnecessary burden associated with replicating voluminous ILEC tariff sections and will allow far more CLECs to benefit from the proposed tariff adoption option. In a local market dominated by Ameritech-Indiana where CLECs will survive only by meeting and exceeding customer expectations, formal CLEC tariff reviews should no longer be necessary. CLEC tariffs should be presumed lawful, or at a minimum approved in an expedited time frame. And CLECs should be given the option of filing initial tariffs with their CTA applications or after CTA applications are granted to minimize unnecessary delays for CLECs who are prepared to begin offering service immediately. TRA urges the Commission to adopt the proposed streamlined regulatory and administrative procedures, incorporating those amendments suggested herein. Respectfully submitted, Telecommunications Resellers Association By: Andrew O. Isar Director – State Affairs 4312 92nd Avenue NW Gig Harbor, WA 98335 253.265.3910 |