[28 Pa.B. 3180]
[Continued from previous Web Page]
Discussion We note that Bell's Petition at Docket No. P-00981358 originally requested a waiver of the 60-day notification period of the instant Business ICB tariff at Docket No. R-00984335. Since the 60 day review period ended on June 5, 1998, that request in the Petition is ''moot.'' At any rate, we have considered the Answers in Opposition to the Petition at Docket No. P-00981358 in reaching our decision on Bell's proposed ICB filing.
We have reviewed, in detail, Bell's proposed filing, the Answers In Opposition to Bell's Petition For Expedited Waiver by AT&T, TCG, ATX and MCI, as well as MCI's Formal Complaint and Bell's Answer to MCI's Formal Complaint. For the reasons discussed below, we shall limit the application of the ICB tariff to Bell's preparation of a bid on the Commonwealth of Pennsylvania RFP. Thereafter, the general determinations made in this Opinion and Order shall govern any future submissions that will be reviewed on a case-by-case basis.
We limit our determinations in this proceeding to those reasonably necessary for giving the Commonwealth of Pennsylvania access to a greater number of bidders on its RFP than would be the case if Bell's request were denied. We also do so in order to prevent any harm to the pending proceedings on related matters here at the Commission.
We accomplish these goals by granting relief that gives Bell the alternative to file a revised tariff which implements guidelines to use under this tariff when submitting proposals for RFPs on a case-by-case basis. The alternative tariff filing will remain in effect as a determination under 66 Pa.C.S. §§ 1301 et seq. as a separate and distinct decision apart from the pending Message Toll Services Reclassification Filing at Docket No. P-00971293 and the Business Services Reclassification Filing at Docket No. P-00971307.
We give Bell the alternative of revising its proposed tariff in accordance with the following terms and conditions.
1. For each proposal submitted under the ICB tariff, Bell shall include a ''fresh-look'' clause on an on-going 3 year basis.
2. The ICB arrangements permitted under the tariff shall be made available in instances where RFPs, in the aggregate, generate $500,000, or more, in annual Bell Atlantic-Pa. total billed revenues. This revenue bar, however, will be $40,000 for RFP's under Section 254 of the TA-96.
3. Any ICB arrangements under the tariff, along with a copy of the RFP, shall be provided to the Commission simultaneously with submission of the bid.''
4. Bell shall submit a proprietary version of any contract executed under this tariff within 30 days of execution.
5. The Rates charged under the ICB arrangements shall exceed the imputation test for toll services approved by the Commission in its Final Order at Docket No. R-00953396C0001. Bell shall develop an imputation test and submit information showing no predatory pricing, price squeezes, and other unfair acts with regard to local and access rates in the tariff consistent with Chapter 13 of the Public Utility Code.
6. Since the public interest and Chapter 13 in the Public Utility Code require public inspection, the contracts submitted under this tariff shall be made publicly available with due regard for Bell's proprietary interest in the underlying contracts.
7. The relief granted in this Opinion and Order shall not be construed to constitute any Commission determinations regarding Bell's obligations under its Network Modernization Plan, including but not limited to DSL technology, or on any subsequent determinations by either the FCC or the Commission concerning Bell's pending Section 706 Petition.
8. The relief granted in this Opinion and Order shall not be construed to countenance, in any way, an exception for Bell with regard to Sections 271 and 272 of the TA-96 regarding the delivery of interLATA services.
9. The relief granted in this Opinion and Order shall not be construed to constitute evidence of any Commission determination regarding the ongoing proceeding examining the filing requirements and interim guidelines for CLECs and ILECs.
10. The scope of relief granted in this Opinion and Order shall be limited to that necessary for Bell's submission of response to the Commonwealth of Pennsylvania RFP. However, the determinations regarding fresh looks, imputation, contract transparency, Commission review, and the impact on pending issues and proceedings shall govern other filings submitted under this tariff.
