STATE OF CONNECTICUT

Transcription

1 STATE OF CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL TEN FRANKLIN SQUARE NEW BRITAIN, CT DOCKET NO DEPARTMENT OF PUBLIC UTILITY CONTROL 2000 ANNUAL REPORT TO THE GENERAL ASSEMBLY ON THE STATUS OF TELECOMMUNICATIONS IN CONNECTICUT December 27, 2000 By the following Commissioners: Jack R. Goldberg Glenn Arthur John W. Betkoski, III DECISION

2 TABLE OF CONTENTS PROLOGUE... 1 I. ANALYSIS OF THE STATUS OF UNIVERSAL TELEPHONE SERVICE IN CONNECTICUT... 1 A. INTRODUCTION... 1 B. UNIVERSAL SERVICE Definition Status of Universal Service in the United States Universal Service - Connecticut Assistance for Hearing and Speech Impaired Persons: Docket No , DPUC Review of the State of Connecticut Telecommunications Relay Service Link-Up America -- Connecticut Telephone Connection Assistance Program (CTCAP) Connecticut Disconnect Data Docket No , DPUC Review of the Connecticut Lifeline Program CC Docket No , Federal State Joint Board on Universal Service... 5 C. JURISDICTIONAL SHIFTS IN TELEPHONE REVENUE REQUIREMENTS... 5 II. THE IMPACT OF COMPETITION IN TELECOMMUNICATIONS MARKETS ON THE WORK FORCE OF THE STATE AND EMPLOYMENT OPPORTUNITIES IN THE TELECOMMUNICATIONS INDUSTRY IN THE STATE... 6 III. AN ANALYSIS OF THE LEVEL OF REGULATION THAT THE PUBLIC INTEREST REQUIRES... 8 A. DOCKET NO , DPUC PROMULGATION OF REGULATIONS CONCERNING TELEPHONE SLAMMING... 8 B. DOCKET NO , DPUC PROMULGATION OF PERFORMANCE STANDARDS AND PERFORMANCE BASED REPORTING REQUIREMENTS REGULATIONS FOR CONNECTICUT TELEPHONE COMPANIES... 9 C. DOCKET NO , DPUC PROMULGATION OF QUALITY OF SERVICE REGULATIONS FOR CONNECTICUT TELEPHONE AND CERTIFIED TELECOMMUNICATIONS PROVIDERS... 9 IV. THE STATUS OF IMPLEMENTING THE PROVISIONS OF CONN. GEN. STAT A TO C, INCLUSIVE; CONN. GEN. STAT E TO I, INCLUSIVE; AND CONN. GEN. STAT K, INCLUDING ACHIEVING EACH OF THE OBJECTIVES OF THE GOALS SET FORTH IN CONN. GEN. STAT A...10 A. DOCKET NO , DPUC INVESTIGATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY S OPERATIONAL SUPPORT SYSTEMS FOR UNBUNDLED NETWORK ELEMENTS PURSUANT TO PUBLIC ACT B. DOCKET NO , DPUC REVIEW OF THE CONNECTICUT LIFELINE PROGRAM TRIBAL ENHANCEMENT...11 C. DOCKET NO RE01, DPUC EXPLORATION OF THE LIFELINE PROGRAM POLICY ISSUES ALTERNATIVE OPTIONS...12 D. DOCKET NO RE02, DPUC EXPLORATION OF THE LIFELINE PROGRAM POLICY ISSUES NEW LIFELINE PLAN...13

3 Docket No Page 2 E. DOCKET NO , APPLICATION OF BELL ATLANTIC-PROPOSED TARIFF FOR UNBUNDLED NETWORK ELEMENT - REBUNDLED SERVICE...13 F. DOCKET NO , APPLICATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY FOR APPROVAL OF A PROPOSED TARIFF FOR UNBUNDLED NETWORK ELEMENT - REBUNDLED SERVICE...14 G. DOCKET NO , PETITION OF CTC COMMUNICATIONS CORP. AND PARTNER COMMUNICATIONS CORP. GROUP LLC FOR A DECLARATORY RULING...14 H. DOCKET NO APPLICATION OF THE NEW YORK TELEPHONE COMPANY FOR ALTERNATIVE RATE REGULATION...15 I. DOCKET NO , DPUC INVESTIGATION INTO THE PROVISION OF SHARED TRANSPORT...16 J. DOCKET NO , APPLICATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY PROPOSED TARIFF FOR COLLOCATION...17 K. DOCKET NO RE03 AND RE05, DPUC REVIEW OF MANAGEMENT OF TELEPHONE NUMBERING RESOURCES IN CONNECTICUT - CONSERVATION MEASURES...18 L. DOCKET NO , DPUC INVESTIGATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY S ALTERNATIVE REGULATION PLAN...19 M. DOCKET NO , APPLICATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY FOR APPROVAL OF COST STUDIES FOR UNBUNDLED NETWORK ELEMENTS 19 N. DOCKET NO , DPUC REVIEW OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY S STUDIES OF UNBUNDLED NETWORK ELEMENTS NON-RECURRING CHARGES...20 O. DOCKET NO , THE VISION FOR CONNECTICUT S TELECOMMUNICATIONS INFRASTRUCTURE...20 P. DOCKET NO , DPUC REVIEW OF PROCEDURES REGARDING THE CERTIFICATION OF TELECOMMUNICATIONS COMPANIES AND OF PROCEDURES REGARDING REQUESTS BY CERTIFIED TELECOMMUNICATIONS COMPANIES TO EXPAND AUTHORITY GRANTED IN CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY REOPENING; DOCKET NO , DPUC INVESTIGATION INTO THE COMPETITIVE PROVISION OF LOCAL EXCHANGE SERVICE IN CONNECTICUT REOPENING; DOCKET NO , DPUC INVESTIGATION INTO PARTICIPATIVE ARCHITECTURE ISSUES REOPENING...21 V. THE STATUS OF THE DEVELOPMENT OF COMPETITION...22 A. REQUESTS FOR CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY...22 B. NEW TARIFF OFFERINGS...22 VI. THE STATUS OF THE DEPLOYMENT OF TELECOMMUNICATIONS INFRASTRUCTURE IN THE STATE...23 A. SOUTHERN NEW ENGLAND TELEPHONE COMPANY...23 B. VERIZON NEW YORK, INC...24 C. WOODBURY TELEPHONE COMPANY...25 D. INTEREXCHANGE CARRIERS...25 AND

