BEFORE THE PUBLIC SERVICE COMMISSION OF
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IN
THE MATTER OF THE FUNDING REQUIREMENT AND PROPOSED ASSESSMENT FACTOR FOR THE JULY
2009 -
JUNE 2010 FISCAL YEAR OF THE |
) ) ) ) ) |
Docket No. 90072-29-XO-09 (Record No. 12101) |
ORDER ESTABLISHING THE
UNIVERSAL SERVICE FUND ASSESSMENT LEVEL
(Issued May 15, 2009)
This matter is before the Wyoming Public
Service Commission (Commission) for the purpose of establishing a Wyoming Universal
Service Fund (WUSF or Fund) assessment level as required by W.S. § 37-15-501 and
Section 500(l) of the Commission’s Rules and other Fund parameters. The Commission, having heard the presentations
of the WUSF Manager, the Office of Consumer Advocate (OCA), Qwest Corporation (Qwest),
and United Telephone Company of the West d/b/a Embarq (Embarq), having reviewed
its files, the documents filed by the WUSF Manager, and applicable Wyoming and federal law, FINDS and
CONCLUDES:
PROCEDURAL HISTORY
1. This
matter was initiated by the Commission on April 1, 2009, with the filing of a Confidential
Report of the Wyoming Universal Service Fund Manager (Report). This proceeding is required to establish the weighted
statewide average essential local exchange service price (the statewide average);
the 130% benchmark; the WUSF disbursement amounts for qualifying telecommunication
companies; and the corresponding WUSF assessment level to be effective for the twelve-month
period beginning July 1, 2009. The assessment
level is determined under Section 500(l) of the Commission’s Rules. Because of the
highly sensitive competitively valuable information contained in the Report, it
is kept strictly confidential to protect carriers’ proprietary information.
2. As
required under Section 500(k) of the Commission’s Rules, the Fund Manager’s Report
details the computation of a recommended assessment level based upon the estimated
amount of disbursements to be paid out of the WUSF. The Report also contains detailed summaries and
supporting schedules relating to the calculation of the statewide average and the associated support benchmark. Pursuant to W.S. § 37-15-501 and Section 500(p)
of the Commission’s Rules, the support benchmark is one hundred thirty percent (130%)
of the statewide average.
3. On
March 3, 2009, the OCA filed a formal request for a copy of the Report and the underlying
confidential source data. After discussion
at the open meeting on March 27, 2009, the Commission
determined that the OCA would receive a copy of the Confidential Manager’s Report
after it is filed and would also have access to the confidential source data and
work papers related to the WUSF Manager’s Report. The basic terms and conditions for OCA’s use of
the data are the same as those established in a Letter Order issued on April 15, 2008. A substantially similar Letter Order was issued on April 1, 2009. The conditions to be observed by OCA with respect
to confidential materials in this and future proceedings related to the determination
of WUSF requirements discussed above are as follows:
1. After receiving any confidential material
in any form, OCA will acknowledge receipt of such confidential material by letter,
including a description of each document received;
2. OCA will take appropriate measures to prevent
unauthorized disclosure of confidential material;
3. OCA will be free to use any electronic
documents that are provided as they deem necessary and may create working copies;
4. At the conclusion of the proceeding, OCA
will destroy or return all copies of confidential materials, regardless of format,
to the Commission;
5. OCA will provide Commission staff an opportunity
to confirm that all electronic copies are deleted or destroyed; and
6. OCA will provide a final letter to the
Commission listing what confidential documents were returned or destroyed and an
inventory of any original working documents created and retained by OCA.
4. On April 1, 2009, the Commission issued
a Notice of Filing and Procedural Order Setting
Hearing (Notice and Order). Copies of
the Notice and Order were sent to all
telecommunications companies doing business in Wyoming along with a copy of the
April 1, 2009, Letter Order, a copy of
the non-confidential version of the Report and a spreadsheet pertaining only to the individual recipient telecommunication
company’s proposed calculation and WUSF support (if they qualified). A Public Notice of the hearing was published once
per week for two consecutive weeks in the
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April 30, 2009, at 5:00 p.m. |
Deadline
for potential parties to intervene and to file comments |
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May
7, 2009, at 9:00 a.m. |
Hearing
commences in |
5. On April
1, 2009, the OCA filed a Notice of Intervention
and noted that a hearing was scheduled in the Commission’s procedural order. According to W.S. § 37-2-402(a)(i),
(a) The consumer advocate
shall have the power to:
(i) Act as a party in any proceeding
before the commission, with the same rights and subject to the same obligations
and requirements and limitations on ex parte communications, including confidentiality
requirements, as other parties to the proceeding;
The
nature of this proceeding is that there are no parties; and, therefore, the OCA
is not considered a party. The intervention
statute giving OCA rights and obligations “as other parties to the proceeding” does
not serve to change the fundamental nature of this proceeding.
6. On April
21, 2009, the OCA filed an informational letter acknowledging receipt of the Report,
with all confidential attachments thereto, and a list of the confidential source
data.
7. On
April 29, 2009, Union Telephone Company filed comments containing changes to rates
and line counts. This information was held
confidentially despite the lack of a Petition
for Confidential Treatment. The OCA filed
a confidential and public version of its Pre-Filed
Direct Testimony of Denise Kay Parrish (OCA Comments). Additionally, Qwest filed its Petition for Leave to Intervene and Request for
Hearing (Qwest Request). The Confidential
Version of the OCA Comments identified
the following issues:
·
Appropriate line counts
(OCA Comments, pp. 8-15.)
·
Computation of the
weighted statewide average price and use of bundled prices (OCA Comments, pp. 15-29.)
·
Incremental and embedded
federal Universal Service Funds (FUSF) (OCA
Comments, pp. 29-34.)
8. On
April 30, 2009, Qwest filed its Prefiled Direct
Testimony of M. Lynn Norsworthy (Qwest Comments) and a Petition for Confidential Treatment (Qwest Petition). The Qwest
Comments argued for its position that the Manager’s calculation of Qwest’s WUSF
distribution is incorrect.
9. On
May 1, 2009, the OCA filed a Motion to Share
Company Specific Information (OCA Motion).
In it, the OCA stated that Qwest’s counsel had sent an e-mail requesting
the specific confidential pages related to Qwest from the OCA Comments.
10. On May 5,
2009, the OCA filed a letter concerning the OCA
Motion, and attached confidential pages
14, 18 and 34 from the OCA Comments, stating
that these were the specific confidential portions relating to Qwest.
11. The Qwest Request, Petition and OCA Motion came before the Commission pursuant to due notice
at its open meeting on May 5, 2009.
Mr. Roger Fransen, Qwest’s counsel, presented the Qwest Request. Commission Counsel
discussed the differences between a trial-type hearing (contested case) and a hearing
in which legislative facts are determined.
She noted that the type of hearing being conducted in this case was not a
trial-type hearing. The Commission determined
this is not a contested case proceeding because the facts at issue in this docket
are legislative in nature. The Commission
denied the Qwest Request, granted the
Qwest Petition and granted the OCA Motion.
12. At
8:34 a.m. on May 7, 2009, the morning of the hearing, Commission Counsel received
an e-mail with attached spreadsheets from Embarq, asking that its distribution amount
be recalculated. With its request, Embarq
provided the WUSF Manager-produced confidential spreadsheets illustrating the calculation
of Embarq’s support and portions of its WUSF Annual Reports showing Embarq’s FUSF
receipts from 2005 to 2008.
13. On
May 7, 2009, the Commission held its duly-noticed legislative hearing on this matter. The Commission first received a presentation from
the WUSF Manager, Mr. Art Schmidt, which summarized the Report and an explained
the process used to establish the weighted statewide average, 130% benchmark, company
distributions and the assessment level. Mr.
Schmidt recommended a weighted statewide average of $25.05 and an associated 130%
support benchmark of $32.57 for the fiscal year beginning July 1, 2009. He further recommended the assessment level remain
at 1.00% because there are several telecommunications companies who still need to
rebalance their rates under W.S. § 37-15-203 (lowering their access charges to 3¢
per minute of use and raising local service rates to cover the lost revenue). Ms. Denise Parrish, OCA Deputy Administrator,
presented OCA’s comments and Ms. Lynn Norsworthy, Qwest’s Lead Financial Analyst,
presented Qwest’s comments. Mr. Jim Roberts
and Ms. Ann Prockish of Embarq participated by telephone and explained why they
would like to have Embarq’s distribution recalculated.
14. Pursuant
to W.S. § 16-4-403, the Commission held public deliberations with regard to this
matter on May 13, 2009, rendered a decision and directed preparation of an order
consistent with the deliberations.
LEGAL AUTHORITY
15. The WUSF was created by the Wyoming Telecommunications
Act of 1995. W.S. §§ 37-15-501 and 37-15-502
govern the WUSF and state,
37-15-501. Universal service fund created; contributions; administration.
(a) There is hereby established the universal service
fund to be administered in accordance with this section. The fund shall be administered
by the commission. All telecommunications companies shall contribute to the universal
service fund. The dates for contributions to the fund and disbursements from the
fund shall be set by the commission, after notice and opportunity for hearing, as
necessary to accomplish the objectives of the fund as specified in subsections (c)
and (d) of this section. The costs of administering the fund may be included in
determining required contributions.
(b) The commission shall after notice and opportunity
for hearing, designate the method by which the contributions shall be calculated,
collected and distributed. The commission shall authorize an additional monthly
charge to customers, in the amount specified by the commission, to recover each
contributor's required payment to the universal service fund. Any charge related
to mobile telecommunications service shall only apply if the customer's place of
primary use is in this state as provided by the Mobile Telecommunications Sourcing
Act, 4 U.S.C. §§ 116 to 126. The
provisions of the Mobile Telecommunications Sourcing Act shall apply to this subsection.
(c) The commission shall administer the monies in
the universal service fund to assist only those customers of telecommunications
companies located in areas of this state with relatively high rates for essential
services. The commission, after notice and opportunity for hearing, shall determine
a reasonable amount and a fair method of distributing monies. The commission may
authorize a credit to customer bills, in the amount specified by the commission,
to reflect distributions received by the local exchange company from the universal
service fund. The commission shall ensure that the method shall promote the emergence
of competition in providing local exchange service.
(d) In accordance with
the method of distribution determined by the commission, a telecommunications company
shall receive funds under this section to the extent that its essential local exchange
service prices, after consideration of any contributions from the federal universal
service fund, exceed one hundred thirty percent (130%) of the weighted statewide
average essential local exchange service prices.
(e) The operation of
the universal service fund may be suspended by the commission, based upon a public
interest finding, after notice and an opportunity for a hearing, that the fund is
not then serving its intended purpose.
(f) The commission's
decisions under this section shall be subject to the provisions of the Wyoming Administrative
Procedure Act.
37-15-502. Universal service fund eligibility and distribution to carriers.
(a) Telecommunications companies which use cellular,
radio spectrum or other wireless technology to provide supported services to customers
who are otherwise eligible to receive universal service support pursuant to W.S.
37-15-501, may establish eligibility to receive universal service fund distributions
in an amount to be determined by the commission, provided that:
(i) The
telecommunications company will offer and advertise all universal service fund supported
services throughout the entire local exchange area;
(ii) The
telecommunications company will provide unlimited local calling throughout an entire
local exchange area for a flat fee;
(iii) The
telecommunications company's bill to the customer reflects a credit for the amount
of distribution the company receives from the state universal service fund for providing
universal service fund supported services to that customer; and
(iv) The
company and services meet such additional criteria, if any, the commission, after
notice and opportunity for hearing, determines are necessary. During its consideration
and determination, the commission shall consider technological and competitive neutrality.
16. Rule 500 addresses the operation of the WUSF. The following portions of Rule 500 are used for
the determination of the weighted statewide average, 130% benchmark and WUSF distributions
and are set out below.
Rule 500(c) states,
(c) No later
than February 15th of each year, all telecommunications companies shall provide
the information required by the Commission and/or the Universal Service Fund manager
to perform the computations necessary for collection and distribution of the Universal
Service Fund. (Emphasis added.)
Rule 500(g) states, in pertinent
part,
(g) The
manager shall annually compute both the statewide weighted average essential local
exchange service price and each telecommunications provider’s essential local exchange
service price in a consistent manner based
on end of calendar year line counts and prices authorized by W.S. § 37-15-203
and W.S. § 37-15-204, taking into account the classification options available to
telecommunications companies under paragraph (h) of this rule. (Emphasis added.)
The relevant portion of Rule 500(h) states,
(h) The fund manager shall apply the provisions of
subsections (g) and (p) in determining required Universal Service Fund distributions
under W.S. § 37-15-501(d).
Rule
Subsections 500(i) through the first part of (m) state,
(i) Mid period revisions to a telecommunications company’s
essential local exchange service price or to a supported wireless service, for purposes
of drawing from the fund, shall only be permitted upon application and approval
by the Commission.
(j) Each company’s incremental Federal Universal Service
Fund receipts resulting from changes in the company’s high cost loop fund support
shall also be credited, monthly, to the bills of customers on a per line basis.
The amount of the credit for each of the customers shall be computed and authorized
by the Commission, in a manner consistent with federal receipt of such funds. The
total amount of this credit shall equal the difference between the amount of Federal
Universal Service Funds received in the most recent calendar year and the amount
of Federal Universal Service Funds most recently used in the computation of rates.
(k) No later than April 1st of each year, the Universal
Service Fund manager shall file with the Commission and with each affected telecommunications
company, a report that details the computation of the recommended assessment rate
that shall be applied to gross retail revenues. This recommended assessment rate
shall be based on the computed amounts needed for payment to telecommunications
companies, the prior year gross retail revenues, and any over or under collection
in the fund from the previous year. Wyoming Universal Service Fund assessment charges
shall appear as a separate line item on each customer’s bill unless a specific waiver
is requested and granted by the Commission.
