WSR 14-12-008 PERMANENT RULES UTILITIES AND TRANSPORTATION COMMISSION [General Order R-575, Docket UT-131239—Filed May 22, 2014, 2:09 p.m., effective June 22, 2014]
In the matter of amending and adopting rules in chapter 480-123 WAC, relating to universal service.
1 STATUTORY OR OTHER AUTHORITY: The Washington utilities and transportation commission (commission) takes this action under Notice WSR No. 14-08-094, filed with the code reviser on April 2, 2014. The commission has authority to take this action pursuant to RCW 80.01.040(4), 80.36.630, 80.36.650, 80.36.660, 80.36.670, 80.36.680, 80.36.690, and 80.36.700.
2 STATEMENT OF COMPLIANCE: This proceeding complies with the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 43.21C RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).
3 DATE OF ADOPTION: The commission adopts this rule on the date this order is entered.
4 CONCISE STATEMENT OF PURPOSE AND EFFECT OF THE RULE: RCW 34.05.325(6) requires the commission to prepare and publish a concise explanatory statement about an adopted rule. The statement must identify the commission's reasons for adopting the rule, describe the differences between the version of the proposed rules published in the register and the rules adopted (other than editing changes), summarize the comments received regarding the proposed rule changes, and state the commission's responses to the comments reflecting the commission's consideration of them.
5 In 2013, the legislature directed the commission to implement a state universal telecommunications program (program). 2E2SHB 1971, § 203, authorizes the commission to adopt rules by July 1, 2014, concerning:
6 The commission amends and adopts rules in chapter 480-123 WAC to implement this legislation. The commission designates the discussion in this order as the remainder of its concise explanatory statement, as that discussion provides a complete but concise explanation of the agency's actions and its reasons for taking those actions.
7 REFERENCE TO AFFECTED RULES: This order amends and adopts the following sections of the Washington Administrative Code: Amending WAC 480-123-020 Definitions; and adopting WAC 480-123-100 Prerequisites for requesting program support, 480-123-110 Petitions for eligibility to receive program support, 480-123-120 Eligibility and distributions from the program, 480-123-130 Reporting requirements, 480-123-140 Commission compliance review of accounts and records, 480-123-150 Advisory board, 480-123-160 Resolution of disputes, and 480-123-170 Operation of the program.
8 PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: The commission filed a Preproposal Statement of Inquiry (CR-101) on July 3, 2013, at WSR 13-14-122. The statement advised interested persons that the commission was considering entering a rule making to consider amending and adopting rules to implement provisions of 2E2SHB 1971, enacted in the 2013 2nd sp. sess. Section 204 of the bill required the commission to establish rules to implement a state universal communications service program. The commission also informed persons of this inquiry by providing notice of the subject and the CR-101 to everyone on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3) and by sending notice to all registered telecommunications companies, the commission's list of telecommunications attorneys and the list for all persons interested in rule-making dockets. The commission posted the relevant rule-making information on its internet web site at http://www.utc.wa.gov/131239. Pursuant to the notice, the commission hosted a stakeholder workshop on July 15, 2013, and received written comments by August 2, 2014. On December 3, 2013, the commission issued draft rules to all interested persons with a December 20, 2013, deadline for filing comments.
9 WORKSHOPS: The commission held a workshop on July 15, 2013, and October 16, 2013, in the Commission's Hearing Room, Second Floor, Richard Hemstad Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. Participants in the workshops included CenturyLink, the Washington Independent Telephone Association (WITA), Tenino Telephone Company, Kalama Telephone Company, Inland Telephone Company, Whidbey Telephone Company, Frontier Communications Northwest Inc. (Frontier), Western Wahkiakum County Telephone Company, Comcast, Broadband Communications of Washington, and the public counsel section of the Washington attorney general's office (public counsel).
10 NOTICE OF PROPOSED RULE MAKING: The commission filed a notice of proposed rule making (CR-102) on April 2, 2014, at WSR 14-08-094. The commission scheduled this matter for oral comment and adoption under Notice No. WSR 14-08-094 at 1:30 p.m., Thursday, May 15, 2014, in the Commission's Hearing Room, Second Floor, Richard Hemstad Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. The notice provided interested persons the opportunity to submit written comments to the commission.
11 WRITTEN COMMENTS: The commission received written comments from WITA, Public Counsel, Frontier, CenturyLink, and AT&T Corp., New Cingular Wireless PCS, LLC, and Teleport Communications America, Inc. (collectively AT&T).