4 PROLOGUE This fourteenth annual report on the status of telecommunications service and regulation in Connecticut is submitted to the General Assembly pursuant to i of the General Statutes of Connecticut (Conn. Gen. Stat.). Under that statutory provision, the Department of Public Utility Control (Department) is charged with analyzing and reporting on six areas relating to telecommunications: 1. An analysis of Universal Service and any changes therein; 2. An analysis of the impact, if any, of competition in telecommunications markets on the work force of the state and employment opportunities in the telecommunications industry in the state; 3. An analysis of the level of regulation, which the public interest requires; 4. The status of implementing the provisions of Conn. Gen. Stat a to c, inclusive, e to i, inclusive, and k, including achieving each of the objectives of the goals set forth in Conn. Gen. Stat a. 5. The status of the development of competition for all telecommunications services; and 6. The status of the deployment of telecommunications infrastructure in the state. To fulfill these charges, the Department annually initiates a docket to conduct a general investigation of the relevant issues. Docket No , Department of Public Utility Control 2000 Annual Report to the General Assembly on the Status of Telecommunications in Connecticut, was established to gather the necessary information and data for The following report presents the Department's analyses and findings. The Department has not drawn specific conclusions or made new recommendations in this report. It is a status report that summarizes the results of the Department's investigation in Docket No , as well as information or findings reached in other docketed proceedings completed during 2000 and information presented in pending dockets. Pertinent information from external sources, including the Federal Communications Commission (FCC) and other regulatory jurisdictions, is also included. The report comprises six major sections. The first, Analysis of the Status of Universal Service in Connecticut, addresses universal service in Connecticut and in the nation. This section also provides an analysis of statistics concerning low-income household participation in the Connecticut version of the FCC's Link-Up America telephone connection assistance program.

5 The second section, The Impact of Competition in Telecommunications Markets on the Work Force of the State and Employment Opportunities in the Telecommunications Industry in the State, addresses Conn. Gen. Stat i(2). This part of the report summarizes the status of the Department's implementation of Conn. Gen. Stat f and its investigation of the telecommunications services opened to competition, and the impact of telecommunications competition on telecommunications workers in Connecticut and in the nation. The third section, Regulation of Telecommunications, reports that there are three current dockets or Department investigations that have been initiated to address the level of regulation imposed on telecommunications service providers. The fourth section, The Status of Implementing the Provisions of Sections a to c, inclusive; e to i, inclusive; and k, Including Achieving Each of the Objectives of the Goals Set Forth in Section a, provides a brief overview of the Department s implementation of Public Act , An Act Concerning Competition in the Telecommunications Industry (Connecticut Act), and discusses the various dockets the Department has initiated to satisfy the goals and objectives of the above noted statutes. The fifth section, The Status of the Development of Competition, discusses the level of competition for telecommunications services in the state. This section also discusses the Connecticut Act s tariff requirements for telecommunications services. The final section, The Status of the Deployment of Telecommunications Infrastructure in the State, discusses the Department s findings regarding the level of technology deployed in Connecticut and the status of infrastructure modernization.

6 I. ANALYSIS OF THE STATUS OF UNIVERSAL TELEPHONE SERVICE IN CONNECTICUT A. INTRODUCTION Subsection (1) of Conn. Gen. Stat i mandates that the Department analyze the issue of Universal Service. This section of the report includes a discussion of Universal Service on a national basis and in Connecticut, a summary of data on disconnected customers in Connecticut, a discussion of the status of Connecticut's version of the Link-Up America telephone connection assistance plan for low-income households, a review of the impact on Connecticut telephone companies and ratepayers of FCC-mandated shifts in revenue requirements from the interstate side of telephone operations to states, and a description and status of the Department's Lifeline Assistance Telephone Program. B. UNIVERSAL SERVICE 1. Definition The Department has defined universal service as the widespread availability of telephone service at a reasonable rate. The Department has further defined widespread availability as the level of telephone penetration among households as measured in percentage points. A value of 90 percent or higher has been considered by the FCC to represent the achievement of universal service. In Connecticut, no particular level of penetration is accepted as an indicator of universal service; rather, it is a public policy goal to connect as many people desiring service to the public switched network as possible. 2. Status of Universal Service in the United States According to the FCC's Telephone Subscribership and Penetration in the United States Report dated November 2000 (FCC Report), between March 1999 and March 2000 approximately 1.1 million households were added to the nation's telephone system. The FCC Report also states that as of March 2000, Census Bureau data show that the percentage of households with telephone service is 94.6%, an increase of 0.6% over the March 1999 data. Table I, below, compares the number of U.S. households with telephone service to those without telephone service for the period March 1999 through March 2000.

