Investigation Order [33 Pa.B. 3457] Public Meeting held
April 17, 2003Commissioners Present: Glen R. Thomas, Chairperson; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr.; Terrance J. Fitzpatrick; Kim Pizzingrilli
Generic Investigation in re: Impact on Local Carrier Compensation if a Competitive Local Exchange Carrier Defines Local Calling Areas Differently than the Incumbent Local Exchange Carrier's Local Calling Areas but Consistent with Established Commission Precedent; I-00030096
Investigation Order By the Commission:
In a recently decided arbitration proceeding, this Commission was presented with the question of whether a Competitive Local Exchange Carrier (CLEC) should be able to broadly define its local calling areas for the purpose of marketing its competitive telecommunications services to end users. See Petition of Global NAPs South, Inc. for Arbitration pursuant to 47 U.S.C. § 252(b) of Interconnection Rates, Terms and Conditions with Verizon Pennsylvania Inc.; Docket No. A-310771F7000 (Order entered April 17, 2003) (Verizon/GNAPs Arbitration).
This question also raised the related issue of what should be the appropriate intercarrier compensation for calls in each direction between a CLEC customer and all associated customers of the Incumbent Local Exchange Carrier (ILEC) when a CLEC defines its local calling area for a particular exchange differently than the ILEC serving that same exchange.1
Verizon Pennsylvania Inc. (Verizon) and the Pennsylvania Telephone Association (PTA) filed Exceptions in the Verizon/GNAPs Arbitration proceeding raising several policy concerns relative to the question of what is the impact on local carrier compensation when a CLEC's local calling area is different than the ILEC's. From the ILEC's perspective, the issue does not concern a restriction on the size of the calling areas that a CLEC may define for its subscribers. Rather, the crux of the issue is the compensation that CLECs and ILECs should pay each other for the completion of calls in both directions when the CLEC-defined local calling area is different than the traditionally defined ILEC local calling areas that were instituted by Commission policies, standards and regulations.2
Invariably, the ILECs view the issue as pertaining to wholesale telecommunications services as compared to retail. Based on this view, the ILECs do not favor an ''originating carrier'' approach to defining the appropriate intercarrier compensation in these instances. ILECs fear that permitting CLECs to define larger local calling areas without the imposition of access charges would circumvent the existing access charge regime and deprive them of terminating access charges to which they are entitled. Therefore, ILECs object to defining CLEC local calling areas more expansively than the ILECs' without the imposition of access charges.
From the CLEC perspective, there is no technical or economic reason for a new competitor to maintain the ILEC's existing local calling area. Therefore, CLECs are of the opinion that ''LATA wide'' or even Statewide local calling promotes competition and could benefit the consumer in that it may allow CLECs to compete with local exchange providers as well as interexchange carriers. Furthermore, CLECs are of the opinion that reciprocal compensation is the appropriate intercarrier compensation that should apply between CLECs and ILECs when the CLEC's local calling area is larger than the ILEC's.
The majority of jurisdictions which have considered this issue appear to favor retaining the ILEC's local calling area as the basis for intercarrier compensation. However, recent decisions in New York and Florida indicate that an originating party's local calling area is used to define intercarrier compensation. See In re: Investigation into Appropriate Methods to Compensate Carriers for Exchange of Traffic Subject to Section 251 of the Telecommunications Act of 1996, FL PSC Docket No. 000075-TP (Phases II and IIA), Order No. PSC-0201248-FOF-TP (September 10, 2002); Petition of Global Naps, Inc. Pursuant to Section 252(B) of the Telecommunications Acct of 1996, For Arbitration to Establish an Intercarrier Agreement with Verizon New York, Inc., N.Y. PSC Docket Case 02-C-0006 (May 22, 2002).3
Also, it appears that some jurisdictions have considered the impact of competition and intercarrier compensation in generic proceedings.4
When the CLEC defines its calling areas more expansively than the ILEC, numerous issues are raised. As part of this Commission's ongoing initiatives to implement competition in the telecommunications area, consistent with State and Federal law, we believe that it is appropriate to open a generic, on-the-record investigation into the impact on intercarrier compensation where the calling areas of local exchange companies, whether CLEC, ILEC, or other, differ. We shall direct the Office of Administrative Law Judge (OALJ) to conduct this investigation culminating in the issuance of a recommended decision to the Commission. We shall further direct that all interested participants and the OALJ consider the following questions:
(1) What other alternative intercarrier compensation arrangements, other than access charges and those arrangements contained in the questions below, could be considered in addressing the different local calling areas between ILECs and CLECs? What are the pros and cons of each arrangement and how should each intercarrier compensation arrangement be applied between the carriers?
(2) What are the current intercarrier compensation arrangement(s) that are in use between ILECs today in cases where the Commission has directed implementation of one-way EAS? Are any of these types of intercarrier compensation arrangements viable options between ILECs and CLECs for the traffic at issue in this investigation (i.e., calls made by a CLEC customer to an ILEC customer where the CLEC's local calling area is larger than the ILEC's local calling area and vice versa)?
