PENNSYLVANIA PUBLIC UTILITY COMMISSION
Harrisburg, Pennsylvania 17105-3265
Public Meeting held October 9, 1997
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
John Hanger
David W. Rolka
Nora Mead Brownell
In Re: Formal Investigation to Examine
And Establish Updated Principles and
Policies for Telecommunications
Services in the Commonwealth
Docket No. I-940035
Opinion and Order
BY THE COMMISSION:
In our Opinion and Order of January 28, 1997, (hereinafter referred to as "Order") in this proceeding, the Commission established a Task Force on Universal Telephone Service to provide a collaborative forum in which all interested stakeholder representatives could participate in the development of further recommendations on universal telephone service. The Task Force was the primary vehicle to enable this Commission to promptly consider the implementation and coordination of universal telephone service policies at the state and federal level. The Task Force extensively considered the Universal Service Report and Order issued by the Federal Communications Commission ("FCC") on May 8, 1997.
The Task Force further organized into four subcommittees to address the various responsibilities. The four subcommittees are: (1) Monitoring and Reporting/Subscribership; (2) Basic Universal Service Costing Model Refinements; (3) Schools and Libraries; and (4) Health Care Facilities. Each Subcommittee has developed a set of recommendations, which were presented, discussed among and endorsed by the full membership of the Task Force. The Task Force submitted a Final Report and Recommendation to the Commission on September 29, 1997, after its unanimous adoption by the more than 30 members of the Task Force.
Prior to submitting the Final Report, the Task Force submitted three Interim Reports to the Commission addressing topical issues which required more immediate action. The Commission adopted the recommendations set forth in each of the Interim Reports. The Interim Reports are hereby incorporated by reference. Each of the Interim Reports and the Commission action in response thereto is noted as follows:
1. Interim Report on Schools and Libraries Discount Matrix (June 2, 1997): PUC Order of June 5, 1997, adopting the federal matrix for discounts for eligible schools and libraries.
2. Interim Report on the Inclusion of Intermediate Units as Eligible Schools (July 11, 1997): PUC Order of July 31, 1997, approving the Task Force Report.
3. Interim Report on the Definition of Rural for the Schools and Libraries and Health Care Programs (July 14, 1997): PUC Petition for Waiver to the FCC on the Definition of Rural, filed July 17, 1997.
The Task Force met periodically since its inception, as follows: April 15, 1997; May 13, 1997; June 2, 1997;June 12, 1997; July 14, 1997; August 28, 1997; and, September 19, 1997 Minutes of the meetings were prepared and circulated for the benefit of the membership. In addition, each of the Subcommittees held periodic meetings to discuss in further detail the various issues and to develop recommendations to present to the full Task Force.
The Task Force recommends that the Commission tentatively approve the Final Report and Recommendation and request comment by any interested person. The Governor's Office, in conjunction with the cooperation of the Public Utility Commission and Pennsylvania Department of Education, is coordinating an on-line seminar on universal telephone service pursuant to the request of the Information Renaissance. The Task Force Report already has been posted electronically to the website of the Information Renaissance to facilitate the on-line conference. The Task Force requests the opportunity to review the comments and input arising from the on-line seminar and other public comments and make recommendations to the Commission on what, if any, of the recommendations should be modified once these matters are concluded.
We commend the efforts of the individual members of the Task Force; the Chairs of the four Subcommittees: Basic Universal Service Costing Models; Schools and Libraries; Health Care Institutions and Monitoring & Reporting/Subscribership Issues; and, the leadership of the Task Force. Their efforts will go a long way toward maximizing the positive benefits of Pennsylvania Act 67 of 1994 (Chapter 30) and The Telecommunications Act of 1996, for Pennsylvania citizens. The Final Report and Recommendation constitutes the beginning of a virtual blue print for action, as well as a recap of the Interim Reports of the Task Force and prior actions of the Commission to facilitate universal telephone service.
