DOCKET NO. UT-970300 PAGE 1 BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of the Investigation Into U S WEST COMMUNICATIONS, INC.'S Compliance with Section 271 of the Telecommunications Act of 1996. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) ) ) ) ) ) ) DOCKET NO. UT-970300 INTERPRETIVE AND POLICY STATEMENT ON PROCESS FOR RBOC APPLICATION UNDER SECTION 271 OF THE 1996 TELECOMMUNICATIONS ACT INTRODUCTION The Telecommunications Act of 1996, Public Law No. 104-104, 101 Stat. 56, codified at 47 U.S.C. 151 et seq. (1996) (referred to as the 1996 Act or simply the Act in this document) is intended to open telecommunications markets to new competition. Sections 251 and 252 provide the conditions for new entrants (competing local exchange companies, or CLECs) to compete with incumbent local exchange carriers (LECs), including Regional Bell Operating Companies (RBOCs) such as U S WEST Communications, Inc. (USWC), in the local service market. The RBOCs provide toll within local area transport areas (LATAs) but up to now have been prohibited from providing toll service between LATAs pursuant to limitations imposed with their divestiture from AT&T. Section 271 of the Act is designed to increase competition in the long distance calling market by allowing RBOCs to enter the market for interLATA toll in their regions once certain competitive conditions exist in their local markets. The law allows the Federal Communications Commission or FCC to authorize RBOC entry into interLATA markets when the RBOC meets standards that are specified in subsection 271(c). Under Section 271, state commissions have a significant role to play in the process. Section 271 identifies many aspects of State participation. This policy statement has been developed by the Commission through open public participation to define the process by which this Commission will fulfill its obligation under the Act. Section 271 Requirements in General Under Section 271, USWC may enter the interLATA market in its service territory if it meets the following requirements: 1. USWC has entered into at least one binding and approved interconnection agreement with a facilities-based competitor who offers service to both residential and business customers, 47 U.S.C. § 271(c)(1)(A), or USWC offers access and interconnection through a statement of generally available terms. 47 U.S.C. § 271(c)(1)(B). 2. USWC complies with the "competitive checklist" contained in 47 U.S.C. § 271(c)(2)(B). 3. USWC provides the interLATA service through a separate affiliate as required by 47 U.S.C. § 272. 4. The application is consistent with the public interest, convenience, and necessity. Approval Process for InterLATA Entry In order to enter the interLATA market, federal law requires that USWC file a petition for approval with the FCC. The FCC must then consult with the state commissions in the USWC region to "verify" that the company is in compliance with the requirements of subsection (c) of the Act. 47 U.S.C. § 271(d)(2)(B). The FCC must also consult with the United States Department of Justice (DOJ). FCC Procedures On December 6, 1996, the FCC issued a Public Notice (FCC 96-469) entitled “Procedures for Bell Operating Company Applications Under New Section 271 of the Communications Act.” The procedures provide, in part, that state commission written consultation must be provided to the FCC within 20 days after the RBOC application is filed. The FCC also entered an order on August 19, 1997, in its Docket No. 97-137, In re the Application of Ameritech Michigan, which the FCC stated was designed in part to guide state commissions and RBOCs in future applications, and it issued a Public Notice on September 19, 1997, entitled “Revised Procedures for Bell Operating Company Applications under Section 271 of the Communications Act." NARUC "Best Practices" To facilitate the FCC's consideration of Section 271 applications, representatives of the National Association of Regulatory Utility Commissioners (NARUC), DOJ, and the FCC held discussions on the importance of state participation in the application process. As a result of these discussions, a list of "best practices" was developed. The list was provided to USWC on August 1, 1996. In summary, NARUC recommends that: (1) RBOCs should provide state commissions advance notice of plans to file an application, (2) that 90 days prior to a filing with the FCC, the RBOC should formally notify the state commission of its intent to file with the FCC and include the information necessary for the state's review of the application, and (3) the RBOC should provide the same materials to the FCC and DOJ at the time of filing with the state. Purpose of this Policy Statement This Commission has an obligation under the Act to verify to the FCC that USWC is in compliance with Section 271(c) of the Act. 47 U.S.C. § 271(d)(2)(B). The FCC has a total of only 90 days to make its determination and has directed states to provide their consultation to the FCC within only 20 days of the RBOC application. In order for this Commission to have any reasonable opportunity to gather and analyze the information necessary to render an informed opinion to the