(3) What are the current intercarrier compensation arrangement(s) that are in use between ILECs today in cases where the Commission has directed implementation of two-way EAS calls between ILECs? Are any of these types of intercarrier compensation arrangements acceptable to both ILECs and CLECs as a fair form of compensation for the traffic at issue in this investigation? (i.e., calls made by a CLEC customer to an ILEC customer where the CLEC's local calling area is larger than the ILEC's local calling area and vice versa)?
(4) What are the pros and cons of non-reciprocal, asymmetrical intercarrier compensation arrangements between CLECs and ILECs when the local calling area of the CLEC and the ILEC are different (i.e., the CLEC's local calling area is larger or smaller than the ILEC's local calling area)?
(5) What is the financial impact on ILECs, CLECs and interexchange carriers, of permitting other viable intercarrier compensation regimes as compared to the current access charge regime?
(6) Is it in the public interest for this Commission to proceed to implement expanded or different local calling areas for CLECs without the necessity of completing access charge reform?
(7) The Commission's Global Order, entered September 30, 1999, at Docket Nos. P-00991648 and P-00991649, contains a consumer protection requirement that all CLECs must offer their customers a local service offering that maintains all pre-existing ILEC EAS routes. Additionally, the Global Order does not prevent CLECs from offering innovative calling plans which include local calling areas that differ from existing ILEC local calling areas. Based on the outcome of this investigation, will it be necessary to revise this policy in any way?
(8) Should the intercarrier compensation agreements be standardized in Pennsylvania for the traffic at issue in this investigation or should carriers be permitted to negotiate individual intercarrier compensation arrangements?
(9) What is the best way to inform other ILEC entities that are not parties to a particular Interconnection Agreement that a CLEC's local calling area is larger than the traditional Commission-established local calling areas?
(10) Should a CLEC be required to file interconnection agreements with all ILECs that will be impacted by the CLEC's decision to expand its local calling areas beyond the traditional Commission-established local calling areas?
(11) Are there any other issues that should be addressed that are deemed necessary and relevant to this investigation?
We request that comments requested under the conduct of the investigation by the OALJ be written in plain English. Furthermore, we request that commenters reference their responses so as to correspond with the specific questions posed in this Investigation Order; Therefore,
It Is Ordered That:
1. The Commission hereby commences a generic investigation regarding the impact on intercarrier compensation if a CLEC defines local calling areas differently than the ILEC's local calling area consistent with established Commission precedent.
2. The OALJ shall conduct the generic investigation consistent with this Opinion and Order.
3. A copy of this Order, which gives notice of this generic investigation, shall be published in the Pennsylvania Bulletin and interested parties shall file comments within 30 days of publication of this notice. Interested parties shall file substantive comments to the previously listed issues in the Commission's Order instituting this investigation, as well as any other additional issues the Commission or the parties consider relevant to this investigation.
4. The Parties shall file their substantive comments at the previously cited docket number and their comments should be addressed to James J. McNulty, Secretary, Pennsylvania Public Utility Commission, Commonwealth Keystone Building, 400 North Street, Harrisburg, PA 17120.
5. After the submission of the substantive comments, the OALJ shall institute hearings as may be necessary to further develop the record to ensure that the investigation fully addresses all relevant and material issues regarding the impact on intercarrier compensation of defining local calling areas differently than ILECs.
6. The presiding Administrative Law Judge assigned to this investigation may subsequently limit, or otherwise restrict or eliminate, any additional issues submitted by interested parties if those issues are deemed not to be relevant to this investigation.
7. Upon conclusion of hearings, the presiding Administrative Law Judge shall cause to be issued a Recommended Decision which shall be served on all parties and submitted to the Commission for its consideration at public meeting.
8. A copy of this Order shall be served on all jurisdictional telecommunications carriers and the PTA, Office of Consumer Advocate, the Office of Small Business Advocate and the Commission's Office of Trial Staff.
______1For purposes of this Order and Investigation, Local Calling Area is defined in accordance with 52 Pa. Code § 63.71 as follows: ''Local calling area--The area, consisting of one or multiple telephone exchanges, between which calls may be completed without having interexchange toll rates applied.''
2The Commission-defined local calling areas contained in each ILEC local exchange tariff is the required minimum local calling area covered by the tariffed local exchange base rate and which were developed over the years based on ''community of interest'' policy standards as well as the standards set forth in our Extended Area Service regulations in 52 Pa. Code § 63.77.
3In the arbitration proceeding, Verizon pointed out that the staff of the Florida Public Service Commission, requested reconsideration of its support for using an ''originating'' carrier approach for intercarrier compensation.
4See Investigation as to Whether Certain Calls are Local; Independent Telephone Companies and Competitive Local Exchange Carriers--Local Calling Areas Final Order; N.H Docket No. DT-00-223; DT-00-054, (October 28, 2002) 2002 N.H. PUC LEXIS 165.
JAMES J. MCNULTY,
Secretary[Pa.B. Doc. No. 03-1385. Filed for public inspection July 11, 2003, 9:00 a.m.]
