PENNSYLVANIA PUBLIC UTILITY COMMISSION
Harrisburg, Pennsylvania 17105-3265

IN RE: FORMAL INVESTIGATION TO EXAMINE
AND ESTABLISH UPDATED PRINCIPLES AND
POLICIES FOR TELECOMMUNICATIONS
SERVICES IN THE COMMONWEALTH;
FINAL REPORT AND RECOMMENDATION OF
THE UNIVERSAL TELEPHONE SERVICE TASK
FORCE

PUBLIC MEETING-
OCTOBER 9, 1997
OCT-97-C-12*
DOCKET NO. I-940035

STATEMENT OF COMMISSIONER DAVID W. ROLKA

Introduction.

The Final Report and Recommendation of the Universal Telephone Service Task Force sets forth numerous proposals for various actions. There are a number of recommendations that I want to highlight in an effort to encourage interested parties to comment and provide input on whether and how to implement the recommendations. I have provided my preliminary responses to the Report and Recommendations for the consideration of anyone offering further comment, including any further comment from the Task Force, its Subcommittees and/or its members.

Final Report of the Subcommittee on BUS Costing Model Refinements.

I recognize that the schedule of formal on-the-record proceedings makes it impractical for the Subcommittee to develop recommendations in this forum. The efforts of the Task Force members are appropriately directed to active participation in those proceedings. I look forward to the follow-up report on the issue of funding public interest pay phones when the issue becomes ripe.

Final Report of the Subcommittee on Schools and Libraries.

This is an area in which my staff and I have a keen and personal interest because of the obvious potential benefits for the future of our children. The success of this initiative has taken precedence over most of the other issues and initiatives before me relating to the implementation of the 1996 Telecommunications Act.

The Report identifies six Issues and Recommendations.

Issue A: Level of Discounts.

On my Motion, the Commission accepted the Interim Report which recommended adoption of the FCC's discount matrix for the provision of qualified intrastate services to eligible schools and libraries. It is now appropriate to focus on developing monitoring and review efforts to gauge the success of the program in Pennsylvania. We can then meaningfully continue to participate in further implementation efforts and evaluation of the impacts and the necessity of supplemental Pennsylvania action. Performance evaluation criteria should be identified to form a substantial basis on which to conduct a program review of the financial impacts; network build out and the administrative issues associated with start up of such a significant program. The Task Force has made a good beginning and I look forward to constructive comments on the recommendations and suggestions.

This is an area where follow-up activity of the Task Force members will be necessary to assure that the appropriate plan for monitoring is developed and implemented.

Issue B: Identify ways to encourage prompt infrastructure modernization in Pennsylvania, including compliance with Chapter 30's alternative regulation and infrastructure modernization requirements.

Infrastructure modernization is a vital component of the future economic health of the Commonwealth. Successful modernization efforts are closely aligned with properly pacing investment with the demand for service. The observation that policies which have the effect of masking demand could result in stifling investment is an important one. Regarding the consortia recommendations, perhaps comments could also offer suggestions regarding innovative approaches to telecommunications service tariffing which could be of assistance.

In other areas in which there has been an ongoing need and desire for intergovernmental coordination, the Commission has established formal working relationships with other Commonwealth agencies to solidify ongoing cooperative efforts. For example, The Commission has already established formal working agreements with the Department of Environmental Protection and PennVEST to address troubled water company issues. Although such a formal approach may not be necessary, such a relationship may be helpful for achieving successful implementation of this set of recommendations.

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.

I believe that these recommendations are consistent with interim recommendations and activities are already well underway to assure our State's timely implementation of its responsibilities under the "E Rate" Program.

Issue D: Identify any aspect of the process that could place undue financial or administrative burden on Schools/Libraries and recommend alternatives.

The Pennsylvania Department of Education was an active, welcome and continuing contributor and facilitator to the work of the Task Force, and I am hopeful that they will welcome the Task Force recommendations. I would expect that the PUC will continue to actively contribute to the Department's efforts in furtherance of successful implementation.

Issue E: Potential for future complaints; PUC role in prevention of complaints.

I consider my support for the public release of the Report and Recommendations as an express and open invitation to provide comments regarding the definition of "similarly situated non-residential customers for similarly situated services" so as to facilitate a prompt response to this recommendation. The recommendation regarding "most favored nation"- like status for schools and libraries with respect to individual case basis contracts is an example of the creative application of tariffing. Implementation in such a way that preserves the confidentiality of competitively sensitive information, however, requires comment and further consideration which I welcome and encourage.

The recommendation to reject the FCC's limitation on the process available to consortia as it relates to intrastate services is consistent with our current ratemaking practices for intrastate pricing, and therefore, I do not perceive there to be any economic consequences associated with this recommendation.

Issue F: Define/identify pre-discount rates or Lowest Corresponding Price (LCP): 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.

The recommendation to apply mediation followed by arbitration appears sound; however, I welcome additional comment on placing potential time limitations on mediation and arbitration steps so as to further promote timely resolutions.

Final Report of the Subcommittee on Health Care Institutions.

The interim recommendation was accepted and a Petition for waiver or in the alternative reconsideration, of the rural definition to permit an additional nine counties to be classified as rural was filed with the FCC on July 17, 1997. These recommendations are applicable to both schools and libraries and rural health and is noted here due to the potentially greater impact of the support among the nine affected counties' rural health care institutions.

