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PA Bulletin, Doc. No. 14-1231

NOTICES

Proposed Modifications to the Application Form for Approval of Authority to Offer, Render, Furnish or Supply Telecommunications Services to the Public in this Commonwealth

[44 Pa.B. 3474]
[Saturday, June 7, 2014]

Public Meeting held
May 22, 2014

Commissioners Present: Robert F. Powelson, Chairperson; John F. Coleman, Jr., Vice Chairperson; James H. Cawley; Pamela A. Witmer; Gladys M. Brown

Proposed Modifications to the Application Form for Approval of Authority to Offer, Render, Furnish, or Supply Telecommunications Services to the Public in the Commonwealth of Pennsylvania; M-00960799

Final Order

By the Commission:

 On December 21, 2006, this Commission entered a Tentative Order (2006 Tentative Order), initiating a proceeding for the revision of the application form and the related instructions (Application) that are utilized by new entrants seeking to provide telecommunications services within the Commonwealth. The 2006 Tentative Order solicited comments and reply comments on the suggested Application revisions.1 We have conducted an in-depth review of the submitted initial and reply comments as well as a reappraisal of whether the Application and the relevant procedures that are currently in force for new telecommunications market entrants in Pennsylvania are in need of material changes. We conclude that the evolving market for telecommunications services and their providers within the Commonwealth do not necessitate at this time a change in the Application and the relevant market entry procedures.

A. Background

 In response to the enactment of the Federal Telecommunications Act of 1996 (TA-96), the Commission initiated a generic proceeding in order to facilitate the market entry and wholesale interconnection of competitive telecommunications carriers in Pennsylvania. This generic proceeding resulted in our Implementation of the Telecommunications Act of 1996 Orders (Implementation Orders) that also included the development of the relevant Application.2 Since the initial issuance of the Implementation Orders in 1996, certain practices and procedures relating to the market entry and certification Application for telecommunications services providers operating in Pennsylvania have evolved in a way that detailed action at this time is not necessary.

 Moreover, the Commission has reviewed certain generic wholesale interconnection matters that were originally addressed in the Implementation Orders.3 Furthermore, certain case adjudications clarified the market entry process for facilities-based competitive carriers seeking operating authority in the service areas of certain rural incumbent local exchange carriers (RLECs).4 Also, the concerns over delays in addressing entry and dispute resolution implicated in our initial review decision have abated.

 As noted in the 2006 Tentative Order, the November 30, 2004, enactment of the current Chapter 30 law (Act 183), and its impact on the regulation of long-distance interexchange carriers (IXCs) necessitated further revisions of the Application.5 The enactment of Pennsylvania's Voice-Over-Internet (VoIP) Freedom Act on July 4, 2008 (P. L. 627, S.B. 1000), codified at 73 Pa.S. § 2251.1 et seq., defined the Commission's jurisdiction over retail communications services that are based on the Internet Protocol (IP) such as VoIP, and also affected the market-entry and certification process for certain providers.6 In 2012, this Commission further addressed our telecommunications market entry rules when we issued additional guidance regarding the timeframe within which a telecommunications carrier should provide service to the public in Pennsylvania following its certification.7

 The Implementation Orders and resolution of challenges and disputes between incumbents and competitors since then have collectively served both this Commission and the regulated telecommunications industry for a very long period in the introduction and enhancement of competitive telecommunications services within the Commonwealth. However, certain issues relating to the market-entry process of competitive telecommunications services providers, and the potential consequences of associated and lengthy litigation,8 were identified even before the issuance of the 2006 Tentative Order, and these issues were addressed at length by the commenting parties.

B. Discussion

 The Commission received substantive initial and reply comments to the 2006 Tentative Order from a number of participating parties. Commenters included the U.S. Department of Justice Antitrust Division (U.S. DOJ), the Office of the Consumer Advocate (OCA), the Broadband Cable Association of Pennsylvania (BCPA), the Pennsylvania Telephone Association (PTA), and Sprint Communications Company L.P. (Sprint).

 The passage of time, the enactment of legislation by the Pennsylvania General Assembly, regulatory developments both within the Commonwealth and in the federal jurisdiction, and the results of individual administrative adjudication and appellate court proceedings have further clarified and refined the standards and practices that govern the market entry, certification, and wholesale interconnection of telecommunications services providers operating within Pennsylvania.