7 Docket No Page 2 Table I Telephone Penetration in the United States Households With Telephones (millions) Percentage With Telephones Households Without Telephone (millions) Percentage Without Telephone Households (millions) March July November March Source: The November 2000 FCC Telephone Subscribership Report Further, the following figures show the annual average subscribership percentages by state for the six New England states for the period 1995 to Table II Average Annual Subscribership Data - New England States USA CT ME MA NH RI VT Universal Service - Connecticut According to the FCC Report, universal service in Connecticut is at 96.5%, compared to the national average of 94.2%. The 1999 national average slightly increased when compared to the 1998 average. In 1999, Connecticut telephone subscribers increased when compared to the 1998 average of 95.5%. Based on the FCC Report, Connecticut holds third place among the New England states in the percentage of households subscribing to telephone service. The Department notes that the percentage rate in Connecticut has fluctuated over time. This fluctuation can be attributed to an increase in subscribers on a national level, which is the highest ever reported in the United States. The high level of telephone subscription in Connecticut can be attributed to several factors: (1) Connecticut's high per capita income level; (2) 1 This information was derived from the U.S. Bureau of Census Current Population Survey (CPS). The specific question asked in the CPS was Is there a telephone in this house/apartment? Since the CPS is asked of a small number of households every four months (approximately 48,000), the annual percentages given above are averages of the surveys for each year.

8 Docket No Page 3 the Department's ratemaking policy; (3) the geographically small size of the state with a high population density; and, (4) the ability of residential and business customers to subscribe to various basic service options, based on usage of local calling Assistance for Hearing and Speech Impaired Persons: Docket No , DPUC Review of the State of Connecticut Telecommunications Relay Service To promote the concept of universal service in Connecticut, the Department, in consultation with the Commission on the Deaf and Hearing Impaired, awarded the contract for provision of Telecommunications Relay Service (TRS) to Sprint Communications Company L.P. (Sprint). 3 The contract requires that the current service offerings will continue to be provided and if needed, the Department may consider the implementation of additional service offerings in the future. All telecommunications providers, including cellular and personal communications service providers offering services in Connecticut, are required to participate in the funding for TRS. These companies are billed directly by Sprint for their proportionate share of the cost for providing TRS in Connecticut. On September 15, 2000, Sprint requested the Department s approval to modify its contract to provide TRS in Connecticut based on recent changes in the provision of TRS mandated by the FCC. Specifically, the FCC amended its rules governing the provision of TRS to expand the types of relay services available and to improve the quality of relay services to make them near the functional equivalent of telecommunications services rendered to persons without hearing and speech disabilities. The Department opened Docket No , Application of Sprint Communications Company, L.P. for Approval of Modifications in Its Provision of Connecticut Telecommunications Relay Service to further examine Sprint s request. 5. Link-Up America -- Connecticut Telephone Connection Assistance Program (CTCAP) On April 16, 1987, in CC , the FCC adopted a two-part plan, Link-Up America, to connect low-income households to the public switched telephone network. 4 Connection assistance is available for one telephone line per household, at the subscriber's principal residence. The FCC established five criteria for participation in the program to ensure that assistance was properly targeted. States could design their own programs within the prescribed guidelines. All customers must meet state- 2 The Department's Report to the General Assembly dated December 21, 1994, in Docket No , Department of Public Utility Control 1994 Annual Report to the General Assembly on the Status of Telecommunications in Connecticut. 3 See the Decision dated June 11, 1997 in Docket No , DPUC Review of the State of Connecticut Telecommunications Relay Service. 4 The first part of the plan provides for federal assistance to pay one-half of the connection charges, up to $30 to commence service. The second part of the plan is an optional program whereby a telephone company may offer an interest-free deferred payment plan (not to exceed 12 months) to new subscribers for service commencement charges, with federal assistance available to the local exchange company to cover the interest costs up to $200.

