BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of the Petition of )
         )
GTE Card Services, Inc., d/b/a ) Docket No. UT-970650
GTE Long Distance )
            ) TCG SEATTLE'S INITIAL                      )   COMMENTS
to Amend Classification as a  ) 
Competitive Telecommunications ) 
Company )
          ) 



 TCG Seattle ("TCG") provides the following initial comments on the Petition of 
GTE Card Services to Amend Its Classification as a Competitive 
Telecommunications Company to extend to provision of local exchange services 
("Petition").  Until the Commission has established reporting requirements and 
performance standards for GTE Northwest, TCG opposes the Petition to the extent 
that GTE Card Services obtains facilities or services directly from GTE 
Northwest to provide its local exchange services.      TCG takes no position on 
whether GTE Card Services' petition should be granted to the extent that it 
obtains facilities or services from carriers other than GTE Northwest.    
COMMENTS
 A. GTE Card Services Possesses Market Power Through Its Affiliation With GTE 
Northwest, and Existing Safeguards Are Insufficient to Prevent GTE Card 
Services from Abusing That Market Power.

 A company is entitled to classification as a competitive telecommunications 
company if it demonstrates to the satisfaction of the Commission "that the 
services it offers are subject to effective competition."  RCW 80.36.320(1).  
"In determining whether a company is competitive, factors the commission shall 
consider include, but are not limited to . . . indicators of market power which 
may include . . . the affiliation of providers of services." RCW 
80.36.320(1)(d) (emphasis added).  GTE Card Services has access to significant 
market power through its affiliation with GTE Northwest, the second largest 
incumbent local exchange company ("ILEC") in Washington.  GTE Northwest has 
both the ability and incentive to provide superior interconnection, access to 
unbundled elements, and resold retail services (collectively "Interconnection") 
to GTE Card Services because both companies are ultimately owned and controlled 
by the same corporate parent.  As long as such conditions exist, GTE Card 
Services should not be classified as a competitive local exchange 
telecommunications company.
 GTE Card Services contends that granting its Petition will further the 
procompetitive goals this Commission has long sought to foster.  TCG and other 
CLECs have taken a similar position but with a critical difference:  TCG and 
other CLECs do not seek to use Interconnection with an ILEC affiliate to 
provide service to their customers.  Without any means of monitoring that 
Interconnection, GTE Card Services could use the market power of its affiliate 
GTE Northwest to undermine development of true local exchange competition. All 
companies that compete with GTE Northwest must rely on Interconnection, and 
other new entrant can effectively compete if one of them receives superior 
Interconnection.  Competition from any carriers that are not affiliated with an 
ILEC, therefore, would be severely threatened if GTE Card Services is subject 
to only minimal regulatory oversight while the Commission and CLECs have no 
means of assuring that GTE Card Services receives the same quality 
Interconnection as other new entrants.  
 GTE Card Services acknowledges its affiliation with GTE Northwest but contends 
that existing legal safeguards -- including the Telecommunications Act of 1996 
("Act") and FCC affiliate separation requirements -- will ensure that GTE 
Northwest will not unduly favor GTE Card Services at the expense of other local 
exchange providers.  These legal obligations, however, do not eliminate the 
potential for preferential treatment in the implementation of the applicable 
federal and state requirements.  Without the means of ensuring compliance with 
the Act, the FCC orders, and state law, the safeguards cited by GTE Card 
Services are insufficient to ensure that local exchange services offered by GTE 
Card Services are subject to "effective competition."
 The Act requires that ILECs -- including GTE Northwest -- provide access to, 
and interconnection with, their networks to competing local exchange carriers 
("CLECs") that is "at least equal in quality to that provided by the [ILEC] to 
itself or to any subsidiary, affiliate, or any other party to which the carrier 
provides interconnection . . . ."  47 U.S.C. § 251(c)(2)(C) (emphasis added); 
see id. § 251(c)(3) & (6).  Congress thus expressly determined that the 
treatment affiliates receive from an ILEC is an issue of regulatory concern -- 
as has the Washington legislature.  See RCW 80.16.  These regulatory concerns 
are well-founded.  The Commission and CLECs have no way to determine whether 
GTE Northwest is complying with its Interconnection parity obligations.  
