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State Take Lead in Telecom Reform

Fortnightly Magazine - February 1 1997

to the FCC rules of August 8, 1996, even though stayed by the federal court for encroaching on state prerogatives?

In Ohio, the PUC has said "no" (em the state need not follow the enjoined FCC guidelines. %n7%n Earlier, the Ohio commission had modified certain previously approved guidelines on local telephone competition specifically to take account of the new FCC rules. %n8%n

But regulators in Minnesota have followed a different approach. In December they took "administrative notice" of the FCC ruling on interconnection pricing in its entirety and considering stayed portions of the FCC order on a equal basis with other evidence submitted in the case. %n9%n Similarly, the Hawaii PUC has rejected a request to "set aside" the FCC pricing rules, %n10%n and in a Virginia case, AT&T and four other new market entrants agreed to utilize FCC pricing provisions as guidelines in settling issues concerning rates for unbundled service elements. %n11%n

In Michigan, however, after the commission had approved a negotiated agreement between Ameritech Michigan and new entrant TCG Detroit, a dissenting commissioner complained that by its very participation in the arbitration process, the commission had ceded "significant authority" to the federal government. %n12%n

Bill-and-Keep Method

Differences of opinion can also be found over the payment of compensation for transport and termination of calls.

For example, regulators have endorsed the "bill-and-keep" method in Florida %n13%n and the District of Columbia, %n14%n but in Rhode Island, a commission-appointed arbitrator rejected a call by new entrant TCG for bill-and-keep as an initial form of compensation. %n15%n

The Wholesale Discount

In November, the New York Public Service Commission has increased the wholesale rate discounts for services offered to resellers by New York Telephone Co. (from 15 to 21.7 percent) and Rochester Telephone Corp. (from 13.5 to 19.6 percent), thus lowering the rate paid by resellers. %n16%n

By comparison, discount rates were set recently at 18.5 percent in Virginia %n17%n and 19.2 percent in Kentucky. %n18%n

Last March (in a decision issued before the FCC released its ill-fated August guidelines), the California PUC approved interim wholesale discounts of 17 and 12 percent, respectively, for Pacific Bell and GTE. However, it specified a second set of lower wholesale discounts for residential service (10 and 7 percent, respectively) explaining that residential rates for local calling were already below direct embedded cost.

The PUC added that it could revisit the wholesale discounts once it had collected enough data to determine the TSLRIC ("total-service, long-run incremental cost"). %n19%n

Other Issues

In Georgia, in addition to resolving rate and service issues, the commission has addressed the need to balance competitive incentives and safeguards to protect customer privacy. Thus it directed Bell South to provide on-line restricted access to customer information for MCI, but forbid the LEC to give access to personal customer information, such as social security numbers. %n20%n

In Iowa, the commission adopted the TELRIC method to determine a proper price floor for unbundled LEC interconnection services. And LEC prices must pass an "imputation test" to ensure that LEC pricing of local loop does not impose a price