 For example, certain corporate merger and/or change of control proceedings have been adjudicated both within this Commonwealth and the federal jurisdiction. These proceedings have affected the operations of incumbent local exchange carriers (ILECs) that are subsidiaries or affiliates of certain holding companies, and have provided additional guidance on wholesale interconnection obligations that have been applicable for specified time frames.9 The Commission subsequently adopted regulations designed to standardize and streamline the process for reviewing merger and change of control proceedings.10

 Since the extensive litigation that occurred with the Sprint and Core Application proceedings and issuance of the regulations governing transfers of control in Section 63.321 of our rules, the Commission has not experienced the same degree of controversy with the market entry of competitive carriers in the Commonwealth, including areas served by rural ILECs, where wholesale interconnection issues under Section 251(c) of TA-96, 47 U.S.C. § 251(c), have not so far been implicated.

 This combination of regulatory action and recent historical experience currently resolves most, if not all, of the more serious concerns that were expressed by the interested parties during the comment cycle in this proceeding including those that were put forward by the U.S. DOJ. However, we wish to highlight some of the U.S. DOJ concerns below and explain why further action at this time is not needed in light of subsequent developments.

 The first primary U.S. DOJ concern regarding this Commission's market entry certification process centered on the fact ''that the filing of any timely protest challenging an application for certification, regardless of the merits, automatically sends the application to the Office of the Administrative Law Judge (''[O]ALJ'') for an administrative hearing, which can entail extensive discovery and the presentation of evidence and live witnesses.''11 The second U.S. DOJ concern focused on the grant of provisional operating authority for competitive local exchange carriers (CLECs) that wished to enter the service areas of rural ILECs. The U.S. DOJ observed that ''in contrast to its rules for non-rural areas, the Commission has not authorized CLECs to enter on a provisional basis in rural areas pending resolution of the certification dispute.''12 The U.S. DOJ commented that these ''procedures not only delay entry, but also raise costs for a new entrant, thereby erecting barriers to entry in tension with Section 253(a) of the [federal] Telecommunications Act.''13

 The U.S. DOJ Comments also pointed out that on occasion, competitive carriers seeking market entry into the service areas of certain ILECs have entered into ''agreements to limit the territories in which CLECs will compete''14 and thus avoid costly litigation proceedings associated with protested applications. The U.S. DOJ asserted that ''such agreements by competitors or prospective competitors to divide territories or not compete in certain territories are among the most serious antitrust law problems.''15

 The U.S. DOJ recommended ''that the Commission extend its non-rural procedures to facilities-based entrants in rural areas by (1) granting provisional operating authority and (2) providing that protests by rural ILECs should be reviewed by Commission staff before the matter is referred to an ALJ, to determine if they raise legitimate issues.''16 The U.S. DOJ suggested that ''the Commission adopt time limits to speed the ALJ hearing process,'' and that ''as in non-rural territories, the Commission should permit facilities-based entrants in rural territories to 'commence the provision of service included in the application' at the time its application 'has been accepted for filing.'''17

 The concerns of the U.S. DOJ hold merit, especially since the U.S. DOJ is entrusted with the enforcement of relevant federal law. However, recent history and other regulatory action indicate that the market entry of competitive wireline carriers in both non-rural and rural ILEC service territories has been addressed in much more abbreviated proceedings as a routine matter without the protracted litigation that took place in the Sprint and Core Application proceedings around the 2006/2007 time period.

 Also, the Commission has not hesitated to take appropriate action to clarify the scope of relevant issues and provide guidance in application proceedings where substantive litigation was imminent.18 The Commission has also taken affirmative action in order to facilitate the certification of new entrants in a manner that has prevented future contested wholesale interconnection proceedings.19

 Furthermore, as pointed out earlier, the Commission has been able to substantially revise the regulations governing transfers of control to mesh them with federal law, particularly the coordination of control and/or merger proceedings involving the subsidiary or affiliate ILECs of certain holding companies with corresponding proceedings before the Federal Communications Commission (FCC), and to incorporate appropriate merger conditions in its related decisions. See generally Embarq-CenturyTel Merger Orders. Consequently, the application processes that were originally established in our 1996 Implementation Orders, as modified through time, have not recently presented ''barrier to entry'' issues in potential conflict with the letter and the spirit of Sec. 253(a) of TA-96, 47 U.S.C. § 253(a).