FCC, the Commission must begin its investigation of USWC’s compliance in advance of the actual USWC filing with the FCC. Advance consideration will have the additional benefit of allowing effective participation by other interested parties. USWC has represented that it intends to file with the FCC pursuant to Section 271 regarding the state of Washington, but has not formally stated an expected time for that filing. The Commission could not verify compliance with statutory requirements in its consultation with the FCC if it lacked the time or the information to make a determination. It is therefore in USWC’s best interests to cooperate with a preliminary state determination on the issues so that the state is in a position to verify compliance contemporaneously with the company’s FCC filing. Both the FCC and the DOJ have indicated that a thorough state review will be extremely valuable to them in performing their responsibilities under the Act. In addition, NARUC recommended that state commissions commence proceedings to prepare for RBOC 271 filings. We establish the elements in this Policy Statement to define and to enable our review of USWC’s compliance with Section 271. The Commission’s review leading to this Policy Statement has been undertaken pursuant to its obligation under Section 271 of the 1996 Act and under Title 80 RCW to regulate rates, services, facilities and practices of telecommunications companies in the public interest. This proceeding is investigative in nature. The initial phase of the proceeding has been conducted pursuant to the preproposal notice of inquiry in Docket No. UT-960269 and has resulted in this Interpretive and Policy Statement regarding Section 271 implementation. RCW 34.05.310, RCW 34.05.230. This interpretive and policy statement interprets the requirements of law and defines the form of proceeding for the second phase, reviewing USWC’s application. The Commission believes that it has sufficient information following the workshop and the written comments to establish the policies for conducting its review under federal law. STATEMENT OF POLICY A. Procedural Matters 1. USWC is directed to notify the Commission at least 90 days in advance of its intention to file a Section 271 application with the FCC to provide in-region interLATA service in Washington. The filing should include the following information: a. Evidence to be relied upon in showing that USWC has met the requirements relating to the presence of a facilities-based carrier, 47 U.S.C. § 271(c)(1)(A). b. Evidence to be relied upon showing that each requirement of the "competitive checklist" has been met, 47 U.S.C. § 271(c)(2)(B). c. Evidence to be relied upon showing the extent to which the service will be provided by a separate affiliate, pursuant to Section 272. d. Evidence showing that the application is in the public interest, including the extent of competition and any special unforeseen circumstances. Further details of the filing shall be resolved in discussions among Commission Staff, USWC, Public Counsel, and other participants and presented by Commission Staff to the Commission pursuant to the Order adopting this Interpretive and Policy Statement, no later than 90 days after its entry. The provisions may be accepted or modified by letter from the Secretary of the Commission. 2. USWC shall provide a copy of the foregoing notice and materials to the FCC, the DOJ, and to each party on the service list for this proceeding, no later than the time it files with this Commission. Any exceptions to this requirement may be resolved prior to filing by letter from the Secretary of the Commission. 3. The filing shall include copies of all information that the Company will file with the FCC. The Company may request a waiver of the filing requirements as to specific documents that otherwise would be required to be filed, from the Secretary of the Commission. The Secretary may waive the requirement by letter in advance of the required filing date, provided that the waiver does not inappropriately inconvenience the Commission or participants. B. Clarification of Matters to Be Included in the Filing 1. The term “binding agreement” as used in Section 271(c)(1)(A) of the Act means an agreement that is final according to its terms, but may include an agreement that is the subject of judicial review. 2. The phrase “is providing access and interconnection” in the Act means the actual delivery of service in quantities and at locations as reasonably requested under a binding agreement that meets all requirements for such service, that it is provided equally and in a nondiscriminatory manner, and that sufficient service has been and is being provided under the agreement to determine whether pertinent standards are being met. 3. The term “predominantly” over the competing carrier’s own facilities means that more than 50% of the facilities must be the competitor’s own. Service provided with unbundled facilities from the RBOC is sufficiently analogous that it will qualify as the CLEC’s “own” facilities. 