BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION IN THE MATTER OF ESTABLISHING ) DOCKET NO. UT-980311(r) UNIVERSAL SERVICE MECHANISMS ) JOINT COMMENTS OF AT&T AND MCI ON SECOND DRAFT RULES Introduction AT&T Communications of the Pacific Northwest, Inc., AT&T Wireless Services, Inc. (jointly “AT&T”), and MCI Telecommunications Corporation (“MCI”) submit these comments in the above-referenced docket. AT&T and MCI have previously provided the Commission with a comprehensive set of draft rules and extensive commentary throughout this as well as related proceedings. The concerns raised in those filings remain. In these comments, AT&T and MCI address only certain key policy issues that threaten the development of competition in this state to the detriment of Washington consumers. I.Supported Services WAC 480-123-090, 100, 200, 290, 300. The combination of rules that propose (a) support for all lines, (b) network capability beyond that designated by the FCC The mandate of 28.8 kilobits is not competitively neutral as it disadvantages wireless carriers because they are unable to consistently transmit data at this speed., and (c) reasonable comparability to mean identical prices and services between urban and rural areas results in a larger than necessary tax that ultimately will be paid by Washington’s consumers. In addition, the Commission’s proposed prohibition on billing the customer directly, continues to shield these subsidies from public scrutiny and virtually assures that consumers will pay too much. II. Eligible Telecommunications Carrier WAC 480-123-310 to WAC 480-123-350 Expansion of the criteria beyond that of Section 214(e) of the Act is essentially anti-competitive, and will inhibit local competitive entry by making it more difficult for new entrants to participate. The addition of criteria to include an ambiguous quality of service standard constitutes such expansion. AT&T and MCI have commented on the anti-competitive effects resulting from the expansion of the ETC criteria previously. III. Calculation of the Cost of Universal Service WAC 480-123-330 Designation of ETC The joint parties urge the Commission to incorporate the following sentence as rule language: “In no event shall the cost of universal service be calculated over a geographic area smaller than the area over which prices for unbundled network elements are deaveraged.” IV. Contributors and Contributions WAC 480-123-160 AND WAC 480-123-230 End-User Retail Revenue This draft rule has been significantly changed from the prior version and appears anti-competitive on its face. The prior version correctly referred to “Gross Intrastate Revenue”, albeit without reference to uncollectibles as discussed in previous comments. The current proposal is anti-competitive for several reasons. First, limiting this rule to “End-User Retail Revenues” exempts tens of millions of dollars of wholesale access revenues from the ILEC universal service responsibility. Second, it is discriminatory because the IXC retail toll revenues reflect and include access charges while the ILEC wholesale access revenues are exempted from universal service responsibility. This problem exists today in significant part because of the lack of local competition. The magnitude of the ILEC wholesale revenues (primarily access charges) dwarf the minuscule wholesale revenues of the CLECs. Given this disparity, it would be patently unfair to not include the wholesale access revenues of the ILECs in this calculation. Limiting the recovery of contributions to end-user retail revenues may be appropriate if the contributions are recovered directly from retail-end users only. It would be wrong to limit recovery of contributions to end-user retail revenues if the ILECs are allowed to recover these costs in the form of rate additives applied to wholesale services such as access. Whatever revenues are to be used as the basis for determining contributions, the rules must clearly limit to those generated in the intrastate jurisdiction only. It should also be noted that this jurisdictional issue is one of those under reconsideration by the Joint Board. AT&T and MCI appreciate the opportunity to provide comments on this draft rule. Respectfully submitted this 29th day of October, 1998. AT&T COMMUNICATIONS OF THE PACIFIC NORTHWEST, INC. _________________________________ Susan D. Proctor Maria Arias-Chapleau 1875 Lawrence Street, Suite 1575 Denver, CO 80202 (303) 298-6164 AT&T WIRELESS SERVICES, INC. Suzanne Toller 795 Folsom Street, Room 670 San Francisco, CA 94107 (415) 442-5587 MCI TELECOMMUNICATIONS CORPORATION Rogelio E. Peña Senior Attorney 707 17th Street, Suite 3600 Denver, CO 80202 (303) 390-6106