Washington State Register

WSR 98-04-028

PERMANENT RULES

UTILITIES AND TRANSPORTATION

COMMISSION

[General Order No. R-448, Docket No. UT-970317--Filed January 28, 1998, 4:15 p.m.]

In the matter of amending WAC 480-80-330 and 480-120-027 and adopting WAC 480-123-010, relating to universal service discounts for telecommunications service provided to schools, libraries and rural health care providers.

statutory or other authority: The Washington Utilities and Transportation Commission takes this action under Notice No. WSR 97-24-115, filed with the code reviser on December 3, 1997. The commission brings this proceeding pursuant to RCW 80.36.080, 80.01.040, and the United States Telecommunications Act of 1996, Section 254.

statement of compliance: This proceeding complies with the Open Public Meetings Act (chapter 42.30 RCW), the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 34.21C RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).

date of adoption: The commission adopted this rule on January 14, 1998.

concise statement of purpose and effect of the rule: On May 8, 1997, the Federal Communications Commission (FCC) released its Report and Order, FCC Order No. 97-157, (FCC Order) implementing key portions of Section 254 of the Telecommunications Act of 1996 (the federal act), which addresses universal service. Among other matters, the order identified services to be supported by federal universal service funding and the mechanisms whereby such funding will be provided. Discounts on telecommunications services and certain nontelecommunications services for schools, libraries, and rural health care providers are among the items identified for support by the new federal program. The funding will be provided by providers of interstate telecommunications services, and the fund will be administered under the supervision of the FCC.

The FCC Order provides for funding of both interstate and intrastate services for schools, libraries, and rural health care providers. The federal act provided that the FCC set the discounts for such interstate services for schools and libraries and reserved to the states the authority to set such discounts for intrastate services. In order for the discounts to be provided to eligible entities in Washington pursuant to this federal program, the FCC's May decision required the state regulatory utility commission, in this case the commission, to adopt the FCC's discount matrix, or discounts no lower than the federal discounts, by January 1, 1998.¹

¹The commission adopted the discount by emergency rule making in this same docket on July 30, 1997. The purpose of the instant order is to make the FCC discount matrix and accompanying rules permanent.

This adoption of a new rule and amendment to existing rule affect no economic values and have no adverse environmental effect, in that they merely provide a means for Washington state schools and libraries to take advantage of the federal program. No intrastate funds are involved and this action will not increase or decrease the amount of funds reserved or set aside from Washington state ratepayers. The commission's rules governing contracts are being modified in relation only to this program, and only for the purpose of providing maximum flexibility to regulated providers while preserving commission oversight.

reference to affected rules: This rule repeals, amends, or suspends the following sections of the Washington Administrative Code: In reviewing the entire record, the commission determines that it should amend WAC 480-80-330 and 480-120-027 and it should adopt WAC 480-123-010, to read as set forth in Appendix A, as a rule of the Washington Utilities and Transportation Commission, to be effective when filed. These rule changes will make commission regulations consistent with the federal requirements and will enable Washington state institutions access to funding.

preproposal statement of inquiry and actions thereunder: The commission filed a Preproposal Statement of Inquiry (CR-101) on July 14, 1997, at WSR 97-15-053.

additional notice and activity pursuant to preproposal statement: The statement advised interested persons that the commission was considering entering a rule making on establishing discounts from otherwise-applicable intrastate telecommunications rates for schools and libraries, and eligibility for federal subsidies, as required by the federal act and Report and Order No. 97-157 of the FCC, and on modification of rules governing contracts. The commission also informed persons of the inquiry into this matter by providing notice of the subject and the CR-101 to all persons on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3) and by sending the notice to all registered telecommunications companies, all telecommunications attorneys, and to a list of persons interested in all rule makings on telecommunications matters. Pursuant to the notice, the commission requested written comments concerning the preproposal statement. Written comments in support of adoption of the discounts were received from GTE Northwest Incorporated (GTE), US WEST Communications, Inc. (USWC), and the Department of Information Services. Oral comments were also received from the City of Seattle, and the Washington Independent Telephone Association. There was no opposition expressed by any party.²

²The preproposal statement was sent out together with a notice concerning the initial adoption of the rules on an emergency basis. Comments were received at the same time with regard to both processes, and were consistently in support of the adoption of the rules.

notice of proposed rule making: The commission filed a notice of Proposed Rule Making (CR-102) on December 3, 1997, at WSR 97-24-115. The commission scheduled this matter for oral comment and adoption under Notice No. WSR 97-24-115 at 9:30 a.m., Wednesday, January 14, 1998, in the Commission's Hearing Room, Second Floor, Chandler Plaza Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. The notice provided interested persons the opportunity to submit written comments to the commission.

commenters (written comments): The commission received written comments from GTE, USWC, the Department of Information Services, and the Washington State Library in support of the proposed rule making. No other written comments were received. No comments in opposition to the proposed rule making were received.

rule-making hearings: The rule proposal was considered for adoption, pursuant to the notice, at the commission's regularly scheduled open public meeting on January 14, 1998, before Commissioner Richard Hemstad and Commissioner William R. Gillis. The commission heard oral comments from Tom Wilson, representing commission staff. No other interested person made oral comments.

suggestions for change that are rejected: No changes were suggested.

commission action: After considering all of the information regarding this proposal, the commission adopted the proposed amendments to the existing WAC and the new section added.

changes from proposal: The commission adopted the proposal with the following changes from the text noticed at WSR 97-24-115.

