BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION 1300 South Evergreen Park Drive, S.W. Olympia, Washington 98504-7250 ) ) Re: Customer Proprietary Network Information ) Docket No. UT-97154 ) ) COMMENTS OF GST TELECOM INC. GST Telecom Inc. (“GST”), by its counsel, Swidler Berlin Shereff Friedman, LLP, hereby files its comments in opposition to the Washington Utilities and Transportation Commission’s (“WUTC”) proposal to adopt amended CPNI rules in the above referenced proceeding. I. Introduction GST is a telecommunications carrier registered with competitive status in the State of Washington and provides local and interexchange service within Washington. Although not a small business for purposes of the Washington Regulatory Fairness Act, GST is considered a small business by the Federal Communications Commission and the United States Small Business Administration. See Matter of Establishing Universal Service Mechanisms, Docket No.UT-980311(r), Comments of GST Telecom Inc. 1-5 (Filed September 8, 1998) (“Universal Service Comments”). As a carrier registered in Washington, GST will have to comply with any requirements adopted in this proceeding. GST will be adversely affected by the adoption of CPNI rules that are inconsistent with those adopted by the FCC. For the reasons GST set forth in its Universal Service Comments, GST urges the WUTC to undertake an appropriate regulatory analysis. GST incorporates by reference the comments filed in that proceeding. II. Adoption of Any Rules Will Conflict With and Frustrate Federal Purposes The WUTC’s proposed rules will invariably conflict with federal rules, frustrate Congressional purposes, and impose burdensome, confusing, and contradictory obligations on carriers. Even if the WUTC adopts rules intended to mirror exactly the FCC rules, inconsistent interpretations and conflicting enforcement will impose expensive, new burdens on carriers, leave carriers confused as to their obligations, and frustrate uniform implementation of the federal Act. This is not idle speculation, but hard fact. The inconsistencies and uncertainties will arise instantaneously upon WUTC enactment of the regulations proposed. A. FCC Rulemaking Is Incomplete and Subject To Reconsideration In February 1998, the FCC adopted comprehensive CPNI regulations, and issued a complex, 160-page interpretive order. Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other Customer Information, (hereinafter “CPNI Proceeding”) Second Report and Order and Further Notice of Proposed RuleMaking, 13 FCC Rcd. 8061 (released Feb. 21, 1998) reconsideration pending (hereinafter “Second Report”). The FCC’s rules have been the subject of significant controversy. Over forty parties have filed Petitions for Reconsideration, oppositions, or replies. In addition, the FCC’s rule makings are not complete. The FCC has adopted rules which implement only the provisions of 47 USC § 222(c). There is outstanding a Further Notice of Proposed RuleMaking to implement 47 USC § 222(a) which may impose new and different obligations and require modification of the existing FCC rules. Id., 13 FCC Rcd 8200-8204. Furthermore, as shown below, the FCC recently has stayed enforcement of rules the WUTC proposes to enact. As a result, the WUTC proposals are more restrictive and burdensome than the federal requirements, and thus may be subject to preemption. Id. at 8077-78. The FCC concluded that it had jurisdiction to enact CPNI rules which covered both interstate and intrastate services: We further conclude that our authority to promulgate regulations implementing section 222 extends to both the interstate and intrastate use and protection of CPNI and other customer information in several important respects. Second Report, 11 FCC Rcd. at 8074. Thus, until overturned on appeal, the federal rules cover all CPNI obtained by carriers in the provision of intrastate or interstate telecommunications services. Carriers must comply with the federal requirements in their use and protection of local service CPNI. There is no necessity for the WUTC to enact parallel CPNI regulations to protect Washington State customers in the provision of local service. Only if the FCC rules are held on appeal to be inapplicable to local service should the WUTC then consider adopting rules to implement the federal Act in order to fill any regulatory void. The states should not adopt CPNI rules. The specter of attempting to comply with 50 separate interpretations of the same CPNI rules, or 50 sets of separate rules, is daunting, if not impossible. Carriers need certainty in dealing with customer information. This is particularly true for smaller carriers such as GST. The WUTC proposals contribute uncertainty. Any perceived “benefit” to consumer privacy upsets the careful balance between privacy and competition enacted by Congress, and would interfere with “the accomplishment and execution of the full purposes and objectives of Congress.” Id., at 8078. B. WUTC Enactment of the FCC Software Flagging and Electronic Monitoring Rules Would Create Inconsistent and Burdensome Obligations Even if the WUTC does nothing more than enact the FCC rules, the WUTC will create conflicting and burdensome obligations for carriers. On September 21, 1998, the WUTC proposed to adopt the FCC rules which require carriers to implement software flagging of customer CPNI and electronic monitoring of carrier access to CPNI records. Compare proposed WAC 480-120-153 (1) and (3) with 47 CFR 64.2009(a) and (c) (1998). Three days later, on September 24, 1998, the FCC stayed enforcement of the very rules the WUTC proposes to adopt. CPNI Proceeding, Order, 1998 WL 65-5039(FCC) (released September 24, 1998) (hereinafter “Extension Order”). The software flagging and electronic monitoring rules are perhaps the most controversial CPNI requirements, and the most likely to be modified on reconsideration. The FCC initially deferred enforcement of these requirements until January 26, 1998. Second Report, 13 FCC Rcd. at 