BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION MCI TELECOMMUNICATIONS ) CORPORATION, AND AT&T ) COMMUNICATIONS OF THE ) DOCKET NO. UT-970658 PACIFIC NORTHWEST, INC., ) ) MOTION OF GTE NORTHWEST Complainants, ) INCORPORATED TO DISMISS ) v. ) ) US WEST COMMUNICATIONS, INC., ) GTE NORTHWEST, INC., and UNITED ) TELEPHONE COMPANY OF THE ) NORTHWEST, ) ) Respondents. ) GTE Northwest Incorporated (“GTE” or “Company”) requests that the Washington Utilities and Transportation Commission ("Commission") dismiss Formal Complaint and Petition for Declaratory Order of MCI and AT&T (“Complaint”). If the Complaint is not dismissed, all allegations will be deemed denied pursuant to WAC 480-09-420(9)(a) and 480-09-425(3)(a). The Complaint is unnecessary and without merit. On September 20, 1996 the Federal Communications Commission (“FCC”) released its Report and Order (“Payphone Order”), and subsequently its Order on Reconsideration on November 8, 1996 (Reconsideration Order”), in CC Docket Nos. 96-128 and 91-35 on the subject of payphone deregulation (collectively “FCC Payphone Orders”). Among other things, the FCC directed local exchange carriers to file tariffs for basic payphone services that were: (1) cost based; (2) consistent with the requirements of Section 276 of the Telecommunications Act with regard, for example, to the removal of subsidies from exchange and exchange access service; and (3) nondiscriminatory. The tariffs were required to be filed no later than January 15, 1997 and approved and effective no later than April 15, 1997. On April 4, 1997 and April 15, 1997 the FCC released two clarification orders (“Clarification Orders”). On January 15, 1997, GTE filed revisions to its state tariffs respecting customer owned pay telephone service. GTE had several discussions with the Commission Staff during its review of said tariff, and, as a result, the Company filed revised payphone tariffs on March 11 and March 18, 1997. The revised filing was approved by the Commission on March 12, 1997, and became effective April 15, 1997. On April 17, 1997, more than three months after GTE had filed its tariff, and more than a month after the Commission has already rendered its approval, AT&T and MCI filed its Complaint against U S West Communications, Inc. (“U S West”), United Telephone Company of the Northwest (“United”) and GTE requesting that the Commission investigate these payphone tariff filings and, more specifically, to lower access rates to reflect the deregulation of payphones and certify that U S West, United and GTE are in compliance with the FCC Payphone Orders. This Complaint is totally without merit. GTE’s filing fully complies with the FCC Payphone Orders and has already been approved and gone into effect. Pursuant to the Clarification Orders, the FCC issued additional information to ensure, among other things, that payphone rates are cost-based and meets the FCC’s “new services test. Additional payphone filings may be necessary. There is also no FCC requirement that the Washington Commission must “certify” that payphone requirements have been met. Therefore, GTE requests that the Commission reject and dismiss the Complaint. GTE’S TARIFF COMPLIES WITH FCC REQUIREMENTS GTE has already initiated various actions at the Federal and State level in order to fully comply with the FCC Payphone Orders. These actions follow the FCC Reconsideration Order (Paragraph 131) and include items such as: (1) filing a revision to its federal cost accounting manual (“CAM”) to reflect new accounting treatment for payphone assets; (2) filing a revision to its interstate carrier common line (“CCL”) tariff reflecting a reduction for deregulated payphone costs and reflecting additional subscriber line charge (“SLC”) revenue; (3) reviewing and adjusting intrastate tariffs reflecting the removal of charges that recover the costs of payphones and intrastate subsidies (where applicable); (4) taking necessary action to deregulate and reclassify the value of payphone customer premises equipment (“CPE”) and related costs as required in the FCC Payphone Orders; (5) filing intrastate tariffs for basic payphone service (for “dumb” and “smart” payphones); and (6) filing intrastate and interstate tariffs for unbundled functionalities associated with those lines. Pursuant to the above requirements, GTE made its payphone tariff filing with this Commission on January 15, 1997. Specifically, this filing removed public and semipublic telephone service from the tariff, established a Coin Line Service that would allow independent payphone providers to use a “dumb” payphone, and set up a new unbundled payphone service called Answer Supervision. GTE already provides Public Access Line (“PAL”) Service that enables independent providers to offer payphone service using a “smart” payphone. GTE included cost data support in its filing that indicated the cost of providing Coin Line Service and Answer Supervision would be covered under the proposed rates. GTE’s payphone tariff was