ZAWISLAK: Good morning, my name is Tim Zawislak and I’m with the 
Telecommunications staff.  Item 2)D is a petition for mitigation investigation 
filed by AT&T Communications of the Pacific Northwest in Docket UT-970325.  I 
would kind of like to put this in context.  It’s been well just about 20 months 
to the day that the Telecommunications Act of ‘96 became law.  And since that 
time the FCC has issued its “trilogy of orders” on local 
competition/interconnection issues, universal service and access reform.  
Actually last night I received a message on the e-mail, receiving news that the 
FCC also just issued an NPRM on jurisdictional separations, which has been 
deemed by some to be called the “fourth leg of the stool”.  So, with all that 
in mind I’d like to describe the AT&T petition and where the state of 
Washington might go from here.

The investigation that AT&T would have the Commission perform would address the 
cost of universal service and the reformation of intrastate carrier access 
charges.  Although there have been numerous activities recently at the state 
level, regarding both, excuse me, regarding either universal service or access 
charges, this petition is unique in that it establishes a nexus between the two 
and allows for what staff would like to see as an open procedural vehicle to 
accommodate all the changes that may be found necessary.  Staff agrees that 
these issues are logically related and have been interconnected in the past.  
In order to move forward with competition in and the continued implementation 
of the Telecommunications Act of 1996 it will be necessary to deal with the 
type of issues brought up in this petition.  Staff views the rule making 
process as an open and an explicit way to develop the new paradigm in this 
state.  An example of the issues that will likely arise are how to identify and 
remove implicit subsidies to the extent possible, how to establish an explicit 
and competitively new funding mechanism, how to ensure that rural and high cost 
customers have adequate and affordable service.  Also, how to relook at pricing 
principles to ensure that economically, efficient cost recovery is allowed.  
And I think the last agenda item regarding imputation, I think Mr. Shaw eluded 
to, (permanent per minute charges versus flat rate type rate design) would 
entail that.  And also how to allow the market place to function while still 
protecting the captive rate payers or customers.

Since the publication of the back up memo and the draft CR101, it’s been 
brought to my attention that we might need to update that form to make it stand 
alone, apart from the AT&T petition and staff has been working on that and we 
hope to revise that it prior to sending it to the Code Revisor.  So at this 
time, staff recommends that the Commission grant the petition to commence an 
investigation via the rulemaking process, to direct the Secretary to file a 
preproposal statement of inquiry with the Code Revisor and to encourage the 
industry’s participation in the potential rulemaking and data collection 
efforts that will be necessary along the way.  I wanted to note for the record 
that WITA, represented by Rick Finnigan and Terry Vann, could not be here 
because of previous commitments but they are extremely interested in the 
process as are all of their members.  And additionally I received a call from 
TRACER last night and they’re also very interested in the process but couldn’t 
be here this morning.  With that I’m available for questions and other 
representatives from the industry may also wish to speak.

LEVINSON: Just a quick point of clarification, I believe WITA’s letter made 
reference to the fact that they thought our schedule was too fast and I’d like 
staff to verify if in fact we get substitive interaction that requires 
lengthier time period for response and additional meeting that that time will 
be permitted for the participants.

ZAWISLAK: Okay. Yes.

[conversation off microphone by Commissioners]

LEVINSON: Sorry.  Is there anyone else who wanted to comment on that matter?

MANIFOLD: Robert Manifold, Assistant Attorney General.  Mr. ffitch was going to 
address this but he stepped out of the room regarding the last matter I 
believe.  We’re very supportive of the Commission finding the right vehicle to 
address these universal service concerns.  It seems to me at least that 
universal service is something that everybody’s talked about for quite a while 
and we haven’t really gotten the docket or the item in which we can get our 
hands around it.  And so I’m glad that AT&T filed their petition and I’m glad 
that staff is wanting to initiate a process to do that.  I hadn’t seen a timing 
issue until you just now mentioned it and I looked on the back of that so that 
obviously will be something to be considered.  I confess that I was in the 
U8523 case and I think it did go on for quite awhile. We may not need to gather 
as much data as we did then but obviously, as Mr. Shaw indicated, lots of money 
moves on this and lots of impacts on competition.  So I hope we will have the 
opportunity to do it as right as possible.

LEVINSON: ....comment...motion then...

GILLIS: With regard to Docket UT-970325 I move we adopt the staff 
recommendations to grant the petition to commence an investigation via a 
rulemaking process, direct the Secretary to file a preproposal statement of 
inquiry, CR101, with the Code Revisor in that docket and encourage industry 
participation in the potential rulemaking and data collection efforts that will 
be needed to address universal service and access charge reform at the 
Washington intrastate level.

HEMSTAD: I’ll second the motion.

LEVINSON: Motion has been seconded and carries.