Via Overnight Delivery
20 October 2000
Ms. Susan Hudson
Clerk of the Board
Vermont Public Service Board
112 State Street, Drawer 20
Montpelier, Vermont 05620-2701
RE:
Regulation of Nondominant Telecommunications Carriers
Dear Ms. Hudson:
The Association of Communications Enterprises (ASCENT)1, on behalf of its members and
pursuant to the Board’s September 13, 2000 solicitation of comment regarding Board proposals to
reduce unnecessary regulatory burdens on competitive telecommunications companies, responds to
questions posed by the Board.
ASCENT commends the Board for its efforts to streamline the current regulatory regime for
competitors.2 Such efforts are entirely appropriate in today’s emerging competitive landscape. A
regulatory approach governing new competitive carriers who do not dominate, control, or otherwise
exert control, over emerging competitive markets does not demand the level of regulatory scrutiny
appropriate for dominant, monopoly-based providers. Armed with a growing choice of service
providers, Vermont consumers possess the ultimate safeguard against substandard service –
competition. Competitive pressures, coupled with regulatory oversight, ensure that service providers
will serve the public responsibly. When combined with the Board’s existing consumer protection
regulation, the public will in no way be exposed to greater risk through the Board’s proposed
streamlining of competitive regulations.
Conventional regulation of competitive providers imposes unnecessary burdens that chill
competition at best and serve as an effective entry barrier at worst. The strong relationship between
the level of competition and regulation is acknowledged through the Board’s desire to lessen
regulatory burdens on service providers, in accordance with the changing regulatory environment.3
1
ASCENT, formerly known as the Telecommunications Resellers Association, is a national industry association representing nearly 800 entities
engaged in, or providing products and services in support of, the provision of telecommunications services. ASCENT was created, and carriers a
continuing mandate, to foster and promote telecommunications resale, to support the competitive telecommunications industry, and to protect and
further the interests of entities engaged in the competitive provision of telecommunications services. ASCENT is the largest association of
competitive carriers in the United States, numbering among its members not only the large majority of providers of domestic interexchange and
international services, but the majority of competitive local exchange carriers.
2
Memorandum from Susan Hudson to Vermont Telecommunications Providers and Interested Persons, September 13, 2000, at 1
3
Id., at 2.
Ms. Susan Hudson
20 October 2000
Page 2
The Board’s interest in streamlining regulation to meet the changing demands of a competitive
market place is commendable and appropriate. Streamlining efforts will contribute to the
development of meaningful telecommunications competition in Vermont.4 With the foregoing in
mind, ASCENT responds to the Board’s specific questions regarding proposed streamlining of nondominant carrier regulations as follows:
What models exist in other jurisdictions for establishing rules over nondominant carriers?
Colorado, Georgia, Montana, North Carolina, North Dakota, Oregon, Texas, Washington, and
Wyoming are among those states that have promulgated streamlined regulations that eliminate
many aspects of traditional regulatory regimes, while maintaining effective regulatory oversight to
ensure consumer protections. The streamlined competitive regulations instituted by these states
range from Wyoming’s simple on-line registration requirements to streamlined competitive carrier
applications and tariffs that become effective on one day’s notice, such as in Texas.
Several states have considered service quality standards for competitive carriers, concluding that
those entities who exert no ownership or control over underlying network facilities should not be
subject to technical network-based service quality standards and reporting requirements. For
example, in recently proposed rules designed to establish expedited service quality rules for
competitive carriers, 5 the New Mexico Public Regulation Commission considered service quality
rules which, contrary to those currently in force in Vermont, impose monthly reporting
requirements solely on dominant incumbent carriers As the New Mexico Commission recognized,
“retail carriers relying on ILEC facilities, services, and interconnection can provide no better quality
of service to customers than an ILEC provides to the retail carrier.”6 With this in mind, the
Commission elected to exempt retail carriers from responsibility for service quality standards and
reporting “to the extent that the carrier’s inability to comply…is caused by the inadequate quality of
wholesale service.”7 The Board should be similarly guided in streamlining certifications, tariffing,
and service quality standards and reporting obligations for competitive carriers.
How Should the Board’s initiatives here build on or complement federal requirements over
regulatory forbearance? The Federal Communications Commission (FCC) has generally adopted
a streamlined approach for competitive companies, particularly with respect to competitor reporting
requirements and service quality standards. Rather than focusing on a traditional regulatory regime,
the FCC has turned its attention to regulations designed to protect consumers, such as recent
slamming and truth-in-billing regulations.
The FCC has also adopted a policy of mandatory detariffing, a policy with which ASCENT
disagrees. Tariff forbearance has proven to be a highly problematic aspect of the FCC’s streamlined
regulatory regime, as it deprives carriers of one of the most eliminates the simplest most effective
4
A clear distinction should be made between competitive carriers and incumbent local exchange carriers in terms of lessening regulatory burdens. A
streamlining of regulation is entirely appropriate for competitive carriers who are unaffiliated with incumbents, given incumbent carrier market
dominance and their ability to control local markets. While the incumbents will continue to argue for regulatory parity, none is appropriate in the
absence of competitive parity. So long as the incumbents are able to effectively control the market, no such regulatory parity is warranted.