Neither the Commission nor the CLECs has access to data concerning ordering, 
provisioning, maintenance, and other measurements of GTE Northwest's provision 
of Interconnection to competing providers.  GTE Northwest has refused to agree 
to measure or provide such data, and the Commission has been unwilling to 
require that any performance standards or reporting requirements be included in 
arbitrated interconnection agreements.  The Commission also has yet to propose, 
much less establish, such standards and requirements as part of a Commission 
rulemaking. The bare requirement that GTE Northwest provide Interconnection 
parity, therefore, is a hollow mandate if no means exist to determine whether 
GTE Northwest is complying with that requirement.
 Classifying GTE Card Services as a competitive local exchange provider would 
compound the adverse impact of this information deficit.  The Commission and 
new entrants not only would be unable to determine whether GTE Northwest is 
providing adequate Interconnection to unaffiliated competitors, but could not 
assess whether GTE Card Services is obtaining Interconnection that is superior 
to the Interconnection GTE Northwest provides to other carriers.  The FCC has 
recognized that the Act, standing alone, does not ensure the development of 
effective competition and has declared that it will review any application by a 
Bell Operating Company ("BOC") for entry into interLATA long distance markets 
"to see if there are appropriate mechanisms, such as reporting requirements or 
performance standards, to measure compliance, or to detect noncompliance, by 
the BOCs with their obligations."  In re Application of Ameritech Michigan, CC 
Docket No. 97-137, FCC 97-298 Memorandum Opinion and Order ¶ 22 (Aug. 19, 
1997).  Such an inquiry is no less important to ensure that GTE Card Services 
is not able to leverage GTE Northwest's market power in Washington local 
exchange markets.
 GTE Card Services relies on the FCC's affiliate separation rules as a check on 
potential anticompetitive behavior, but those requirements fail to address, 
much less ensure, that GTE Card Services does not receive Interconnection from 
GTE Northwest that is superior to the Interconnection provided to other local 
carriers.  Indeed, these FCC requirements virtually invite abuse by authorizing 
ostensibly competing affiliates to use the same personnel, offices, and 
services:  "The affiliate may be staffed by personnel of its affiliated 
exchange companies, housed in existing offices of its affiliated exchange 
companies, and use its affiliated exchange companies' marketing and other 
services . . . ."  47 C.F.R. § 64.1903(b). GTE Card Services thus apparently 
asks the Commission to simply assume that a person employed by GTE Northwest 
will treat GTE Card Services the same as other CLECs when he or she is also 
employed by GTE Card Services.  The Commission should decline to make such an 
assumption and should require that GTE Northwest or GTE Card Services produce 
sufficient evidence, on an ongoing basis, to prove that GTE Card Services is 
not receiving better quality Interconnection than other local carriers.
 GTE Card Services also inaccurately contends that TCG's position conflicts 
with the FCC's decision in CC Docket No. 96-149, refusing to prohibit the entry 
of BOC affiliates into in-region local exchange markets.  TCG does not propose 
that GTE Card Services be prohibited from offering local exchange services.  
Rather, TCG urges the Commission to condition amendment of GTE Card Services' 
competitive classification on the existence of measuring and reporting 
obligations that will enable the Commission and CLECs to ensure that GTE Card 
Services and GTE Northwest comply with the Act and FCC requirements. The Eighth 
Circuit recently affirmed the Commission's authority to regulate intrastate 
services, stating that state commissions "retain the primary authority to 
enforce the substantive terms of the agreements made pursuant to sections 251 
and 252."  Iowa Utils. Bd. v. FCC, 120 F.3d 753, 804 (8th Cir. 1997).  
Conditioning GTE Card Services' Petition for reduced regulation on measurable 
compliance with existing legal requirements is well within the Commission's 
federal and state authorized jurisdiction and responsibility.  TCG's 
recommendation thus is fully consistent with the Act, the FCC's orders, 
Washington law, and the best interests of this state's telecommunications 
consumers.
