BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of the Application and Petition of COMPUTERS 5*, INC., d/b/a COMPUTERLAND NETWORK & TELEPHONE, For Registration as a Telecommunications Company and Classification as a Competitive Telecommunications Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) ) ) ) ) ) ) ) ) ) DOCKET UT-991575 ORDER AUTHORIZING REGISTRATION AND GRANTING PETITION FOR COMPETITIVE CLASSIFICATION AND APPROVING PRICE LIST BACKGROUND By petition filed October 18, 1999, in Docket UT-991575, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone (ComputerLand) 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 application for registration, competitive classification petition, and initial price list were brought before the Commission at its regularly scheduled open public meeting of November 15, 1999. DISCUSSION ComputerLand proposes to register with the Commission as a telecommunications company to offer the services specified in Exhibit A of its application, and may collect deposits and prepayments from customers of those services. In support of its petition, ComputerLand asserts that its services compete with other interexchange carriers’ and local exchange carriers’ telecommunications services. ComputerLand states that customers have readily available, equivalent alternatives and that there are no captive customers of the company’s services. ComputerLand is a Washington corporation, headquartered in East Wenatchee, Washington, and is owned by Dimitri Mandelis and numerous individuals. Rates, terms, and conditions set forth in the proposed price list are structured similarly to rates filed by other interexchange carriers and local exchange carriers for services in the relevant market. ComputerLand has provided information showing that it meets the requirements of RCW 80.36.350. Pursuant to statutes and rules governing registration applications and advance payment proposals, ComputerLand has proposed a satisfactory bond agreement for protection of those advance payments. Initially, the bond agreement will be for $5,000 and will increase proportionally as the outstanding amount of advance payments increases. ComputerLand will notify the Commission at least 30 days prior to terminating its operations, and provide the insurer and the Commission notice in writing and within 24 hours of ceasing its operations with its list of all outstanding account numbers and customer balances. Within 15 days after December 31, 1999, and each calendar quarter thereafter, ComputerLand will be required to submit to the Commission a report containing the following information specific to its state of Washington operations: (a) total outstanding debit card balance at the beginning of the reporting period; (b) dollar amount of debit cards sold during the reporting period; (c) depleted usage of debit cards during the reporting period; and (d) total outstanding debit card balance at the end of the DOCKET UT-991575 PAGE 1 reporting period. Statements shall continue to be filed within 15 days after each 3-month period thereafter until the applicant is notified in writing by the Commission that such reports are no longer required. Based upon this information, ComputerLand will adjust the amount of the bond to assure compliance with WAC 480-120-058. In addition, Commission Staff may request current company financial information. After one year’s administration of the bond agreement, the reporting requirement may be modified to a semi-annual level, upon request by ComputerLand and authorization by the Commission, if the company demonstrates that it has maintained adequate levels in the bond agreement during the previous 12-month period. ComputerLand shall state an unconditional, money-back guarantee on the debit card or in supplemental materials provided at the time the debit card is purchased, and include a statement warning customers to safeguard their cards. If ComputerLand ceases its operations, it must provide refund information to its customers through the company’s “800" phone number for a minimum of six months after ceasing operations. ComputerLand will provide a free call detail report to customers upon request. In conjunction with classification, the company is seeking waiver of: RCW 80.04.300 Budgets to be filed by companies--Supplementary DOCKET UT-991575 PAGE 1 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 ComputerLand 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. FINDINGS OF FACT 1. ComputerLand 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 the services specified in Exhibit A of its application. 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 ComputerLand 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 ComputerLand include, but are not limited to, U S WEST Communications, 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. ComputerLand has no captive customer base. 8. The services offered are subject to effective competition. 9. ComputerLand should be permitted to provide services under its proposed price list. 10. ComputerLand requested waivers of certain laws and rules relating to telecommunications services. The laws and rules for which waivers should be granted are listed on 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 classification proceeding and ComputerLand. 2. ComputerLand 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. ComputerLand should be permitted to provide services under price lists promulgated under RCW 80.36.320 (2). These services shall include alternate operator services. 4. ComputerLand should be granted waivers of the laws and rules listed in Appendix A. ORDER THE COMMISSION ORDERS: 1. After the effective date of this Order and subject to any conditions imposed, the application of Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, requesting an order authorizing registration as a telecommunications company to provide service to the public in this state is approved. 2. The petition of Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, 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 Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, for rates and services is approved. DOCKET UT-991575 PAGE 4 4. Registration of Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, 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, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, 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. Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, is authorized to offer rates and services pursuant to the 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, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, 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. 7. Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, is authorized to provide alternate operator services. 8. The bond agreement in the amount of $5,000 filed by Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, is sufficient to initiate operations. Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, will adjust the amount of the bond to assure compliance with WAC 480-120-058. As part of the bond agreement and in the event the company ceases operations, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, is required to provide notice, in writing and within 24 hours, to the insurer and the Commission to include a list of outstanding account numbers and balances. 9. Within 15 days after December 31, 1999, and each calendar quarter thereafter, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, will be required to submit to the Commission a report containing the following information specific to its state of Washington operations: (a) total outstanding debit card balance at the beginning of the reporting period; (b) dollar amount of debit cards sold during the reporting period; (c) depleted usage of debit cards during the reporting period; and (d) total outstanding debit card balance at the end of the DOCKET UT-991575 PAGE 1 reporting period. Statements shall continue to be filed within 15 days after each 3-month period thereafter until the applicant is notified in writing by the Commission that such reports are no longer required. Based upon this information, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, will adjust the amount of the bond to assure compliance with WAC 480-120-058. In addition, Commission Staff may request current company financial information. After one year’s administration of the bond agreement, the reporting requirement may be modified to a semi-annual level, upon request by Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, and authorization by the Commission, if the company demonstrates that it has maintained adequate levels in the bond agreement during the previous 12-month period. 10. Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, shall state an unconditional money back guarantee on the face of the debit card or on supplemental material that will be provided at the time the debit card is purchased with a statement warning customers to safeguard their cards. 11. In the event the Company ceases operations, Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, is required to provide refund information to its customers on the company’s “800" phone number for a minimum of six months. 12. Computers 5*, Inc., d/b/a ComputerLand Network & Telephone, shall provide a free call detail report to customers upon request. 13. The Commission retains jurisdiction over the subject matter and the parties to effectuate the terms of this Order. DATED at Olympia, Washington, and effective this 15th day of November, 1999. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION CAROLE J. WASHBURN, Secretary DOCKET UT-991575 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