DE 96-090

                  Implementation of IntraLATA Presubscription

                       Order Modifying Order No. 22,281

                           O R D E R  N O.   22,541

                                 April 1, 1997

          APPEARANCES:  Victor D. Del Vecchio, Esq. for New England
Telephone and Telegraph; Palmer & Dodge LLP by Jay Gruber, Esq.,
and Carol Friar for AT&T;  Gerald Cleary for Atlantic Long
Distance; James A. Sanborn for Union Telephone Company; Devine,
Millimet & Branch by Frederick J. Coolbroth, Esq., for Granite
State Telephone Company, Merrimack County Telephone Company,
Contoocook Valley Telephone Company, Wilton Telephone Company,
Hollis Telephone Company, Dunbarton Telephone Company, Northland
Telephone Company of Maine, Bretton Woods Telephone Company, and
Dixville Telephone Company; Glass, Seigle & Liston by Robert A.
Glass, Esq. for MCI; the Office of the Consumer Advocate by James
R. Anderson, Esq. for  residential ratepayers; and  E. Barclay
Jackson, Esq. for the Staff of the New Hampshire Public Utilities
          On January 30, 1997, MCI Telecommunications Corporation
(MCI) filed with the New Hampshire Public Utilities Commission
(Commission) a Motion for Modification of Order No. 22,281 (Order). 
The Order mandates that implementation of intraLATA presubscription
(ILP) preserve for New Hampshire customers the benefits of
Municipal Calling Service (MCS).  The Order states:
     "Municipal calling is currently resolved through billing,
     rather than technically, and the Commission finds that
     the customer benefits of municipal calling shall not be
     compromised.  Some of the LECs and IXCs have offered to
     develop a method by which to maintain municipal calling
     through billing systems.  We will order the companies to
     complete their efforts to resolve this issue and to file
     a plan within 90 days to accomplish ILP while retaining
     customers' ability to receive municipal calling."
          In compliance with the Order, the Parties and Staff
participated in three technical sessions designed to develop a
method to maintain MCS through billing systems.  As a result of the
technical sessions, MCI filed its Motion for Modification.
In its motion, MCI argued that the dollar value of the MCS benefit
to New Hampshire subscribers is heavily outweighed by the
administrative cost to each competitive provider for developing and
maintaining an appropriate billing system.  MCI therefore seeks
modification of the Order to permit competitive providers to choose
among several options.  The options suggested include:
     1.  Automatically giving every MCI-eligible subscriber a
     standard monthly credit of $0.50, the estimated average
     monthly value of MCS per customer;

     2.  Advising customers in advance of subscription that MCS is
     unavailable, thus permitting the customer to weigh the benefit
     of MCS and to pick a carrier on the basis of complete

     3.  Providing MCS by reselling NYNEX toll;

     4.  Providing MCS by a billing approach, as NYNEX does
          By letter, dated February 10, 1997, NYNEX informed the
Commission that, except with regard to a resale option it asserted
was not technically feasible, NYNEX would not oppose MCI's motion. 
At the duly noticed hearing on March 3, 1997, the Commission heard
oral argument regarding the four suggested MCS options.   
          MCI, AT&T, the Independent Telephone Companies (ICOs),
and Union agreed that providing MCS as a billing function will
require an extremely large capital investment.  The investment
necessary might be large enough to deter entry into the New
Hampshire market.  MCI, AT&T, the ICOs, and Union all agreed that
providing MCS as a switching/routing function would be a better
solution but is not technologically possible at this time.  MCI
argued that flexibility in providing MCS is necessary in order to
allow implementation of ILP by June 2, 1997, as date mandated in
Commission Order No. 22,281.
          AT&T supported MCI's request for relief from the
obligation to provide MCS as a billing function.  AT&T emphasized
that customer dissatisfaction would result from inevitable billing
errors occurring during the start-up phase of a billing-driven MCS
service, which would impair competitors' entry into the intraLATA
toll market.  AT&T's technical expert furnished details regarding
the extraordinarily large database which each carrier would have to
maintain and further stated that the costs of maintaining such a
data base would be prohibitive.    
          Although it supported MCI's motion for flexibility, AT&T
pointed out that NYNEX would enjoy a marketing advantage as the
result of its competitors' inability to provide MCS.  AT&T
indicated that it had no objection to NYNEX exercising its
marketing advantage as long as competitors were not constrained as
to what discount they could offer to offset the advantage.   
          NYNEX opposed the resale option (#3 above) because the
Telecommunications Act of 1996 (TAct) limits resale to services
which are offered to end-users.  NYNEX pointed out that inasmuch as
the toll component of MCS is offered as part of basic exchange
service, and is not offered as a separate service to end users,
NYNEX need not make such "naked toll"  available for resale under
the TAct.   
          NYNEX sought guidance from the Commission in reconciling
the potential conflicting obligations for safeguards against
anti-competitive marketing practices, required in Section III, 5 of
the Order, and for accepting and changing customers' presubscribed
intraLATA carrier (PIC) choice, required in Section III, 4 of the
Order.  The marketing prohibition forbids NYNEX from using as
marketing opportunities those interactions with customers where the
customer is requesting an ILP change.  If the Commission were to
approve MCI's proposed modification of the Order, NYNEX would be
required to discuss MCS availability without appearing to be
marketing its own MCS capability.
          The ICOs forcefully echoed AT&T's concern for customer
dissatisfaction, pointing out the preponderance of MCS eligible
customers in their service territories.  Union also supported MCI's
          The Office of Consumer Advocate argued that more
investigation is required to understand the potentially significant
impact of the MCI motion.  Although Staff supported MCI's options
approach to MCS, Staff suggested that the provision of MCS could be
viewed as a benefit to particular customers.  If MCS were
eliminated, a level playing field for the intraLATA toll market
could be promoted.  However, the service might reappear as an
optional service provided by NYNEX.

