Agenda Date:  November 15. 1999    
Item Number:

Docket:  UT-991476
       
Company Name: Telecommunications General
   Petition to Adopt Rule -- Early Termination of Customer Contracts

Staff:    Glenn Blackmon, Assistant Director-Telecommunications
      
 
Recommendation: 

Deny the petition filed by Advanced Telecommunications Group, Inc., et al., to 
establish rules for the early termination of certain customer contracts with 
incumbent local exchange carriers and direct the Secretary to send a letter to 
the petitioners stating the reasons for denial and the alternative means by 
which the issues could be addressed.

Discussion:

On September 28, 1999, a group of competitive local exchange companies The 
petitioners are Advanced Telecommunications, Inc., McLeodUSA, Incorporated, and 
the Western States Competitive Telecommunications Coalition, representing 
Advanced TelCom Group, Inc., Allegiance Telecom of Washington, Inc., Electric 
Lightwave, Inc., GST Telecom Washington, Inc., and NEXTLINK Washington, Inc. 
asked the WUTC to adopt a new rule that would in some circumstances allow 
customers of incumbent local exchange companies to terminate their term 
contracts without paying any cancellation fees that would otherwise be provided 
for in the contract or tariff.

The petitioners argue that releasing customers from term contracts would 
promote competition by allowing them to take a "fresh look" at alternative 
service providers.  They also argue that the existing contracts perpetuate 
incumbent monopoly power and unfairly penalize customers who entered into the 
contracts with no bargaining power.

Two industry trade associations, the Telecommunications Resellers Association 
and the Competitive Telecommunications Association, have submitted comments in 
favor of the petition. GTE submitted comments in opposition.

The state's Administrative Procedure Act requires that the WUTC act on a 
petition to adopt a rule within 60 days, or by November 27, 1999 in this case.  
RCW 34.05.330 requires that the agency (a) deny the petition in writing, 
stating (i) its reasons for the denial, specifically addressing the concerns 
raised by the petitioner, and, where appropriate, (ii) the alternative means by 
which it will address the concerns raised by the petitioner, or (b) initiate 
rulemaking proceedings in accordance with RCW 34.05.320.

Docket UT-991476
November 15, 1999
Page 2


Staff has reviewed the petition and comments and believes that the WUTC should 
not propose to adopt a rule on this subject at this time.  The petition states 
no specific examples of customers or competitors who have been harmed by the 
existence of term contracts and the associated cancellation penalties.  The use 
of such contracts is common practice within the industry by both competitive 
and non-competitive telecommunications companies.  The specific cancellation 
provisions have been submitted for review by the WUTC.

If specific contract or tariff provisions have been used in discriminatory or 
anti-competitive ways, Staff believes that the appropriate way to bring that 
problem to the WUTC would be for the customer or competitor to file a 
complaint.  That process would allow the WUTC to examine the facts specific to 
that situation.

If the WUTC were to address this issue through a rule, Staff believes the 
appropriate proceeding would be Docket UT-991301, in which the WUTC is 
reviewing the agency's tariff and contract rules.  However, at this point Staff 
continues to believe that no such rule is necessary.

Conclusion:  
The Staff recommends the Commission direct the Secretary to send a letter 
denying the petition to the petitioners stating the WUTC’s reasons for denial 
and stating the alternative means by which the issues could be addressed.