In the last sentence in amendatory section WAC 480-80-330, new subsection (8), the word "may" is changed to "shall," as follows:

(8) ***The contract shall become effective immediately upon filing with the commission, or at such later time as is specified in the contract.

This change is required for clarity and certainty of the adopted provision, and does not alter flexibility in compliance.

In amendatory section WAC 480-120-027, new subsection (5), in the first sentence after the title of the new subsection, the word "tariff" is changed to "price list" so that the sentence will now read,

When a telecommunications company enters into a contract to provide competitively classified service to a school, library, or rural health care provider as part of the federal universal service program, the telecommunications company must file the contract if the rates, terms, or conditions of the prediscounted contract service depart from the price list.

This corrects an oversight in the noticed version, in that the amended section refers to price lists and not tariffs.

The word "may" in the last sentence in amendatory section WAC 480-120-027, new subsection (5) is changed to "shall," as follows:

(5)... The contract shall become effective immediately upon filing with the commission, or at such later time as is specified in the contract.

This change is required for clarity and certainty of the adopted provision, and does not alter flexibility in compliance.

statement of action; statement of effective date: In reviewing the entire record, the commission determines that WAC 480-80-330 and 480-120-027 should be amended to read as set forth in Appendix A, and new section WAC 480-123-010 should be added as rules of the Washington Utilities and Transportation Commission, to take effect pursuant to RCW 34.05.380(2) on the thirty-first day after filing with code reviser.

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 1, amended 2, 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

the commission orders That:

1. WAC 480-80-330 and 480-120-027 should be amended to read as set forth in Appendix A, and new section WAC 480-123-010 should be added 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).

2. 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 chapter 1-21 WAC.

3. The commission adopts the commission staff memoranda, presented when the commission considered filing a Preproposal Statement of Inquiry, when it considered filing the formal notice of proposed rule making, and when it considered adoption of this proposal in conjunction with the text of this order, as its concise explanatory statement of the reasons for adoption, as required by RCW 34.05.025.

dated at Olympia, Washington, this 28th day of January, 1998.

Washington Utilities and Transportation Commission

Richard Hemstad, Commissioner

William R. Gillis, Commissioner

appendix "a"

AMENDATORY SECTION (Amending Order R-301, Docket No. U-88-1704-R, filed 6/1/89)

WAC 480-80-330 Telecommunications contracts. (1) Contracts to be filed. All contracts with end use customers for the retail sale of regulated intrastate telecommunications services which contain or state rates or conditions not in conformance with any applicable tariff or which provide for telecommunications services which are not specifically addressed in the telecommunications company's published tariffs shall be filed with the commission in accordance with this section. For purposes of this section the modification of a previously executed contract will be treated as a new contract. This section shall not apply to contracts which offer services subject to a price list filed pursuant to WAC 480-120-027.

(2) Application. This section shall apply prospectively to all contracts as defined in subsection (1) of this section executed after the effective date of this section.

(3) Time for filing and effectiveness. With the exception of firm bid contracts allowed under subsection (4) of this section, each contract shall be filed with the commission in accordance with this subsection. A contract which does not qualify for treatment under subsection (4) of this section shall be filed with the commission not less than thirty days prior to the proposed effective date of the contract, and shall become effective according to its terms unless earlier approved or rejected by the commission: Provided, That upon application and for good cause shown, the commission may approve the contract as of an effective date prior to the date that the contract would have become effective in accordance with this section.

(4) Federal contracts. Where a federal agency asserts its authority to solicit a firm offer of services and a contract subject to this section is submitted in response to that solicitation, the provisions of subsection (3) of this section will not apply. Upon the acceptance of such a contract offer by the federal agency, the telecommunications company shall immediately file the contract with the commission and must include the same documentation required for approval by subsection (5) of this section.

(5) Documentation. Each contract and substantial contract modification filed pursuant to this section shall be accompanied by documentation to show that the contract does not result in undue or unreasonable discrimination between customers receiving like and contemporaneous service under substantially similar circumstances; and provides for the recovery of all costs associated with the provision of the services. In addition, the telecommunications company shall file the following information in conjunction with each contract submitted:

(a) A statement summarizing the basis of the rate or charge proposed in the contract and an explanation of the derivation of the proposed rate or charge;

(b) An explanation of all cost computations involved in arriving at the derivation of the level of the rate or charge in the contract; and

(c) A statement indicating the basis for the use of a contract rather than a filed tariff for the specific service involved.