9 Docket No Page 4 determined income criteria. The Department's plan for low-income residents of Connecticut, effective November 20, 1987, was one of the first approved by the FCC. 5 Connecticut residents continue to take advantage of CTCAP. The Southern New England Telephone Company (SNET) stated that a total of 4,749 CTCAP applications were processed between October 1999 and September During the same time period, 8 customers of the Woodbury Telephone Company (Woodbury) applied for CTCAP and Verizon New York, Inc. (Verizon) received no applications. SNET, Woodbury and Verizon Responses to Interrogatory TE Connecticut Disconnect Data For purposes of this Report, the Department requested that the state's telephone companies provide the number of customers involuntarily disconnected from the public switched network. 6 In response to Department interrogatories, the incumbent local exchange carriers (ILECs) provided the number of customers whose telephone services were involuntary disconnected between October 1999 and September SNET, Verizon and Woodbury provided, under protective order, data separately for residential and business customers. Although there is no clear trend in the number of disconnects, the Department will continue to monitor the number of disconnected residence and business customers closely. SNET, Verizon and Woodbury Responses to Interrogatory TE-5d. 7. Docket No , DPUC Review of the Connecticut Lifeline Program In the Decision dated May 3, 1995 in Docket No , DPUC Exploration of the Lifeline Policy Issues (Lifeline Policy Decision), the Department stated its intention to conduct true-up proceedings to review the actual cost of providing the Lifeline credit and recalculate Lifeline assessments to incorporate any additional telecommunications providers not previously contributing to the funding of the state s Lifeline Program. Additionally, Public Act , An Act Concerning the Telecommunications Lifeline Program, required the Department to apportion the funding for the state s Lifeline Program among telecommunications carriers on an equitable basis, based on the gross revenues of each carrier. Accordingly, Docket No was opened to assess all telecommunications services providers pursuant to PA and explore the 5 On February 27, 1989, the FCC issued a decision that eliminated two eligibility criteria for its Link-Up America program. In addition, during 1989, Connecticut's three telephone companies submitted proposed tariff revisions to bring their Link Up America eligibility criteria into conformance with the FCC recommendations. In each case, the Department reviewed and approved the telephone company s proposed tariff revision. 6 Disconnected customers are divided into two broad categories: voluntary and involuntary. Generally, voluntary disconnection occurs when the subscriber requests service termination. Often, the subscriber quickly returns to the network because the disconnection was most likely due to relocation, merging of households or vacation, for example. Involuntary disconnection is for financial reasons, such as a failure to pay telephone bills or bankruptcy. Clearly, affordability is the key factor for those involuntarily disconnected. However, it is also true that some voluntary disconnects occur for financial reasons. For purposes of the Department's current study, disconnection due to a subscriber's death is not considered an involuntary disconnection.

10 Docket No Page 5 appointment of an independent administrator to manage the state s Lifeline Program, as discussed in the Lifeline Policy Decision. In the Decision dated March 25, 1999, in Docket No , the Department required all telecommunications companies, including Commercial Mobile Radio Service (CMRS) providers, to contribute to the state program. 7 The Department also determined in that docket, that the amount of each telecommunications providers contribution would be based on each carrier s interstate and intrastate gross revenues. While the federal contribution increased to $5.83, the Department was able to reduce the in-state portion to $1.17 and maintain the Lifeline credit at $7.00. Finally, the Department indicated that it would assume the role of Lifeline Program Third Party Administrator, as recommended by several of the parties. 8. CC Docket No , Federal State Joint Board on Universal Service In its Decision in CC Docket No , In the Matter of Federal-State Joint Board on Universal Service (Decision) released May 8, 1997, the FCC implemented the mandate for universal service set forth in the Telecommunications Act of 1996 (1996 Telcom Act) by convening a Federal-State Joint Board (Joint Board) on universal service. 8 The 1996 Telcom Act requires the FCC and the states to ensure that affordable, quality telecommunications services are available to all Americans. Consistent with Congress' mandate, the FCC placed into motion universal service policies that would ensure that all Americans, including low-income consumers and those who live in rural, insular, high cost areas, have affordable service, and that would help to connect eligible schools, libraries, and rural health care providers to the global telecommunications network. 9 C. JURISDICTIONAL SHIFTS IN TELEPHONE REVENUE REQUIREMENTS In the year 2000, there were no changes mandated by the FCC that would impact the intrastate revenue requirement in Connecticut. SNET, Verizon and Woodbury Responses to Interrogatory TE-7. 7 Although Verizon Wireless (VW) and Springwich Cellular Limited Partnership (Springwich) argued that the Department is preempted by Federal law from requiring CMRS providers to contribute to universal service funds, the Department disagreed with these carriers. Pursuant to FCC rulings, States may require universal service fund contributions from CMRS providers. 8 The Telecommunications Act of 1996 required the FCC, among other things, to institute and refer to a Federal-State Joint Board, a proceeding to recommend changes to any of its regulations to establish policies for the preservation of universal service. Those principles embodied within the 1996 Telcom Act include: quality and rates, access to advanced services, access in rural and high cost areas, equitable and nondiscriminatory contributions, specific and predictable support mechanisms, and access to advanced telecommunications services for schools, health care, and libraries. 9 Further details on Universal Service can be found in the FCC Decision in CC Docket No , In the Matter of Federal-State Joint Board on Universal Service released May 8, There have been no significant changes in the past two years.

11 Docket No Page 6 II. THE IMPACT OF COMPETITION IN TELECOMMUNICATIONS MARKETS ON THE WORK FORCE OF THE STATE AND EMPLOYMENT OPPORTUNITIES IN THE TELECOMMUNICATIONS INDUSTRY IN THE STATE Subsection (2) of Conn. Gen. Stat i requires the Department to submit an "analysis of the impact, if any, of competition in telecommunications markets on the work force of the state and employment opportunities in the telecommunications industry in the state. Since issuance of passage of the Task Force Act, additional intrastate services have been opened to competition. Connecticut's three ILECs have provided information that indicates no noticeable shifts in their telecommunications work force requirements resulting from the introduction of intrastate competition. SNET states that competition and technological innovations such as switch modernization, remote testing and dedicated inside facilities have contributed to a reduction in work force requirements in certain areas. The Company is not able to measure and isolate the impact of each of these factors individually. Additionally, SNET does not know what technological advancements will be developed from competition. However, it anticipates that as competition continues to expand, its revenue, and therefore its work force requirements, will continue to be affected. SNET Response to Interrogatory TE-23. Expansion into new business and unregulated services by SNET has created new employment requirements and opportunities throughout the company. As a result, some shifts in work force from regulated operations to deregulated operations and hiring of new employees has occurred. SNET s Project Pronto 10 and participation in the roll out of Digital Subscriber Line (DSL) services has also increased its Connecticut workforce. The service center handling competitive local exchange carriers (CLECs) has also added force to accommodate demand to process wholesale line orders and orders for unbundled network elements (UNEs). SNET Response to Interrogatory TE- 22. Moreover, SNET states that work force requirements are driven by the economy, the financial condition of the Company, available technology, and the impact of competition. The Company looks at the total environment when making work force decisions. As a result, some areas of the business may experience reductions and other areas may experience an increase in work force. Therefore, the Company is unable to specifically quantify the impact of competition on the work force. Verizon states that it will continue its commitment to support its customers by providing innovative technology and competitive services. Verizon further states that although telecommunications competition has created technological changes and the Connecticut Act has resulted in the implementation of new carrier to carrier and end user service regulations, neither will affect its work force requirements. Additionally, 10 On October 18, 1999, SBC Communications Inc. announced a $6 billion company -wide initiative designed to transform the Company over the next three years into the largest single provider of advanced broadband services. This initiative involves SBC s entire 13 state in-region territory and intends to meet customers needs for data, voice and video products as well as high speed Internet access.

