The Minnesota Public Utilities Commission has rejected a proposal by U S WEST Communications Inc. to discontinue offering its Centrex family of business services to new customers.
According to the commission, the local-exchange carrier's plan would make it much harder for new resellers to enter the local telephone market and seriously hamper the development of competition in the state.
U S WEST had claimed that misapplication of "Centron/Centrex" offerings by smaller users had resulted in significant "tariff arbitrage" of basic business service. The company said it planned to develop a replacement offering better tailored to new market conditions. The carrier explained it had originally developed the service for large users and did not anticipate the development of tariff arbitrage by smaller users.
The commission ruled that U S WEST's proposal was illegal because both state and federal law prohibited restrictions on the resale of local telephone services. In addition, it found that U S WEST had not developed a substitute for the service. Access to the network obtained through the Centron tariffs is currently an "essential stepping stone to local competition," the commission said. Finally, the PUC concluded the carrier had failed to support its claim regarding the existence of uneconomic arbitrage associated with the service. The company had presented no studies to show that Centron was priced below cost or that it was experiencing a loss of contribution due to the resale of the service, the commission explained. Re U S WEST Communications, Inc., Docket No.
P-421/EM-96-471, Feb. 20, 1997 (Minn.P.U.C.).