12 RULE-MAKING HEARING: The commission considered the proposed rules for adoption at a rule-making hearing on May 15, 2014, before Chairman David W. Danner, Commissioner Philip B. Jones, and Commissioner Jeffrey D. Goltz. The commission heard oral comments from WITA and AT&T, both of whom emphasized aspects of their written comments.
13 SUGGESTIONS FOR CHANGE THAT ARE REJECTED/ACCEPTED: The commission received written and oral comments suggesting changes to the proposed rules. A summary of the suggested changes and the commission's reason for rejecting or accepting those suggestions are described below.
WITA
Calendar Year Distribution
14 WITA expressed concern with provisions in the proposed rules that the commission will authorize distributions from the program on a calendar year basis because the legislature provided funding for the program on a state fiscal year basis running from July 1 through June 30. WITA suggests that distributing funding on a calendar year basis runs the risk that a stakeholder may claim during the fifth year of the program that the final distributions can cover only half of calendar year 2019 and thus should be less than a full year distribution. WITA suggests that the rule language be revised to reflect program operations on a fiscal year basis.
15 The proposed rules provide for distributions on a calendar year basis to match the time period for other aspects of the program, specifically federal Connect America Fund (CAF) calculations and state and federal data reporting, all of which are based on calendar years. We find it unlikely that any stakeholder would challenge the amount of the distribution in the final year of the program as WITA fears, particularly when that amount will be calculated based [on] data from the prior years. We nevertheless will modify the rules to refer only to "annual" distributions, and we confirm that our intent is to make complete distributions to eligible companies each of the five years the program is in effect.
Cash Flow
16 WITA contends that a cash flow issue arises from the commission terminating the traditional universal service support pool as of July 1, 2014, but not making the first distribution from the program until January 2015. Companies entitled to support under both the traditional fund and the new fund will not receive their monthly distribution from the traditional fund for six months or more, potentially imperiling their ability to meet their financial obligations. WITA suggests modifying the language of proposed WAC 480-123-120 to allow a one-time payment related to the termination of the traditional universal service fund in October 2014.
17 We are sensitive to WITA's cash flow concerns. At the same time, however, we note that only eligible companies may receive program support, and we are unwilling to adopt rule language that would require a partial distribution to companies that have applied for such support before the commission has made a final eligibility determination. Accordingly, we will modify proposed WAC 480-123-120 to provide the commission with the flexibility to make a partial distribution to eligible companies before the first distribution of program funds early next year if circumstances warrant and permit such action.
Timing of Distributions
18 WITA expresses concern about proposed WAC 480-123-120 which states, "Each eligible provider will receive a single distribution for the year after January 1 of that year." WITA fears that the commission could make the distribution as late as December 31 of that year, and WITA members need greater certainty about the timing of the distributions to structure their financial obligations accordingly. WITA proposes that the provision be revised to state, "Each eligible provider will receive a single distribution for the fiscal year between January 1 and January 15 of that year."
19 As we stated in the context of addressing WITA's cash flow issue, we will order funds from the program to be distributed only to companies that are eligible to receive those funds. We are unwilling to adopt a rule that requires distributions by a specific date when the commission, despite reasonable efforts, may not be able to make a final eligibility determination by that date. Our goal, however, is to make reasonable efforts to ensure that the annual distributions to eligible companies occur soon after January 1 of each year of the program.
Benchmark Rate Calculation
20 WITA objects to using the Federal Communications Commission's (FCC) urban rate floor as the basis for the benchmark monthly local exchange service rate the commission must establish in proposed WAC 480-123-100 (1)(d) as threshold requirement for eligibility for program funding. WITA acknowledges that it previously had recommended using the FCC's urban rate floor in prior comments in this proceeding, but WITA now questions that accuracy and utility of the FCC's calculations after the FCC announced that it expects its urban rate floor to rise to approximately $20.46 over the next two years. WITA offers three alternatives for setting the benchmark: (1) Use the FCC's urban rate floor in effect in 2013; (2) calculate the weighted average of the stand-alone residential rate paid by the customers of the two largest incumbent local exchange carriers in Washington; or (3) use the FCC's urban rate floor rate that is in effect as of the date of the carrier's initial filing for eligibility (currently $14.00).