12 Docket No Page 7 due to the relative size of its Connecticut operations, Verizon does not anticipate any shift in the size of its work force in the state. Verizon comments that over the next three years it intends to continue upgrading its current facilities and services, and maintains that these changes in technology will facilitate compatibility with other networks throughout the country. Verizon Responses to Interrogatories TE-21, TE-22 and TE-23. Woodbury states that it is not able to quantify the effects of competition in telecommunications or identify any negative effects of competition on its work force. The size of Woodbury s work force has remained relatively constant for the past few years. The Company has not expanded into any new business or introduced unregulated services in the past year. Woodbury Responses to Interrogatories TE-21, TE-22 and TE-23. Regarding Connecticut's ILECs apprising workers of competitive changes, Woodbury and SNET report that periodically, Business Unit/Department Heads and executives of SNET and of the CUTW/CWA Local 1298 meet for the purpose of sharing and discussing the current status of the Corporation and its subsidiaries, as well as short and long-term corporate strategy and plans. At these meetings the impact of competition in terms of products and services, revenues and costs and effects on and concerns from employees have been discussed. Further, the Union/Management Joint Bargaining Team meets on an ongoing basis to review current issues, at which time competition, technology and their effects are frequently discussed. Woodbury and SNET Responses to Interrogatory TE-24. Verizon indicates that discussions between company management and unions remain ongoing as a result of the merger with GTE and the marketplace in general. Regional and company-wide newsletters are made available via the Internet and as print material to all employees. They contain strategic discussions on new technologies as well as effects of competition. Additionally, monthly meetings take place between management and union employees at each company location for face-to-face discussions on topics such as long distance, resale and competition and how they affect employees. These efforts are all part of Verizon s Front Line Communications initiative to give the employees the necessary tools to satisfy customers. Key messages such as customer satisfaction, quality service and accountablitiy are stressed as an everyday part of the changing competitive industry. Verizon Response to Interrogatory TE-24. Connecticut's ILECs also reported on other efforts to inform workers of technological changes. SNET and Woodbury employees for example, participate in both internal and external training courses designed to expand existing knowledge and to develop new expertise. Verizon states that it continues its commitment to developing and maintaining the best-trained work force in the industry. Verizon also states that rapid response to changes in training requirements driven by technological and process advances are facilitated by vehicles such as Training Advisory Panels and Performance Consultants assigned to each line of business. Verizon continues to assess and revise its technical offerings, incorporating new procedures into existing courseware. When new technology is purchased from vendors training solutions continue to be an important part of Verizon s negotiating process. SNET, Woodbury and Verizon Responses to Interrogatory TE-25.

13 Docket No Page 8 III. AN ANALYSIS OF THE LEVEL OF REGULATION THAT THE PUBLIC INTEREST REQUIRES The third area to be addressed under Conn. Gen. Stat i is an analysis of the level of regulation that the public interest requires. The statute states that any terms and conditions the Department develops for competitive telecommunications services must apply equally to all providers unless the Department determines otherwise. Pursuant to the Connecticut Act and 252(c)(3), 253(b), 254(g) and 261(b-c) of the 1996 Telcom Act, the Department has established the following dockets to consider the sufficiency of current policies, procedures and protocols adopted by telephone companies in Connecticut to satisfy the providers duties, obligations and requirements under both State and Federal statutes. The Department has considered three dockets this year that affect the level of regulation of telecommunications service providers in Connecticut. These proceedings include: Docket No , DPUC Promulgation of Regulations Concerning Telephone Slamming; Docket No , DPUC Promulgation of Performance Standards and Performance Based Reporting Requirements Regulations for Connecticut Telephone Companies; and Docket No , DPUC Promulgation of Quality of Service Regulations for Connecticut Telephone and Certified Telecommunications Providers. These dockets are detailed below. A. DOCKET NO , DPUC PROMULGATION OF REGULATIONS CONCERNING TELEPHONE SLAMMING Pursuant to Public Act , An Act Concerning Slamming, the Department was charged with adopting regulations to implement the Act s anti-slamming provisions. On October 9, 1998, the Department issued a Notice of Request for Written Comments requesting that interested participants file comments concerning suggested provisions for the new anti-slamming regulations. The Department received comments from several telecommunications providers, most of which suggested that the Department fashion its regulations in accordance with those adopted by the FCC. Pursuant to the procedures established in the FCC First Order On Reconsideration in CC Docket No , Policies and Rules Concerning Unauthorized Changes of Consumers Long Distance Carriers, released May 3, 2000, the Department elected to take primary responsibility for resolving Connecticut consumers intrastate and interstate slamming complaints as of the effective date of the FCC s modified unauthorized carrier change rules. On October 27, 2000, the FCC announced the effective date of its revised slamming liability rules to be November 28, The Department is currently in the process of reviewing the FCC s slamming liability rules in order to evaluate whether or not additional regulations at the state level will be necessary. A copy of the FCC Regulations are appended hereto as Attachment 1.