This Report should be publicly released and we encourage interested parties to submit comments on the Report and Recommendations. We accept the procedural recommendations of the Task Force as providing an efficient mechanism for digesting the additional public comments that may be submitted. We also welcome the comments being developed via the on-line seminar sponsored by the Governor's Office for Information Technology. In recognition of the fact that the issues and recommendations relate to a program and activities of significant interest and potential benefit to the Commonwealth's citizens we welcome comments on an effective mechanism to sustain the efforts of the Task Force in issue identification, recommendations, monitoring and evaluation. We emphasize that this additional public comment and public input may result in the Commission's modification to the Task Force's Report and Recommendation. Attached hereto as Appendix A is an Overview of the Report which summarizes the recommendations submitted by the Task Force.
Conclusion
The Commission is encouraged by the accomplishments of this diverse group of public and private interested parties that are reflected in the various Interim Reports as well as the Final Report and Recommendation. This Task Force reflects outstanding cooperation among various intergovernmental entities: the Governor's Office for Information Technology; the Departments of Education and Health; the Rural Development Council; the Center for Rural Pennsylvania; the Rural Utilities Service; the Office of Consumer Advocate and the Office of Small Business Advocate. A similarly diverse group of private interest groups also contributed to the Task Force, such as representatives of all components of the telecommunications industry; the education and health communities. We expect these groups to continue the dialogue and information exchange that the Task Force has cultivated; THEREFORE, IT IS ORDERED:
1. The Final Report and Recommendation of the Universal Telephone Service Task Force is tentatively approved;
2. Notice of the availability of the Task Force Report, and the contents of this Order, should be published in the Pennsylvania Bulletin and the Report and Order should be posted electronically to the Pennsylvania PUC's website, with links to the report to be encouraged to be implemented by other Commonwealth agency members of the Task Force;
3. Interested parties should be given 21 days from the date of publication of the Notice in the Pennsylvania Bulletin within which to submit an original and 15 copies of comments on the Task Force Final Report and Recommendation;
4. The results of the on-line seminar on universal telephone service coordinated by the Information Renaissance should be formally filed in this Investigation Docket by no later than the deadline established for submitting comments on the Task Force Final Report and Recommendation;
5. The Universal Telephone Service Task Force should be directed to submit to the Commission its recommendations following review of the public comments and results of the on-line seminar regarding what, if any, modifications to the Report should be made, within 45 days of the deadline for the submission of public comments;
6. This matter should be assigned to the Law Bureau to effectuate the appropriate publication in the Pennsylvania Bulletin;
7. In addition to serving all parties of record, copies of the Tentative Order should be served on all members of the Task Force and the Information Renaissance; and
8. Following the receipt of the Task Force's 45 day recommendation, the Commission should issue a Final Order addressing the Final Report and Recommendation of the Task Force and public comments received in response to this Order.
BY THE COMMISSION,
James J. McNulty
Acting Secretary
(SEAL)
ORDER ADOPTED: October 9, 1997
ORDER ENTERED:
Appendix A
Overview of the Final Report and Recommendation of the
Pennsylvania Universal Telephone Service Task Force
(filed on September 29, 1997 at Docket No. I-940035)
Final Report of the Subcommittee on BUS Costing Model Refinements
The BUS Subcommittee was charged with:
Identification of further refinements to the BUS costing models. This would entail:
1. Holding workshops to explore and to examine various improvements and enhancements that continue to evaluate the various models revised by the FCC for federal funding purposes.
2. Apprising the Commission of further developments.
3. Making recommendations to the Commission.
4. Funding for public interest payphones.
As a result of the Commission's action in the Reconsideration Order issued July 15, 1997, the BUS Subcommittee has elected to refrain from further meeting and instead elected to participate in the workshops to be convened in the future.
With respect to the issue of public interest payphone funding, the Subcommittee concludes that the issue is too complex to be addressed within the time allotted. Further, much of the information that the Subcommittee needs to consider will not be available until after October 7, 1997, the date on which the regulation of payphone prices is scheduled to end. The Subcommittee will address this issue when the requisite information becomes available, and will submit a supplemental report to the Commission concerning this subject.