8200. However, in June 1998, the national telecommunications trade associations jointly requested a further stay of enforcement. Carriers demonstrated that the rules would require investments of hundreds of millions of dollars. Estimates submitted included the following: (1) GTE – $42 million development; $17 million annually; (2) BellSouth – $75 million over 5 years; (3) Sprint: $23.5 million to implement, $8 million to obtain computer capacity; (4) National Telephone Cooperative Assn. (NTCA) – $16-167 per line; (5) AT&T – $621 million, year one; (6) SBC – $54 million initially, $40-60 million annual maintenance of non-marketing databases, $900 million for ongoing marketing decision support system databases. Extension Order, slip op at 3, note 9. Just a few days ago, the FCC responded by extending the time for carriers to install electronic flagging and monitoring requirements until six months after reconsideration petitions are resolved. The FCC also indicated that it may modify the software flagging and electronic monitoring rules on reconsideration. Id., slip op at 3. The FCC recognized the universal opposition to CPNI software flagging and electronic monitoring: . . . we note that all segments of the industry unanimously oppose these requirements as adopted. We emphasize that the circumstances presented here are both unique and compelling. Id. Implementation of the proposed software flagging and electronic monitoring requirements in Washington State also would require investment of millions of dollars per system. The “unique and compelling . . . circumstances” for deferring enforcement of the federal rules militate against imposition of these onerous requirements by the states. The brief, tortured implementation history of the software flagging and electronic monitoring rules dramatically demonstrate the pitfalls awaiting WUTC adoption of supposedly “parallel” state requirements. The WUTC has not proposed any delay in enforcement, any stay pending FCC reconsideration, or any flexible implementation to avoid conflicts. Simply enacting the FCC rules would create inconsistent requirements, at substantial risk and expense to carriers. Washington State should not enact rules which the FCC has deferred, will reconsider, and may never enforce. III. The WUTC Proposes “Unpublished Number” Rules Which Directly Conflict With The Federal Balance Between Privacy, Competition, and Interstate Commerce. The WUTC proposes to prohibit a company from making a “telephone solicitation or telemarketing calls using its list of customers with nonpublished or unlisted numbers” unless annual notice is given to the customer. Proposed WAC 480-120-144. However, the Federal Communications Commission (FCC) determined that a customer’s name, address, and telephone number, including unlisted telephone numbers, were not CPNI, and could be used by the telecommunications company for contacting a customer about new service offerings. Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other Customer Information, CC Docket No. 96-115, Order, 1998 WL 65–5039 (F.C.C.) slip op. at 6-7, (May 21, 1998). Interpreting Congressional intent, the FCC struck a balance between consumer privacy, competition, and interstate commerce which the WUTC may not disrupt: If the definition of CPNI included a customer’s name, address, and telephone number, a carrier would be prohibited from using its business records to contact any of its customers to market any new service that falls outside the scope of its existing service relationship with those customers. In fact, under such an interpretation, a carrier would not even be able to contact a single customer in an effort to obtain permission to use their CPNI for marketing purposes because the carrier’s mere use of its customer list to initiate contact with its customer would constitute a violation of section 222. Id., at 7. The WUTC’s proposal would subject carriers to inconsistent requirements regarding contact with customers with unlisted numbers. Such customers must be contacted annually, while other notification and approval requirements must continue in effect until modified by the customer. Compare 47 CFR § 64.2007(d) with proposed WAC 480-120-152 and WAC 480-120-144. Having proposed to adopt conflicting notice requirements for customers with unlisted numbers, the WUTC proposes also to adopt notice applicability provisions inconsistent with the FCC rules. This is exactly the type of state-by-state variation which place carriers at risk in attempting to comply with different regulations governing the same business conduct. Customers changing their listings will create added confusion and risks for carriers. The proposed rules will increase the risk that carriers would violate Washington State rules when they conduct marketing efforts from Oregon, for example, in which carriers call Washington customers about local service improvements, or new “adjunct to basic” features. See proposed rule WAC 480-120-151(3)(c). Even if the WUTC disagrees with the FCC’s conclusion on carrier calls to customers with unlisted phone numbers, it may not enact conflicting rules which upset the balance Congress created, as interpreted by the regulatory agency Congress charged with implementing CPNI legislation. The WUTC should not place carriers at risk of inconsistent multi-state obligations. Instead, the WUTC should participate in the FCC’s rule making to resolve any conflicts or disagreements. IV. Conclusion In conclusion, it is respectfully submitted that the WUTC must refrain from adopting any CPNI rules, even those which attempt to mirror the FCC rules, unless the FCC rules are determined on appeal to be inapplicable to CPNI generated through the provision of local service. Respectfully submitted, GST TELECOM INC. By: /s/ RAYMOND J. KIMBALL Raymond J. Kimball, Esq. Swidler Berlin Shereff Friedman, LLP 3000 K Street, N.W., Suite 300 Washington, DC 20007 Telephone: (202) 424-7500 Attorney for GST Telecom Inc. Date: October 2, 1998. 254048.1