BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of the Application and Petition of THE FREE NETWORK, L.L.C. For Registration as a Telecommunications Company and Classification as a Competitive Telecommunications Company.............................) ) ) ) ) ) ) ) ) ORDER AUTHORIZING REGISTRATION; GRANTING PETITION FOR COMPETITIVE CLASSIFICATION; AND APPROVING PRICE LIST BACKGROUND By petition filed April 26, 1999, in Docket UT-990616, The Free Network, L.L.C. (Free) seeks registration as a telecommunications company, classification as a competitive telecommunications company, and approval of its proposed price list pursuant to RCW 80.36.350 and 80.36.320. The registration application, competitive classification petition, and initial price list were brought before the Commission at its regularly scheduled open public meeting of May 12, 1999. DISCUSSION Free proposes to register with the Commission as a telecommunications company to offer resold direct-dialed long distance, inbound 800/888/887, calling cards and directory assistance. In support of its petition, Free asserts that its services compete with other interexchange carriers’ telecommunication services. Free states that customers have readily available equivalent alternatives and that there are no captive customers of the Company’s services. Free is a limited liability company, headquartered in Troy, Michigan, and is owned by numerous individuals. Rates, terms, and conditions set forth in the proposed price list are structured similarly to rates filed by other interexchange carriers for calls placed in the relevant market. Free has provided information showing that it meets the requirements of RCW 80.36.350. Applicant does not propose to collect advance payments or deposits from customers. In conjunction with classification, the Company is seeking waiver of: RCW 80.04.300 Budgets to be filed by companies--Supplementary budgets RCW 80.04.310 Commission’s control over expenditures RCW 80.04.320 Budget rules RCW 80.04.330 Effect of unauthorized expenditure--Emergencies RCW 80.04.360 Earnings in excess of reasonable rate--Consideration in fixing rates RCW 80.04.460 Investigation of accidents RCW 80.04.520 Lease of utility facilities RCW 80.36.100 Tariff schedules to be filed and open to public RCW 80.36.110 Tariff changes--Statutory notice--Exception Chapter 80.08 RCW Securities (except RCW 80.08.140) Chapter 80.12 RCW Transfers of Property Chapter 80.16 RCW Affiliated interests Chapter 480-80 WAC Tariffs Chapter 480-140 WAC Budgets Chapter 480-143 WAC Transfers of Property Chapter 480-146 WAC Securities and affiliated interests WAC 480-120-026 Tariffs WAC 480-120-031 Accounting WAC 480-120-032 Accounting-Political information and political education activities WAC 480-120-036 Finance--Securities, affiliated interests, transfer of property WAC 480-120-046 Services offered WAC 480-120-131 Reports of accidents Rules invoked include WAC 480-120-022, WAC 480-120-023, WAC 480-120-024, and WAC 480-120-025. Statutes invoked include RCW 80.36.320, and RCW 80.36.350. The ultimate issues are whether Free should be registered as a telecommunications company, whether it should be classified as a competitive telecommunications company, whether its proposed price list should be approved, and the extent to which it should be relieved of regulatory requirements to which it would otherwise be subject. Based upon the entire record and the file in this matter, the Commission makes the following findings of fact and conclusions of law. FINDINGS OF FACT 1. Free filed an application for registration as a telecommunications company and a petition for classification as a competitive telecommunications company pursuant to the provisions of RCW 80.36.350 and 80.36.320, to provide resold direct dialed long distance, inbound 800/888/887, calling cards and directory assistance. 2. As to form, the application and petition meet the requirements of RCW 80.36.350 and 80.36.320, and comply with the Commission’s rules and regulations. 3. The registration of Free as a telecommunications company is not inconsistent with the public interest. 4. In this proceeding, the Commission in no way endorses the financial viability of applicant nor the investment quality of any securities it may issue. 5. Alternative providers of service to that of Free include, but are not limited to, AT&T Communications of the Pacific Northwest, Inc., GTE Northwest Incorporated, MCIWorldCom, Inc., and Sprint Communications Company L.P. All services are fully available from alternative providers in the relevant market. 6. The relevant market is the state of Washington. 