DE 96-420
Freedom Ring, L.L.C.
Petition Requesting that Incumbent Local Exchange Carriers
(ILECS) Provide Customers with a Fresh Look Opportunity
Order Clarifying Timing of Fresh Look
O R D E R N O. 23,030
October 5, 1998
APPEARANCES: Swidler & Berlin by Eric Branfman, Esq.,
for Freedom Ring, L.L.C.; Victor Del Vecchio, Esq. for Bell
Atlantic; Chris Zibailo, Esq. for Digital Signal Communications;
Downs, Rachlin & Martin, P.L.L.C. by Nancy Malmquist, Esq. for
CTC Communications; Office of Consumer Advocate by William
Homeyer for residential ratepayers; and, E. Barclay Jackson for
the Staff of the New Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
As a result of Order No. 22,798, issued by the New
Hampshire Public Utilities Commission (Commission)on December 8,
1997, long-term contract customers of New England Telephone and
Telegraph (Bell Atlantic) have an opportunity to take a "Fresh
Look" at their contracts and choose a competitive carrier for
local exchange service. This Order applies to both special and
tariffed long-term local contracts. The Fresh Look opportunity
lasts for 180 days, beginning when a competitor is operational
within a particular geographic area identified by NXX prefixes.
Order No. 22,798 addressed operational competitive local exchange
carriers (CLECs) but did not address the effect of an operational
reseller.
On April 17, 1998, the Commission issued Order No.
22,903, which opened a Fresh Look opportunity in the Manchester
and Nashua exchanges and clarified procedures for obtaining and
providing termination charge information. Also in that Order,
the Commission noted that the Commission Staff (Staff) and other
parties had raised the question of whether resale opportunities
obviated the need for a Fresh Look opportunity. The Commission
determined that because it had not fully considered whether the
four-point test, when applied to resellers, opens up a Fresh Look
opportunity, it directed that a further hearing be held on this
issue.
On April 21, 1998, a letter was issued by the Executive
Director indicating that a hearing would be held on May 8, 1998
to take comments on the effect of an operational reseller on the
Fresh Look opportunity. A duly noticed public hearing was held
on May 8, 1998 at which written and oral comments were received
from Bell Atlantic, CTC Communications Corporation (CTC), Staff,
Freedom Ring L.L.C.(Freedom Ring), and Digital Signal
Communications (Digital). The Commission deliberated this matter
at its public meeting on August 17, 1998.
II. POSITIONS OF THE PARTIES
A. Freedom Ring
Freedom Ring is a facilities-based carrier. While it
supports the notion of resale, and believes that resale offers
alternative vendors to the consumer, it argues that resale is
distinct from facilities-based carrier alternatives, and that
Fresh Look is inapplicable to resellers. Freedom Ring argues
that the Fresh Look opportunity allows for the termination of the
current ILEC contract; the incumbent local exchange carrier's
(ILEC) facilities are no longer used, and therefore customers
benefit from an opportunity to obtain services from alternative
facilities-based vendors that may not be currently provided by
the ILEC. Additionally, Freedom argues that under resale,
customers' opportunities for discount are limited to the
wholesale discount obtained by the reseller. Further, Freedom
submits that because construction of alternative facilities takes
longer than 180 days, if a reseller triggers the Fresh Look
opportunity, a facilities-based entrant would miss the 180-day
window entirely and might stay out of the area since it cannot
take advantage of Fresh Look. Thus, in order to promote new
facilities-based service, only facilities-based providers should
trigger Fresh Look. Finally, Freedom Ring states that resellers
do not need a Fresh Look window because the Telecommunications
Act entitled resellers to resell contracts from the day it went
into effect.
