BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION ) In the Matter of Establishing ) Universal Service Mechanisms ) Docket No. UT-980311(r) ) ____________________________________) Comments of GST Telecom Inc. on the Second Draft Universal Service Rules Pursuant to the Notice of Proposed Rulemaking (“NPRM”) adopted on October 21, 1998, GST Telecom Inc. (“GST”) respectfully submits its comments in this docket, UT-980311(r), concerning the second draft of universal service rules. GST, as a carrier registered with competitive status (“CLEC”) in the state of Washington, will be required to make contributions to this fund should the Commission adopt the proposal in current form. GST notes that many of the issues raised in its prior comments were not addressed in this revision or were not adopted by the Commission. GST strongly urges the Commission to reconsider these rules based on GST’s comments submitted in response to prior notice in this docket. Therefore, GST incorporates by reference its comments filed in reponse to the previous notice in this docket. I. Section-by-Section Analysis GST provides the following comments on the individual sections of the second draft universal service rules. Any section for which GST fails to provide commentary should not be interpreted as GST support for that particular section’ s principles or language; it simply means that GST has no comment at this time. A. WAC 480-120-070 Outcome Measures Reports Please refer to GST’s comments in response to the first draft of the universal service rules. B. WAC 480-120-090 Access Line Please refer to GST’s comments in response to the first draft of the universal service rules. C. WAC 480-123-100 Access Line Equivalent Please refer to GST’s comments in response to the first draft of the universal service rules. D. WAC 480-123-140 Eligible Telecommunications Carrier Please refer to GST’s comments in response to the first draft of the universal service rules. E. WAC 480-123-150 Service Area Please refer to GST’s comments in response to the first draft of the universal service rules. F. WAC 480-123-180 High-Cost Location Please refer to GST’s comments in response to the first draft of the universal service rules. G. WAC 480-123-190 Revenue Benchmark Please refer to GST’s comments in response to the first draft of the universal service rules with respect to the opportunity to comment on the revenue benchmarks. However, GST is troubled that the Commission does not provide any guidance or formula for determining what portion of a bundled price will be considered in arriving at a revenue benchmark. GST believes that the Commission should provide appropriate details on the methodology it plans to adopt in order to allocate the portion of the bundled price to the revenue benchmark. H. WAC 480-123-200 Services Supported The Commission makes one modification to the definition that GST found adequate in the first draft. The Commission proposes that universal service support for construction and upgrading of local loops so that they can receive information at rates no lower than 28.8 kilobits per second. Carriers eligible for withdrawals from the fund could then use the fund to pay for the installation of fiber-optic capabilities to the curb, i.e., each business and residence served by the carrier. In short, GST, other CLECs operating in urban areas (as well as their customers) would be subsidizing services that these low-cost customers themselves do not have. Universal service funds are designed to ensure that rural and other hard-to-serve customers have services equal to those available to easily served customers in urban and suburban areas; not services vastly superior to those available to those customers. Therefore, GST opposes the inclusion of this provision and believes that the Commission should adopt the provision in the original draft. I. WAC 480-123-240 Revenue Reports Please refer to GST’s comments in response to the first draft of the universal service rules. J. WAC 480-123-250 Access Line Reports Please refer to GST’s comments in response to the first draft of the universal service rules. K. WAC 480-123-290 Contributions From Company Revenue Please refer to GST’s comments in response to the first draft of the universal service rules. L. WAC 480-123-300 Commission Notice on Universal Service Please refer to GST’s comments in response to the first draft of the universal service rules. M. WAC 480-123-330 Designation of ETC While GST had no comment in its initial comments on this section, GST objects to the new version because it cross-references the provision of advanced services in WAC 480-123-200. An adequate level of quality for Internet access may vary dramatically depending upon the technology used and the distance to the central office. For example, if one carrier is able to offer Internet access to all customers at 256 kilobits per second and another carrier only is able to offer the service at 128 kilobits per second, is the provision of the slower bit rate an inadequate level of quality? Similarly, if a customer is unable to reach a dial-up Internet service provider due to excessive line noise at a particular moment, has the carrier failed to provide adequate service? And if an Internet user fails to reach a particular server, is that considered inadequate service? These and other questions should raise substantial concerns about the Commission proposing to include advanced services within the definition of universal service. GST also objects to the proposed alternative version of this section. In particular, the alternative provides that an eligible carrier will have facilities that do not impede the provision of advanced telecommunication and information services by 2003. It is impossible, given the rapid change in technology, to ascertain the types of services that will be offered in 2003. For example, two years ago, 33.6 kilobits per second was considered state-of-the-art for Internet access over conventional telephone lines. Today, local exchange carriers in urban areas are offering residential customers DSL service with access rates ten times those of a modem that was considered state-of-the-art just two years ago. Without defining the type of technology that would be used to provide these advanced services, it is impossible to determine whether a carrier will be able to comply with this mandate. And given the rapid change in the industry, GST does not believe the Commission should select particular types of technology since any selected technology may become outdated very quickly. One only need ask the manufacturers of Kflex modems or those local exchange carriers that promoted ISDN development about the rapid pace of technological advancement in computer communications. N. WAC 480-123-380 Universal Service Support Calculation Please refer to GST’s comments in response to the first draft of the universal service rules. O. WAC 480-123-440-460 Independent Administrator Please refer to GST’s comments in response to the first draft of the universal service rules. P. WAC 480-123-490 Program Compliance Please refer to GST’s comments in response to the first draft of the universal service rules. V. Conclusion GST commends the Commission for the efforts it has undertaken in tackling this complex problem. However, GST is disappointed that the Commission has not addressed many of the major concerns that GST noted in response to the original comments. Nevertheless, GST remains committed to working with the Commission and its staff as it continues the process for developing a universal service fund that achieves the objective of supporting high-cost carriers while reducing the regulatory burdens and costs on competitive carriers. Dated at Vancouver, Washington, this 29th day of October, 1998. Respectfully submitted, [electronically submitted] Barry Pineles Regulatory Counsel GST Telecom, Inc. 4001 Main Street Vancouver, WA 98663 Tel: 360-906-7104 Fax: 360-906-7165 e-mail: bpineles@gstworld.net