5
In The Matter Of The Adoption Of A Rule To Establish An Expedited Regulatory Process For Considering Telecommunications Matters Before The
Commission Pursuant To House Bill 400, Utility Case No. 3237; In The Matter Of The Adoption Of A Rule Establishing Consumer Protection And
Quality Of Service Standards For Telecommunications Service In New Mexico Pursuant To House Bill 400, Utility Case No. 3437, August 8, 2000.
6
17.11.16 NMAC §8
7
Ibid.
Ms. Susan Hudson
20 October 2000
Page 3
method available to carriers to establish the legal relationship with their customers. Tariffs protect
consumers by allowing service providers to a cost-effective tool to define their business relationship
with consumers. This in turn allows carriers to offer lower cost, on-demand services and to roll out
new service offerings more rapidly.
The Board should consider moving toward a more streamlined approach consistent with the
approach taken by the FCC, with the exception of that agency’s mandatory tariff forbearance
regulations. In that regard, ASCENT recommends that the Board allow carriers to continue to file
tariffs that are presumed lawful, are no longer subject to Board scrutiny, and become effective on
one day’s notice, as is currently authorized in Texas and Georgia, among other states.
With respect to forbearance:
a. Which carriers or types of carriers should be affected? Any regulatory streamlining should
apply to competitive carriers only. Incumbent local exchange carrier (ILEC) affiliates should not
enjoy the type of regulatory streamlining envisioned by the Board in its proposed amendments,
intended for non-dominant carriers. The real anti-competitive threat that such affiliates pose if the
relationship between affiliate and ILEC does not fall under appropriate Board scrutiny underscores
the need to exclude ILEC affiliates from any proposed streamlined regulatory scheme. Regulating
ILEC affiliates through the same process available to unaffiliated competitors creates significant
risk for anticompetitive abuses, if left unchecked.
ILEC affiliates have the potential ability to arm themselves with incumbent customer information,
to share common management and employees with the incumbent parent, to access reduced cost
facilities provided by the incumbent, and to be afforded the benefits of parent brand name identity
and favorable business relationships with the parent company. These benefits provide a competitive
edge that no competitor can hope to match. In the absence of Board scrutiny over new incumbent
affiliate applications, ILECs may gain yet additional competitive advantage over competitors.
While ILECs may argue that their affiliates are indeed competitive entities and should be subject to
like treatment as competitive carriers by virtue of the existence of competitors, the ILECs’
arguments ignore the unique relationship that exists between ILEC and affiliate that no other
registrant can claim. It is this unique relationship that, left unchecked, opens a literal Pandora’s box
of anti-competitive potential that will thwart, rather than promote, competitive entry. To allow an
ILEC affiliate to receive such scrutiny as accorded to non-dominant telecommunications service
provider on the basis of presumed competition could, in effect, allow the ILEC to make an end run
around statutory obligations, undermining Congress’ and this Board’s pro-consumer, procompetitive policies.
b. What services? Regulatory streamlining should apply only to services offered by competitive
service providers not affiliated with incumbent carriers. Such streamlining should under no
circumstances apply to incumbent local exchange carriers or their affiliates, regardless of the
services offered, at least until such time as the incumbent is deemed to have opened its Vermont
markets to competition under the requirements of Section 271 of the 1996 Telecommunications Act.
Ms. Susan Hudson
20 October 2000
Page 4
To what extent, if at all, should the rules extend to matters related to service level forbearance
permitted under section 227a? Under Title 30, Section 227a, the Board may suspend or reduce
any regulatory requirements currently imposed on carriers, upon a finding of the existence of a
competitive market. For the reasons outlined supra, any extension of the rules to matters related to
service level forbearance under section 227a should be only on behalf of competitive service
providers who are not affiliated with incumbent carriers.
Should the Board adopt rules that create a presumption of nondominance for certain types of
carriers? Yes. Competitive carriers who are not affiliated in any way with incumbent service
providers should be presumed to be non-dominant carriers. Non-dominant carriers are generally
unable to control service offerings or market pricing, as are dominant carriers. Such presumption
will conserve Board, as well as carrier, resources by automatically placing carriers in the position of
being regulated under the Board’s less stringent regulatory regime. To require carriers to prove
non-dominance before allowing them to be regulated under a streamlined regulatory scheme
subverts some of the Board’s stated goals to streamline carrier regulation and ease regulatory
burdens on competitors.
ASCENT applauds the Board for undertaking an investigation into streamlining competitive carrier
regulation. The Board should generally model its approach to regulatory streamlining after that
taken by the FCC and several state commissions, by focusing on consumer protection regulation
rather than more traditional carrier regulations. In particular, ASCENT urges the Board streamline
regulations governing tariff filings, to make such effective on one day’s notice to the Board, and
allowing waivers of network-based service quality standards and reporting requirements for
competitive carriers, as defined herein. ASCENT appreciates this opportunity to comment and
looks forward to working with the Board to assist in crafting more streamlined rules consistent with
Vermont’s developing competitive marketplace.
Sincerely,
Association of Communications Enterprises
Andrew O. Isar