B. Bell Atlantic
Bell Atlantic argues that the Commission's December 8,
1997 Order (Order No. 22,798) did not make a distinction between
facilities-based and non-facilities-based CLECs, and that
pursuant to that order, the Fresh Look regulations apply equally
to all competitors, including resellers. Support for this
interpretation of the Commission's decision is found in several
sources. First, Bell Atlantic argues that the statements made by
the Commission in the analysis portion of its Order regarding the
standards adopted by the Public Utilities Commission of Ohio
(PUCO) effectively incorporated those standards by reference.
Bell Atlantic submits that the PUCO applies Fresh Look equally to
all CLECs, and it was the intent of the Commission to do the
same.
Second, Bell Atlantic points out that N. H. Admin.
Rules, Puc Chapter 1300, the Commission's Local
Telecommunications Rules, do not provide separate standards for
facilities-based and non-facilities-based competitors, and
therefore the term "CLEC" as used in the December 8, 1997 Order
includes resellers. Third, the Commission excluded intraLATA
toll contracts from the Fresh Look opportunity, basing its
decision on the fact that the toll market is open to competition
and had been for some time. Bell Atlantic points out that the
method for toll competition is largely through the resale of toll
service, and by excluding toll contracts from Fresh Look the
Commission based its evaluation on the availability of
competitive services, not on the type of competitor.
Bell Atlantic then argues that since the Commission's
December 8, 1997 Order already provides a Fresh Look for
resellers, providing a separate Fresh Look for facilities-based
competitors would establish multiple Fresh Look windows.
Establishing such multiple windows would be inconsistent with the
Commission's stated objective to establish only a limited Fresh
Look opportunity for each exchange. Continuing with this
argument, Bell Atlantic provided testimony which it claimed
demonstrated that there would be an increased burden on the
company and confusion to customers if multiple windows of Fresh
Look are allowed for each of the exchanges in the state. Thus,
Bell Atlantic would maintain provision of only one Fresh Look
opportunity in each exchange and have it apply equally to both
resellers and facilities-based carriers. On this basis, Bell
Atlantic's position is that there are broad areas of the state
within which the 180 day Fresh Look should be starting now
because the exchanges are subject to resale agreements and the
first commercial calls have been made.
Finally, Bell Atlantic points out that in point number
3 of the four point test for an operational competitor that was
defined in Order No. 22,798, the reference to "CLEC" should be
revised to "ILEC." This change would clarify the Commission's
apparent intent to recognize the two methods available for
competitors to secure local exchange services.
C. CTC Communications
CTC stated that Fresh Look is more applicable to
facilities-based carriers where the customer terminates service
with Bell Atlantic or the ILEC. CTC also argues that the
termination fees payable to Bell Atlantic for the recovery of
lost revenue when a customer leaves Bell Atlantic's service
should not apply when a reseller assumes the full term of the
contract. CTC claims that Bell Atlantic instituted a policy
change after its merger with NYNEX Corporation and now charges
early termination fees when there is an assumption of a contract
by a reseller. CTC requested a ruling that resellers could
assume contracts of customers in the services that were
contracted without the customers having to pay a termination fee.
D. Digital Signal Communications
Digital is a reseller of Bell Atlantic as well as a
reseller of various other providers such as Teleport, Winstar,
Digex, Worldcom, and Intermedia. Digital claims that, although a
reseller, it is not limited to simply reselling or repackaging at
a discount the same service as provided by Bell Atlantic or the
ILEC. Digital offers different products and provides real
competition to Bell Atlantic. It is Digital's position that it
satisfies the Commission's four point test as soon as it has a
customer in the particular exchange, and therefore the Fresh Look
opportunity does and should continue to apply to resellers.
E. Staff
Staff's position is that resellers do not trigger a
Fresh Look because resellers do not constitute full competition.
The Fresh Look window should only open when a customer terminates
its contract with Bell Atlantic in order to accept a better
contract with a CLEC. It is Staff's contention that a reseller,
when it resells Bell Atlantic's services, does not act to
terminate the customer's contract. Thus, Staff argues, only a
facilities-based CLEC or a CLEC which operates using a
combination of facilities-based and resold services can trigger
the Fresh Look opportunity.