We have reached these determinations in order to address the reasonable concerns of the commentators, including Bell. We have also reached these determinations to facilitate the submission of multiple RFPs to the Commonwealth of Pennsylvania. Moreover, our result is premised on Chapter 13 of the Public Utility Code and avoids prejudicing any ongoing proceedings before the Commission. Finally, our result is based, in significant part, on our determinations to the following questions:
1. Is the proposed Business ICB tariff premature and does the proposed Business ICB tariff circumvent and grant essentially the same regulatory freedom that Bell is seeking to obtain in the pending Business Services Reclassification proceeding at Docket No. P-00971307?
2. Will Pennsylvania consumers and Bell's competitors be disadvantaged by Bell's proposed Business ICB tariff?
3. Will there be any detrimental consequences if Bell's proposed Business ICB tariff were approved and if Bell's Business Service Reclassification Tariff Under Chapter 30 were subsequently rejected?
4. Is the proposed Business ICB tariff in violation of the Commission's Competitive Safeguards Investigation at Docket No. M-00940587 and inconsistent with the plain language of 66 Pa.C.S. § 3005(e)(2)?
5. Must there be operational parity among Bell and the CLECs before regulatory parity exists among the carriers for a tariff like that proposed by Bell in this case?
The first question deals with whether Bell's Business ICB tariff is premature because it circumvents and essentially grants the same regulatory freedom that Bell is seeking to obtain in the pending Business Services Reclassification proceeding at Docket No. P-00971307.
In our view, an unqualified approval of the tariff could be cited as evidence of a Commission determination well beyond the issues pending in the Toll Services Reclassification Chapter 30 Petition and Business Services Reclassification Chapter 30 Petition at Docket Nos. P-00971293 and P-00971307, respectively. However, this determination is premised on Chapter 13 and shall not, in any way, implicate those ongoing proceedings arising under Chapter 30. This is a separate and distinct determination arising under a separate and distinct statutory provision.
Moreover, our determination in this proceeding must not be construed to be a grant of regulatory flexibility for all business services including local, toll and access services3 when such services are provided under a competitive bid situation. That is not our result. Any subsequent submission under this ICB tariff shall be examined on a case-by-case basis consistent with the determinations reached in this proceeding.
In our March 30, 1998 Opinion and Order at Docket No. P-00971307, we stated the following in response to our action to extend the consideration period of Bell's Business Services Reclassification filing from 180 to 270 days:
Finally, the main thrust of BA-PA's Petition is that a 180-day schedule is crucial to preventing substantial prejudice to its business customers, and the public generally because business customers are increasingly issuing requests for proposals which require submission of customized proposals. BA-PA claims that it is unable to provide such customized service offerings due to current tariff restrictions. However, this argument holds little weight since BA-PA's Special Services tariff at Pa. P.U.C. No. 304 does provide for flexible pricing and sanctions pricing on an individual case basis depending on the circumstances in each case. Nevertheless, in recognition of the potential for benefit to the Commonwealth, and the express acknowledgment of BA-PA's counsel that the issue of a Commonwealth-wide RFP might not occur before this proceeding is completed, the Commission stands ready to expeditiously respond to any request for appropriate waiver of BA-PA's tariff provisions or clarification that would facilitate a fair bidding process.We underscore that our determination today does not mean that Bell has blanket approval to provide customized bids to any and all business customers. We believe that granting such broad regulatory relief in this proceeding could act to the detriment of the issues being examined in the ongoing Business Services and Toll Services Reclassification proceedings. Other than the general guidelines for competitive bids set forth above, the specific tariff relief granted in this proceeding is carefully limited to waiver of the tariff provisions Bell needs in order to submit a competitive RFP to the Commonwealth of Pennsylvania. That is underscored by the pending Commonwealth of Pennsylvania's state-wide contract.4
Consequently, we are limiting Bell's relief to the Commonwealth of Pennsylvania RFP. However, the determinations regarding fresh looks, imputation, contract transparency, Commission review, and the impact on pending issues and proceedings shall guide other filings under Chapter 13.
The second question pertains to whether Pennsylvania consumers and Bell's competitors would be disadvantaged by Bell's proposed Business ICB tariff. At this point, Bell has certain regulatory flexibility afforded to it under Chapter 30. Presently, the following specific services have been declared competitive: Billing Services, Centrex Service, Directory Advertising, High Capacity Special Access Services, Paging Services, Repeat Call Service, and Speed Calling Service.
Bell also currently has regulatory flexibility with regard to its business Message Toll Service under its Customer Specific Pricing tariff in Section 7 of its Toll Tariff-Telephone Pa. P.U.C. No. 1A. The proposed Business ICB tariff would extend regulatory flexibility to include all business local exchange services as well as all access services.
We note that Bell's business customers that issue RFPs and commit to generating $40,000 or greater in annual Bell Atlantic-Pa., Inc. total billed revenues could certainly benefit immediately under Bell's proposed tariff if the resulting rates will be below Bell's present tariffs. However, this immediate benefit may eventually become a burden on those same business customers if a business customer becomes locked into a long-term contract with Bell and competition in the local market increases to the point that the business customer would no longer benefit from Bell's Business ICB tariffs.
We believe that by requiring Bell to limit the contract period in its bids in response to RFPs would resolve the issue of locking new competitors out of the market. We will also ensure that the affected business customer is not harmed by long term contracts before all business services and other access services are deemed competitive by this Commission under Chapter 30.
We also believe that increasing the $40,000 annual revenue commitment level to a higher amount of $500,000 will further promote competition and protect competitors until such time that true local competition develops throughout Bell's service territory in Pennsylvania. However, the lower $40,000 limit shall not apply to Section 254 services to facilitate greater bids than would otherwise be the case in these fledgling services.
Moreover, as part of the alternative, we shall require Bell to include a three year ''fresh-look'' clause in each proposal that is submitted under the ICB tariff, until such time that Bell's local, toll and access services are deemed competitive. We note that if Bell's proposal were selected by the Commonwealth of Pennsylvania, or any other entity, this ''fresh-look'' clause would permit the Commonwealth of Pennsylvania, or any other entity, to review the rates quoted by Bell in response to the RFP every 3 years in order to take advantage of the developing competitive market and to ensure that competitors are not locked out of the market.
In taking these actions, we will allow Bell to move a step closer in obtaining additional regulatory flexibility in responding to business competition in the local and toll market under Chapter 13 separate and apart from any Chapter 30 proceeding seeking similar relief.
If Bell accepts this alternative, we are willing to let this tariff become effective on one day's notice. We believe that consumers will benefit because the rates will be set at levels at, or above costs, and provisions have been made to ensure that this becomes a market reality. Also, competition is promoted and competitors are protected during the transition with provisions that prevent them from responding to future developments under the three-year ''fresh-look'' requirement. There are also annual revenue limit for contracts under this tariff. We have expressly declared that our decisions here do not constitute any determinations regarding Bell's NMP, Bell's Section 706 Petition at the FCC, the pending rulemaking on CLEC and ILEC filing requirements, and any Section 271 proceedings.
The third question involves whether there would be any detrimental consequences if Bell's proposed Business ICB tariff were approved and other action was subsequently taken regarding Bell's Business Service Reclassification Tariff Under Chapter 30. We are particularly concerned that a similar occurrence of what happened with Bell's Centrex Extend Service at Docket No. M-00940587 might also result here if Bell was awarded a contract only to find later that it must increase the rates to the contracting party because the rates have been deemed by a higher court to be below cost.
To prevent this regulatory problem, we are giving Bell the alternative of including a tariff that allows an interested person to test any contracts executed under an RFP consistent with the Commission's proprietary treatment procedures found in the Commission's Procedures Manual at 219. This insures that any harm occasioned by the discovery of any predatory pricing, price squeezes, or other unfair acts will be recovered from Bell's deregulated operations and accounts. The beneficiary of any such contract shall not, and will not, be required to bear the burden stemming from any predatory pricing, price squeezes, or other unfair acts. These requirements protect the consumer's benefit, provide Bell the flexibility and confidentiality they need to submit a realistic bid, and promote the transparency in terms and conditions needed to create a truly robust and competitive market.
The fourth question deals with whether Bell's proposed ICB tariff is in violation of the Commission's Competitive Safeguards Investigation at Docket No. M-00940587 and inconsistent with the plain language of 66 Pa.C.S. § 3005(e)(2). A tariff approved under Chapter 13 of the Public Utility Code should not, standing alone, normally violate competitive safeguards when the express terms, prices, and conditions are absent and a contract has not been executed. Moreover, the competitive safeguards requirements of Chapter 30 are separate from the Chapter 13 tariff we approve today even if, to be extra careful, we craft an alternative that is consistent with those provisions. Also, the tariff we approve shall necessarily be conditioned by any subsequent determinations, guidelines, or regulations that we make regarding competitive safeguards under Chapter 30. Finally, this proceeding is clearly without detriment to the Chapter 30 proceedings now pending before the Commission.
The fifth question deals with whether there must be operational parity among the CLECs and ILECs before regulatory parity exists among the carriers for a tariff like that proposed by Bell in this case. As indicated above, the Commission is examining the viability of guidelines, regulations, and policies in a current proceeding. Consequently, the Commission's grant of relief under Chapter 13 in this case should not be cited as evidence of any Commission predisposition in that pending proceeding.
In that regard, we note that Bell accurately points out that some of its competitors have similar provisions to what Bell has proposed in this tariffs. We believe it is important to note that we will extend the same flexibility to all of Bell's competitors that we extend to Bell by thealternative offered by this Opinion and Order. Since the scope of this Opinion and Order is limited to a Chapter 13 tariff focused on the pending Commonwealth of Pennsylvania RFP, our determinations in that regard are limited to similar provisions used in conjunction with submission of a party's bid to the Commonwealth of Pennsylvania's RFP.
Finally, in light of the alternative that we are offering Bell, if Bell accepts the alternative, we shall direct MCI to formally notify this Commission and Bell Atlantic-Pa., Inc. whether it wishes to maintain its Formal Complaint action against the instant tariff filing, as modified by our Opinion and Order, and without any prejudice to MCI's rights of participation in any proceeding associated with the instant docket, within 15 days from the date of entry of this Opinion and Order.
Our review and analysis of the proposed tariff revisions and supporting data indicates that the proposed revisions may be unjust, unreasonable, unlawful or contrary to the public interest. Therefore, we shall suspend the proposed tariff revisions and give the Company the alternative to file a revised tariff supplement in accordance with the terms and conditions delineated in the body of this Opinion and Order. Should the Company accept the alternative, then it would not appear that the tariff revisions, as modified, would be unjust, unreasonable, unlawful, or contrary to the public interest. This does not constitute a determination that the alternative tariff revisions are lawful, just and reasonable, but only that further investigation is not warranted at this time; Therefore,
It Is Ordered That:
1. The request of Bell Atlantic-Pennsylvania, Inc. for an expedited waiver of the 60-day notification period for Business Individual Case Basis Tariff which was filed on April 6, 1998, be, and hereby is, dismissed as moot.
2. The proposed tariff revisions to Bell Atlantic-Pennsylvania, Inc.'s Local General Tariff-Telephone Pa. P.U.C. No. 1, which were filed on April 6, 1998, to become effective June 5, 1998, and subsequently voluntarily postponed until June 21, 1998, be, and hereby are, suspended for a period of not to exceed 6 months, or until December 21, 1998, pursuant to 66 Pa.C.S. § 1308.
3. The Company shall file the appropriate tariff suspension supplement.
4. The Company be, and hereby is given the alternative to file, within 10 days after the date of entry of this Opinion and Order, a revised tariff supplement, which cancels and supersedes the tariff revisions which were filed on April 6, 1998, and which incorporates the following revisions:
(a) For each proposal submitted under the ICB tariff, Bell shall include a ''fresh-look'' clause on an ongoing 3 year basis.
(b) The ICB arrangements permitted under the tariff shall be made available in instances where RFPs, in the aggregate, generate $500,000, or more, in annual Bell Atlantic-Pa. total billed revenues. This revenue bar, however, will be $40,000 for RFP's under Section 254 of the TA-96.
