STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
Illinois Commerce Commission
On Its Own Motion
Amendment of 83 Ill. Adm. Code 730.
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11-0622
SECOND NOTICE ORDER
By the Commission:
I. INTRODUCTION
On September 8, 2011, the Illinois Commerce Commission ("Commission") entered a first notice order authorizing the submission to the Secretary of State of the first notice of the proposed amendments to 83 Ill. Adm. Code 730, "Standards of Service for Local Exchange Telecommunications Carriers,” ("Part 730"). The proposed amendments reflect revisions to the Public Utilities Act ("Act"), 220 ILCS 5/1-101 et seq., stemming from Public Act 96-0927 ("PA 96-0927"). Telecommunications carriers are regulated by the Commission and subject to its rules pursuant to Article XIII of the Act. PA 96-0927 added a new Section 13-506.2, concerning "Electing Providers1," and amended Section 13-712, concerning basic local exchange service quality.
The proposed amendments were published in the Illinois Register on October 7, 2011, initiating the first notice period pursuant to Section 5-40(b) of the Illinois Administrative Procedure Act, 5 ILCS 100/1-1 et seq. MCImetro Access Transmission Services LLC d/b/a Verizon Access Transmission Services ("Verizon") and the Cable Television and Communications Association of Illinois ("CTCA") each petitioned to intervene. The Administrative Law Judge granted both petitions to intervene. On November 21, 2011, CTCA filed comments on the first notice rules. Verizon and Commission Staff ("Staff") each filed reply comments on December 7, 2011.
There have been no hearings held. The only changes in the proposed amendments are in response to technical and stylistic suggestions from the Joint Committee on Administrative Rules ("JCAR"). A Proposed Second Notice Order was served on the parties. CTCA filed a Brief on Exceptions. Staff filed a Brief in Reply to Exceptions. The Brief on Exceptions and Brief in Reply to Exceptions have been considered in the preparation of this Second Notice Order. With the end of the
1 Section 13-506.2(a)(1) of the Act defines "Electing Provider" as a telecommunications carrier that is subject to either rate regulation pursuant to Section 13-504 or Section 13-505 or alternative regulation pursuant to Section 13-506.1 and that elects to have the rates, terms, and conditions of its competitive retail telecommunications services solely determined and regulated pursuant to the terms of Article XIII of the Act. 11-0622
Second Notice Order
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statutorily-mandated first notice period, the Commission can now submit the second notice of the proposed amendments to JCAR.
II. PARTIES POSITIONS
A. CTCA Position
CTCA submits that the proposed amendments need further modification to conform Part 730 and other Commission rules to the language, policy, and purpose of the Act. In particular, CTCA claims that the proposed amendments would create unwarranted disparate regulation between Electing Providers and other providers of competitive services. CTCA contends that the intent of the statutory revisions made through PA 96-0927 is to eliminate outdated regulations, in favor of marketplace forces, and to level the playing field between carriers providing competitive services.
Part 730 currently states that the statutory authority for the regulations therein arises from Sections 8-301 and 13-712 of the Act. The proposed amendments to Part 730 would add Section 8-505 as a statutory basis for authority. Sections 8-301 (standards of service, examinations, and tests) and 8-505 (safety of plant, equipment, or other property) are made applicable to telecommunications carriers pursuant to Section 13-101 of the Act. Under PA 96-0927, the Commission retains its authority to enforce Section 13-101 as to Electing Providers “(n)otwithstanding other provisions of this section.” (See Section 13-506.2(k)) Consequently, CTCA observes, the Commission’s authority to impose regulations based on Sections 8-301 and 8-505 applies to both Electing Providers and to competitive providers. Moreover, CTCA continues, although Section 13-506.2(k) states that Section 13-712 no longer applies to Electing Providers, the specific service quality requirements of Section 13-712, as enumerated in Section 13-712(d), are now substantially included in Sections 13-506.2(e)(1) and (2) applicable to Electing Providers. Thus, CTCA concludes that the Commission’s statutory authority is fundamentally similar in application to both competitive providers and to Electing Providers.
CTCA claims, however, that the proposed amendments to Part 730 would subject Electing Providers and other competitive providers to differing levels of regulation not found in the Act. Specifically, CTCA is concerned by the Commission's proposal to revise Section 730.100(a) to state that Part 730 “does not apply to Electing Providers as defined in Section 13-506.2(a)(1) of the [Act]." Instead, CTCA understands that the Commission proposes to create a new Part 737, "Standards of Service and Customer Credits for Electing Providers." (See Docket No. 11-0624, Illinois Commerce Commission On Its Own Motion, Adoption of 83 Ill. Admin. Code 737) Because Part 737 as proposed does not incorporate all of the regulations found in Part 730, CTCA argues that the effect of the proposed amendments is that the Commission would remove a number of regulations from application to Electing Providers that would remain otherwise applicable to other competitive providers. CTCA relates that these regulations include Sections 730.200, 730.310, 730.320, 730.330, 730.400, 730.405, 730.410, 730.415, 730.420, 730.425, 730.430, 730.435, 730.440, 730.445, 730.450, 11-0622
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730.500, 730.505, 730.510, 730.715, and parts of 730.515, 730.520, 730.535, 730.540, and 730.545. CTCA therefore concludes that a disparity would be created in regulation between Electing Providers and other competitive providers.
