DOCKET NO. UT- # PAGE 1 BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of the ) Supplemental Application of ) PARACOM, INC., ) DOCKET UT-971186 for an Order Amending the ) Registration of Applicant ) FIRST SUPPLEMENTAL as a Telecommunications Company ) ORDER AMENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) REGISTRATION On May 14, 1998, Paracom, Inc., filed a supplemental application to amend its registration as a telecommunications company pursuant to RCW 80.36.350. Applicant proposes to offer resold long distance and debit card services to the public. Paracom, Inc., is a Washington corporation, headquartered in Tukwila, Washington, and is wholly-owned by numerous individuals. Initially, Paracom, Inc., was authorized to provide pay telephone and operator services in Docket UT-971186. Rates, terms and conditions set forth in the proposed tariff, filed as Exhibit G of the application, are structured to be competitive with other telecommunications companies in relevant markets. Exhibit G was amended on May 14, 1998. Paracom, Inc., has provided information showing that it meets the requirements of RCW 80.36.350. The nature of the debit card service implies that Paracom, Inc., will collect advance payments from customers. Pursuant to statutes and rules governing registration applications and advance payment proposals, Paracom, Inc., has proposed a satisfactory bond agreement for protection of those advance payments. Initially, the bond agreement will be for $7,500 and will increase proportionally as the customer base increases. If Paracom, Inc., ceases operations, it will provide the insurer and the Commission lists of outstanding account numbers and balances within 48 hours. Paracom, Inc., will limit the maximum denomination of each debit card purchased by residential customers to not more than $50 and debit cards purchased by business customers to not more than $200. Within 15 days after September 30, 1998, and quarterly thereafter, Paracom, Inc., 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-971186 PAGE 1 reporting period. Statements shall continue to be filed within 15 days after each 3-month period thereafter until Commission staff informs applicant such reports are no longer required. Based upon this information, Paracom, Inc., will adjust the amount of the bond to assure compliance with WAC 480-121-040. 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 if the company has maintained adequate levels in the bond agreement during the previous 12-month period. Paracom, Inc., will state an unconditional money back guarantee on 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. If Paracom, Inc., goes out of business, it will provide refund information on the company’s “800" phone number for its customers for a minimum of six months. Paracom, Inc., will provide a free call detail report to customers upon request. FINDINGS THE COMMISSION FINDS: 1. Paracom, Inc., filed a supplemental application for registration as a telecommunications company pursuant to the provisions of RCW 80.36.350 and the rules and regulations of the Commission. 2. As to form, the application filed by Paracom, Inc., as supplemented and amended, meets the requirements of RCW 80.36.350 and the rules and regulations of the Commission adopted pursuant thereto. 3. The registration of Paracom, Inc., 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. O R D E R THE COMMISSION ORDERS: 1. After the effective date of this order and subject to the conditions contained in this Order, the Commission approves the supplemental application of Paracom, Inc., filed pursuant to RCW 80.36.350 for registration as a telecommunications company to provide service to the public in this state. 2. The proposed tariff revisions as filed on May 14, 1998, supplemented and amended in Exhibit G, attached to the application, is satisfactory. 3. Registration of Paracom, Inc., as a telecommunications company shall not be construed as an endorsement of financial viability or of the investment quality of any securities it may issue. 4. As a telecommunications company providing service to the public in this state, Paracom, Inc., is subject to the jurisdiction of this Commission under the provisions of Title 80 RCW and all rules and regulations of the Commission adopted pursuant thereto. 5. Paracom, Inc., filed with the Commission a satisfactory bond agreement in the amount of $7,500. As part of the bond agreement and in the event the company ceases operations, Paracom, Inc., will within 48 hours provide to the insurer and the Commission lists of outstanding account numbers and balances. 9. Paracom, Inc., will limit the maximum denomination of each debit card to be purchased to $50 for residential and $200 for business customers. 10. Within 15 days after September 30, 1998, and quarterly thereafter, Paracom, Inc., will submit to the Commission a report containing the following information specific to 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 reporting period. Statements shall continue to be filed within 15 days after each 3-month period thereafter until Commission staff informs applicant such reports are no longer required. Based upon this information, Paracom, Inc., will adjust the amount of the bond to assure compliance with WAC 480-121-040 and notify the Commission of that adjustment in its next quarterly report. 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 if the company has maintained adequate levels in the bond agreement during the previous 12-month period. 11. Paracom, Inc., will state an unconditional money back guarantee on 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. 12. In the event the company ceases operations, Paracom, Inc., will provide refund information on the company’s “800" phone number for its customers for a minimum of six months. 13. Paracom, Inc., will provide a free call detail report to customers upon request. DATED at Olympia, Washington, and effective this 27th day of May, 1998. PAUL CURL, Acting Secretary