(l) No later than May 15th of each year, the Commission
shall by order set the Universal Service Fund assessment rate for the twelve-month
period beginning July 1st of each year.
(m) All telecommunications companies realizing intrastate
revenue from operations in
(i) If the assessment
for the first or second month of the calendar quarter (plus any unpaid assessment
amount of $100 or less from any prior month of the calendar quarter) exceeds $100,
then the report of revenue and payment of assessment for such period is due on or
before the last day of the month after the month in which the unpaid assessment
exceeded $100. If the assessment is $100 or less, a report and payment is not required,
and the unpaid assessment shall carry over to the next month. The report of revenue
and payment of assessment whatever the amount, is required on or before the last
day of the first month after the end of any calendar quarter in which a telecommunications
company realizes any intrastate revenue from its operations in
(ii) Assessments not timely paid shall be subject to
a late payment charge equal to one and one-half percent (1.5%) on the unpaid amount
for each month, or part thereof, that the assessment remains unpaid.
Rule
Subsections 500(o) through (p) state:
(o) Affected telecommunications providers subject to
paragraph (k) of this rule include but are not limited to: local exchange companies;
competitive access providers; interexchange companies; cable companies providing
telephony; cellular providers; wireless providers; commercial radio common carriers;
personal communications service providers; paging service providers; and pay telephone
providers. All telecommunications companies as defined by W.S. § 37-15-103(a)(xi)
and companies which provide telecommunications services as defined by W.S. § 37-15-103(a)(xii)
shall report and pay into the fund as provided for in paragraph (m).
(p) Distributions from the fund shall be made monthly.
Pursuant to W. S. § 37-15-501(d) and W.S. § 37-15-502, and consistent with the Commission’s
administration of the fund as specified in these rules, telecommunications companies
shall receive funds to the extent that their essential local exchange service prices
or supported wireless service price(s), after consideration of any contributions
from the Federal Universal Service Fund, exceed one hundred thirty percent (130%)
of the weighted statewide average essential local exchange service prices.
(i) Distributions to telecommunications companies shall
equal: the sum of the products resulting from the difference, expressed in dollars,
by which each essential local exchange service price or supported wireless service
price exceeds one hundred thirty percent (130%) of the statewide weighted average
essential local exchange service price multiplied by the total number of lines or
subscribers to which that price applies.
(ii) Telecommunications companies receiving Wyoming
Universal Service Funds support shall display the amount of such support
as a separate line item credit on each affected customer’s bill unless a specific
waiver is requested and granted by the Commission.
17. Docket
No. 90072-XO-02-21 (Sub 21) was an investigation into the compliance of Wyoming
telecommunications carriers with Rule 500(j) which describes how FUSF is considered
in the calculation of WUSF support, and which had been amended prior to the investigation. The Order in Sub 21, issued on October 15, 2002,
states at paragraph 21, “The Commission concurs with Qwest’s assertion that the
amended rule provisions should be uniformly applied to all companies in a nondiscriminatory
manner.”
18. Commission
Docket No. 90072-XO-03-22 established the funding
requirement and proposed assessment factor for the 2003-2004 WUSF fiscal year
(Sub 22).
Docket No. 90072-XI-03-23 was an investigation on the Commission’s own motion into the calculation
of the weighted statewide average and 130% benchmark (Sub 23). After the investigation was opened, the Commission consolidated the dockets and
they proceeded in a contested case format.
The Commission issued its Order in Subs 22 and 23 on February 24, 2004. At paragraphs 28 and 29, it states:
28.
Based upon the evidence of record, in this proceeding, the Commission concludes
that the current WUSF manager should be directed to recalculate the weighted statewide
average local exchange rate for the 2003-2004 fiscal year in the following manner:
a. The
revised calculation shall use local exchange
service rates which are net of incremental
FUSF receipts. (Emphasis added.)
b. The revised calculation
shall include multi-party and PAL lines since
they constitute, in the Commission’s opinion, “essential services” as defined
by W.S. § 37-15-103(a)(iv). (Emphasis added.)
29. Based
upon the evidence of record, in this proceeding, the Commission concludes that revised
WUSF support, including support for multi-party and PAL lines, which is based upon
the revised weighted state-wide average local exchange service rate support bench-mark
should be made effective January 1, 2004.
The
Commission directed the Fund Manager in the Subs 22 and 23 Order to determine the
weighted statewide average using net local exchange service rates. It established that the WUSF support payments
would be based on the weighted statewide average using the net rates. The Fund Manager further determined the required
WUSF support payments using the net rates.
