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 Commission. I. PROCEDURAL HISTORY 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 information; 3. Providing MCS by reselling NYNEX toll; 4. Providing MCS by a billing approach, as NYNEX does currently. 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. II. POSITIONS OF THE PARTIES AND STAFF 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 motion. 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. III. COMMISSION ANALYSIS 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