DS 98-185 Bell Atlantic Petition to Revise Tariff NHPUC-No. 77 and Introduce the "Weekend Choice" Plan as an Optional Residential Intralata Toll Calling Plan. Order Granting Conditional Approval O R D E R N O. 23,083 December 11, 1998 On October 15, 1998, New England Telephone and Telegraph Company, d/b/a Bell Atlantic (Bell Atlantic), filed a petition with the New Hampshire Public Utilities Commission (Commission) requesting authority to introduce a new optional residential intralata toll calling plan called "Weekend Choice". Pursuant to Order No. 23,065, the time to review the filing was extended for an additional 30 day period. Subscribers of "Weekend Choice" will be able to make an unlimited amount of Intralata toll calls on the weekend at no charge. All weekday calls will be billed at $0.15 per minute. The minimum monthly charge per subscriber line will be $5.95. There is no service establishment or subscription charge for this service. "Weekend Choice" is available only to residential customers who utilize Bell Atlantic as their local and intralata toll service provider. Along with the petition, Bell Atlantic provided an initial set of supporting documents which suggested forecasted average revenues per minute of usage (ARPM) will exceed the cost of relevant access, a requirement pursuant to Order No. 20,916 in docket DE 90-002. Based on the formula prescribed by Order No. 20,916, the current cost of relevant access is $.0775 per minute. According to Bell Atlantic, customers migrating from message telecommunication service or 603 CallAround to "Weekend Choice" will double the amount of their current conversation minutes during Weekend days. Concurrent with increases in weekend conversation minutes, Bell Atlantic also anticipates the same customers will suppress current weekday conversation minutes by 10%. Based on the Company's analysis of changes in customer demand characteristics, the Company believes aggregate ARPM generated by all "Weekend Choice" customers during the week will exceed the relevant cost of access even though weekend calls are free of charges. After analyzing the initial set of Bell Atlantic documents, Staff recommended that the Commission extend the time to review the petition for an additional 30 days. In Staff's opinion, the documents attached to the Company's filing did not adequately support Bell Atlantic's assertion that ARPM exceeded the relevant cost of access. At the time, Staff was concerned the amount of unrated weekend conversation minutes would reduce ARPM below the cost of relevant access. Subsequent to Order No. 23,065, Bell Atlantic provided a number of additional workpapers in support of the petition. Based on an analysis of these workpapers, Staff now recommends that the Commission grant conditional approval. New information provided by Bell Atlantic indicates that, on average, weekend conversation minutes of those customers most likely to subscribe to "Weekend Choice" will have to increase by more than a factor of 3 times before the cost of access will exceed ARPM generated by this service. Additionally, Bell Atlantic claims that increases in weekend conversation minutes are limited. In support of this assertion, Bell Atlantic provided information about weekend calling patterns in New York where "Weekend Choice" has been available since July, 1998. According to this information, the average customer subscribing to "Weekend Choice" increased the amount of their weekend conversation minutes between the date of service introduction and October, 1998. However, that increase is less than the critical 3.0 threshold factor for New Hampshire. Because New Hampshire Intralata toll customers subscribing to this service will have to increase their current average weekend calling usage by more three times before the cost of access exceeds ARPM, it is Staff's opinion that approval is in the public interest. However, Staff recommends that the Commission also order Bell Atlantic to submit "Weekend Choice" reports on a quarterly basis for a minimum of two years from the date of this order. In Staff's opinion, aggregate ARPM will exceed the relevant cost of access for at least several months after introducing this service. Over time, customer calling patterns may change as a result of increased marketing efforts. As customers change calling habits by postponing weekday calls to the weekend, ARPM will decrease. Reports indicating by month the number of subscribers, Weekday Conversation Minutes, Weekend Conversation minutes, Total Conversation minutes, "Weekend Choice" day rate ($0.15\minute), total actual usage revenue, actual minimum bill revenue, total actual revenue and average revenue per minute will provide the Commission with useful information on the amount of increases in Weekend conversation minutes by subscribers. In addition, a quarterly report will indicate whether or not ARPM generated by the service exceed the cost of access. With advanced notification from these reports, Staff will have sufficient information to make additional recommendations on modifying this Service such as increasing the Weekday rate or charging for weekend calling. After reviewing the petition and Staff's recommendation, we find Bell Atlantic's request to be in the public interest. Approval will provide the Company additional flexibility to meet the demands of its customers. Because this is a new service in New Hampshire, we will require the Company to submit quarterly reports indicating by month the number of subscribers, Weekday Conversation Minutes, Weekend Conversation minutes, Total Conversation minutes, "Weekend Choice" day rate ($0.15\minute), total actual usage revenue, actual minimum bill revenue, total actual revenue and average revenue per minute. We will direct Bell Atlantic to submit quarterly reports for a two year period from the date of this order. With the reports, the Commission will be able to monitor increases in Weekend conversation minutes and whether ARPM exceed the cost of relevant access. If the cost of access exceeds ARPM generated from this service at a point in the future, we will direct the Company to immediately modify this service by either increasing the current Day rate of $0.15 per minute, charging for weekend conversation minutes or terminating the service. Based upon the foregoing, it is hereby ORDERED,that the proposed request is APPROVED with Conditions ; and it is FURTHER ORDERED, that Bell Atlantic file quarterly reports as described above for two years from the date of this Order. Reports shall be submitted no later than the 15th day following the end of each fiscal quarter. By order of the Public Utilities Commission of New Hampshire this eleventh day of December, 1998. Douglas L. Patch Susan S. Geiger Nancy Brockway Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary