Agenda Date:  August 11, 1999
Item Numbers:

Dockets:  UT-990985, et. al

Staff:   Fred Ottavelli, Senior Policy Strategist
   Teri Wallace, Transportation Specialist
   Kippi Walker, Customer Service Specialist
   Shannon Smith, Assistant Attorney General


Recommendation:

Initiate proceedings to classify as competitive the telecommunications 
companies named in Attachment A.


Discussion:

The Commission is authorized to competitively classify telecommunications 
companies on its own motion if it finds that the services provided by the 
companies are subject to effective competition.  “Effective competition” means 
that a company’s customers have reasonably available alternatives and that the 
company does not have a significant captive customer base.  In determining 
whether the services provided by a company are competitive, the Commission 
considers, at a minimum, the following factors set forth in RCW 80.36.320:

 (1)  The number and sizes of alternative providers of services;

 (2)  The extent to which services are available from alternative providers in 
the  relevant market;

 (3)  The ability of alternative providers to make functionally equivalent 
or                  substitute services readily available at competitive rates, 
terms, and conditions; and

 (4)  Other indicators of market power, which may include market share, growth  
in market share, ease of entry, and the affiliation of providers of services.

Competitive telecommunications companies are subject to minimal regulation.  
Minimal regulation means that a competitive telecommunications company may file 
price lists for its services, rather than tariffs.  In addition to the ability 
to file price lists instead of tariffs, the Commission may waive other 
regulatory requirements for competitive companies.  Staff proposes the 
Commission waive the statutes and rules set forth in Attachment B, Order 
Initiating Competitive Classification.

It appears that all of the companies listed on Attachment A are subject to 
effective competition. Washington consumers have multiple, reasonably available 
alternatives when choosing a telecommunications provider.  Many companies, 
including large diverse telecommunications companies, offer services in 
Washington that compete with services offered by the companies listed in 
Attachment A.  These services are readily available to Washington consumers at 
competitive rates, terms, and conditions.

The purpose of this proceeding is not simply to reduce the level of regulation 
but also to establish the appropriate level of regulation for these companies.  
Regulation of a company with significant market power entails scrutiny of its 
rates, profits, affiliated interest transactions, securities issues, and 
transfers, but the appropriate regulation of a competitive company focuses more 
on clear disclosure to customers of rates and terms and compliance with fair 
consumer practices.  Moreover, unless a company is classified by the Commission 
as competitive, state law exempts it from the antitrust and consumer protection 
laws that apply to most other businesses.  

Notice of Opportunity to Comment

Any person may file comments regarding the proposed competitive classification 
of the companies named in Attachment A, including comments regarding whether 
the Commission should set the competitive classification for hearing under 
chapter 34.05 RCW or a formal investigation and fact-finding under RCW 
80.36.145.  Comments must be received by the Commission on or before September 
8, 1999.

Recommendation

For each of the companies listed in Attachment A, staff recommends the 
Commission issue an order in the designated docket numbers initiating 
competitive classification and provide notice of opportunity to file comments 
as set forth in Attachment B.  The competitive classification of these 
companies, if approved, shall be effective September 22, 1999.  The Commission 
will consider the competitive classification of the companies at an open 
meeting on September 22, 1999.

Attachments