Under the Commission’s current proposal, although all of the residential and business services of Electing Providers would be classified as competitive by statutory definition (See 13-506.2(c)), CTCA maintains that those services would be subject to less regulation than the same services of other competitive providers that would remain subject to Part 730. By continuing to apply to other competitive providers a number of the regulations in Part 730 that would be removed from Electing Providers, CTCA contends that the regulation in Illinois of competitive services would be distorted and irrational. According to CTCA, the policies of the State of Illinois may justify the elimination of the regulations proposed to be removed from Electing Providers, but this would also justify the removal of the same regulations from all competitive service providers, not just the Electing Providers.
CTCA insists that removal of such regulations from competitive providers would be consistent with the policies and intent of the General Assembly in the passage of PA 96-0927. CTCA cites the legislative transcript in support of its position. CTCA states that Rep. Kevin McCarthy, Chairman of the House Telecommunications Committee and chief sponsor of the underlying bill, stated that, “The fundamental purpose of the Bill is to eliminate outdated regulation to level the playing field ...” (96th General Assembly, House of Representatives Transcription Debate, 137th Legislative Day, May 5, 2010, p. 138) CTCA argues that it is the expressed intent in the passage of PA 96-0927 to allow market forces, rather than regulatory requirements, to regulate the provisioning of local services where there are competitive providers. To that purpose, CTCA states that PA 96-0927 sought to level the playing field as to the regulatory oversight of competing providers. CTCA fears that the proposed amendments to Part 730 do not level the playing field, but rather, tilt it in favor of an Electing Provider.
For the Commission to “eliminate outdated regulation to level the playing field,” CTCA maintains that the amendments to Part 730 must be consistently applied to all providers of competitive services. CTCA asserts that the regulations in Part 730 that the Commission proposes to continue to apply to competitive carriers are not required by any specific provisions of the Act. Where such additional regulations are not deemed necessary for the state’s largest provider of local exchange services, AT&T, which has declared itself an Electing Provider, CTCA contends that it would be inconsistent with the policy and purpose of PA 96-0927 to continue to impose such regulations on the substantially smaller competitive providers.
CTCA recommends that the statutory purpose of PA 96-0927 may be accomplished by removing both the Electing Providers and the other competitive providers from Part 730, and including both in the Commission’s proposal for a new Part 737. CTCA states that this would reflect similar regulatory requirements, subject to the specific requirements found in Section 13-506.2 and Section 13-712, respectively. To this end, CTCA proposes that Section 730.100(a) be amended as follows:11-0622
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Section 730.100 Application of Part
a) This Part shall apply to all local exchange carriers offering or providing either competitive or noncompetitive telecommunications services as defined in Sections 13-209 and 13-210 of the Universal Telephone Service Protection Law of 1985 (“Law”) [220 ILCS 5], except that Sections 730.115(b), 730.535(c), 730.540(d) and (e), and 730.545(h) and (i) are not applicable to telephone cooperatives as defined in Section 13-212 of the Law pursuant to Section 13-701 of the Law. This Part shall only apply to the relationship between a serving local exchange carrier and its end user. This Part shall not apply to the relationship between a serving local exchange carrier that provides wholesale facilities or services to another serving local exchange carrier for provisioning of services to its retail end user customers.
In addition, CTCA recommends corresponding changes to the Commission’s proposed new Part 737 reflecting similar regulatory requirements for Electing Providers and other competitive carriers, but with the specific requirements found in Sections 13-506.2 and 13-712. Attached to CTCA's comments on the first notice rule for Part 730 are its proposed changes to Part 737.
B. Staff Position
Staff disagrees with CTCA regarding the alleged deficiencies in the proposed Part 730 amendments and recommends that the Commission reject in their entirety the changes that CTCA recommends. Staff explains that PA 96-0927 created a new regulatory classification, termed "market regulation." Staff states that carriers that are regulated pursuant to Section 13-504, Section 13-505, or alternative regulation Section 13-506.1 are permitted to elect to have rates, terms, and conditions of their competitive retail services solely determined and regulated pursuant to market regulation. Staff relates that the proposed amendments to Part 730 adopted by the Commission on first notice afford all telecommunications carriers that elect market regulation identical treatment. While CTCA does not specifically define what it means when it refers to “other providers of competitive services” that receive disparate treatment, Staff presumes these to be telecommunications carriers that are providing competitive services that have not elected to be regulated pursuant to market regulation. Thus, Staff presumes CTCA's concern to be a disparity in treatment under Part 730 between carriers that have elected to be regulated pursuant to market regulation and those that have not.