21 Eligible carriers receive the lion's share of their universal service support funding from the federal government, and that funding is tied to the carriers charging local exchange rates at or above the FCC's urban rate floor. The proposed rule appropriately bases the benchmark rate the commission establishes for state universal service fund (USF) support on the federal standard. Indeed, WITA initially advocated that the commission adopt this approach, but WITA changed its position when the FCC published its latest calculations. We find that the proposed rule properly uses a principled basis for establishing the benchmark rate in Washington that is administratively efficient and consistent with federal law. The requirement that the commission set the benchmark rate based on the FCC urban rate floor establishes a presumption that those two rates will be the same but allows the commission the flexibility to make an adjustment if necessary to ensure that local service rates for rural incumbent local exchange companies (ILECs) in Washington are fair, just, reasonable, and sufficient. We reject WITA's suggested changes to the proposed rules on this issue.
Benchmark Rate as Threshold Requirement
22 No company would be eligible for program funding if its local exchange rates are not at or above the benchmark the commission would establish under proposed WAC 480-123-100 (1)(d). WITA recommends that the commission modify this requirement to allow petitioning carriers to charge rates below the benchmark as long as the company imputes the revenues the company would have received if its rates were at the benchmark. A company would then have the flexibility to set its rates at levels the market will bear as long as the company is willing to accept lower revenues from its local service rates.
23 The statute establishes three eligibility criteria for companies seeking support from the program, one of which is that "[t]he customers of the communications provider are a [at] risk of rate instability or service interruptions or cessations absent a distribution to the provider that will allow the provider to maintain rates reasonably close to the benchmark."1 Customers of a company that voluntarily charges a local service rate below the benchmark rate the commission establishes are not at risk of rate instability. To the contrary, that company's response to competitive pressures will keep its rates in check.
1 RCW 80.36.650 (3)(b).
24 The purpose of the program is not to subsidize a company's ability to compete with other providers in a competitive market. Rather, the legislature has provided that state funds should only be distributed to companies that otherwise would be compelled to raise their customers' local rates well above the benchmark rate. The proposed rule properly implements this statutory requirement by conditioning a company's eligibility for program support on the provider charging local service rates at or above the benchmark. The commission, therefore, rejects WITA's suggested modification.
Notification of Distribution Amounts
25 WITA states that its members need some degree of certainty concerning the amounts they will be receiving from the program in order to properly post accruals for their financial statements. WITA does not propose a modification to the draft rules but requests the commission state in its adoption order that the carriers will be notified of their approved distribution by December 1 prior to the distribution the following January.
26 As we stated above, the commission intends to make final eligibility determinations and calculations of program support for each eligible company so that funds can be distributed soon after January 1 of each year the program is in effect. The commission cannot know, much less guarantee, that this process will be completed by December 1. The commission, however, will promptly notify companies eligible for program support when the commission has made its eligibility determinations and corresponding program support calculations.
Duplicative Information
27 WITA is concerned that proposed WAC 480-123-110(1) requires duplicative reporting because subsection (e), subparts (i), (ii), and (v), and subsection (f) each ask essentially for the same information. To reduce redundant filings, WITA suggests that draft WAC 480-123-110(3) be modified to enable companies to refer to any documentation they have previously filed with the commission, not just documents filed in conjunction with a filing for certification as an eligible telecommunications carrier, so that companies need not provide multiple copies of the same documents in response to the filing requirements in the rule.
28 WITA's suggested changes to proposed WAC 480-123-110 (1)(e) are reasonable, and we will incorporate them into the final rule.
Identification of ILECs
29 WITA states that in proposed WAC 480-123-100 (1)(b), the citation identifying which companies are ILECs should be to 47 U.S.C. section 251(h), not 253(h). In addition, WITA recommends that to include companies that became ILECs after that statute was enacted, the proposed rule should state that an ILEC can also be a company that the FCC has designated as an ILEC.
30 WITA's suggested changes to proposed WAC 480-123-100 (1)(b) are reasonable, and we will incorporate them into the final rule.
Washington Exchange Carrier Association (WECA) Administrative Costs
31 WITA observes that when the commission terminates the traditional universal service fund, WECA will need to undertake certain activities to end the pool activities. WITA points to current contracts, previously approved by the commission, related to WECA's administration of the pools that contain procedures that must be followed to true-up the activities related to the traditional USF access rate element, including the conducting of audits and other actions. In its written comments, WITA suggests that proposed WAC 480-123-120(2) be expanded to add a subsection that would enable these costs to be paid from program distributions. At the adoption hearing, however, WITA stated its support for staff's proposal to fund these costs by allowing WECA to continue to collect revenues from the traditional USF switched access charge rate element for a limited period of time after that fund terminates.