Final Report of the Subcommittee on Schools and Libraries
The Subcommittee on Schools and Libraries was charged with the following, specific responsibilities:
1. Identification of the range of services to be provided to schools and libraries per section 254. (Order, p. 133)
2. Identification of the level of discounts to providers of services to schools and libraries per section 254 (c)(1)(B). (Order, p.133)
3. Identification of the need for changes to the definition of universal service in the future, relative to schools and libraries. (Order, p. 135)
4. Identification of ways to encourage prompt infrastructure modernization in Pennsylvania, including compliance with Chapter 30's alternative regulation and infrastructure modernization requirements. (Order, p. 135)
Scope of the Report
The Subcommittee on Schools and Libraries has previously produced, and the Task Force has adopted, three Interim Reports dealing with various aspects of these responsibilities. These reports are:
Issue A: Level of Discounts.
Recommendations
3. The Task Force recommends that the PaPUC monitor the adequacy of the federal fund's performance in Pennsylvania and are inclined to make recommendations on the following items: criteria for evaluations; methods by which to monitor; and time frame for performance review.
4. The Task Force recommends that it conduct a periodic evaluation of the Universal Service Discount Program for Schools and Libraries (also know as E-rate) in Pennsylvania. This evaluation should monitor the annual financial impact to schools and libraries and the effectiveness of the infrastructure build-out in Pennsylvania.
Issue B: Identify ways to encourage prompt infrastructure modernization in Pennsylvania, including compliance with Chapter 30's alternative regulation and infrastructure modernization requirements.
1. Guiding Principles for the Development of Requests for Service
Recommendation: To promote new services and infrastructure development, the work group recommends that schools and libraries be advised to formulate their request for service according to the following principles:
1.1 Whenever possible, requests for service should articulate a need for a service rather than a specific technology or facility.
1.2 Whenever possible and when advantageous to the schools and libraries, the request for service should state that public switched network services are preferred to private dedicated networks.
2. Consortia
The Task Force recommends further research to determine the best means or mechanism that can take advantage of a common, single source to advertise aggregated demand. This mechanism could be implemented at the state level; however, it would be far more effective at the federal level, through the bid advertising web site to be established by the Fund Administrator. Such a mechanism can encourage competition and new service deployment if providers can see a potential for demand beyond eligible consortia participants.
3. Potential Impact of Regulatory Activity on the Schools and Libraries Program
The Task force recommends that the PaPUC make every effort to identify the portions of its orders which could have an impact on a school's or a library's ability to receive competitive bids for specific services. Such portions of any ruling, with their anticipated effects, should be clearly outlined. We further recommend that a channel of communication be established whereby the PaPUC can proactively and routinely direct this information to the Pennsylvania Department of Education, or other agreed upon entities, which can effectively disseminate this information to those most likely to be affected under this program.
4. Note on Chapter 30
The Task force examined the Schools and Libraries portion of the FCC's Universal Service Order to determine what might further contribute to infrastructure development in PA, either independently or in conjunction with the objectives of Chapter 30. The work group attempted to address ways in which to capitalize on Chapter 30 and Universal Service existing simultaneously. Our conclusion, however, is that the topic is too complex to address within the required deadline. This conclusion is at least partly due to the pre-existence of commitments made by various carriers under Chapter 30, as written.
Issue C: Identify the basic information that must be submitted by the School/Library to the Administrator's subcontractor; possible uses of technology to assist the PUC.
1. State governmental entities and interested stakeholder groups should continue to work together to facilitate electronic access to information regarding service providers and technology availability as well as information concerning the discount calculations for each school and/or library. The information should be available for each school district or library. The Pennsylvania PUC should offer assistance in this undertaking by assisting in the identification of, and collection of, useful information. Further, the Pennsylvania PUC and the Pennsylvania Department of Education should encourage those entities that each deals with in their official capacities to maintain the integrity of this information through, at least, annual updates.
A web site should be established for this purpose, and the Pennsylvania PUC should recommend that the Office of Administration (OA/OIT) and the Pennsylvania Department of Education should organize this activity.
2. The Pennsylvania PUC's efforts to facilitate Internet access to various telecommunications providers' tariffs should be publicized to the schools and libraries to enable them to more readily access such information.