approved by the Commission on March 12, 1997 and became effective on April 15, 1997. PAYPHONE SUBSIDY REQUIREMENT HAS BEEN MET Included in the Complaint is an overriding allegation that U S West, United and GTE “are not in compliance with the FCC payphone orders” with respect to the removal of subsidies from their payphone operations. With regard to GTE that allegation is wrong. The Company has made the necessary subsidy analysis and included such information in its January 15, 1997 tariff filing. Pursuant to Section 276(b)(1)(B) of the Telecommunications Act of 1996 (“TA96"), incumbent LECs are to “discontinue the intrastate and interstate carrier access charge payphone service elements and payments...and all intrastate and interstate payphone subsidies from basic and exchange access revenues...”. Paragraph 163 of the FCC Reconsideration Order indicates that LECs must file intrastate tariffs that remove any subsidies from exchange and exchange access services, that such payphone tariffs be filed no later than January 15, 1997, and that the tariffs be effective no later than April 15, 1997. Pursuant to these requirements, the Company conducted subsidy analyses in all of its states, including Washington, to determine if there were any payphone costs, or subsidies, that would continue to be recovered through its regulated rates after the reclassification and deregulation of payphone costs. This analysis has previously been provided to the Commission Staff. The Company’s intrastate analysis identified all the payphone expenses and investment that were being reclassified and deregulated pursuant to Section 276 of TA96 and the FCC Payphone Orders. The analysis also recognized that there will be certain revenues that will also be reclassified and deregulated. If the deregulated intrastate revenues generated by the payphone service exceed the revenue requirement of providing such service, then there would be no remaining cost recovery in its regulated rates and charges. Conversely, if the revenues did not cover the revenue requirement of these deregulated payphone costs, then there would continue to be some recovery, or subsidy, from the Company’s regulated rates and charges. The results of the intrastate study, that have already been provided to the Commission Staff, clearly demonstrate that the revenues cover, and, in fact exceed, the revenue requirement of the payphone service that is being deregulated. As a result, it is clear that GTE does not have any subsidy that requires elimination and no further action is required to comply with this aspect of the FCC Payphone Orders. In the Executive Summary that was filed with its payphone tariff of January 15, 1997, GTE included an explanation of this specific issue and stated that a subsidy did not exist. FCC DID NOT REQUIRE THAT STATE COMMISSIONS MUST “CERTIFY” Included in the Complaint is a request that the Washington Commission “certify” whether U S West, United and GTE have met all the state-specific requirements identified in the FCC Payphone Orders, and that such information should be communicated to the FCC. There is nothing in the FCC Payphone Orders that would require that the Washington Commission “certify” that LECs have met all such requirements. Paragraph 131 of the Reconsideration Order states that “a LEC must be able to certify” that it has met the requirements. GTE submitted a letter to the FCC on April 18, 1997 certifying that it has met all LEC compliance requirements contained in the FCC Payphone Orders, subject to the limited waivers of (1) the Commission’s tariffing requirements for unbundled features and functions, and (2) the Commission’s requirements that effective intrastate tariffs for payphone services be in compliance with the federal “new services” test, that were contained in the FCC’s Clarification Orders. This certification should be sufficient. There is no requirement or need for the Washington Commission to make this certification for U S West, United and GTE. SUMMARY The Complaint filed by AT&T and MCI over three months after GTE filed its payphone tariff, and after which time the Commission has already given its approval, is entirely without merit. GTE’s payphone tariff is in full compliance with the FCC Payphone Orders, has already been approved by this Commission and is currently in effect. GTE has made all the requisite filings and studies and has determined that no payphone subsidy exists in Washington. As a result, there are no further tariff changes that need to be made. There is also no requirement that the Washington Commission make any “certification” to the FCC. The Commission should dismiss this Complaint, as it pertains to GTE, as it has fully addressed and responded to all the FCC payphone requirements. Dated this _____ day of May, 1997. GTE NORTHWEST INCORPORATED ______________________________ Richard E. Potter A. Timothy L. Williamson Timothy J. O’Connell Attorneys for GTE Northwest 1800 41st Street Everett, WA 98201 (206) 261-5006 Fax: (206) 258-9275