       As we stated in the Order, presubscription of
intraLATA toll calls is an important step toward full competition
and serves the public interest of New Hampshire.  The customer
benefits of MCS are also important; we intend, as we stated in the
Order, that implementation of ILP should not compromise those
benefits.  Hence, we will not eliminate MCS to achieve a level
playing field.  In light of the evidence presented, however, we
will modify the Order to permit Interexchange Carriers (IXCs) the
option to offer MCS if they wish to do so, but we will remove the
mandate.  Each individual competitor will have to make the business
decision to offer MCS.
       Because we are no longer mandating provision of MCS
for all competitors, we also decline to require IXCs to offer a
credit to a customer who elects to select a carrier which does not
offer MCS.  Although IXCs may choose to offer a credit, the
decision is a business decision best made by each individual IXC. 
Therefore, option 1 of MCI's proposed modification remains an
option and does not rise to the level of a mandate.
       As we stressed in Section III, 6 of our Order, we
consider customer education to be a crucial element in implementing
ILP. Therefore, in line with option 2 of MCI's proposed
modification of our Order, we will require ICXs to advise
MCS-eligible customers, clearly and unambiguously, that the
particular IXC is unable to provide MCS, if such is the case. 
Identification of MCS-eligible customers will be accomplished using
a database provided by NYNEX.
       With respect to option 3 of MCI's proposed
modification, we accept NYNEX's evidence that resale of MCS is not
technically feasible at this time and therefore we will not approve
that option.
       With regard to marketing safeguards and PIC changes,
we affirm our decision to require NYNEX to accept PIC changes
directly from customers.  In the course of a call during which a
PIC change is requested, NYNEX should ask customers whether they
have been advised that MCS may not be provided by the alternate
PIC.  The discussion regarding MCS should cease if the customer has
been so advised.  If not, NYNEX should provide the information
concerning MCS objectively, pursuant to a scripted MCS advice
dialogue.  The scripted MCS advice dialogue will insure that the
call has not been used as a marketing tool for NYNEX.  We direct
NYNEX, our Staff and other interested parties to work together to
develop that language.          Based upon the foregoing, it is hereby
       ORDERED, that Order No. 22,281 is modified to remove
the mandatory provision of MCS by IXCs; and it is
       FURTHER ORDERED, that IXCs shall clearly and
unambiguously advise MCS-eligible customers of the effect of
presubscribing that carrier, on the customers' receipt of MCS; and
it is
       FURTHER ORDERED, that Staff and NYNEX, along with
other interested parties, shall develop, prior to May 16, 1997, a
scripted MCS advice dialogue for NYNEX employees to use.
       By order of the Public Utilities Commission of New
Hampshire this first day of April, 1997.

  Douglas L. Patch      Bruce B. Ellsworth     Susan S. Geiger
      Chairman             Commissioner          Commissioner

Attested by:

Thomas B. Getz
Executive Director and Secretary