 At this point, however, we are hesitant to adopt a uniform mandate suggested by the U.S. DOJ recommendation that facilities-based CLECs seeking market entry in the service areas of rural ILECs be automatically given provisional operational authority pending the adjudication of their respective certification applications. The existing process, the unique federal legislative provisions addressing competitive carrier entry in service areas of rural ILECs, and the recent lack of protests against relevant market entry and certification applications, adequately balances the rights of competitive carriers and those for rural ILECs under Sec. 251(f)(1) of TA-96, 47 U.S.C. § 251(f)(1), and does not produce any extraordinary delays or costs that would constitute an unwarranted ''barrier to entry.''

 The risk of protests against market entry applications of competitive carriers where such protests may lack substantive merit, and are used to delay entry, or support anticompetitive restrictions as a precondition to with-drawing such protests are matters that can continue to be addressed through the existing process of the Commission's Implementation Orders in conjunction with our procedural rules and due process requirements. To the extent that future developments demonstrate that the working procedures supporting termination of this application revision proceeding raise issues of unreasonable process, timelines, or competitive impact, the Commission could limit those protest proceedings under the Public Utility Code to specific time periods governing market entry in rural areas under federal law. However, we see no reason to take that approach at this time because the process of referring protests to the OALJ has produced timely results in a reasonable period.

 In particular, we emphasize that the automatic referral of a protested application to OALJ does not mean that a meritless protest will necessarily survive the process of preliminary and subsequent motions or that the Commission will not be able to constructively intervene by timely addressing relevant petitions for interlocutory review and answers to material questions. See generally 52 Pa. Code §§ 5.302 to 5.305. We acknowledge that this process may entail an expenditure of time and impose potentially unnecessary costs on an applicant. However, this Commission is also legally obliged to afford appropriate due process to all pending proceedings and their participants, including protestants to market entry applications of competitive carriers. Similarly, in matters where an applicant's provisional operating authority is concerned, the preliminary grant of such authority and its potential revocation while an application is pending are decisions first made by Commission Staff. Such action is subject to Commission review and approval. This process already requires notice to a recipient that the action is being taken and that the notice inform the recipient of their right to file a timely appeal from a Staff determination under our regulations. See inter alia 52 Pa. Code 1.75 and 52 Pa. Code § 5.44.

 In light of our extensive review of the comments submitted in this proceeding, we will not make, at this time, any substantive modifications to the existing application form and the accompanying processes that govern the market entry of providers of telecommunications services within this Commonwealth. Nevertheless, we will continue to actively monitor the relevant issue areas and actively intervene where and when the conduct of entities that we regulate so requires. Therefore,

It Is Ordered That:

 1. A copy of this Order be served upon the parties submitting comments in this proceeding.

 2. A copy of this Order be published in the Pennsylvania Bulletin.

 3. The instant phase of this proceeding be terminated and marked closed while retaining the relevant Docket No. M-00960799 for appropriate use in future proceedings as needed.

ROSEMARY CHIAVETTA, 
Secretary

[Pa.B. Doc. No. 14-1231. Filed for public inspection June 6, 2014, 9:00 a.m.]

_______

1  A separate set of Directed Questions was concurrently propounded through a separate Statement of then Vice Chairman James H. Cawley.

2  In Re: Implementation of the Telecommunications Act of 1996, Docket No. M-00960799, Order entered June 3, 1996, 1996 WL 482990; Order on Reconsideration entered September 9, 1996, 26 Pa.B. 4588 (1996), 1996 WL 677528 (collectively Implementation Orders).

3  See generally Proposed Modifications to the Review of Interconnection Agreements, Docket No. M-00960799, Tentative Order adopted June 26, 2003; Final Order entered May 3, 2004, 34 Pa.B. 2657 (May 15, 2004).

4  See generally Amended Application of Vanguard Telecom Corp., et al., Docket Nos. A-310621F0002, A-310621F0003, Orders entered April 8, 1999 (Material Question), and August 23, 2000; Application of AT&T Communications of Pennsylvania and TCG Pittsburgh, et al., Docket Nos. A-310125F0002, A-310213F0002, Order entered April 10, 2001, 95 Pa. P.U.C. 277 (2001), 2001 Pa. PUC LEXIS 11.

5  2006 Tentative Order at 3.

6  See generally Application of Comcast Business Communications, LLC d/b/a Comcast Long Distance for Expanded Authority to Offer, Render, Furnish or Supply Telecommunications Services as a Competitive Local Exchange Carrier to the public in the Commonwealth of Pennsylvania, et al., Docket Nos. A-2008-2029089 et al., Order entered September 29, 2008.

