Preproposal statement of inquiry was filed as WSR 05-10-100.
Title of Rule and Other Identifying Information: Chapter 480-123 WAC, Universal service, eligible telecommunications carrier (ETC) designation and certification.
Hearing Location(s): Commission Hearing Room, Second Floor, Chandler Plaza, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, on May 18, 2006, at 1:30 p.m.
Date of Intended Adoption: May 31, 2006.
Submit Written Comments to: Carole J. Washburn, Washington Utilities and Transportation Commission, P.O. Box 47250, Olympia, WA 98504-7250, e-mail email@example.com, fax (360) 586-1150, by May 3, 2006. Please include "Docket UT-053021" in your comments.
Assistance for Persons with Disabilities: Contact Mary De Young by May 16, 2006, TTY (360) 586-8203 or (360) 664-1133.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The commission has jurisdiction to designate certain common carriers as eligible telecommunications carriers (ETCs) so the carriers may receive federal universal service support funds. An ETC may request that the commission certify to the Federal Communications Commission (FCC) that the ETC is using federal support only for the intended purposes. The proposed rules delete the current rule that addresses certification to the FCC (WAC 480-120-399(2)). The proposed rules establish the requirements for designation as an ETC and create requirements for reporting and certification for those ETCs that request commission certification to the FCC that the ETC has used federal universal service support only for the intended purposes. The proposed rules will enable the commission to provide oversight of the use of federal universal service support funds.
Proposed Rule Topics: WAC 480-123-020 Definitions, 480-123-030 Contents of petition for designation as an eligible telecommunications carrier (ETC), 480-123-040 Approval of petitions for ETC designation, 480-123-050 Revocation of ETC designation, 480-123-060 Annual certification of ETCs, 480-123-070 Annual certifications and reports, 480-123-080 Annual plan for universal service support expenditures, and 480-123-999 Adoption by reference.
Reasons Supporting Proposal: The FCC has requested state commissions adopt rules for ETC designation and certification that will result in oversight of the use of federal universal service support by ETCs. The proposed rules respond to that request.
Statutory Authority for Adoption: RCW 80.01.040, 80.04.160, 80.36.600, 80.36.610.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Washington utilities and transportation commission, governmental.
Name of Agency Personnel Responsible for Drafting: Bob Shirley, 1300 Evergreen Park Drive S.W., Olympia, WA 98504-7250, (360) 664-1292; Implementation and Enforcement: Carole J. Washburn, 1300 Evergreen Park Drive S.W., Olympia, WA 98504-7250, (360) 664-1174.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Designation as an ETC is the threshold requirement for a carrier to be eligible to draw funds from the federal universal service fund. For an ETC to continue receiving funds from one year to the next, it must obtain annual certification from the UTC to the FCC that the ETC will use federal universal service support funds only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.
The essential effect of the rules is to require information from each ETC sufficient for the UTC to determine if it should certify to the FCC that the ETC uses federal high-cost support only for the intended purposes under law, and to determine how the funds benefit customers in Washington. The proposed rules seek less information on many topics from companies than the FCC requires of companies it certifies, but the proposed rules also seek information on portions of federal support that companies self-certify to the FCC.2
II. PROCESS: On May 10, 2005, the UTC invited comments on this topic from interested persons. After comments were received and reviewed, the UTC held a workshop attended by approximately fifteen representatives of stakeholders and the commissioners. The June 29, 2005, workshop was held in the afternoon and the discussion touched on all significant issues raised in the comments.
On July 14, 2005, the UTC held a workshop for the purpose of receiving a presentation by the National Exchange Carrier Association (NECA). Two commissioners attended and several representatives of stakeholders. The presentation described the process used by NECA to determine the amount of federal universal service fund support that will be received by rural telephone companies (all of which are ETCs in Washington).
On October 21, 2005, the UTC circulated draft rules and requested comments not later than November 14, 2005. On October 27, 2005, the UTC circulated a request for comments on the expected economic impact of the draft rules and requested responses not later than November 22, 2005.
On November 23, 2005, the UTC notified interested persons that a rule proposal would be presented to the commission on Wednesday, December 14, 2005. On December 6, 2005, the UTC notified interested persons that it would not hold a hearing for the purpose of receiving oral comments on a proposed rule on December 14, 2005, and invited further comment not later than January 27, 2006.
The UTC received thirteen responses to its request for economic information to use to develop a small business economic impact statement (SBEIS) for this rule making.
