WSR 97-21-153

PREPROPOSAL STATEMENT OF INQUIRY

UTILITIES AND TRANSPORTATION

COMMISSION

[Filed October 22, 1997, 11:17 a.m.]

Subject of Possible Rule Making: Access charge reform and the cost of universal service. Provisions that might be affected are currently codified in WAC 480-80-047, 480-80-048, and adjudicated in Cause No. U-85-23, et al. (primarily, the Seventeenth and Eighteenth Supplemental Orders). Other rules and/or orders relating to these topics might also be affected. Docket No. UT-970325.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 80.01.040, chapter 80.36 RCW and 47 U.S.C. Sections 253 and 254.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The Telecommunications Act of 1996 and related Federal Communications Commission orders and actions.

Existing rules and precedent address Intrastate Interexchange Carrier Access Charges and the state Universal Service Fund. The underlying rationale for the existing rules originated as a result of the divestiture of the Bell System in 1984 (see WUTC Cause No. U-85-23, et al.). Now, as a result of the Telecommunications Act of 1996 (act), made law on February 8, 1996, the FCC has embarked upon and set into motion a procompetitive deregulatory national policy framework in which it has recently completed its "Trilogy" foundation of orders for this new paradigm. On August 8, 1996, the FCC issued its Local Competition order under FCC 96-325. On May 8, 1997, the FCC issued both its Universal Service order and Access Charge Reform order under FCC 97-157 and FCC 97-158, respectively. The new paradigm set in motion by the act and partially implemented through the FCC rules will have an enormous impact upon the telecommunications industry in Washington. These new national procompetitive rules and policies create the necessity to revisit our current rules and precedent, and move forward with competitively neutral rules and policies as part of the commission's responsibility in carrying out its obligations under the act and the legislative directive outlined in chapters 80.01, 80.04, and 80.36 RCW. The issues that must be addressed at a minimum should be how to:

(1) Identify the existence of any implicit subsidies for universal service and remove them to the extent possible.

(2) Establish a new universal service funding system and replace the existing system with an explicit, specific, predictable, and sufficient funding mechanism for universal service that is competitively neutral.

(3) Review pricing principles to ensure recovery of economically efficient costs, and to ensure that appropriate rate levels and rate design are established in proper relationship to the costs and market power of each provider.

(4) Allow the marketplace to function, while protecting captive ratepayers.

(5) Ensure that service to rural and high cost area customers is adequate and affordable, as specified in 47 U.S.C. 254 (b)(3).

The need for this proceeding is also evidenced by the Petition for Investigation filed August 8, 1997, by AT&T Communications of the Pacific Northwest, Inc., in Docket No. UT-970325; and the proceeding in Docket No. UT-970653, wherein the pleadings suggest that a general and open process such as rule making is preferable to a case-by-case, company-by-company, approach to the issues.

Expected accomplishments will be the development of rules and mechanisms applicable on a competitively neutral basis to all regulated industry participants. The rule-making process is open and explicit and will allow all industry participants (incumbent and new entrant alike) and interested persons to become involved and help shape the future of competitive telecommunications service provision in Washington state.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: Federal Communications Commission regulates comparable interstate service and costing. The major reason for this rule making is to bring state rules into consistency with federal requirements (and/or recommendations) to the extent feasible, and to allow for a more competitive telecommunications market in the state of Washington. This will include a review and study of pertinent federal laws, federal rules, and other resources.

Process for Developing New Rule: Agency study; and the commission will call for written comments, and may provide the opportunity for additional written comments. The commission will schedule an informal workshop(s) with interested persons in a manner designed to develop consensus regarding any rule proposal. Data collection may also be necessary. See below.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. Interested persons may contact the Secretary, Washington Utilities and Transportation Commission, P.O. Box 47250, Olympia, WA 98504-7250, (360) 753-6451, FAX (360) 586-1150. Such persons may submit comments, as specified below, or may ask to be included in the commission's list of interested persons for the proceeding.

Written Comments: Written comments in response to the CR-101 from persons interested in the subject matter of this proposed rule making may be filed with the commission secretary, referencing Docket No. UT-970325, not later than November 21, 1997. All commenters are asked, but not required, to file an original and ten copies of their written comments. The commission also requests, but does not require, that comments be provided on a 3 1/2 inch IBM formatted high-density disk, in WordPerfect version 5.1, 6.0 or 6.1, labeled with the docket number of this proceeding and the commenter's name and type of software used. The commission may offer additional opportunities to provide written comments. Interested persons may file additional written comments in response to any such invitation. Interested persons may also attend and participate in the workshop described below and in any other workshop that may be scheduled. The commission will provide written notice of any additional preproposal workshops to all commenters and to any other persons specifically asking to receive notice in this rule-making proceeding.

Notice of Workshop: A workshop will be held at 9:30 a.m., Tuesday, January 13, 1998, in Room 206 of the Commission's Headquarters Office, 1300 South Evergreen Park Drive S.W., Olympia, WA. please note: The commission's teleconference bridge line will be available for this workshop. A limited number of teleconference ports will be available for the Olympia workshop and will be assigned one to an organization, on a first-come, first-served, basis. Remaining open ports on the day of the workshop will be assigned to provide more ports per organization, if requested. Persons wishing to attend via the teleconference bridge line must contact Tim Zawislak, at (360) 664-1294, no later than 3:00 p.m., Friday, January 9, 1998.

October 22, 1997

Terrence Stapleton

for Steve McLellan