14 Docket No Page 9 B. DOCKET NO , DPUC PROMULGATION OF PERFORMANCE STANDARDS AND PERFORMANCE BASED REPORTING REQUIREMENTS REGULATIONS FOR CONNECTICUT TELEPHONE COMPANIES The Connecticut Act requires the Department to re-evaluate the scope and scale related to telephone company performance standards and performance-based reporting requirements. The Department initiated the instant docket to consider the need for additional performance requirements in the evolving Connecticut telecommunications marketplace. The Connecticut Act also required the Department to promulgate quality of service regulations by April 1, On February 8, 2000, draft regulations concerning customer ordering, preordering, provisioning, billing, maintenance and repair, wholesale service quality standards, outage reporting procedures and standards, recourse and mediation procedures, termination of wholesale service policy, Department reporting requirements and monitoring policies were published in the Connecticut Law Journal. On March 29, 2000, revised draft regulations were published and formally adopted by the Department. At this time, the Department is awaiting an informal opinion from the Attorney General concerning the Department's statutory authority to award damages to certified telecommunications service providers or end-users for violations by the wholesale provider of telecommunications services of the performance standards for provision of wholesale services. Consequently, on October 2, 2000, the Department requested an additional 120 day extension from the Legislative Regulations Review Committee to submit the required regulations. If the request for an extension of time is granted, the new date for submission to that committee will be February 6, C. DOCKET NO , DPUC PROMULGATION OF QUALITY OF SERVICE REGULATIONS FOR CONNECTICUT TELEPHONE AND CERTIFIED TELECOMMUNICATIONS PROVIDERS The Connecticut Act also required the Department to promulgate quality of service regulations by April 1, On February 7, 2000, draft regulations concerning retail service quality standards, timeliness in responding to complaints or reports, wholesale service quality standards, CLEC to CLEC provisioning protocols, outage reporting procedures and standards, retail billing policies and procedures, security deposit policy, customer complaint and inquiry practices, recourse and mediation procedures, termination of wholesale/retail service policy, Department reporting requirements, monitoring and enforcement of standards were published in the Connecticut Law Journal. These new regulations became effective on November 8, A copy of the regulations are appended hereto as Attachment 2.

15 Docket No Page 10 IV. THE STATUS OF IMPLEMENTING THE PROVISIONS OF CONN. GEN. STAT A TO C, INCLUSIVE; CONN. GEN. STAT E TO I, INCLUSIVE; AND CONN. GEN. STAT K, INCLUDING ACHIEVING EACH OF THE OBJECTIVES OF THE GOALS SET FORTH IN CONN. GEN. STAT A The fourth section, provides a brief overview of the Department s implementation of the Connecticut Act and discusses the various dockets the Department has initiated to satisfy the goals and objectives of the above-noted statutes. A. DOCKET NO , DPUC INVESTIGATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY S OPERATIONAL SUPPORT SYSTEMS FOR NETWORK ELEMENTS PURSUANT TO PUBLIC ACT UNBUNDLED The Connecticut Act required the Department to conduct an examination of the systems and processes used to provide CLECs UNEs and UNE-combinations. The Department limited the scope of the examination to those capabilities, facilities and services categorized by the FCC as UNEs in CC Docket No , In the Matter of Implementation of the Local Competition Provisions of the Telecommunications Act of The examination did not address the resale of ILEC telecommunications services because those issues were previously addressed by the Department. In November 1999, the Department engaged Cap Gemini Telecom Media & Networks US, Inc. (Cap Gemini) to conduct an independent examination and evaluation of SNET s Operational Support Systems (OSS) capabilities. SNET, the Office of Consumer Counsel (OCC), the Office of the Attorney General (AG) and a number of CLECs provided assistance during the engagement. This proceeding was limited to examining and evaluating a predetermined set of UNEs currently available from SNET to CLECs. The functions reviewed included both automated and manual processes that are used to support requests by CLECs for UNEs. The review of the SNET OSS identified a number of documentation, process and system problems. Approximately 40 Change Requests were issued during the examination to correct such systems and documentation errors. In addition, during the examination a number of physical changes to the SNET interfaces were necessitated. It was also noted during this proceeding that changes, enhancements and modifications to SNET s current OSS that are under consideration by the corporate parent of SNET, SBC Communications, Inc. (SBC) have purportedly made a number of CLECs reluctant to commit to develop fulfillment systems that will interface with the current OSS. Given the limited amount of information available to Cap Gemini regarding future changes to the SNET OSS and even less information regarding the respective CLECs OSS capabilities, it was not possible to evaluate the merits of such concern during the engagement. However, based upon those concerns a number of CLECs expressed limited willingness to actively participate in the engagement, contending that any commitments they made to support the current OSS would be of no future value. Reluctantly, Cap Gemini was dependent soley on the experience of a