 B. The Commission Should Deny GTE Card Services' Petition or, at a Minimum, 
Establish Measurement and Reporting Requirements Sufficient to Minimize GTE 
Card Services' Market Power.

 RCW 80.36.320 requires that the Commission determine in this proceeding 
whether GTE Card Services has demonstrated that the local service it would 
provide using Interconnection obtained from GTE Northwest would be subject to 
effective competition. GTE Card Services has not, and cannot, make that showing 
in the absence of performance measures and reporting requirements sufficient to 
prove that GTE Card Services will not receive preferential Interconnection from 
GTE Northwest.  The Commission, therefore, should deny the Petition.  At a 
minimum, the Commission should condition any grant of competitive 
classification for GTE Card Services on monthly measurement and reporting 
standards that will minimize GTE Card Services' ability to leverage GTE 
Northwest's market power to its competitive advantage.
 GTE Card Services mischaracterizes TCG's position by claiming that, because 
GTE Northwest and CLECs other than TCG are not parties, the relief TCG seeks is 
not available in this docket.  TCG is not asking the Commission to establish 
service quality standards for GTE Northwest as a result of this proceeding.  To 
the contrary, TCG agrees that such standards should be the subject of a generic 
proceeding to which U S WEST Communications, Inc., and other CLECs are full 
participants.  The Commission has opened a docket to address these issues, but 
the Commission has yet to propose any rules or otherwise to initiate resolution 
of these issues.  Such a proceeding, once engaged, is likely to be contentious 
and time-consuming, and in the meantime, no one other than the ILECs themselves 
will know whether they are in full compliance with the Act.  The Commission 
cannot remedy those circumstances in this proceeding, but the Commission can 
limit the negative impact by refusing to allow GTE Card Services to take 
advantage of those circumstances through its affiliation with GTE Northwest. 
 GTE Card Services would have the Commission believe that it is simply an 
innocent bystander in this dispute and that its ability to provide local 
exchange services should not be held hostage pending establishment of 
appropriate service quality standards.  GTE Card Services, however, is 
ultimately owned and controlled by the same company that owns and controls GTE 
Northwest.  GTE Card Services cannot credibly maintain that its parent's 
attempt to use it as a vehicle for providing competitive local exchange service 
bears no relationship to its parent's use of GTE Northwest to maintain a de 
facto monopoly position in Washington local exchanges.  GTE Card Services would 
be the ultimate beneficiary of any favorable treatment accorded by GTE 
Northwest.  GTE Card Services would be the entity provided an improper 
competitive advantage over other CLECs seeking to compete with GTE Northwest.  
GTE Card Services, therefore, should be denied the opportunity to receive that 
benefit and precluded from exercising that improper advantage as long as the 
conditions created by its parent continue to exist.
 Nor should the Commission accept GTE Card Services' invitation to ignore or 
delay addressing the issues TCG has raised.  The Commission should take 
appropriate preventive action now -- in this proceeding -- not at some future 
date.  The anticompetitive effects of premature competitive classification 
would be immediate and irreparable.  Other new entrants would have no way to 
determine whether or how GTE Card Services is able to offer superior service 
(e.g., shorter service provisioning intervals, reduced call blocking, better 
maintenance, fewer service disruptions), and reduced Commission oversight of 
GTE Card Services' operations would leave only ineffective avenues of redress 
should a CLEC suspect such practices.  The CLEC could file a complaint but 
would be unlikely to obtain sufficient evidence to support such an action if 
neither GTE Northwest nor GTE Card Services maintains the necessary service 
quality records.  Even if the CLEC were able to prevail on such a complaint, 
the prospective relief the Commission could provide would not remedy the CLEC's 
competitive losses.  The Commission's ability to reclassify GTE Card Services 
would suffer from the same lack of sufficient information and absence of an 
effective remedy.
 The following examples illustrate the type of inquiry necessary to determine 
whether GTE Card Services is benefitting from GTE Northwest's market power as 
an incumbent local exchange carrier:
 -- Interconnection.  Does GTE Card Services have the same access to tandem and 
end office connections (including switch ports and physical collocation) under 
the same intervals and provisioning delays (if any) GTE Northwest provides to 
other CLECs?  Are GTE Card Services' calls routed the same as other CLEC 
traffic so that all carriers experience the same level of call blocking?  Does 
GTE Northwest coordinate provisioning of interim local number portability with 
GTE Card Services the same as with other CLECs so that all carriers' customers 
are subject to the same level of service disruption (if any)?
