Docket UT-970545 December 10, 1997 Page 1 Agenda: December 10, 1997 Item: Docket: UT-970545 Minimum Local Calling Areas, etc. Staff: Bethany Weidner, Policy Consultant Glenn Blackmon, Asst. Director, Telecommunications Bob Wallis, Rules Coordinator Recommendation: In Docket No. 970545, direct the Secretary to file a Proposed Rule (CR 102) defining the minimum local calling area to be provided as an element of basic telephone service. Discussion Earlier this year, the Commission filed a Statement of Inquiry proposing to clarify mechanisms to ensure telephone subscribers have a minimum reasonable local calling area and opportunities to make interexchange calls at flat rates or rates less than statewide tariffed per minute toll rates. Most commenters said that there is a role for public policy (rather than the market) in determining how much calling is included in the minimum unit of telecommunications service a carrier can sell -- “basic” service. That role was generally described as defining a “minimum scope of local calling.” Most commenters also agreed that, without access charge reform, we will continue to have extremely diverse demands for wider local calling from people who are burdened by high bills for calling to nearby locations. The current access charge reform docket may be able to resolve most of this demand. If not, we will consider additional rulemaking to clarify opportunities for interexchange calling at local rates. We have therefore developed a rule that defines the scope of local calling that each local exchange carrier must provide as an element of basic service. The draft rule language is attached. This rulemaking also is consistent with the Telecommunications Act of 1996 and FCC requirements relating to universal service. These call for states to define a level of local usage as part of the basic service; and to develop explicit mechanisms to ensure that basic service is affordable and, therefore, universally available. We anticipate meeting with legislators, members of the public in various parts of the state, telecommunications companies and industry associations. We expect to obtain information that will allow the Commissioners to continually evaluate the proposed rule during the public participation process. This will ensure that what is ultimately adopted will be effective and workable. Note: Outside of the specific language of the proposed rule, we have identified three different “tests” for when the minimum local calling area standard is met. We will be asking for specific comment and information on the results of including one or another of these tests in the rule. Attachments Attachment A: TEXT OF PROPOSED RULE DOC. NO. 970545 WAC 480-120-045. Basic service to include a minimum local calling area. (1) Each local exchange company shall provide as an element of basic service, a local calling area adequate to allow customers to reach community services, including medical facilities, local government offices, elementary and secondary schools and a primary commercial center. (2) No local calling area shall exhibit any discontinuities; i.e., the local calling area for an exchange shall contain all intervening exchange areas. (3) “Basic service” is the minimum service a carrier may offer. (4) Any local exchange company providing service to an exchange for which the local calling area is not adequate to meet the basic service standard as required in subsection (1) shall, within 10 months from the date this rule becomes effective, file price lists or tariff revisions necessary to comply with the standard. Such filings may provide for a reasonable delay in implementation if additional facilities are required. (5) Nothing in this rule is intended to prohibit companies from offering service priced on an optional basis to a larger geographical area. WAC 480-120-400 through 435 is repealed. Attachment B: Possible criteria for determining when basic service standard (ability to reach community services) is met: State statutes, federal requirements and commentators to the CR 101 support the inclusion of a specified amount of telephone use to be included for the subscriber’s basic rate. In this rule, we propose that the subscriber’s basic rate, at a minimum, pay for unlimited calls within an area defined by the availability of adequate services. It may be that a specific, measurable test for what is “adequate services” should also be considered. The Commission will offer possible tests at the rulemaking hearings, and request comment from carriers about how outcomes would differ for each test. We list and briefly describe the three tests below: A. Any exchange shall be considered to have an adequate local calling area as required in section (2) if the local calling are of the exchange includes at least one city or town with a population of more than (4000). Using a town of 4000 or more as the standard represents a small change from the status quo and is consistent with historical efforts to minimize basic local rates and maintain the maximum contribution from access (or toll) usage-based rates. B. Any exchange shall be considered to have an adequate local calling area as required in section (2) if the local calling area of the exchange includes at least one city or town with a population of more than (10,000). Using a town of 10,000 or more would incorporate outlying exchanges into larger local calling “regions” and is more consistent with current dynamics and federal requirements that are expected to shift more cost recovery to the basic local rate. C. Any exchange shall be considered to have an adequate local calling area if the average annual revenue per residential customer of the exchange is not greater than the FCC’s affordability benchmark for universal service ($31/month). Revenues used in this calculation shall include all charges necessary to obtain local service, interstate and intrastate access charges, access charges including imputed access charges for toll provided by the local exchange company and charges for optional features. This test would pick up on the fact that -- as the FCC and the Joint Board concur -- the scope of the local calling area directly and significantly impacts affordability. An average monthly telephone cost above the $31 benchmark could indicate a problem with the scope of local calling.