7. Free has no captive customer base. 8. The services offered are subject to effective competition. 9. Free should be permitted to provide services under its proposed price list. 10. Free requested waivers of certain laws and rules relating to telecommunications services. The laws and rules for which waivers should be granted are listed in Appendix A, incorporated by this reference and made a part of this Order. CONCLUSIONS OF LAW 1. The Washington Utilities and Transportation Commission has jurisdiction over the subject matter of this registration application and classification petition and Free. 2. Free should be registered as a telecommunications company pursuant to RCW 80.36.350 and classified as a competitive telecommunications company pursuant to RCW 80.36.320(1). 3. Free should be permitted to provide services under price lists promulgated under RCW 80.36.320 (2). These services shall not include alternate operator services as defined in WAC 480-120-141. 4. Free should be granted waivers of the laws and rules listed in Appendix A; waivers of laws and rules requested that are not included in Appendix A should be denied. ORDER THE COMMISSION ORDERS: 1. After the effective date of this Order and subject to any conditions imposed, the application of The Free Network, L.L.C. requesting an Order authorizing registration as a telecommunications company to provide service to the public in this state is approved. 2. The petition of The Free Network, L.L.C. for classification as a competitive telecommunications company is approved; waiver of the laws and rules listed in the attached Appendix A is granted. 3. The proposed price list of The Free Network, L.L.C. for rates and services is approved. 4. Registration of The Free Network, L.L.C. as a telecommunications company shall not be construed as an endorsement of financial viability nor of the investment quality of any securities it may issue. 5. As a telecommunications company providing service to the public in this state, The Free Network, L.L.C. is subject to the jurisdiction of this Commission under the provisions of Title 80 RCW and all rules and regulations adopted by the Commission. 6. The Free Network, L.L.C. is not authorized to collect advance payments or deposits unless it first demonstrates to the Commission’s satisfaction that it has an arrangement to protect customer monies as provided in WAC 480-121-040. 7. The Free Network, L.L.C. is authorized to offer rates and services pursuant to price list in the format prescribed by the Commission. The price list approved in this proceeding, and subsequent changes to that price list, become effective only after ten days notice to the Commission and to customers. In the event of a price list reduction or of a change in terms and conditions which do not have rate impact, personal notice to customers is not required. To comply with the statutory notice requirement, The Free Network, L.L.C. may publish notice of price reductions or changes in terms and conditions of service that do not have rate impact by a display advertisement in such newspaper(s) as are geographically situated to be circulated over the Company's service area. 8. The Free Network, L.L.C. is not authorized to provide alternate operator services as defined in WAC 480-120-141. 9. The Commission retains jurisdiction over the subject matter and the Company to effectuate the terms of this Order. DATED at Olympia, Washington, and effective this 12th day of May, 1999. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION CAROLE J. WASHBURN, Secretary DOCKET UT-990616 APPENDIX A RCW 80.04.300 Budgets to be filed by companies--Supplementary budgets RCW 80.04.310 Commission’s control over expenditures RCW 80.04.320 Budget rules RCW 80.04.330 Effect of unauthorized expenditure--Emergencies RCW 80.04.360 Earnings in excess of reasonable rate--Consideration in fixing rates RCW 80.04.460 Investigation of accidents RCW 80.04.520 Lease of utility facilities RCW 80.36.100 Tariff schedules to be filed and open to public RCW 80.36.110 Tariff changes--Statutory notice--Exception Chapter 80.08 RCW Securities (except RCW 80.08.140, State not obligated) Chapter 80.12 RCW Transfers of Property Chapter 80.16 RCW Affiliated interests Chapter 480-80 WAC Tariffs Chapter 480-140 WAC Budgets Chapter 480-143 WAC Transfers of Property Chapter 480-146 WAC Securities and affiliated interests WAC 480-120-026 Tariffs WAC 480-120-031 Accounting WAC 480-120-032 Accounting-Political information and political education activities WAC 480-120-036 Finance--Securities, affiliated interests, transfer of property WAC 480-120-046 Services offered WAC 480-120-131 Reports of accidents