(c) Any ICB arrangements under the tariff, along with a copy of the RFP, shall be submitted to the Commission simultaneously with the submission of the bid.
(d) A proprietary version of any contract executed under this tariff shall be submitted to the Commission within 30 days of execution.
(e) The Rates charged under the ICB arrangements shall exceed the imputation test for toll services approved by the Commission in its Final Order at Docket No. R-00953396C0001. Bell shall develop an imputation approach and submit information showing no predatory pricing, price squeezes, and other unfair acts with regard to local and access rates in the tariff consistent with Chapter 13 of the Public Utility Code.
(f) Since the public interest and Chapter 13 in the Public Utility Code require public inspection, the contracts submitted under this tariff shall be made publicly available with due regard for Bell's proprietary interest in the underlying contracts.
5. If the Company files a revised tariff supplement in accordance with Ordering Paragraph 4, above, then it is further ordered that:
(a) The revised tariff supplement shall be permitted to become effective on at least one day's notice;
(b) The suspension shall be terminated and the case marked closed;
(c) Bell, be, and hereby shall be, permitted to submit a proposal in response to the Commonwealth of Pennsylvania RFP consistent with this Opinion and Order and the guidelines in the alternative tariff.
(d) The relief granted in this Opinion and Order shall not be construed to constitute any Commission determinations regarding Bell's obligations under its Network Modernization Plan, including but not limited to DSL technology, as well as any subsequent determinations by either the FCC or the Commission concerning Bell's pending Section 706 Petition.
(e) The relief granted in this Opinion and Order shall not be construed to countenance, in any way, an exception for Bell with regard to Sections 271 and 272 of the TA-96 regarding the delivery of interLATA services.
(f) The relief granted in this Opinion and Order shall not be construed to constitute evidence of any Commission determination regarding the ongoing proceeding examining the filing requirements and interim guidelines for CLECs and ILECs.
(g) The scope of relief granted in this Opinion and Order shall be limited to that necessary for Bell's submission of response to the Commonwealth of Pennsylvania RFP. However, the determinations regarding fresh looks, imputation, contract transparency, Commission review, and the impact on pending issues and proceedings shall guide other filings submitted under this tariff.
(h) MCI be, and hereby is, directed to formally notify this Commission and Bell Atlantic-Pa., Inc. whether it wishes to maintain its Formal Complaint action against the instant tariff filing, as modified by our Opinion and Order, and without any prejudice to MCI's rights of participation in any proceeding associated with the instant docket, within 15 days from the date of entry of this Opinion and Order. A copy of MCI's response shall be served on the Office of Administrative Law Judge.
6. If Bell Atlantic-Pennsylvania, Inc. does not file a revised tariff supplement in accordance with Ordering Paragraph No. 4, above, then it is further ordered that:
(a) An investigation on Commission Motion shall hereby be instituted, without further Order of the Commission, to determine the lawfulness, justness and reasonableness of the rates, rules and regulations contained in the proposed tariffs, and all items of concern delineated in the body of this Opinion and Order shall be investigated;
(b) MCI's Formal Complaint shall be consolidated with the investigation;
(c) The Office of Administrative Law Judge shall assign this matter to an Administrative Law Judge for Recommended Decision, and shall schedule such hearings as may be necessary;
(d) The investigation shall include all of the items of concern delineated in the body of this Opinion and Order as well as MCI's Formal Complaint.
7. This Opinion and Order is without prejudice to any other formal complaints timely filed against the proposed tariff revisions.
8. A copy of this Opinion and Order be served upon Bell Atlantic-Pa., Inc., AT&T Communications of Pa., Inc., ATX Telecommunications Services, Ltd., MCI Telecommunications Corporation, MCImetro Transmission Services, Inc., Teleport Communications Group, the Office of Consumer Advocate, the Office of Small Business Advocate, the Office of Trial Staff.
9. This Opinion and Order be published in the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 98-1078. Filed for public inspection July 2, 1998, 9:00 a.m.]
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