Telecommunications companies were directed to provide their net rates in
the WUSF Annual Report due on February 15th each year. The net rates are among the first inputs into
each company-specific spreadsheet.
COMMISSION DISCUSSION OF COMMENTS
19. To begin
deliberations, Deputy Chairman Oxley observed that the Fund Manager used data as
of December 31, 2008, as is appropriate under Commission Rule 500(g). Additionally, he noted Rule 500(i) allows telecommunications
companies to apply for mid-period adjustments to its WUSF support. He added that the OCA Comments were well thought out and that they identified a wide disparity
in line counts between the WUSF Annual Report, the Commission Annual Report and
the Wyoming Relay line number reported on page 17 on the Commission Annual Report,
as illustrated on Confidential OCA Schedule DKP-1, Page 1 of 1. He observed that there is data in the Confidential
Report of the Wyoming Universal Service Fund Manager sufficient to go forward with
the Manager’s recommendation now and to sort through some of the issues
thereafter.
20. Chairman
Minier stated Qwest and Embarq rely on an oversimplified equation. A timing issue exists between the WUSF and the
FUSF, and the simplified formula does not account for everything. He stated he appreciated the spirit of Qwest’s
approach, but it did not reach the level of complexity to overrule what has been
done in the past. He observed that the Fund
Manager moved forward in the Report with practices consistent with WUSF computations
completed in past years. He was not moved
by Qwest and Embarq’s issues.
21. Commissioner
Lewis added that a lag will always be there.
The rule states that end of calendar year data will be used, which for this
year is December 31, 2008.
22. Deputy Chairman
Oxley stated that Qwest’s presentation of a simple formula does not change the fact
that Qwest’s concept does not apply the rule.
In the past, Qwest’s desired outcome required an out of period true-up which
circumvented the process. That
adjustment was unexamined by the Commission.
23. Chairman
Minier stated that some of OCA’s issues have been visited before. He said that the issue OCA has with a small
number of Chugwater Telephone Company (Chugwater) lines is not large enough to warrant
throwing out the Manager’s calculation. He
emphasized the Commission does need to secure compliance. In order to make its calculations, the Commission
is required to make a set of judgments. He
questioned the continuing validity of the definition of “essential service” from
the Wyoming Telecommunications Act as it is progressively less common to find a
simple “essential service” Offering. There
is a problem with reporting, observing that Chugwater’s lines are all bundled. He noted the judgments of the WUSF Administrator
include reporting, observations of the program and the interconnectedness of FUSF
and WUSF.
24. Commissioner
Lewis stated that technologically telecommunications industry continues to
evolve. Plain Old Telephone Service (POTS)
is thus difficult to define. She stated the
WUSF is not a revenue stream. Its purpose
is to bring customer’s rates down to the 130% benchmark. She believes the WUSF is ripe for legislative
or rule change. The statute requires the
WUSF be applied to old technology. If a legislative
change is pursued, it is unknown what the result may be; but some action should
be taken in this “bundled world.”
25. Deputy Chairman
Oxley stated that the problem is similar regarding possible changes to federal telecommunications
law as well. Many are reluctant to
reopen the law out of apprehension over the unpredictability of the result.
26. Chairman
Minier stated that the Commission may have some leverage for positive change
through the eligible telecommunications carrier (ETC) certification process this
year. This is how he would consider addressing
the reporting issues found here. If better
reporting were done, the Commission might not have to rely upon extraordinary
efforts of the Fund Manager to secure satisfactory information from the
telecommunications. To some of the telecommunications
companies, especially those not receiving support, the WUSF is simply a burden. The ETC certification process may be the
context in which some carriers could be persuaded to find value in improving the
quality of their reporting.
27. Deputy Chairman
Oxley rejected OCA’s argument that private branch exchange (PBX) lines should not
be counted in the WUSF line counts. Although
OCA argued otherwise, PBX lines are not the same as Centrex or Integrated Services
Digital Network (ISDN) lines. Payphone Access
Lines (PALs) should also be counted.
Both types of line are now not often differentiated from 1FR or 1FB
lines.
28. Chairman
Minier observed that if there were better reporting, the Commission would have
less difficulty in trying to determine which lines should or should not be counted. He stated further that he understood the Bresnan
pricing issue had been resolved in last year’s WUSF docket.