As additional support for its position, Staff points to
the effect of resale on Bell Atlantic's operations. Resale
competitors do not affect Bell Atlantic's market share - they
continue to provide the service over Bell Atlantic's facilities,
and Bell Atlantic continues to receive revenues for those
services. While these revenues may be lower than previously
obtained as a result of the wholesale discount, the discounted
rate was established at a level to provide Bell Atlantic with
full cost recovery with the exception of its avoided costs.
Therefore, Bell Atlantic is made whole and the provisions for
termination fees in the Fresh Look opportunity are inapplicable.
Staff believes that the four point test established by
the Commission in the December 8, 1997 Order is sufficient when
applied to facilities-based competitors, and no additional tests
are necessary for a reseller, as a reseller does not open Fresh
Look. Staff disagrees with Bell Atlantic's contention that the
Commission adopted in full the position of the PUCO when it
referenced the Ohio decision. Staff submits that the reference
applies only to the portions of the Ohio decision expressly
noted.
III. COMMISSION ANALYSIS
We find convincing the arguments that resellers do not
constitute full competition for the purposes of Fresh Look. The
effect of resale competition is quite different from that posed
by a facilities-based competitor. A reseller cannot offer any
services to customers substantially different from what the
incumbent offers; other than customer services and billing and
collection, the actual telephone service is the same. While
resellers and the alternatives that they offer are beneficial to
competition, they are limited by the cost structure of the ILEC.
A facilities-based competitor, on the other hand, has
the ability to have a much greater impact on competition by
virtue of putting into place new facilities which bring with them
the ability to offer new and innovative packages or offerings.
The alternatives that facilities-based CLECs bring to the market
will go further than resellers in achieving the goal of a fully
competitive market. To hold that the existence of resale
opportunities triggers the Fresh Look opportunity would severely
limit its effectiveness and defeat much of the purpose for which
it was established, especially in a state like New Hampshire
which has many rural areas that will probably not see meaningful
local facilities-based competition for some time. As it is, the
Fresh Look opportunity is already quite limited; it would not be
prudent to take any steps to further limit that opportunity.
Thus, the existence of an operational reseller within a
particular geographic area alone should not trigger the Fresh
Look opportunity, i.e., the ability for a customer to terminate a
Bell Atlantic contract in order to be served by another carrier;
this can only be triggered by the existence of a facilities-based
competitive local exchange carrier (CLEC) that meets the
four-part test outlined in Order No. 22,798.
We disagree with Bell Atlantic's interpretation of our
references to the PUCO decision in Order No. 22,798 and its
arguments that the Local Telecommunications Rules limit our
ability to determine separate standards for facilities-based and
non-facilities-based competitors. We did not intend to adopt the
standards applied by the Ohio Commission for Fresh Look in their
entirety. As Order No. 22,903 makes clear, the purpose of the
May 8, 1998 hearing was to consider whether the Fresh Look
opportunity applied to resellers.
We note that the arguments and allegations raised by
CTC with respect to whether Bell Atlantic should be required to
allow the assumption of a contract by a reseller without
subjecting the customer to early termination fees is addressed in
a separate docket. See, DE 98-061.
Finally, we agree with Bell Atlantic that number 3 of
the Commission's four criteria for an operational competitor
should be revised. The reference to "CLEC" therein should be
replaced with "LEC."
Based upon the foregoing, it is hereby
ORDERED, that Order No. 22,798 issued in this docket is
clarified to indicate that only the presence of facilities-based
CLECs, not the existence of operational resellers within a
particular geographic area, triggers the Fresh Look window; and
it is
FURTHER ORDERED that number 3 of the four criteria for
determining the existence of an operational competitor defined in
Order No. 22,798 is revised as follows:
(3) an executed, approved interconnection
agreement or the ability to purchase out of
another LEC's schedule for providing basic
local exchange services;
By order of the Public Utilities Commission of New
Hampshire this day of fifth day of October, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary