DOCKET NOS. UT-981074 & UT-970545 (RM) PAGE 1 BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of a Petition ) ) DOCKET NO. UT-981074 for Waiver of WAC 480-120 Through ) ) DOCKET NO. UT-970545 WAC 480-120-345 ) ) ORDER GRANTING PETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) FOR WAIVER OF RULE BACKGROUND By petition filed August 10, 1998, in Docket No. UT-981074, the Washington Independent Telephone Association (WITA), GTE Northwest Incorporated (GTE), U S WEST Communications, Inc. (U S WEST), CenturyTel of Washington (CenturyTel), CenturyTel of Cowiche (Cowiche), Sprint/United Telephone Company of the Northwest (Sprint), The Toledo Telephone Co., Inc, (Toledo), McDaniel Telephone Company (McDaniel), St. John, Co-operative Telephone And Telegraph Company (St. John), and Pioneer Telephone Company (Pioneer), (hereafter, Telephone Companies) seek waiver of WAC 480-120-400 through WAC 480-120-435 (hereafter, EAS rule). Commission Staff joins in and supports the waiver requested by the petitioners. MEMORANDUM On May 27, 1998, in Docket No. UT-970545, the Commission proposed a rule to define the minimum local calling area for each local exchange. The proposed rule provided a list of community services that should be accessible as a local call; proposed a list of towns and cities, at least one of which should be accessible as a local call; and provided that companies should recover through local rates their costs and lost revenues resulting from expanded local calling areas. On August 10, 1998, the Commission circulated an alternative to that prescriptive rule. Under this alternative approach, local telephone companies would be ordered to implement specified expansions of local calling areas on a specific time line. In order to implement this alternative approach, the Telephone Companies filed with the Commission a joint petition for waiver of the current EAS rule. On September 9, 1998, the Commission at its regularly scheduled open public meeting accepted a Settlement Agreement proposed by Commission Staff and the Telephone Companies, which included an agreed set of expanded local calling areas and a proposed alternative rule. The petition of the Telephone Companies is part of the implementation of the Settlement Agreement. The petition specifically seeks the following relief: 1. That the Commission waive WAC 480-120-400 through 480-120-435 as they may apply to the actions that are to be taken under the Settlement Agreement. 2. That the Commission enter an order directing the companies to implement or study the EAS routes as outlined on Exhibit A to the Settlement Agreement by the implementation or study date set forth therein; provided, that the companies may ask the Commission for a change in such date if significant network restructure is required or other uncontrollable events occur. 3. That the Commission enter an order directing that all such EAS routes that are implemented be implemented on a revenue-neutral and two-way basis, including any EAS routes for St. John and Pioneer that result from the studies to be performed by those companies. 4. That the Commission’s order include a provision that provides that, if after implementation of EAS routes, extraordinary expenses result from increased data traffic as a result of the EAS route conversions, the affected company will be allowed to recover that cost using the threshold for extraordinary expenses and other conditions set forth in the Settlement Agreement. 5. That the Commission include in its order a provision allowing U S WEST to include its network costs and toll and switched access revenue losses associated with implementation of EAS routes listed in Exhibit A to the Settlement Agreement, as part of the toll rates filed in conjunction with a “postalized MTS rate” tariff proposal that bears an effective date concurrent with the EAS conversion effective date no later than December 31, 1998. 6. That the Commission include in its order a provision allowing GTE and Sprint to include toll revenue losses in addition to other factors such as EAS network costs and switched access losses in calculating its revenue-neutral EAS filings. 7. That the Commission include in its order authorization for Sprint to make a revenue-neutral tariff filing that collapses its two EAS matrices into a single-rate matrix which allows for a full-measured option. 8. That the Commission’s order direct U S WEST, CenturyTel, and Commission Staff to work together to attempt to develop a solution that addresses the local calling needs of customers that reside in that portion of Kitsap County located within CenturyTel’s Gig Harbor exchange by December 31, 1998. 9. That the Commission’s order contain a provision directing Toledo, U S WEST, and Commission Staff to prepare and file on behalf of Toledo, U S WEST, and the Commission a petition for waiver by the Federal Communications Commission to allow U S WEST to pass EAS traffic to Toledo and accept EAS traffic from Toledo across the LATA boundary and that the Commission’s order further directs Toledo to initiate this process. 10. That the Commission accept Staff’s recommendation to withdraw the proposed rulemaking in Docket No. UT-970545. 11. That the Commission institute a CR 102 process which, in part, proposes the repeal of WAC 480-120-400 through 480-120-435 and proposes a new rule WAC 480-120-045. 12. That the Commission accept the Settlement Agreement. At the Open Meeting on September 9, 1998, the Commission asked the Telephone Companies to consent to the following modification of item 8 of the petition, dealing with Kitsap County calling area studies; instead of: U S WEST, CenturyTel and the Commission will work together to attempt to develop a solution that addresses the local calling area needs of customers who reside in Kitsap County located within CenturyTel’s Gig Harbor exchange by December 31, 1998; to read: U S WEST, CenturyTel and the Commission, with input from the community, will work together to develop a solution by December 31, 1998, that addresses the local calling area needs of customers who reside in Kitsap County located within CenturyTel’s Gig Harbor exchange. The Telephone Companies’ representatives consented to this amendment to the Settlement Agreement and Petition. The Commission has carefully reviewed the petition for waiver and considered all comments of interested persons, and finds the requested rule waiver to be in the public interest. ORDER THE COMMISSION ORDERS: 1. The petition of Telephone Companies for waiver of WAC 480-120-400 through WAC 480-120-435 is granted. 2. Telephone Companies will implement or study the EAS routes as outlined on Exhibit A to the Settlement Agreement by the stated implementation or study date; provided, the Telephone Companies may ask the Commission to alter such date(s) if significant network restructure is required or other uncontrollable events occur. 3. EAS routes will be implemented on a revenue neutral, two-way basis, including any EAS routes for St. John and Pioneer that result from the studies to be performed by those companies. 4. If, after implementation of EAS routes, extraordinary expenses result from increased data traffic as a result of the EAS route conversions, the affected Telephone Companies will be allowed to recover that cost using the threshold for extraordinary expenses and other conditions set forth in the Settlement Agreement. 5. U S WEST will include its network costs and toll and switched access revenue losses, associated with implementation of EAS routes listed in Exhibit A to the Settlement Agreement, as part of the toll rates filed in conjunction with a “postalized MTS rate” tariff proposal, that bears an effective date concurrent with the EAS conversion effective date, but no later than December 31, 1998. 6. GTE and Sprint may include toll revenue losses in addition to other factors, such as EAS network costs and switched access losses, in calculating revenue neutral EAS filings. 7. Sprint’s revenue neutral tariff filing may collapse its two EAS matrices into a single rate matrix which allows for a full measured service option. 8. U S WEST, CenturyTel, and Commission Staff, with input from the community, will work together to develop a solution by December 31, 1998, that addresses the local calling area needs of customers who reside in Kitsap County located within CenturyTel’s Gig Harbor exchange. 9. Toledo, U S WEST, and Commission Staff shall prepare and file, on behalf of Toledo, U S WEST, and the Commission, a petition for waiver by the Federal Communications Commission allowing U S WEST to pass EAS traffic to Toledo and accept EAS traffic from Toledo across the LATA boundary. Toledo shall initiate this process. DATED at Olympia, Washington, and effective this day of September 1998. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION ANNE LEVINSON, Chair RICHARD HEMSTAD, Commissioner WILLIAM R. GILLIS, Commissioner ATTACHMENT A Settlement Agreement The companies will implement or study the extended area service routes listed and consistent with the terms and conditions set forth in this document and in Exhibit A. All routes listed in Exhibit A are two way EAS. Terms and Conditions All affected companies will implement or study the EAS routes as outlined in Exhibit A. While the implementation dates for the EAS routes have been set by the companies, the companies may ask the Commission for a change if significant network restructure is required, or other uncontrollable events occur. For all companies: EAS routes would be established on a revenue neutral basis. Estimated EAS rate additives are shown in Exhibit A. After implementation, should extraordinary expenses result from increased data traffic as a result of these route conversions, the companies will be allowed to recover that cost. For U S WEST extraordinary expense would be defined as a million dollars or more spent as a result of data traffic stimulation within three years following the conversions; and for other companies the threshold amount will vary relative to size. For U S WEST: Commission will approve a U S WEST tariff filing that recovers all associated network costs and toll and switched access revenue losses resulting from the conversion to EAS routes. The costs and revenue losses will be recovered through increased toll rates filed in conjunction with U S WEST’s “postalized MTS rate” tariff proposal to be effective concurrent with the EAS conversion effective date no later than December 31, 1998. The total impact of the conversion of routes listed in Exhibit A is estimated to be $2,000,000 for U S WEST. This amount is a preliminary estimate and could vary by as mush as 25%. For SPRINT: Commission will approve a revenue neutral SPRINT tariff filing that collapse two EAS matrices into a single rate matrix which allows for a full-measured option. U S WEST, CenturyTel and the Commission will work together to attempt to develop a solution that addresses the local calling area needs of customers who reside in Kitsap County located within CenturyTel’s Gig Harbor exchange by December 31, 1998. Toledo Telephone Company, U S WEST and the Commission will file jointly for a FCC waiver to allow U S WEST to pass EAS traffic to Toledo across the LATA boundary. Toledo Telephone Company will initiate this filing process. With the settlement agreement and the resulting EAS filings, staff will recommend the Commission withdraw the proposed rule making in Docket N. UT-970545; and that the existing rule WAC 480-120-400 through 480-120-435 be repealed. Commission staff and industry representatives propose a new rule WAC 480-120-045, as shown in Exhibit B. The settlement agreement will be implemented by the companies filing a petition for waiver of the existing EAS rule. The waiver request will set out the terms and conditions for this settlement agreement. The settlement request is presented as a package by the affected local exchange companies in Washington and by representatives of the Washington Utilities and Transportation Commission. Therefore, if any term or condition changes, or if the Commission does not accept and implement any of the recommendations contained herein, or if any of the EAS routes and rates are modified, this proposal is null and void. Based on the foregoing, the undersigned hereby respectfully submit this Settlement Agreement this [10th] day of [August] , 1998. COMPANY IMP. R1 - RATE EFFECT DATE CENTURY TEL Coulee City to Almira Sep, 98 Coulee City 73˘ and Almira 23˘ Coulee City to Wilbur Sep, 98 Wilbur 18˘ Coulee City to Creston Sep, 98 Creston no change Hunters to Chewelah Feb, 99 Hunters $1.50 Hunters to Colville Feb, 99 Lake Quinault to Feb, 99 Lake Quinault 93˘ Aberdeen Lake Quinault to Feb, 99 Humptulips Snoqualmie Pass to Feb, 99 Snoqualmie Pass Issaquah, Bellevue, North $3.50 Bend, Fall City, Carnation White Pass / Rimrock to Feb, 99 White Pass / Rimrock Yakima $7.50. Measured option @ 12˘ Cowiche to Feb, 99 No change Rimrock / White Pass COMPANY IMP. R1 - RATE EFFECT DATE GTE Molson / Chesaw to March, 99 $2.25 EAS adder Oroville ($14.55 to $16.80) Loomis to Oroville Tonasket to Omak Stanwood to Everett, 120 days New RG2A Marysville, Granite Falls, after established Silver Lake, Arlington approval Stanwood ($10 to $13.25) Everett, Marysville, Granite falls, and Silverlake ($12.75 to $13.25) Arlington no change ($15.00) Wenatchee Cluster June, 99 RG1 to RG2 ($10. (Mansfield, Wenatchee, to $12.75) Entiat, Chelan, Cashmere, Waterville, Leavenworth) Bellingham Cluster June, 99 RG1 to RG2 ($10. (Mansfield, Wenatchee, to $12.75) Entiat, Chelan, Cashmere, Waterville, Leavenworth) Bellingham Cluster June, 99 $4.25 EAS adder Lynden, Blaine, Custer, ($14.55 to $18.80) Everson, Maple Falls, Sumas to Bellingham SPRINT Glenwood to White Salmon Oct, 98 Glenwood $2.00 and White Salmon no change Roosevelt to Goldendale Oct, 98 Roosevelt $2.00 and Goldendale no change White Swan to Yakima Feb, 99 White Swan $3.75 Bickleton to Mabton Jan, 99 Bickleton $2.00 and Mabton 40˘ Mattawa to Sunnyside Jan, 99 Mattawa $3.25 and Sunnyside 40˘ Chimacum to Port Ludlow Feb, 99 Chimacum 80˘ Brinnon to Port Townsend Mar, 99 Brinnon $2.80 Poulsbo to Bremerton Mar, 99 Poulsbo $4.78 WITA St. John to Colfax, Will Study & Rate impact Endicott to Colfax, Report by Jan 8, will be part of LaCrosse to Colfax, 99* the study St. John to LaCrosse, St. John to Endicott Onalaska to Centralia Feb, 99 $8.00 & Chehalis Mossyrock to Feb, 99 $8.00 Centralia to Chehalis Salkum to Centralia to Feb, 99 $8.00 Chehalis Toledo to Winlock, Three months $10 Chehalis, Centralia after FCC (& $7 adder waiver increased to $10 is granted for Longview also) Measure option @ 11˘ * The report will be evaluated by criteria to be determined by the companies and commission staff, but those criteria shall not include the limitation proposed in WAC 480-120-045 (1), as set forth in Exhibit B. DOCKET NOS. UT-981074 & UT-970545 (RM) PAGE 9 Attachment B Substitute Proposed rules, Docket UT-970545 WAC 480-120-045. Local calling areas. (1) The Commission may expand local calling areas only under the most exceptional circumstances. The Commission will generally rely on long distance competition, local competition, and optional calling plans that assess additional charges only to participating customers to meet customer demand for alternate or expanded calling. (2) In evaluating requests for expanded local calling, the Commission will consider whether the local calling area is adequate to allow customers to call and receive calls from the following community services: community medical facilities, police and fire departments, city or town government, elementary and secondary schools, libraries, and a commercial center. In evaluating such requests, the Commission will consider the overall community of interest of the entire exchange, and may consider other pertinent factors such as customer calling patterns and the availability and feasibility of optional calling plans. WAC 480-120-400 through 480-120-435 are repealed.