29. Deputy Chairman
Oxley agreed, noting Bresnan serves largely in urban areas also served by Qwest. The $23.10 the price for essential service in
Qwest’s base rate areas, is cost-based. Bresnan
is the second largest telecommunications carrier in the state; and $23.10 is an
appropriate price surrogate. He did not accept
the arguments the OCA made regarding the Federal Communications Commission’s (FCC)
safe harbor provision for identifying intrastate portions of bundled VOIP services. He noted that telephone calls are carried on the
Bresnan system from the subscriber’s premises to Bresnan’s “Central Office.” From there, IDT America, Corp. carries the call
under agreement with Bresnan, in a generally traditional manner. The call does not disappear into an internet “cloud”. Accurate unpacking of bundled rates to
isolate the cost of supported services remains an issue at the FCC as it does
at the Commission.
30. Commissioner
Lewis stated that Bresnan is a fixed system and the issue was not the same as what
OCA was describing. She also emphasized the
fact that the law lags behind technology.
31. Chairman
Minier stated that one of the companies listed on Confidential OCA Schedule DKP-1
is an example of the worst reporting. By
using the ETC process to encourage integrity and good timing in reporting, the Commission
may have some leverage to improve the quality of the data received. If the Commission gets an early start on the ETC
certification process, then there may be better results. The goal is to encourage accurate and timely reporting
for the WUSF.
32. Deputy Chairman
Oxley believed that there is a requirement for more accuracy in reporting as illustrated
by the vagaries of reporting found here and argued by the OCA. That is why he suggested the Commission give interim
approval in this docket. He would follow
OCA’s recommendation.
33. Chairman
Minier would close this year because he does not favor unresolved dockets. He would accept the Report and move forward.
34. Commissioner
Lewis is inclined to accept the Report. The
WUSF staff can look into the problems and find means to address them. The Commission should look forward and use the
ETC certification process to help solve the problem.
35. Chairman
Minier moved for discussion purposes to accept the Confidential Report of the Wyoming
Universal Service Fund Manager as filed.
Deputy Chairman Oxley stated he would accept Bresnan’s price at $23.10 and
count PBX and PAL lines in the WUSF calculation.
36. Chairman
Minier noted that bundles in 1995 are not the same as bundles in 2009. Given the definition of essential service and
the reality of bundled telecommunications services, the passage of time has
created policy issues about what WUSF should be supporting.
37. The Commission
determined it would accept the Confidential Report of the Wyoming Universal Service
Fund Manager as filed. Deputy Chairman Oxley
moved that the WUSF Management Staff should, in the interim, research the
problem of bundles which contain the supported services, consult with the OCA
and others, and return to the Commission with the results of that research. He said the safe harbor provision argued by OCA
does not apply because Bresnan is not a VoIP provider. Chairman Minier applauded the OCA for thinking
about bundles creatively.
LEGAL CONSIDERATIONS
38. OCA suggested that the Fund Manger apply the FCC safe harbor percentage
to Bresnan and use that amount for Bresnan’s net rates in the WUSF calculation of
the weighted statewide average and 130% benchmark. The FCC’s safe harbor provision assigns a percentage
to both the interstate and intrastate traffic so the FCC can determine what amount
nomadic VoIP providers should contribute to the FUSF. The United States Court of Appeals for the Eighth
Circuit issued an opinion on May 1, 2009, in No. 08-1764, Vonage Holdings Corp; Vonage Network, Inc., v.
Fixed VoIP service, however,
originates from a fixed geographic location. For example, cable television companies
offer interconnected VoIP service, and the transmissions use the cable running to
and from the customer's residence. As a result, the geographic originating point
of the communications can be determined and the interstate and intrastate portions
of the service are more easily distinguished.
The
Eighth Circuit did not make determination on the use of the safe harbor as applied
to fixed VoIP, and most of the opinion related to the safe harbor and nomadic VoIP
providers. It is clear, however, that
the nomadic VoIP formula would not apply to a carrier like Bresnan.
39. There are some issues regarding
the application of the incremental FUSF in this docket. Returning to Subs 22 and 23, Qwest’s witness offered
testimony regarding consistent treatment among telecommunications companies and
“recommended that the WUSF calculations for the 2003-2004 fiscal year be re-run
taking incremental FUSF receipts into account, for all companies, on the same basis.
(Tr., p. 127.)” (Subs 22 and 23 Order, paragraphs
19 and 20, quotation at paragraph 20.)