Issue D: Identify any aspect of the process that could place undue financial or administrative burden on Schools/Libraries and recommend alternatives.
1. The Pennsylvania PUC should consider allocating some resources to facilitate ongoing education and outreach efforts regarding the E-rate Program. For example, when the program applications are finalized and made available, the Pennsylvania PUC should coordinate outreach efforts with the Pennsylvania Department of Education (PDE) and the Office of Administration, Office for Information Technology (OA/OIT), to assure that all eligible schools and libraries have access to these program materials and accurate information concerning the program administration and operation.
2. PDE should be encouraged to implement a process for review and approval of technology plans that comply with the E-rate program requirements and which would also cover the eligibility criteria for other federal and state technology grants and loans. The procedure and time table for departmental review and approval of the technology plans should be disseminated and posted electronically to PDE's website and through PennLink. The contents of the technology plan and explanation of how to prepare a technology plan should be made available to eligible schools and libraries.
Pending development of the comprehensive technology plan requirements, PDE should rely on existing federal standards for technology plans such as those set forth in Title III of Improving America's Schools Act, Section 3135.
The process for review and approval of technology plans should strive to be cost-effective and to build consensus. One way in which to meet these objectives is to consider a peer review process, which would call on education technology experts to assist in the evaluation of technology plans. The process should be consultative by encouraging the participation and cooperation of other governmental agencies with appropriate expertise.
3. All existing sources of funds for technology for schools and libraries should be evaluated for their use in facilitating schools and libraries' compliance with the other requisites of the E-rate program. For example, schools and libraries are required to conduct a technology assessment; develop a request for services; certify that they have a plan for using the technology; certify that they have adequate hardware, software and staff training to use the services effectively. Existing technology funding sources should be tapped to enable schools and libraries to meet these E-rate program requirements. Information about these resources should be made electronically accessible via the Internet under the leadership of PDE.
4. Schools and libraries should be encouraged to identify funding sources to supplement existing resources to assure that such an infrastructure is in place so that they may make the certifications required as prerequisites to participating in the E-rate program. Such funding sources may be available from other technology grant or loan programs administered either at the federal or state level or through their local budgeting process.
Issue E: Potential for future complaints; PUC role in prevention of complaints.
1. The Pennsylvania PUC should set forth standards to govern the definition of "similarly situated non-residential customers for similarly situated services" for purposes of evaluating the lowest corresponding price. Such standards should include: (a) type of service; (b) physical proximity of school/library and other customers; (c) number of connections for school/library and other customers; (d) volume of usage for school/library and other customers. No hard and fast rule can be adopted that will govern all situations, but the identification of various criteria may assist the customers and providers in their negotiations. The Pennsylvania PUC should develop the standard after providing interested parties opportunity for comment.
2. The Pennsylvania PUC should require that carriers offer prices to schools and libraries which are being offered via individual case basis contracts to similarly situated non-residential customers for similarly situated services. Procedures should be implemented to preserve the confidentiality of competitively sensitive information relating to such contracts.
3. The Pennsylvania PUC should continue to adhere to its historic practice of requiring prices for intrastate services to be set no lower than incremental cost. The PUC should reject the FCC's limitation on the prices available to consortia relating to the provision of intrastate services.
Issue F: Define/Identify pre-discount rates or Lowest Corresponding Price: how that is to be derived and the PaPUC's role in determining LCP for regulated and non-regulated services; PaPUC's role in complaint resolution.
1. The process for seeking recourse to the Pennsylvania PUC for intrastate service complaints regarding the lowest corresponding price should be handled initially through mediation.
Final Report of the Subcommittee on Health Care Institutions
Scope of the Report
The Subcommittee on Health Care Facilities previously developed and the Task Force previously adopted an Interim Report Concerning the Definition of Rural Areas, in conjunction with the Subcommittee on Schools and Libraries. The Report was filed with the PUC on July 15, 1997, and recommended that the Pennsylvania PUC submit a petition for waiver, or in the alternative, reconsideration of the rural definition to permit an additional nine counties to be classified as rural. The Pennsylvania PUC adopted this recommendation and filed a Petition for Waiver with the FCC on July 17, 1997. The Subcommittee hereby incorporates by reference its Interim Report Concerning the Definition of Rural Areas, and the Pennsylvania PUC's Petition for Waiver.