7  Final Order Regarding the Commission's Plan to Implement A One-Year Timeframe for Inactive Telecommunications Carriers To Provide Service On An Annual Basis Within the Commonwealth of Pennsylvania, Docket Nos. M-2011-2273119 and M-00960799, Order entered July 19, 2012.

8  See generally Application of Sprint Communications Company L.P. For Approval of the Right to Offer, Render, Furnish or Supply Telecommunications Services as a Competitive Local Exchange Carrier to the Public in the Service Territories of Alltel Pennsylvania, Inc., Commonwealth Telephone Company and Palmerton Telephone Company, Docket Nos. A-310183F0002AMA, A-310183F0002AMB, A-310183F0002AMC, Order entered December 1, 2006, 101 Pa. P.U.C. 895 (2006) (Sprint Application); Application of Core Communications, Inc. for Authority to amend its existing Certificate of Public Convenience and necessity and to expand Core's Pennsylvania operations to include the Provision of competitive residential and business Local exchange telecommunications services throughout the Commonwealth of Pennsylvania, Docket Nos. A-310922F0002AmA, A-310922F0002AmB, Order entered December 4, 2006, (Core Application), aff'd Rural Tel. Co. Coalition v. Pub. Util. Comm'n, 941 A.2d 751 (Pa. Cmwlth 2008).

9  See generally Joint Application of The United Telephone Company of Pennsylvania LLC d/b/a Embarq Pennsylvania and Embarq Communications, Inc. For approval of the Indirect Transfer of Control To CenturyTel, Inc., Docket No. A-2008-2076038, Opinion and Order entered May 28, 2009; Tentative Order entered November 25, 2009; Opinion and Order entered March 1, 2010, aff'd Lloyd v. Pa. Pub. Util. Comm'n, 17 A.3d 425 (Pa. Cmwlth 2011), 2011 Pa. Commw. LEXIS 77 (Embarq-CenturyTel Merger Orders—coordination and incorporation of transfer of control and merger conditions with corresponding proceeding before the Federal Communications Commission).

10  See generally Rulemaking to Amend Chapter 63 Regulations so as to Streamline Procedures for Commission Review of Transfer of Control and Affiliate Filings for Telecommunications Carriers, Docket No. L-00070188; and Petition of Level 3 Communications, LLC To Amend the Public Utility Commission Regulations to Streamline Transfer of Control and Affiliate Filing Requirements for Competitive Carriers, Docket No. P-00062222, Final Rulemaking Order adopted April 22, 2010, 40 Pa.B. 4254 (2010), set forth at 52 Pa. Code § 63.321 et seq.

11  U.S. DOJ Comments, at 7 and n. 13.

12  U.S. DOJ Comments, at 8 (citation omitted).

13  U.S. DOJ Comments, at 8.

14  U.S. DOJ Comments, at 9.

15  U.S. DOJ Comments, at 9.

16  U.S. DOJ Comments, at 10-11. The U.S. DOJ points out that such a procedure had been adopted for the entry of competitive carriers in the service areas of non-rural ILECs with our June 1996 Implementation Order. Id., at 11 and n. 26.

17  U.S. DOJ Comments, at 11 (citations omitted).

18  See generally Joint Petition of Verizon Pennsylvania Inc. and Halo Wireless Services, Inc. for Approval of an Interconnection Agreement and Amendment No. 1 to the Interconnection Agreement Under Section 252(e) of the Telecommunications Act of 1996 et al., Docket Nos. A-2011-2251147, A-2011-2250700, Comments Protests and Objections of the Pennsylvania Telephone Association filed August 2, 2011, Secretarial Letter entered August 11, 2011, Halo Wireless Services, Inc., Notice of Dismissal Without Prejudice filed September 29, 2011.

19  See generally Application of Intrado Communications, Inc. for Approval to Offer, Render, Furnish or Supply Telecommunications Services as a Competitive Local Exchange Carrier to the Public in the Service Territories of: Verizon Pennsylvania Inc.; Verizon North Inc.; The United Telephone Company of Pennsylvania d/b/a Embarq Pennsylvania, Docket Nos. A-2008-2027726, A-2008-2027733, A-2008-2027713, Order entered August 1, 2008 (CLEC supplying alternative 911/E911 connectivity services is entitled to rights and responsibilities of Sec. 251 and 252 of TA-96, 47 U.S.C. §§ 251 and 252).



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