(6) Duration of contract. All contracts shall be for a stated time period.

(7) Confidentiality. Filings under this section may be submitted with portions designated "confidential" pursuant to WAC 480-08-015. However, any filing which designates as "confidential" the essential terms and conditions will be rejected by the commission.

(8) Federal universal service contracts with schools, libraries, and rural health care providers pursuant to 47 CFR, Part 54. When a telecommunications company enters into a contract to provide service to a school, library, or rural health care provider, as part of the federal universal service program, the telecommunications company must file the contract if the rates, terms, or conditions of the prediscounted contract service depart from the tariff. The contract must be filed immediately upon acceptance by the administrator of the federal universal service program. The filing must include the same documentation required for approval by subsection (5) of this section. The contract shall become effective immediately upon filing with the commission, or at such later time as is specified in the contract.

[Statutory Authority: RCW 80.01.040. 89-12-038 (Order R-301, Docket No. U-88-1704-R), 480-80-330, filed 6/1/89; 88-22-037 (Order 291, Docket No. U-88-2337-R), 480-80-330, filed 10/28/88; Order R-5, 480-80-330, filed 6/6/69, effective 10/9/69.]

AMENDATORY SECTION (Amending Order R-301, Docket No. U-88-1704-R, filed 6/1/89)

WAC 480-120-027 Price lists. (1) Pursuant to RCW 80.36.310 telecommunications services classified by the commission as competitive will be offered under price lists. All services of competitive telecommunications companies as classified by the commission under RCW 80.36.310 will be offered under price lists.

(2) All price lists filed with the commission must describe the service being offered and all prices, charges, terms, and conditions pertaining thereto. Each page of every price list shall contain, in general, the company name, the page number, and the effective date. All subsequent revisions of a price list shall bear consecutive revision numbers. Price lists must provide sufficient detail for customers and potential customers reasonably to determine what is being offered and what charges the customer incurs in obtaining the service.

(3) Contracts (including modifications to previously executed contracts) for services which are governed by this section may be offered subject to the requirements of this subsection.

(a) Contracts of companies classified "competitive" under RCW 80.36.310 shall be filed with the commission not later than five business days after execution. A contract filed pursuant to this subdivision will not be rejected by the commission in the absence of competent evidence that the contract is unlawful.

(b) Contracts which offer services classified as "competitive" under RCW 80.36.330 shall be filed with the commission at least ten days prior to the effective date. Such contracts may not include both "price listed" and "tariffed" services unless the tariffed services are set forth separately and offered under an approved tariff or contract (see WAC 480-80-330). A contract filed pursuant to this subdivision may be rejected if the telecommunications company is unable to document that the price charged covered its relevant costs under either a long run incremental cost analysis or a fully distributed cost analysis whichever is lower, or any other commission-approved cost method. A contract filed pursuant to this subdivision may also be rejected upon a showing that it is otherwise unlawful. To meet its burden of proving that the contract is cost-based, the company shall, at a minimum, provide the following information at the time of filing:

(i) A statement summarizing the basis of the rate or charge proposed in the contract and an explanation of the derivation of the proposed rate or charge; and

(ii) An explanation of all cost computations involved in arriving at the derivation of the level of the rate or charge in the contract.

(d) Filings under this subsection may be submitted with portions designated "confidential" pursuant to WAC 480-08-015. However, any filing which designates as "confidential" the essential terms and conditions will be rejected by the commission.

(5) Federal universal service contracts with schools, libraries, and rural health care providers pursuant to 47 CFR, Part 54. When a telecommunications company enters into a contract to provide competitively classified service to a school, library, or rural health care provider, as part of the federal universal service program, the telecommunications company must file the contract if the rates, terms, or conditions of the prediscounted contract service depart from the price list. The contract must be filed immediately upon acceptance by the administrator of the federal universal service program. The filing must include the same documentation required for approval by subsection (3)(b) of this section. The contract shall become effective immediately upon filing with the commission, or at such later time as is specified in the contract.

[Statutory Authority: RCW 80.01.040. 89-12-038 (Order R-301, Docket No. U-88-1704-R), 480-120-027, filed 6/1/89; 87-24-055 (Order R-282, Cause No. U-86-125), 480-120-027, filed 11/30/87.]

NEW SECTION

WAC 480-123-010 Federal universal service contracts. For purposes of schools and libraries receiving federal universal service funding under 47 CFR, Part 54 of the Federal Communications Commission rules, the following discounts shall apply:

schools and libraries

discount matrix discount level

how disadvantaged?

% of students

eligible for national urban rural

school lunch program discount discount

(%) (%)

<1 20 25

1-19 40 50

20-34 50 60

35-49 60 70

50-74 80 80

75-100 90 90

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