Issue1: Identification of the range of services to providers of services and health care institutions.
1. The Task Force recommends that the Pennsylvania PUC concur with the range of services identified in the federal program for purposes of providing rate reductions to qualified health care institutions pursuant to The Telecommunications Act of 1996.
2. The Task Force recommends that its efforts and attention be focused on developing educational and informative materials to publish and distribute to qualified health care institutions and service providers in order to insure that the federal program provides a maximum benefit to Pennsylvanians.
3. The Task Force recommends that it be directed to monitor the implementation of the federal program for rural health care facilities so as to assure the timely transmittal of updated information concerning the federal program is disseminated throughout Pennsylvania to qualified health care institutions and to service providers.
4. The Task Force recommends that a cost effective and efficient procedure be developed for measuring the advantages of the federal program which inure to the citizens of Pennsylvania. The procedure should be developed as partnership of public and private entities and resources. The results of the measurement program should be publicly reported within 24 months of the date of the start-up of the federal program.
Issue 2: Identification of the level of discounts to providers of services to health care institutions.
1. The Task Force should monitor the Pennsylvania PUC's Petition for Waiver of the Rural Definition and determine whether there is any supplemental information that the FCC staff would like to obtain regarding the Petition.
2. The Task Force should review the results of the procedure for measuring the benefits of the federal program for Pennsylvanians, and make recommendations as to what, if any, additional measures the state should consider undertaking to further the provision of universal telephone service to health care institutions.
Issue 3: Identification of ways to encourage prompt infrastructure modernization in Pennsylvania including compliance with Chapter 30's alternative regulation and infrastructure modernization requirements.
The Subcommittee on Health Care Institutions concurs with the discussion and recommendations of the Subcommittee on Schools and Libraries set forth in that Subcommittee's Final Report, Issue B.
Final Report of the Subcommittee on Monitoring & Reporting/Subscribership Issues
The Monitoring & Reporting/Subscribership Subcommittee of the Universal Service Task Force was delegated with the following responsibilities:
1. Identification of monitoring and reporting requirements that provide an adequate range of information necessary for the Commission to effectively monitor universal service in Pennsylvania in the future (Universal Service Order of January 28, 1997, Docket No. I-00940035, p. 135).
2. Identification of the special needs of low income customers in Pennsylvania (Universal Service Order entered January 28, 1997, Docket No. I-00940035, p. 135).
3. Identification of the need for changes to the definition of universal service in the future (Universal Service Order entered January 28, 1997, Docket No. I-00940035, p. 135).
4. Identification of ways to encourage prompt infrastructure modernization in Pennsylvania including compliance with Chapter 30's alternative regulation and infrastructure modernization requirements (along with the other subcommittees) (Universal Service Order entered January 28, 1997, Docket No. I-00940035, p. 135).
5. Identification of recommendations concerning extended area service policies for a competitive local exchange market (PUC Order entered April 15, 1997, Docket No. P-00961130, pp. 11 and 13).
Issue 1: Monitoring & Reporting.
The Subcommittee does not support the creation of additional burdensome monitoring reports and recommends that additional tracking reports only be required in instances where existing statistical information is not available. However, it is important to consider the impact that Lifeline and Link-Up programs will have on telephone penetration. It is especially important to monitor the impact that these programs will have on the low-income penetration rate, as well as on specific sub-groups such as black, Hispanic, rural household, and tenant.
The Subcommittee has reviewed the possible methods by which an accurate population base could be determined that would represent the total number of all existing telephone customers and potential telephone customers.