16 Docket No Page 11 pseudo-clec for the Functionality Test, a position that, while not desireable, proved sufficient to satisfy its needs. In its November 1, 2000 report, Cap Gemini proposed a number of changes that should be made by SNET which would foster a more competitive environment, consistent with the intent of the Task Force Act, the Connecticut Act and the 1996 Telcom Act. First, Cap Gemini recommended that documentation and systems must be synchronized. Cap Gemini also recommended a prompt transition to the SBC systems and processes. Cap Gemini also proposed that the SBC systems and processes undergo further examination and evaluation with a team comprised of an independent auditor and several interested CLECs to determine the most expeditious means of achieving standardization with other SBC platforms. If it is not possible to move immediately to SBC systems and processes, Cap Gemini proposed immediate changes to the Mechanized Service Access Platform architecture, including but not limited to improvements in disaster recovery capabilities and the availability of hot spares. Independent of any effort to intoduce an SBC-standardized OSS platform, Cap Gemini recommended that the hours of operation for both systems and order processing centers be expanded to improve the level of service afforded to CLECs. Furthermore, it recommended that Local Number Portability and Maintenance and Repair processes be improved to ensure the quality of service experienced by a CLEC subscriber is not inadvertently jeopardized by the introduction of competition. Additionally, performance metrics used to evaluate the performance of the SNET OSS must be expanded to closely match generally accepted industry measurements. Finally, Cap Gemini recommended that wholesale billing functions be further examined by the Department to ensure accuracy and consistency with other provisioning activities. Cap Gemini concluded that the current OSS support available from SNET, while not capable of meeting the expectations of all interested parties, does not deny CLECs the opportunity to participate in the Connecticut telecommunications market; that SNET will be able to satisfy the demand for UNE support in the near future; that the actions of SNET during this engagement represented those of a company that is sincerely interested in identifying means to improve the level of service provided to CLECs in its market; and that the scope and scale of improvements made by SNET to the current OSS platform will be a function of management commitment by SBC to the Connecticut market and the corresponding efforts of the Department, OCC and Office of the Attorney General to demand such commitment of SNET. A copy of the Cap Gemini Report was filed with the Legislative Committee on Energy and Technology on November 1, B. DOCKET NO , DPUC REVIEW OF THE CONNECTICUT LIFELINE PROGRAM TRIBAL ENHANCEMENT By letter dated October 5, 2000, SNET requested to amend its Lifeline Plan in order to offer plan enhancements for eligible individuals living on Native American Tribal Lands in Connecticut pursuant to the FCC s Twelfth Report and Order. In this Order,

17 Docket No Page 12 the FCC adopted actions to encourage telecommunications subscribership and infrastructure deployment within American Indian and Alaska Native tribal communities. In light of the FCC s amendments, the Telco proposed an enhanced Lifeline Plan for qualifying low-income consumers living on tribal lands in Connecticut to include a lifeline credit of up to $30.25 per month. In addition, qualified Link Up applicants will receive a reduction on service connection charges, up to a maximum of $100. On December 21, 2000, the Department issued a Notice of Request for Written Comments seeking comments on the above FCC actions and how they affect Connecticut s Lifeline Program. The Department also sought comments on any disadvantages to Connecticut by not implementing the actions at this time; the cost of funding and administering the new program; and whether this progam has been successful elsewhere. Written Comments are due to the Department by January 15, 2001 which will form the basis of the Decision in this reopened proceeding. C. DOCKET NO RE01, DPUC EXPLORATION OF THE LIFELINE PROGRAM POLICY ISSUES ALTERNATIVE OPTIONS The Connecticut Lifeline Program provides customers with the ability to choose among local service options, provides subscribers with maximum choice in terms of service features and price; makes use of federal funds; permits participation by subscribers without interruption; is competitively neutral; and permits the application of Lifeline credits to customers bills regardless of their provider of basic service. By letter dated November 5, 1999, SNET proposed to offer a stand-alone Universal Service Assistance (USA) lifeline plan to eligible Connecticut telephone service subscribers. According to SNET s letter the proposed lifeline plan includes the discounts, subscriber eligibility, and eligible services that are comparable to the Ohio USA Lifeline plan set forth in Ameritech s Ohio Alternative Regulation Plan, Case No TP-ALT. SNET states that this lifeline proposal is being offered pursuant to the SBC - Ameritech Corporation (Ameritech) Merger Agreement approved by the FCC. As part of that agreement, SBC would offer a USA lifeline plan to all state commissions in the SBC states (except Ohio). By Decision dated December 20, 2000, the Department rejected the SBC standalone USA lifeline plan as an alternative option for qualified Lifeline subscribers in Connecticut because it was not in the public interest. The Department determined that adoption of the USA lifeline plan would not provide any additional benefits than those currently provided with the Connecticut Lifeline Program. The current Connecticut Lifeline Program has more programs to aid participants and addresses the needs of its subscribers. Participation in the current program is increasing and the Department does not believe the need exists for an additional program at this time. A copy of the December 20, 2000 Decision, is appended hereto as Attachment 3.