III. REGULATORY FAIRNESS ACT REQUIREMENTS: The Regulatory Fairness Act requires that an SBEIS include a brief description of the reporting, record-keeping, and other compliance requirements of the proposed rule. It also requires a list of the kinds of professional services needed to comply with the requirements of the proposed rule.
The proposed rules are based on comments, including economic impact information, made by stakeholders in response to draft rules. The proposed rules reflect the process of sharing a draft with stakeholders, reviewing their comments and economic impact information, and preparing proposed rules that contain changes intended to reduce the economic impact of the final rules on small business.
IV. BRIEF DESCRIPTION OF REQUIREMENTS IN DRAFT RULE:
Petitions for ETC Designation: The draft rules required a petition by a carrier that seeks ETC designation. This has been required of petitioners for ETC designation since 1997.
In addition to the petition, the draft rules required a substantive plan identifying the investments to be made with initial federal support during the first two years in which support is received, and a substantive description of how those expenditures will benefit customers.
The petition must also be accompanied by a general description of the area where the petitioner has customers, and an electronic (.shp format) map must be included. The map need only be general; it need not show the location of every line or cable but must, through shading or cross-hatching, describe the area where service is provided.
The petition must also contain factual information about the operations of the petitioner that demonstrate the petitioner's ability to remain functional in emergency situations. Finally, the petition must include information that demonstrates the petitioner will comply with the applicable consumer protection and service quality standards.
Annual Certification Reports in Draft Rules: To obtain annual certification under the draft rule, each ETC would have had to:
|•||Certify that the ETC has used federal funds only for the intended purposes.|
|•||Report on the use of federal funds and benefits to customers.|
|•||Complete a service outage report.|
|•||Report on failures to provide service.|
|•||Report on complaints per 1,000 handsets or lines.|
|•||Certify compliance with applicable service quality standards.|
|•||Certify the ability to function in emergency situations.|
|•||Certify that advertising requirements were met.|
|•||Provide an annual plan for universal service support expenditures and update electronic-format maps every three years.|
V. COST OF COMPLIANCE WITH DRAFT RULES: The UTC must analyze the cost of compliance with the draft rules by small businesses, and compare the compliance costs of small businesses to large businesses. The UTC conducts this analysis with the company information provided in response to a questionnaire.
The UTC received economic information from three businesses that are not small businesses. Qwest, one of the state's largest businesses, responded but did not assign dollar values to anticipated efforts that would be required by the draft rules. CenturyTel responded and did assign dollar values to anticipated efforts that would be required. Mashell Telecom also assigned dollar values to anticipated efforts that would be required under the draft rules.
Cost Information: The remaining responses were from small businesses that are ETCs and that will be required to comply with the rules in order to continue receiving federal support.
The reported estimate of increases in cost for small businesses and large businesses to operate in compliance with the draft rules is $1,177,541.3 The small business share is $385,936. If all small and large businesses that are ETCs had responded, the amounts would be greater.
The bulk of the expected increase in costs is for advertising and map making. Small businesses expect the cost of compliance with the advertising standard to be $74,925 and the cost to produce electronic maps to be $178,707. The remaining $132,304 is divided between the cost of producing a report on the use of funds received and producing a plan for how funds will be used.
Small businesses supplied information sufficient to permit the UTC to calculate cost-per-year estimates and a cost-per-employee estimate. The range of cost-per-year estimates for small businesses is from $4,000 per year to $65,848. See Table I. The range of costs-per-employee estimates for small businesses is from $900 to $6,280. Id.
The variation in costs per year is explained by differences in the number of maps a company would be required to produce under the draft rule, the number of daily newspapers published where ETCs operate, and the stated range of anticipated hourly labor costs (i.e., from $30 to $85 per hour4) to perform tasks required by the draft rules.
These reported costs for small businesses can be compared to those provided by two large businesses that responded. CenturyTel reported costs of $419,313 per year and Mashell reported $36,292 per year. The costs per employee for these businesses are, respectively, $1,165 and $637.
According to these data, the average cost-per-employee for small businesses is more than double that of large businesses.
|Small Business||Large Business|
Although the reported data are highly inconsistent and therefore do not appear to be particularly reliable, they suggest that the cost impacts on small businesses may be disproportionate. Accordingly, the UTC found it should consider carefully the possible changes to the draft rules that would reduce the costs of compliance.