32 We, too, agree with staff that the appropriate vehicle for funding WECA's winding down of the traditional USF is a temporary continuation of the traditional USF rate element. Accordingly, we address this issue in the order we enter in Docket UT-971140 terminating the traditional USF.
Business Plans
33 WITA objects to provisions in proposed WAC 480-123-120(1) and 480-123-130 (1)(f) requiring companies that receive distributions from the program to provide reports on the company's business plan to implement operational efficiency and to transition from the provision of legacy voice service to broadband service. WITA suggests the commission should recognize that the provision of broadband service in rural areas is a capital intensive proposition, requiring constant upgrades to equipment. WITA specifically objects to the word "efficiency" if it is intended to mean operating at a lower cost because the commission would be building into the rule an unrealistic expectation. WITA notes that the commission annually will receive each company's five-year plan set out in the FCC Form 481 filing and that the five-year plan contains substantial information about deployment of broadband.
34 WITA misunderstands these rule requirements. The legislature established the program as a temporary source of funding for rural ILECs to facilitate their transition to modern communications markets. More specifically, the program gives these companies more time to reduce their reliance on federal or state USF support, and the commission must report to the legislature on the effectiveness of the program in achieving that goal.
35 Accordingly, the proposed rules require companies who seek or obtain program support to detail what they are doing to accomplish the legislature's objective, including operational efficiencies they undertake to reduce their costs and business plans they develop and implement to modernize their networks and service options. The commission does not intend to provide state tax dollars to companies merely to enable them only to maintain the status quo. The proposed rules, therefore, appropriately provide that among the factors the commission will consider when determining eligibility for the program and how participants make use of program support is the extent to which companies are planning or implementing operational efficiencies and business plan modifications consistent with the program's goals. We reject WITA's suggested modifications to the rules on this issue.
AT&T
Calculation of Support Amount
36 AT&T expresses a single concern about the commission's flexibility under the draft rules to adopt a benchmark local exchange rate that is lower than the FCC urban rate floor. A potential unintended consequence of that flexibility, according to AT&T, is that by setting a lower benchmark, the commission might inadvertently enable an eligible carrier to receive program funding for the reduction in its federal funding resulting from the carrier charging less than the FCC urban rate floor. AT&T proposes that the commission modify WAC 480-123-020 (2)(b) to clarify that no such result is possible.
37 We appreciate AT&T's concerns, but we do not find that any clarification of the rule is necessary. Program support under proposed WAC 480-123-120(2) is limited to (a) traditional USF fund amounts received in 2012; and (b) "[t]he cumulative reduction in support from the Connect America Fund incurred by the provider." A reduction in support from the CAF does not include imputed revenues for the difference between the FCC urban rate floor and a provider's actual local rates. Even if a provider receives less federal support as a result of charging rates below the FCC urban rate floor, the rule we adopt today does not authorize that provider to receive any program funds to compensate for that lower level of federal support. The rule reflects our intent to authorize an eligible provider to receive no more than the cumulative five percent annual CAF reduction the FCC has mandated for carriers whose local service rates are at the FCC urban rate floor (to the extent program funds are available) in addition to the provider's 2012 state traditional USF distribution. We reject AT&T's suggested clarification of WAC 480-123-020 (2)(b).
Public Counsel
Benchmark Rate
38 Public counsel contends that the commission should implement a Washington-specific local rate benchmark rather than use the FCC urban rate floor. Public counsel believes that the commission should determine independently "a reasonable level customers should pay," particularly in light of the ongoing concerns at the federal level and circumstances affecting the calculations of the national average rate. Public counsel, moreover, recommends that the commission should undertake to review this issue once the FCC has issued its decision on implementation of the new urban rate floor.
39 We addressed the issue of establishing the benchmark rate in response to WITA's concerns above, and we incorporate that discussion here.2 We reject public counsel's suggested changes to the proposed rule.
2 See Supra ¶ 20.
Advisory Board
40 Public counsel notes possible confusion between proposed WAC 480-123-150(4) (initiating advisory board action) and WAC 480-123-160 (resolution of disputes). The former provision allows "any person" to petition the commission to initiate advisory board action regarding "program issues or matters." The latter provision, however, appears to limit the right to petition the commission more narrowly to "an affected provider" regarding "any disputed matter concerning the program." Public counsel seeks clarification of this apparent inconsistency.