4. The phrase “competing provider” in the statute means that “real” -- i.e., more than insignificant or de minimis -- competition must exist between the interconnecting company and USWC. It does not mean that a fully competitive market must have emerged. A subsidiary or affiliate of USWC may not constitute a competing facilities-based provider. 5. Real competition must exist in both residential and business service. If USWC believes that structural impediments to competition exist, USWC is not precluded from presenting credible and objective evidence that it believes will meet its burden of proving the validity of that theory. 6. The “statement of generally available terms” option that is set out in Section 271(c)(1)(B) of the Act is not available to USWC in Washington, consistent with the purposes of the act and the provisions of Section 271(c)(1)(B), subject to the possibility of such a review for residential services if the test above is met. 7. The "Competitive Checklist" review required under Section 271 is not satisfied by the mere demonstration that the Commission considered those items in approving an interconnection agreement. The review under Section 271 requires an examination of the implementation of agreements, rather than the existence of agreements. Full implementation is required, including a showing of nondiscriminatory treatment. 8. No special definitional, legal, or policy issues related to items on the checklist are identified that the Commission should address and resolve in advance of a Section 271 filing. Such issues may be identified in the course of reviewing an application. 9. USWC must provide supporting information as to its compliance with items specified in the checklist, of a nature and in a form that enables the Commission to determine whether USWC is in compliance. 10. All matters relating to USWC’s Section 271 application should be addressed in a single process. Some relevant matters may relate to other issues, such as enforcement, which are not foreclosed by a pending 271 application. 11. USWC must provide sufficient information in its filing to demonstrate that any affiliate or affiliates involved in local exchange service are satisfactorily segregated from its own operations, and must also demonstrate by sufficient specific objective information that it is not showing a preference for any affiliate. 12. The public interest test is within the Commission’s obligation to consult with the FCC. Related information is also essential to the Commission’s consultation regarding the extent to which a competitor is “providing service.” 13. The existence of one or more signed interconnection agreements does not mean that the market for local exchange service is competitive. USWC must present information that is in its possession about the number of customers, the nature of service, and such other objective information as will enable the Commission to determine whether the market is open and whether one or more competitors are offering more than token competition to USWC. 14. USWC shall provide information in its filing that will enable the Commission to respond to questions posed by the DOJ regarding USWC service in the state of Washington. PROCEEDING SCHEDULE The Commission adopts the following as a model schedule that will enable a full, fair and impartial review of USWC’s application to the FCC for authorization to provide interLATA message toll service and enable the Commission to consult with the FCC and perform its obligations under state law to interface with federal agencies on matters relating to the Commission’s jurisdiction. 90 days in Advance of submission to FCC (“Notice Date”) USWC provides the Commission and other interested persons with notice of its intent to file a Section 271 application, including all supporting evidence that it intends to file with the FCC and additional information as required to satisfy Commission requirements, including pre-filed testimony. Notice Date + 7 days Commission and others serve information requests. Notice Date + 17 days USWC answers information requests. Notice Date + 31 days Commission Staff and interested persons file prefiled testimony. Notice Date + 38 days USWC serves its information requests. Notice Date + 48 days Deadline for responses to USWC requests. Notice Date + 62 days USWC files answering testimony. Notice Date + 69-70 days Hearings Notice Date + 80 days Simultaneous post-hearing memoranda. Notice Date + 90 days Draft Commission Consultation [date of USWC’s expected filing with FCC]. Notice Date + 97 days Participants’ comments and objections to Draft Consultation. Notice Date + 110 days Commission consultation due with FCC (If USWC files application with FCC at Notice + 90 days). The Commission will retain the authority, on its own motion or at the request of interested persons, to modify the model schedule to consider the actual filing date, holidays or other exigencies. To assure that exigencies do not hamper the Commission’s ability to complete its review in the time provided, the Company is urged to file in advance of the minimum time allowed. DATED at Olympia, Washington and effective this day of October 1997. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION ANNE LEVINSON, Chair RICHARD HEMSTAD, Commissioner WILLIAM R. GILLIS, Commissioner