VI. MITIGATION: The Regulatory Fairness Act lists six methods for reducing the cost on small businesses.
(a) Reducing, modifying, or eliminating substantive regulatory requirements.
(b) Simplifying, reducing, or eliminating record-keeping and reporting requirements.
(c) Delaying compliance timetables.
(d) Reducing or modifying fine schedules for noncompliance.
(e) Any other mitigation techniques.
The UTC's proposed rules reflect consideration of these approaches and modification of the draft rules to mitigate the compliance costs for small and large businesses.
Reductions, modifications, and elimination of substantive requirements:
|•||The proposed rules eliminate the requirement in draft WAC 480-123-0020 (1)(f) that wireline carriers must submit electronic maps with their petition to be designated as an ETC.|
|•||The proposed rules eliminate prescriptive advertising requirements from draft WAC 480-123-0060(7) in favor of a restatement of existing obligations under federal statute and rule.|
|•||The proposed rules eliminate the requirement in draft WAC 480-123-0070(3) that wireline carriers must submit electronic maps every three years.|
|•||Proposed WAC 480-123-0020 (1)(f) clarifies that maps from wireless petitioners must only show signal location and not the location of plant and equipment.|
|•||Proposed WAC 480-123-0060 clarifies that reports must only include activity in Washington.|
|•||The requirement to provide copies of all reports provided to the National Exchange Carrier Association (NECA) is removed from draft WAC 480-123-0060 (1)(a) thereby reducing the reporting requirements for ETCs that receive federal high-cost funds based on past investment and past expenses.|
|•||Draft WAC 480-123-0060(2) is changed by eliminating reporting for carriers subject to certain other commission reporting rules related to local service outages.|
|•||Draft WAC 480-123-0060(3) is changed by eliminating reporting for carriers subject to certain other commission reporting rules related to failure to provide service.|
|•||Draft WAC 480-123-0060(4) is changed by eliminating reporting on complaints to ETCs and complaints to the commission. There is also a change with respect to categories of complaints which reduces or eliminates an additional record-keeping requirement.|
Reduction or modification of fine schedules for noncompliance: There are not fine schedules in the proposed rules.
Other mitigation: All economic mitigation is reported in the preceding sections.
Summary of Effect of Mitigation on Costs of Compliance: For wireline small businesses, removal of the mapping requirement will eliminate what was reported to be a substantial expense. As a percentage of total expenses anticipated by those ETCs that responded, elimination of the mapping requirement reduces the reported cost of compliance by 44%.
The elimination of prescriptive advertising requirements in favor of a restatement of federal advertising requirements eliminates all incremental advertising costs because ETCs under the proposed rule will need to do no more than is already required by federal law. This eliminates 43% of the reported compliance costs.
The remaining reporting requirements represent 13% of the reported costs of compliance. As indicated above, that reporting requirement is reduced by changes to several of the rules. Thus, the UTC estimates mitigation included in the proposed rules, relative to the draft rules, results in a reduction of at least 87% of the anticipated cost of compliance.
2 "In addition, state commissions may require the submission of any other information that they believe is necessary to ensure that ETCs are operating in accordance with applicable state and federal requirements." Id., ¶ 71.
3 Qwest did not provide a dollar amount for compliance activities; however, it provided sufficient information about anticipated additional advertising costs to estimate it would spend $336,000 more per year in advertising.
4 We accept the costs provided to us notwithstanding the substantial range of the hourly rates quoted. For example, Western Wahkiakum reported a "loaded labor rate" of $29.97 per hour and Tenino reported a "loaded labor rate" of $85.00 per hour.
A copy of the statement may be obtained by contacting the Washington Utilities and Transportation Commission, Records Center, Docket No. UT-053021, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, phone (360) 664-1234, fax (360) 586-1150, e-mail firstname.lastname@example.org.
A cost-benefit analysis is not required under RCW 34.05.328. The proposed rules are not significant legislative rules of the sort referenced in RCW 34.05.328(5).
March 31, 2006
Carole J. Washburn
FEDERAL)) UNIVERSAL SERVICE (( CONTRACTS))
"Applicant" means any person applying to an ETC for new service or reconnection of discontinued service.
"Eligible telecommunications carrier" and "ETC" mean a carrier designated by the commission as eligible to receive support from federal universal service mechanisms in exchange for providing services supported by federal universal service mechanisms.
"Facilities" means for the purpose of WAC 480-123-030 (1)(b) any physical components of the telecommunications network that are used in the transmission or routing of the services that are supported by federal universal service mechanisms.