The monitoring reports should determine the penetration levels of low-income households in Pennsylvania as well as the penetration levels for specific sub-group populations such as black, Hispanic, rural household, and tenant. Where specific Pennsylvania information is not available through the FCC or other means, it must be obtained independently, unless it can be demonstrated to the Commission that it is impractical or uneconomical
We also recommend that the federal and state Universal Service Fund Administrators may be reliable sources for obtaining tracking information. However, the subcommittee recommends that the PUC wait until such time that the Fund Administrators are actually selected before determining what information can be gleaned from the Fund Administrators' records. In addition, the Subcommittee recommends that the Commission prepare an annual summary of basic one-party flat-rated residence and business local service rates, by area by Company, in order to determine where local competition actually exists in both the residential and business markets, and the effects that local service competition may have on rates.
The Subcommittee agrees with the Commission that all telephone companies be required to file at a minimum, a Lifeline Plan. Currently all incumbent local exchange companies in Pennsylvania have Link-Up in their tariffs. The Subcommittee recommends that all CLECs that do not have Link-Up provisions in their tariffs be directed to do so.
With regard to Lifeline, the Subcommittee recommends that all LECs file a Lifeline Tariff that will achieve the goals of the FCC and Commission's Universal Service Order, as well as comply with the mandate of Chapter 30 to ensure that low-income households are able to connect to and maintain in-home telephone service. The Subcommittee also recommends that all LECs and CLECs be directed to use, as a minimum, Bell's Lifeline Service tariff as an illustrative guide to develop Lifeline Service tariffs which all ILECs and CLECs would be required to file as part of their Lifeline Plans. Bell's Lifeline Service includes its Budget Usage and Standard Usage local service options and many of the incumbent LECs today only offer flat rate service pricing. Therefore, it should be recognized that the rate structure and actual local service offerings of a specific LEC's Lifeline plan may vary from company to company.
In addition, the Subcommittee recommends that the Commission undertake the necessary action to formulate a public relations or communications plan to educated subscribers as well as non-subscribers about the options that are available under Universal Service, Lifeline, and Link-Up. It is also recommended that some consideration be given to informing the illiterate, as well as those who speak a different language other than English.
Issue 3: Universal Service Definition Changes.
The Subcommittee notes that although the PUC's definition of universal service is similar to the FCC's definition, there is a difference. The FCC's definition includes the availability of "toll limitation services" for qualifying low-income consumers, while the PUC's definition does not. Since it would initially be administratively easier to use similar definitions for universal service, the Subcommittee recommends that the PUC also include "toll limitation services" in its definition of universal service with the same caveats as those contained in the FCC's definition (i.e. a carriers that are incapable of providing toll limitation services may, for a specific period of time, also receive universal service support while completing network upgrades required for them to offer these services).
Furthermore, with regard to the frequency of universal service definition changes, the subcommittee recommends that for the first review, the PUC wait until the FCC finalizes its definition changes based on the recommendation of the Federal-State Joint Board. The Subcommittee further recommends that the PUC then act within the first six months after the FCC adopts its revised universal service definition to modify the state's universal service definition.
Issue 4: Ways to Encourage Prompt Infrastructure Modernization in Pennsylvania
The Subcommittee on Monitoring and Reporting/Subscribership Issues concurs with the discussion and recommendations of the Subcommittee on Schools and Libraries set forth in that Subcommittee's Final Report at Issue B.
Issue 5: EAS Revisions in a Competitive Environment
The Subcommittee notes that the Commission's EAS regulations have been in place since 1989 and that the total number of qualifying EAS routes have been declining since that time. Therefore, the Subcommittee believes that before making an official recommendation, it would be best to wait until the next round of biennial EAS traffic usage studies are filed to determine whether the number of qualifying routes would justify the need to continue the traffic studies in 1999. Therefore, the Subcommittee recommends that, before making a final determination on how the EAS regulations should be revised, the Commission should review the results of the 1997 traffic usage studies to determine the number of routes that qualify for EAS and Optional Calling Plans ("OCP"). If it is determined that the number of qualifying EAS routes are significant to the point that EAS requirements should be maintained to some degree, the Subcommittee recommends that the Monitoring & Reporting/Subscribership Subcommittee be directed to reconvene with other interested parties, no later than July 1, 1998, to review the EAS regulations in detail and make a final recommendation to the Commission.