41 No clarification to the rules is necessary on this point. The two proposed rules govern different circumstances. Proposed WAC 480-123-150(4) requires any person seeking advisory board action to petition the commission. Proposed WAC 480-123-160 establishes the process for an affected provider to resolve disputes concerning the program and provides that the commission, at its discretion, may refer any such dispute to the advisory board for initial review and consideration. These rules operate independently, and nothing in WAC 480-123-150(4) limits the ability of persons other than an affected provider to petition the commission to initiate advisory board action pursuant to WAC 480-123-160.
42 COMMISSION ACTION: After considering all of the information regarding this proposal, the commission finds and concludes that it should amend and adopt the rules as proposed in the CR-102 at WSR 14-08-094 with the changes described below.
43 CHANGES FROM PROPOSAL: The commission adopts the proposal with the following changes from the text noticed at WSR 14-08-094 based on the discussion above.
44 STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: After reviewing the entire record, the commission determines that WAC 480-123-020 should be amended and WAC 480-123-100, 480-123-110, 480-123-120, 480-123-130, 480-123-140, 480-123-150, 480-123-160, and 480-123-170 should be adopted to read as set forth in Appendix A, as rules of the Washington utilities and transportation commission, to take effect on the thirty-first day after the date of filing with the code reviser pursuant to RCW 34.05.380(2).
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 8, Amended 1, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
ORDER
45 THE COMMISSION ORDERS:
46 The commission amends WAC 480-123-020, and adopts WAC 480-123-100, 480-123-110, 480-123-120, 480-123-130, 480-123-140, 480-123-150, 480-123-160, and 480-123-170 to read as set forth in Appendix A, as rules of the Washington utilities and transportation commission, to take effect on the thirty-first day after the date of filing with the code reviser pursuant to RCW 34.05.380(2).
47 This order and the rule set out below, after being recorded in the register of the Washington utilities and transportation commission, shall be forwarded to the code reviser for filing pursuant to chapters 80.01 and 34.05 RCW and 1-21 WAC.
DATED at Olympia, Washington, May 22, 2014.
WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
David W. Danner, Chairman
Philip B. Jones, Commissioner
Jeffrey D. Goltz, Commissioner
Appendix A
(Chapter 480-123 WAC - RULES)
AMENDATORY SECTION (Amending WSR 06-14-051, filed 6/28/06, effective 7/29/06)
WAC 480-123-020 Definitions.
As used in ((WAC 480-123-030 through 480-123-080)) this chapter:
"Applicant" means any person applying to an ETC for new service or reconnection of discontinued service.
"Communications provider" or "provider" means a company providing communications service that assigns a working telephone number to a final consumer for intrastate wireline or wireless communications services or interconnected voice over internet protocol service, and includes local exchange carriers.
"Communications services" includes telecommunications services and information services and any combination of these services.
"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™.
"Program" means the state universal communications services program created in RCW 80.36.650.
"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.
"Substantive" means sufficiently detailed and technically specific to permit the commission to evaluate whether federal universal service support has had, or will have, benefits for customers. For example, information about investments and expenses that will provide, increase, or maintain service quality, signal coverage, or network capacity, and information about the number of customers that benefit, and how they will benefit is sufficient to enable evaluation.
"Telecommunications" has the same meaning as defined in 47 U.S.C. Sec. 153(43).
NEW SECTION
WAC 480-123-100 Prerequisites for requesting program support.
(1) Wireline communications providers. A wireline communications provider may seek support from the program if the provider satisfies all of the following requirements:
(a) The provider is a local exchange company as defined in WAC 480-120-021 that serves less than forty thousand access lines within the state;
(b) The provider is an incumbent local exchange carrier as defined in 47 U.S.C. Sec. 253(h);
(c) The provider offers basic residential and business exchange telecommunications services as set forth in WAC 480-120-021 and RCW 80.36.630;
(d) The provider's rates for residential local exchange service, plus mandatory extended area service charges, are no lower than the local urban rate floor established by the commission as the benchmark rate based on the Federal Communications Commission's most current calculation of a national local urban rate floor pursuant to 47 C.F.R. Sec. 54.318 in the year in which the provider files a petition for support; provided that, if the provider's rates exceed the benchmark, the provider may not seek support from the program for the purpose of reducing those rates towards or to the benchmark; and
(e) The provider has been designated by the commission as an eligible telecommunications carrier for purposes of receiving federal universal service support pursuant to 47 C.F.R. Part 54 Subpart D – Universal Service Support for High Cost Areas, with respect to the service areas for which the provider is seeking program support.