".shp format" means the format used for creating and storing digital maps composed of shape files capable of being opened by the computer application ArcGIS™.
"Service outage" means a significant degradation in the ability of an end user to establish and maintain a channel of voice communications as a result of failure or degradation in the performance of a communications provider's network. Planned service interruptions with a duration of less than five minutes that occur between the hours of 12:00 midnight and 5:00 a.m. are not included in this definition.
"Substantive" means sufficiently detailed and technically specific to permit the commission to evaluate whether federal universal service support has had, or will have, specific benefits for customers. For example, information about investments and expenses that will provide, increase, or maintain service quality, signal coverage, or network capacity, and the number of customers that benefit, and how they will benefit from such investments and expenses is sufficient to enable evaluation.
(a) A description of the area or areas for which designation is sought;
(b) A statement that the carrier will offer the services supported by federal universal service support mechanisms throughout the area for which it seeks designation, either using its own facilities or a combination of its own facilities and resale of another carrier's services (including the services offered by another ETC);
(c) A description of how it will provide each supported service;
(d) A substantive plan of the investments to be made with initial federal support during the first two years in which support is received and a substantive description of how those expenditures will benefit customers;
(e) A statement that the carrier will advertise the availability of services supported by federal universal service mechanisms, including advertisement of Lifeline programs that is reasonably calculated to reach low-income consumers not receiving discounts;
(f) For wireless petitioners, a map in .shp format of proposed service areas (exchanges) with locations of cell sites and shading to indicate where the carrier provides commercial mobile radio service signals;
(g) Information that demonstrates its ability to remain functional in emergency situations including a description of how it complies with WAC 480-120-411 or, for a wireless carrier, information that demonstrates it has at least four hours of back up battery power at each cell site, back up generators at each microwave hub, and at least five hours back up battery power and back up generators at each switch; and
(h) Information that demonstrates that it will comply with the applicable consumer protection and service quality standards of chapter 480-120 WAC or, for a wireless carrier, a commitment to comply with the Cellular Telecommunications and Internet Association's (CTIA) Consumer Code for Wireless Service. Information regarding the version of the CTIA code adopted and where to obtain it is set forth in WAC 480-123-999.
(2) A company officer must submit the petition in the manner required by RCW 9A.72.085.
(2) The commission will certify an ETC's use of federal high-cost universal service fund support, pursuant to 47 C.F.R. §§ 54.307, 54.313, or 54.314 only if the ETC complies with the requirements in WAC 480-123-070, and the ETC demonstrates that it will use federal high-cost funds only for the provision, maintenance, and upgrading of facilities and services for which the support is intended through the requirements of WAC 480-123-080.
(1) Report on use of federal funds and benefits to customers.
(a) For an ETC that receives support based only on factors other than the ETC's investment and expenses, the report must provide a substantive description of investments made and expenses paid with support from the federal high-cost fund.
For ETCs that receive any support based on the ETC's investment and expenses, the report must provide a substantive description of investment and expenses the ETC will report as the basis for support from the federal high-cost fund.
(b) Every ETC must provide a substantive description of the benefits to consumers that resulted from the investments and expenses reported pursuant to (a) of this subsection.
(2) Local service outage report. ETCs not subject to WAC 480-120-412 and 480-120-439(5) are required to report local service outages pursuant to this subsection. The report must include detailed information on every local service outage thirty minutes or longer in duration experienced by the ETC. The report must include:
(a) The date and time of onset and duration of the outage;
(b) A brief description of the outage and its resolution;
(c) The particular services affected, including whether a public safety answering point (PSAP) was affected;
(d) The geographic areas affected by the outage;
(e) Steps taken to prevent a similar situation in the future; and
(f) The estimated number of customers affected.
(3) Report on failure to provide service. ETCs not subject to WAC 480-120-439 are required to report failures to provide service pursuant to this subsection. The report must include detailed information on the number of requests for service from applicants within its designated service areas that were unfulfilled for the reporting period. The ETC must also describe in detail how it attempted to provide service to those applicants.
(4) Report on complaints per one thousand handsets or lines. The report must provide separate totals for the number of complaints concerning local service related issues that the ETC's customers made to the Federal Communications Commission, or the consumer protection division of the office of the attorney general of Washington. The report must also generally describe the nature of the complaints and outcome of the carrier's efforts to resolve the complaints.