 -- Use of Unbundled Network Elements.  Are GTE Card Services' orders for UNEs 
processed and provisioned under the same intervals as orders placed by other 
CLECs?  Is provisioning of switching or unbundled loops, for example, 
coordinated with GTE Card Services the same as with other CLECs so that all 
carriers' customers are subject to the same level of service disruption (if 
any) at service cut-over?
 -- Resale.  Are GTE Card Services' orders for GTE Northwest services for 
resale processed no faster than other CLECs?  Does GTE Card Services have the 
same access -- including intervals and error rates -- to GTE Northwest's OSS? 
Does GTE Card Services have the same coordination for service cut-over that GTE 
Northwest provides to other CLECs?
The Commission should deny GTE Card Services' Petition or condition approval on 
either GTE Northwest or GTE Card Services providing this information to the 
Commission on a periodic basis and making the information available to other 
new entrants that obtain Interconnection from GTE Northwest. GTE Card Services 
contends that it should not be required to file such reports because it has no 
control over GTE Northwest's service quality.  Even if that statement were 
true, it fails to address the issue.  Such reporting is necessary to determine 
whether GTE Northwest is complying with the Act or extending its market power 
by providing preferential treatment to a minimally regulated affiliate.  TCG 
agrees that GTE Northwest ultimately should measure and provide service quality 
reports, but conditioning GTE Card Services' competitive classification on the 
filing of appropriate reports is a remedy that is available in the context of 
this proceeding and would at least provide sufficient information to enable the 
Commission and interested parties to determine if GTE Northwest is treating its 
affiliate the same as it treats other new entrants.
 If the Commission decides not to deny the Petition, the Commission should 
impose appropriate conditions on GTE Card Services' ability to provide local 
service, including waiving fewer regulatory requirements for GTE Card Services 
than it has waived for other local exchange providers that have been classified 
as competitive.  RCW 80.36.320(2).  One such requirement the Commission should 
refuse to waive if it authorizes GTE Card Services to provide local exchange 
services is RCW Chapter 80.16 Affiliated Interests.  Those statutory provisions 
require that the Commission not only approve contracts and service provisioning 
arrangements between affiliated interests but "have continuing supervisory 
control over the terms and conditions of such contracts and arrangements . . . 
so far as necessary to protect and promote the public interest."  RCW 
80.16.050.  The Commission at a minimum should use this provision to require 
that GTE Northwest and GTE Card Services file periodic reports with the 
Commission on the implementation of any agreement between the two companies 
until such time as appropriate performance standards and reporting requirements 
are in place.
CONCLUSION
 The Commission should condition competitive classification of GTE Card 
Services using Interconnection provided directly to GTE Card Services by GTE 
Northwest on the implementation of reporting requirements and performance 
measurements by GTE Northwest. Until the mechanisms exist that will allow 
enforcement of the safeguards necessary to ensure compliance with the Act's 
parity requirements, GTE Card Services can wield the market power of GTE 
Northwest and thus is not subject to effective competition as required by the 
statute.  At the very least, the Commission should impose appropriate 
restrictions on GTE Card Services, including refusing to waive Chapter 80.16 
Affiliated Interests, and should make clear that it will require reporting 
requirements and performance measurements as part of any approval of a contract 
or other arrangement between GTE Card Services and GTE Northwest for the 
provision of telecommunications facilities or services.
 RESPECTFULLY SUBMITTED this _____ day of November, 1997.

      DAVIS WRIGHT TREMAINE LLP
      Attorneys for TCG Seattle



      By  
       Gregory J. Kopta
       WSBA No. 20519

      Michael Morris
      Deborah Waldbaum
      Karen Notsund
      Teleport Communications Group,       Inc.
      201 North Civic Drive
      Walnut Creek, CA  94596