(2) Wireless communications providers. A wireless communications provider may seek support from the program if the provider satisfies all of the following requirements:
(a) The provider is licensed by the Federal Communications Commission to offer commercial mobile radio service within the state of Washington;
(b) The provider serves fewer than the equivalent of forty thousand access lines in Washington; and
(c) The provider has been designated by the commission as an eligible telecommunications carrier for purposes of receiving federal universal service support pursuant to 47 C.F.R. Part 54 Subpart D – Universal Service Support for High Cost Areas, with respect to the service areas for which the provider is seeking program support.
(3) In calculating access lines or equivalents under this section, the access lines or equivalents of all affiliates must be counted as a single threshold, if the lines or equivalents are located in Washington; provided that only the wireline access lines of the affiliates of a provider seeking support as a wireline carrier will count toward the single threshold for that provider, and only the wireless access line equivalents of the affiliates of a provider seeking support as a wireless carrier will count toward the single threshold for that provider.
NEW SECTION
WAC 480-123-110 Petitions for eligibility to receive program support.
(1) Wireline communications providers. A wireline communications provider that satisfies the prerequisites in WAC 480-123-100 may petition the commission to receive support from the program. The provider must petition the commission each year to be eligible to receive support from the program the following year. The petition must include the following information:
(a) The name of the legal entity that provides communications services and is seeking program support;
(b) A corporate organization chart showing the relationship between the legal entity identified in (a) of this subsection and all affiliates as defined in RCW 80.16.010 and a detailed description of any transactions between the provider and those affiliates recorded in the provider's operating accounts;
(c) A service area map or detailed reference to any maps on file with the commission showing the provider's Washington service area;
(d) A demonstration that the provider's customers are at risk of rate instability or service interruptions or cessation in the absence of support from the program;
(e) Detailed financial information and supporting documentation in a form prescribed by the commission for the provider's total Washington regulated operations for the two calendar years prior to the year in which the provider is filing the petition including, but not limited to, the following:
(i) The provider's balance sheet and statements of income and retained earnings or margin from, or in the same format and detail required in, Rural Utilities Service (RUS) Form 479;
(ii) The provider's consolidated audited financial statements; if the provider does not have consolidated audited financial statements prepared in the normal course of its business, the provider must submit financial statements reviewed by a certified public accountant;
(iii) Information demonstrating the provider's earned rate of return on a total Washington unseparated regulated operations basis for each of the two prior years;
(iv) Information demonstrating the provider's earned return on equity on a total company (regulated and nonregulated) Washington basis for each of the two prior years;
(v) Information detailing all of the provider's revenues from the statements of income and retained earnings or margin section of RUS Form 479 for the two prior years; if the provider does not submit RUS Form 479, the provider must file with the commission the same revenue information specified in this subsection that is required to complete the applicable portion of that form;
(vi) Information detailing the amounts of any corporate operations adjustments to existing high-cost loop and interstate common line support mechanisms the Federal Communications Commission required of the provider for the two prior years or a statement under penalty of perjury from a company officer of the provider with personal knowledge and responsibility certifying that no such adjustments apply to the provider;
(vii) Any additional supporting information the commission requests to enable it to analyze the provider's financial results for program purposes; and
(viii) A statement under penalty of perjury from a company officer of the provider with personal knowledge and responsibility certifying that the provider complies with state and federal accounting, cost allocation, and cost adjustment rules pertaining to incumbent local exchange companies;
(f) A complete copy of the FCC Form 481 the provider filed with the Federal Communications Commission for the calendar year preceding the year in which the provider is filing the petition; if the provider does not submit FCC Form 481 to the Federal Communications Commission, the provider must file with the commission the same information required to complete that form;
(g) Information detailing the number of residential and business local exchange access lines the provider served as of December 31st for each of the prior two years and the monthly rate charged to each customer category; and
(h) A statement under penalty of perjury from a company officer of the provider certifying that if it receives program support the provider will continue to provide communications services pursuant to its tariffs on file with the commission throughout its service territory in Washington for which it is seeking and receives program support during the entirety of the calendar year in which the provider is applying for support from the program.