The
OCA offered testimony “that WUSF calculations must be performed using net rates
in order to be consistent with applicable statutory provisions and rules. (Tr., p 140)” (Subs 22 and 23 Order, paragraph
21.) In the OCA’s pre-filed direct testimony
in those cases, Ms. Parrish gave four examples of how to calculate the statewide
average and advocated that the Commission follow Example Four and stated,
In this example, the statewide average rate is based on the net
rate per line, rather than the gross rate per line. * * * In this case, it is assumed
that companies are required to return any incremental FUSF funds to customers in
the form of a bill credit, and those incremental amounts are used in the computing
the statewide average and WUSF distributions. * * * The only situation in which
customers pay 130% of the statewide weighted average rate or less is in Example
Four. This is the only example where the
incremental federal universal service funds are: used for computing the statewide weighted average,
used in making WUSF distributions, and are retuned directly to customers. This is the method that the Commission should be using. (Prefiled
Direct Testimony of Denise Kay Parrish in Subs 22 and 23, page 11.)
Later in her prefiled testimony, Ms. Parrish stated,
However, this practice of basing the gross rates on the year end
authorized levels appears to be inconsistent with the timing of some of the estimates
made by the manager regarding the net rates and the level of the FUSF the net rates
and the level of FUSF credit. Specifically
the April 7th confidential Appendix II shows that Qwest’s gross rate
(used for the computation of the statewide average rate) contains both the approved
TSLRIC-based rate as of December 2002, as well as the FUSF credit as of the end
of 2002. This timing is consistent with that
of the line counts and rates for the other companies. However, the inconsistency seems to appear when
there is then included in the net rate an additional
FUSF credit for Qwest, reflecting the FUSF credit totals that did not take effect
until mid-2003. * * * In other words, for Qwest, there is too much FUSF credit included
in the net rate which then forms the basis for its Wyoming universal fund receipts.
* * * The WUSF computation only works if the data is consistent within each year
among companies, and is consistent from year-to-year for individual companies. By using only the credits in the Qwest tariff
as of December 31st each and every year, the Commission can assure customers
that each year’s incremental FUSF amount has been incorporated in rates and will
be passed on to customers – whether it is an increase or a decrease. (Prefiled Direct Testimony of Denise Kay Parrish
in Subs 22 and 23, page 18.)
Ms.
Parrish stated further, “By using the net rate, each company includes its full amount
of FUSF receipts and bill credits in the computation. Thus, the use of the net rate is more competitively
neutral, that is the use of the gross rate.
(Prefiled Direct Testimony of Denise Kay Parrish in Subs 22 and 23, page
19.) She then recommended, “The Commission
should direct that the 2003-2004 support levels be recomputed using only the Qwest
FUSF bill credits in place as of December 31, 2002.” (Prefiled Direct Testimony of Denise Kay Parrish
in Subs 22 and 23, page 19.) In the OCA’s
Post-Hearing Brief in Subs 22 and 23, the OCA states, “The method proposed by the
OCA, and illustrated in Ms. Parrish’s ‘Example Four’ includes incremental FUSF in
the computation of the Statewide Average, the use of net rates in the calculation
of WUSF distributions, and the explicit direct crediting to customers of FUSF support
to the extent it effects the amounts of their bills. (OCA Ex. 1, pp. 4, 11-12.)” (OCA Post-Hearing Brief in Subs 22 and 23, p.
5.) The OCA defines “Incremental FUSF Support”
in footnote 1 as “that which is not included in tariffed rates.” (OCA Post-Hearing Brief in Subs 22 and 23, p.
5.)
40. Qwest presented
comments regarding its method of calculating its WUSF support. Ms. Norsworthy illustrated the calculation. She argued that Qwest must receive its tariff
price, but that is not possible with the Manager’s calculation. She further stated that the benchmark plus the
FUSF per line plus the WUSF per line shall equal the tariff price. She demonstrated that a new FUSF amount should
be used and therefore, a new WUSF should be determined. Qwest appears to believe that different FUSF credit
amounts and different prices need to be used:
[i] one FUSF credit amount and net rate in the calculation for the WUSF weighted
statewide average and [ii] another FUSF credit amount and the tariff price in the
calculation of WUSF support. As noted above,
Rule 500(g) requires that end of calendar year prices be used in the calculations
of WUSF of the weighted statewide average, associated 130% benchmark, telecommunication
companies’ WUSF distributions and assessment level. This is consistent with the determinations made
in Subs 22 and 23.
41. Union Telephone
asked for the statewide average, 130% benchmark, and company WUSF support to be
recalculated using revised net rates submitted on April 29, 2009. Rule 500(c) requires that WUSF Annual Reports
be filed by February 15th of each year.