The report identifies three Issues and companion Recommendations.

Issue A: Identification of the range of services to providers of services and health care institutions.

Although it is not clear that formal action by the Pennsylvania Commission is required regarding the services for which federal universal service support is available for rural health care institutions, I am inclined to accept the recommendation to concur with the range of services identified in the federal program and suggest that it would be appropriate to advise the FCC of our concurrence.

I welcome comments on ways such as the second and third recommendations that will sustain the efforts of the Task Force. As I observed with respect to the recommendation of the Schools and Libraries Subcommittee, it is now appropriate to focus on developing monitoring and review efforts to gauge the success of the program in Pennsylvania. We can then meaningfully continue to participate in further implementation efforts and evaluation of the impacts and the necessity of supplemental Pennsylvania action. Performance evaluation criteria should be identified to form a substantial basis on which to conduct a program review of the financial impacts, network build out and the administrative issues associated with start-up of such a significant program. The Task Force has made a good beginning and I look forward to constructive comments on the recommendations and suggestions.

Issue B: Identification of the level of discounts to providers of services to health care institutions.

Application of the FCC's definition to Pennsylvania's 67 counties results in the exclusion of nine counties which are typically considered to be rural. The Task Force's Interim Report on the Rural Definition set forth a comprehensive explanation of the Task Force's concern that the FCC's definition of rural areas is too narrow to adequately meet our State's concerns. The nine counties at issue are: (1) Butler; (2) Carbon; (3) Columbia; (4) Fayette; (5) Lebanon; (6) Perry; (7) Pike; (8) Somerset; and (9) Wyoming. Each of these counties is classified as an urban area under the FCC's definition. Yet according to the rural experts' consensus opinion, these nine counties share more in common with their non-metropolitan counterparts than with the other metropolitan counties, and have a rural rather than urban character. In furtherance of this recommendation and prior to the filing of the Petition for Waiver, I joined representatives of the Task Force in meeting with FCC officials and staff to provide background information and an overview of the concern leading up to the filing of the Petition. At this time, I agree that the appropriate course of action is to monitor the reaction to the Petition and provide any supplemental information that the FCC staff would like to obtain regarding the Petition. Subsequent to implementation of the Program, the monitoring and evaluation comments apply here as well.

Issue C: Identification of ways to encourage prompt infrastructure modernization in Pennsylvania including compliance with Chapter 30's alternative regulation and infrastructure modernization requirements.

My comments here mirror those of the Subcommittee and refer back to the related recommendation of the Subcommittee on Schools and Libraries.

Final Report of the Subcommittee on Monitoring & Reporting/Subscribership Issues.

Five areas of responsibility were delegated to this Subcommittee.

Issue A: Monitoring & Reporting.

I appreciate the reluctance of the Subcommittee to recommend the creation of additional potentially burdensome reports prior to a determination that existing statistical information is not available. Perhaps future activities of the subcommittee will include identification of additional sources of useful information. I agree with the observation that the purpose of monitoring and reporting of penetration rates is to ensure that those residence and business customers who want telephone service are able to receive it at affordable rates and in a timely manner. Comment on the proposed use of the FCC's 1996 penetration rate of 96.9% for Pennsylvania as the baseline for measuring compliance with the provisions of section 254(f) of TA-96 and recommendations on the mechanism for making such a finding are welcome. Further clarification and recommendations are also welcome regarding the potential preparation of an annual report summarizing rates by some geographic area smaller than a company.

Issue B: Special Needs of Low-income Customers (i.e. Lifeline and Link-Up).

It is my expectation that the Commission staff will forward a recommendation to the Commissioners analyzing the obligation of CLECs to provide Link-Up provisions in their tariffs. I subscribe to the general proposition that no opportunity to advise potential and current customers of the availability of these two programs to assist in establishing and sustaining access to telecommunications services should be missed. This obligation is particularly strong for service providers but is one which is shared through out the Commonwealth's citizenry.

Issue C: Universal Service Definition Changes.

The Subcommittee observed a difference between the FCC's and the PUC's definition regarding the availability of "toll limitation services" for qualifying low-income consumers and recommended that it would be administratively easier to use similar definitions for universal service with the same caveats as those contained in the FCC's definition. Because a change in the definition could have consequences regarding the matters under consideration in pending dockets, it would appear appropriate that a copy of this recommendation be forwarded to the Secretary with instructions that it be provided to the parties of record in the following proceedings: I-940035 re: the cost of Universal Service; L-950105 re: the Universal Service Rulemaking; and I-960066 re: the Access Charge investigation.

Issue D: Ways to Encourage Prompt Infrastructure Modernization in Pennsylvania.

Please refer back to the recommendation of the subcommittee on Schools and Libraries at Issue B.

Issue E: EAS Revisions in a Competitive Environment.

I agree with the recommendation of the Subcommittee.

Conclusion.

I look forward to reviewing the results of the Information Renaissance on-line seminar on universal telephone service as well as the comments of all interested parties filed in response to the Task Force Report and Recommendation. I also look forward to the Task Force's response to my preliminary observations as set forth herein.

____________________________
DATED

___________________________________________
DAVID W. ROLKA, COMMISSIONER