(2) Wireless communications provider. A wireless communications provider that meets the requirements in WAC 480-123-100 may petition the commission to receive support from the program. The provider must petition the commission each year to be eligible to receive support from the program the following year. The petition must include the same type of information for the same periods required of wireline communications providers in subsection (1) of this section. The first time a wireless communications provider seeks to file such a petition, the provider must first submit its request to file the petition to the advisory board, pursuant to any guidelines the advisory board will adopt, detailing how the provider will compile and supply the information required by this rule. The advisory board will make a recommendation to the commission, and the commission will determine the precise information the provider must file in support of its petition.
(3) Information already on file with the commission. To the extent that the provider has filed any of the information required under this rule in conjunction with its application for certification as an eligible telecommunications carrier, the provider need not include that same information in its petition so long as the provider identifies the docket number, documents, and location within those documents in which the provider included that information.
(4) Timing of petitions. A provider must file a complete petition that fully complies with this section no later than August 1st if the company seeks support from the program for the following calendar year. Program support is available annually until the expiration of the program on June 30, 2019.
(5) Certification. One or more company officers responsible for the provider's business and financial operations must certify in the form of a statement under penalty of perjury that the information and representations made in the petition are accurate and that the provider has not knowingly withheld any information required to be provided to the commission pursuant to the rules governing the program. The provider must file this certification with its petition.
NEW SECTION
WAC 480-123-120 Eligibility and distributions from the program.
The commission will authorize distributions from the program on a calendar year basis. Each eligible provider will receive a single distribution for the year after January 1st of that year.
(1) Eligibility. A wireline communications provider that complies with the requirements in this chapter is eligible to receive distributions from the program if the provider demonstrates that its financial circumstances are such that its customers are at risk of rate instability or service interruptions or cessations absent a distribution to the provider that will allow the provider to maintain rates reasonably close to the benchmark the commission has established. In making that determination, the commission will consider the provider's earned rate of return on a total Washington company books and unseparated regulated operations basis, the provider's return on equity, the status of the provider's existing debt obligations, and other relevant factors including, but not limited to, the extent to which the provider is planning or implementing operational efficiencies and business plan modifications to transition or expand from primary provision of legacy voice telephone service to broadband service or otherwise reduce its reliance on support from the program.
(2) Calculation of support amount. The amount that a wireline communications provider eligible to receive support from the program may receive in a calendar year shall not exceed the sum of the following:
(a) The amount the provider received in 2012 from the former traditional USF fund established in Docket U-85-23, et al., and administered by the Washington exchange carrier association; and
(b) The cumulative reduction in support from the Connect America Fund incurred by the provider up through and including the year for which program support is distributed to the provider to the extent the program contains sufficient funds.
(3) Distribution to wireless communications providers. The advisory board will make a recommendation to the commission on eligibility and distribution calculations for any wireless communications provider that seeks support from the program, and the commission will determine that provider's eligibility and the amount of support, if any, the provider may receive consistent with RCW 80.36.650 and commission rules.
(4) Total requests in excess of available funds. If the total requests for support for a calendar year exceed the program funds available for that year, the commission will distribute the available funds to eligible carriers on a pro rata basis. The commission may seek a recommendation from the advisory board on the best pro rata distribution methodology to use.
(5) Commission determination. The commission will consider petitions from companies seeking support from the program and will make the necessary eligibility and distribution determinations in response to those petitions prior to January 1st of the calendar year in which funds from the program will be distributed.
NEW SECTION
WAC 480-123-130 Reporting requirements.
(1) Wireline communications provider reports. A wireline communications provider that receives program support must submit the following information and reports to the commission on or before July 1st of the year following each calendar year in which the provider receives that support unless a different date is specified below:
(a) The number of residential and business access lines served within the state of Washington for which the provider used program support in the provision of basic telecommunications service (broken down to reflect beginning and end of year quantities);
(b) Detailed information on how the provider used program support the provider received during the preceding year;
(c) A list with detailed information of all consumer requests for new basic telecommunications service in the area for which the provider received program support during the preceding year that the provider denied or did not fulfill for any reason;
(d) A statement under penalty of perjury from a company officer of the provider with personal knowledge and responsibility certifying that, during the preceding year, the provider materially complied with all commission rules in chapter 480-120 WAC that are applicable to the provider and its provision of service within the area for which the provider received program support;
(e) Complete copies of the FCC Form 477 for the state of Washington that the provider filed with the Federal Communications Commission during and for the calendar year in which the provider receives support at the same time the provider submits those forms to the Federal Communications Commission; if the provider does not submit FCC Form 477 to the Federal Communications Commission, the provider must file with the commission the same information required to complete that form at the same time carriers that file FCC Form 477 are required to submit that form;
(f) A report on operational efficiencies and business plan modifications for the area for which the provider receives program support during the preceding year that the provider has undertaken to transition or expand from primary provision of legacy voice telephone service to broadband service or otherwise reduce its reliance on support from the program, and whether and how disbursements from the program were used to accomplish such outcomes;
(g) Detailed information on any other efforts the provider made to use program support to advance universal service and the public interest in Washington; and
(h) Any other information or reports the commission requires including, but not limited to, information the commission needs to provide a report to the legislature concerning the program.