(5) Certification of compliance with applicable service quality standards. Certify that it met substantially the applicable service quality standard found in WAC 480-123-030 (1)(h).
(6) Certification of ability to function in emergency situations. Certify that it had the ability to function in emergency situations based on continued adherence to the standards found in WAC 480-123-030 (1)(g).
(7) Advertising certification, including advertisement on Indian reservations. Certify it has publicized the availability of Lifeline service in a manner reasonably designed to reach those likely to qualify for service, including residents of federally recognized Indian reservations within the ETC's designated service area. Such publicity should include advertisements likely to reach those who are not current customers of the ETC.
(a) The planned use of federal support related to Washington state that will be received during the period October 1 of the current year through the following September; or
(b) The planned investment and expenses related to Washington state which the ETC expects to use as the basis to request federal support from any category in the federal high-cost fund.
(2) The report must include a substantive plan of the investments and expenditures to be made with federal support and a substantive description of how those investments and expenditures will benefit customers.
(3) As part of the filing required by this section to be submitted in 2007, and at least once every three years thereafter, a wireless ETC must submit a map in .shp format that shows the general location where it provides commercial mobile radio service signals.
(1) The Cellular Telecommunications and Internet Association's (CTIA) Consumer Code for Wireless Service.
(2) The commission adopts the version in effect on September 9, 2003.
(3) This publication is referenced in WAC 480-123-020 (contents of petition for eligible telecommunications carriers).
(4) Copies of the CTIA Consumer Code for Wireless Service are available at http://www.ctia.org/wireless_consumers/consumer_code/.
AMENDATORY SECTION(Amending Docket No. A-021178 and TO-030288, General Order No. R-518, filed 2/28/05, effective 3/31/05)
WAC 480-120-399 Access charge and universal service reporting. ((
(1))) Intrastate mechanism reporting.
(a))) (1) Until legislation creating a new universal
service fund is adopted and effective and commission rules to
implement the legislation are adopted and effective, each
Class A company in the state of Washington and the Washington
Exchange Carrier Association, must provide annually:
(i))) (a) The actual demand units for the previous
calendar year for each switched access tariff rate element (or
category of switched access tariff rate elements, both
originating and terminating) it has on file with the
(ii))) (b) Primary toll carriers (PTCs) must file, in
addition to the information required in (a)(( (i))) of this
subsection, the annual imputed demand units for the previous
calendar year that the company would have had to purchase from
itself if it had been an unaffiliated toll carrier using
feature group D switched access service (including intraLATA
and interLATA, both originating and terminating demand units).
For purposes of this subsection, a PTC means a local exchange
company offering interexchange service(s) to retail customers
using feature group C switched access service for the
origination or termination of any such service(s).
(b))) (2) The report containing the information
required in (( (a) of this)) subsection (1) of this section
must be filed by July 1 of each year.
(c))) (3) Each company providing information required
by this section must include complete work papers and
sufficient data for the commission to review the accuracy of
(2) Annual state certification requirements for
interstate (federal) mechanism. Each eligible
telecommunications carrier (ETC) in Washington receiving
federal high-cost universal service support funds must provide
the following to the commission not later than August 31 of
(a) A certification that, during the calendar year preceding the year in which certification is made, the ETC provided the supported services required by 47 U.S.C. § 214(e) and described in the commission order granting it ETC status;
(b) A certification that, during the calendar year preceding the year in which certification is made, the ETC advertised the availability of supported services and the charges for them as required by 47 U.S.C. § 214(e) and as described in the commission order granting it ETC status;
(c) A certification that funds received by it from the federal high-cost universal service support fund will be used only for the provision, maintenance, and upgrading of the facilities and services for which the support is intended;
(d) The amount of all federal high-cost universal service fund support received for the calendar year preceding the year in which the filing must be made (this includes, but is not limited to, high cost loop support or "HCL," local switching support or "LSS," long term support or "LTS," interstate access support or "IAS," and interstate common line support or "ICLS");
(e) The loop counts on which federal high-cost universal service support was based for support received during the calendar year preceding the year in which the filing must be made;
(f) The certifications required in (a) through (e) of this subsection must be made in the same manner as required by RCW 9A.72.085.))
[Statutory Authority: RCW 80.01.040, 80.04.160, 81.04.160 and 34.05.353. 05-06-051 (Docket No. A-021178 and TO-030288, General Order No. R-518), § 480-120-399, filed 2/28/05, effective 3/31/05.]