18 Docket No Page 13 D. DOCKET NO RE02, DPUC EXPLORATION OF THE LIFELINE PROGRAM POLICY ISSUES NEW LIFELINE PLAN By letter dated July 7, 2000, Verizon proposed to offer a stand-alone USA Lifeline plan to eligible telephone service subscribers. The proposed Lifeline plan includes the discounts, subscriber eligibility, and eligible services that are comparable to the Ohio USA Lifeline plan set forth in Ameritech s Ohio Alternative Regulation Plan, Case No TP-ALT. Verizon Proposed to offer this plan in its service territory pursuant to the Bell Atlantic Corporation GTE Corporation (BA/GTE) Merger Agreement approved by the FCC, whereby Verizon would offer a Universal Service Assistance (USA) Lifeline plan to all states served by Verizon/GTE (except Ohio). The Department reopened Docket No , for the limited purpose of reviewing Verizon s proposal and its effects on the existing Connecticut Lifeline Program. On December 21, 2000, the Department issued a Notice for Written Comments comparing the BA/GTE lifeline plan to the current existing Connecticut Lifeline Program. The Department also sought comments concerning the need to replace the existing state lifeline plan with the BA/GTE plan; any disadvantages to Connecticut by not implementing the BA/GTE plan at this time; the cost of funding and administering the BA/GTE plan; and whether the BA/GTE plan has been successful elsewhere. Written Comments are due to the Department by January 15, 2001 which will form the basis of the Decision in this reopened proceeding. E. DOCKET NO , APPLICATION OF BELL ATLANTIC-PROPOSED TARIFF FOR UNBUNDLED NETWORK ELEMENT - REBUNDLED SERVICE 11 Verizon (f/k/a BA-NY) filed with the Department on March 3, 1999, a limited set of proposed tariff offerings for bundled UNEs. Verizon stated that the proposed filing was consistent with the Department's requirements and policies that may need to change pursuant to the Third Report and Order in CC Docket No (Third Report and Order). By Decision dated May 17, 2000, the Department required Verizon to provide, through interconnection agreements, all UNE combinations that are technically feasible which are currently offered in New York and not included in its Connecticut tariff. The Department required that these combinations be offered under the same terms and conditions as in New York. The Department also required that new CLEC-requested combinations that are currently deployed in Verizon s network be offered as quickly as possible. Additionally, the Department required that CLECs submit up to five potential UNE combinations that they believed were consistent with the FCC s Third Report and Order and which the CLECs required to be tariffed for the provision of local exchange service. Regarding Verizon s proposed rates, the Department determined that it was appropriate to adopt in Connecticut, the rates and charges approved by the New York 11 Reference the Department s May 17, 2000 Decision in Docket No , Application of Bell Atlantic Proposed Tariff for Unbundled Network Elements Rebundled Service.

19 Docket No Page 14 Public Service Commission. The Department also required that any rate elements that are changed in New York, be revised in Connecticut within 10 business days after they become effective in New York. A copy of the May 17, 2000 Decision is appended hereto as Attachment 4. F. DOCKET NO , APPLICATION OF THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY FOR APPROVAL OF A PROPOSED TARIFF FOR UNBUNDLED NETWORK ELEMENT - REBUNDLED SERVICE Pursuant to a Department directive in the Decision dated August 17, 1998 in Docket No , DPUC Investigation into Rebundling of Telephone Company Network Elements, SNET filed its tariff for unbundled network elements-rebundled service (UNE-RS) for use by CLECs. The Department determined in that proceeding that it was appropriate to examine SNET s proposed UNE-RS to ensure compliance with pricing rules promulgated by the FCC. Additionally, the Department investigated SNET s compliance with previous Department filing requirements, evidence of bias pricing and compliance with Department and FCC requirements. In the February 9, 2000 Decision in this proceeding, the Department determined that the cost methodology utilized by the Telco was acceptable for the UNE-RS tariff filing. However, the Department determined that SNET s proposed Minute of Use (MOU) rate was inflated and that it should assume that 50% of all local calls are intraoffice, and adjust the MOU rate accordingly. The Department also rejected SNET s inclusion of the residual charge and ordered that it be deleted from the tariff. Additionally, the Department ordered the Telco to reflect a 25% joint and common cost level and a 50% reduction in the non-recurring charges included in this filing. A copy of the February 9, 2000 Decision, is appended hereto as Attachment 5. G. DOCKET NO , PETITION OF CTC COMMUNICATIONS CORP. AND PARTNER COMMUNICATIONS CORP. GROUP LLC FOR A DECLARATORY RULING By Petition for Declaratory Ruling, dated March 8, 1999, CTC Communications Corporation (CTC), requested that the Department order SNET to cease and desist in its unlawful and anticompetitive practices immediately. CTC alleged that SNET had refused to allow customers to assign contracts to resellers, refused to provide copies of customer contracts upon request, had required payment of additional common block charges, had required migrating customers to leave lines behind, had unilaterally changed due dates, had required unreasonable termination fees, does not provide a wholesale toll product or does not adhere to its tariffs and fails to provide detailed itemized bills to petitioners. CTC also argued that the termination penalties are an unreasonable restriction on resale and that they violate the 1996 Telcom Act. CTC further claims that when a customer migrates to a reseller of SNET services, SNET will continue to earn revenues from that customer; therefore, the termination fees are unreasonable. SNET argued that the Department is not required to disregard the terms and conditions of contracts to further competition in Connecticut. SNET added that the contracts are legally enforceable, allow for better terms and conditions for customers and are utilized throughout the industry. SNET does not believe that the Department