(2) Wireless communications provider reports. The advisory board will make a recommendation to the commission on the information and reports that any wireless communications provider that receives support from the program should provide, and the commission will determine the information and reports that provider must provide consistent with RCW 80.36.650 and commission rules.
(3) Information already on file with the commission. To the extent that the provider has filed any of the information required under this rule in conjunction with its application for certification as an eligible telecommunications carrier, the provider need not include that same information in its report so long as the provider identifies the docket number, documents, and location within those documents in which the provider included that information.
(4) Comments from stakeholders. Interested persons may submit information or comments on any of the issues on which the providers must report under this rule. Persons must submit such information or comments by July 1st of the year following each calendar year in which the commission distributes program support.
NEW SECTION
WAC 480-123-140 Commission compliance review of accounts and records.
Communications providers that receive program support are subject to compliance reviews and other investigations by the commission to ensure compliance with program rules and orders. Each provider shall retain all records required to demonstrate to the commission that the support the provider received was consistent with RCW 80.36.650 and commission rules and orders. Providers shall retain all such documentation for at least five years from the distribution of program funds, and a provider shall make that documentation available to the commission upon request. Any eligible providers authorized to receive program support that fail to comply with public interest obligations under federal or Washington law or any other terms and conditions established by the commission may be subject to further action, including the commission's existing enforcement procedures and penalties, reductions in program support amounts, potential revocation of program eligibility designation, and suspension from, or disentitlement to future participation in the program.
NEW SECTION
WAC 480-123-150 Advisory board.
(1) Establishment. The commission will establish an industry and consumer advisory board to provide recommendations to the commission on the implementation and management of the program.
(2) Membership. The commission secretary is authorized to solicit nominations and approve membership on the board.
(a) The board will be comprised of members representing the following interests:
(i) One from incumbent local exchange companies serving fewer than forty thousand access lines in Washington;
(ii) One from incumbent local exchange companies serving more than forty thousand access lines in Washington;
(iii) One from competitive local exchange companies serving customers in Washington;
(iv) One from wireless communications providers offering service in Washington;
(v) One from the public counsel division of the office of the attorney general of Washington; and
(vi) One from the commission staff.
(b) Commission staff and public counsel shall have permanent membership on the board. The commission will appoint industry members for a term of three years, at the expiration of which the industry members are eligible for appointment to a subsequent three-year term.
(3) Duties. The board shall:
(a) Have a consultative role on matters directly referred to it by the commission;
(b) Conduct meetings no less than once per year;
(c) Conduct all meetings as public meetings in accordance with the Open Public Meetings Act, chapter 42.30 RCW; and
(d) Prepare and submit to the commission a written report on matters brought to it for consideration including, where appropriate, a recommendation to the commission on potential resolution of such matters.
(4) Initiating board action. The commission alone may initiate board action other than the execution of administrative duties, which the board may conduct on its own initiative. Any person who seeks board participation in program issues or matters must petition the commission to initiate board action.
NEW SECTION
WAC 480-123-160 Resolution of disputes.
An affected provider may petition the commission to resolve any disputed matter concerning the program including, but not necessarily limited to, the provider's eligibility to receive program support, the amount or timing of any distribution of support, and calculations of the provider's revenues and earnings levels. The commission may refer such requests to the advisory board as the initial point of review and consideration of the matter for which a carrier seeks resolution. The commission will make the final determination on any petition.
NEW SECTION
WAC 480-123-170 Operation of the program.
The commission will authorize and process payments from the universal communications services account for providers that the commission determines have met the requirements of WAC 480-123-100 through 480-123-140.
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