42. In
comments received literally minutes before the hearing in the instant docket,
Embarq requested that the Fund Manager not apply the December 31, 2008, amounts
of FUSF shown in Embarq’s tariffs in effect as of that date in calculating
Embarq’s amount of WUSF support for the 2009-2010 Fund year. Embarq’s tariff filing, found in its tariffs
on file with the Commission as of
December 31, 2008, was made as a result of the Docket No. 90072-28-XO-08 (the
docket establishing the WUSF statewide average, 130% benchmark, assessment
level and each telecommunication companies WUSF distributions for fiscal year
2008-2009).. In Docket No. 70009-316-TT-08
(Sub 316), dealing with Embarq’s FUSF
monies, and which went to hearing on October 8, 2008. Ms. Barbara Taylor-Iversen, WUSF
Administrator, made a presentation in that case regarding the WUSF. She emphasized several times at the hearing
in that case that year-end tariffs as of December 31, 2008, including FUSF credits, would be used for the determination of the
WUSF weighted statewide average, 130% benchmark, assessment level and WUSF
distributions for the 2009-2010 fiscal year.
During the Sub 316 hearing, Ms. Iversen stated, in response to a
question regarding the simplicity of the WUSF utilizing Embarq’s proposed
tariffs,
I think the calculation is much
simpler. Where it gets complicated is when
the company says, oh, no, you can't use my end of year, you have to use my current
year and we have this big mismatch. I think
as long as the company understands that I am using exactly what is in place on December
31st, the tariffs, the rate, the line count, then we're all going to be on the same
page and it will be a very simple calculation. (Sub 316 Transcript, p. 138.)
She stated that the end-of-year rates, referenced in Rule
500(g), are used for the computation of the weighted statewide average, 130% benchmark
and the WUSF support of each company. (Sub
316 Transcript, p. 141.)
The Sub 316 Order issued on November 13, 2008, states at
paragraph 24 where Ms. Parrish discussed the proposed Stipulation, “The proposed effective date of the tariff would be no
later than December 31, 2008, to ensure the rate would be in place prior to the
end of the calendar year so that it can be utilized by the universal service fund
manager for USF calculation purposes.”
43. The Fund
Manager computes the weighted statewide average and the amount of WUSF support using
FUSF credits listed on the tariffs on file at the end of the year, or December 31,
2008, as directed by Rule 500(g). Only Qwest
and Embarq have tariffed FUSF credits.
COMMISSION DETERMINATIONS
44. Based upon
comments received at the May 7, 2009, hearing; and the Commission’s deliberations
held on May 13, 2009; and taking into account the current fund balance; the estimated
fund disbursements; the estimated fund receipts for the July 2009 – June 2010 fiscal
year, the Commission accepts the Confidential Report of the Wyoming Universal Service
Fund Manager and will allow the Wyoming Universal Service Fund assessment level
for the twelve-month period beginning July 1, 2009, to remain at one percent (1.00%).
45. For
the twelve-month period beginning July 1, 2009, the weighted statewide average local
exchange service rate is established at $25.05.
The associated 130% support benchmark is established at $32.57. Therefore, no
46. As
required by Section 500(o) of the Commission’s Rules, beginning July 1, 2009, telecommunications
providers shall report and pay into the Fund the 1.00% assessment in conjunction
with the monthly and quarterly reporting requirements of Section 500(m) of the Commission’s
Rules.
47. The
WUSF Management Staff is directed to research bundles and how the price of
basic supported telecommunications service components therein might be best and
most accurately determined. Staff may consult
with the OCA and whomever else they wish, and return to the Commission with a paper
setting out the results of that research.
IT IS THEREFORE ORDERED:
1. Pursuant
to the hearing held on May 7, 2009, and deliberations on May 13, 2009, the Commission
accepts the Confidential Report of the Wyoming Universal Service Fund Manager and
sets the Wyoming Universal Service Fund assessment level, effective for the twelve-month
period beginning July 1, 2009, at 1.00 percent (1.00%) of gross intrastate retail
telecommunications revenues. The assessment
level will be applicable to all telecommunications customer billings rendered on
and after July 1, 2009.
2. The
Commission establishes the weighted statewide average local exchange service rate
for the twelve-month period beginning July 1, 2009, at $25.05. The associated support benchmark for the twelve-month
period beginning July 1, 2009, is established at $32.57. Therefore, no
3. The Commission has provided to the twelve
telecommunications companies eligible to receive Wyoming Universal Service Fund
support a confidential spreadsheet denoting the amount of WUSF support the company
is eligible to receive. The aggregate amount
of WUSF support proposed to be distributed monthly is $225,769.
4. The
WUSF Management Staff is directed to research bundled service issues as
described in paragraph 47 above.
5. This
Order is effective immediately.
MADE
and ENTERED at
Public
Service Commission of
ALAN B.
MINIER, Chairman
STEVE
OXLEY, Deputy Chairman
(SEAL) KATHLEEN A. LEWIS, Commissioner
Attest:
J.
BLAIR BALES, Assistant Secretary