As an initial matter, Staff asserts that nothing precludes “telecommunications carriers that are providing competitive services” from electing market regulation. Thus, telecommunications carriers that have not elected to be regulated pursuant to market regulation have it within their own power to elect market regulation and eliminate any disparity in regulation pursuant to the proposed Part 730. Therefore, Staff observes, 11-0622
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the remedy that CTCA seeks through its comments, parity in treatment under Part 730, is within the power of any competitive carrier to achieve through its election of market regulation.
Staff states further that the proposed amendments to Part 730 treat telecommunications carriers that have not elected to be regulated pursuant to market regulation differently from telecommunications carriers that have elected to be regulated pursuant to market regulation because that is precisely what the Act requires. Notwithstanding CTCA's assertions, Staff argues that the Act clearly and unequivocally creates different regulations for telecommunications carriers that have elected to be regulated pursuant to market regulation than for those that have not. To demonstrate its point, Staff points out that Electing Providers are required to provide certain specified optional packages of services or consumer safe harbor options. (See Section 13-506.2(d)) No such requirement is imposed on telecommunications carriers that have not elected to be regulated pursuant to market regulation. More pointedly, Staff states that the specific service quality requirements of Section 13-712 do not apply to telecommunications carriers that have elected to be regulated pursuant to market regulation. (See Section 13-506.2(k)) Staff insists that the Act unequivocally and indisputably provides for disparate treatment between telecommunications carriers that have and have not elected to be regulated pursuant to market regulation, despite CTCA's claims to the contrary.
According to Staff, CTCA's assertions about parity between the service quality requirements imposed in Section 13-712 on telecommunication carriers that have not elected market regulation and the service quality requirements imposed on telecommunication carriers that have elected market regulation in Section 13-506.2(e) are simply incorrect. In particular, Staff notes that Section 13-712 requirements apply to residential and business lines used for local exchange telecommunications service, while Section 13-506.2(e) requirements apply only to retail competitive residential stand-alone network access lines and residential safe harbor options. Thus, business lines which are mandated for inclusion in the Commission’s service quality rules for telecommunications carriers that are non-Electing Providers are excluded from the service quality requirement imposed upon Electing Providers. Conversely, Staff continues, Section 13-506.2(e) applies service quality requirements to residential safe harbor options, options that carriers that have not elected market regulation are not required to provide. Staff also observes that Section 13-712 specifies requirements that “at a minimum,” the Commission must include in its rules, while Section 13-506.2(e) specifies requirements, but omits such “at a minimum” discretionary language. In fact, Staff states further, Section 13-506.2(f) enforces this difference by including language that specifies that, with respect to the regulation of Electing Provider’s competitive retail telecommunications services, the Commission does not have jurisdiction over service quality (even in areas where prior to PA 96-0927 it did) unless expressly stated in Section 13-506.2. Additionally, Staff notes that Section 13-712 requires the Commission to require quarterly quality of service performance measurement and customer credit reports, while Section 13-506.2(e) requires quarterly reporting of customer credits and annual reports of performance data for such 11-0622
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measures. Staff states that such statutory differences between the service quality requirements imposed on Electing Providers and on telecommunications carriers that have not elected market regulation are the reason that it recommended that service quality requirements of Electing Providers and non-electing telecommunications carriers be addressed in different code parts. Even if one ignores all differences other than the fact that Section 13-712 applies to certain business services, while Section 13-506.2(e) does not apply to any business services, Staff believes that the service quality requirements imposed in the Commission’s rules on Electing Providers and non-electing telecommunications carriers must, by statute, differ.
C. Verizon Position
Verizon agrees that the intent behind PA 96-0927 is to eliminate outdated regulations, in favor of marketplace forces, and to level the playing field between carriers providing competitive services. Verizon therefore does not object to CTCA's proposed revisions to Part 730. But as a procedural matter, however, Verizon disagrees that the Commission can adopt – in this docket – revisions to proposed Part 737, as suggested by CTCA. Verizon asserts that this docket is limited to consideration of the adoption of revisions to Part 730. The Commission has initiated Docket No. 11-0624 to consider the adoption of Part 737. Verizon believes that Docket No. 11-0624 is the appropriate proceeding in which to address CTCA's concerns with proposed Part 737 and therefore does not address those issues in its reply comments.
III. COMMISSION CONCLUSION
The Commission understands the disparity concerns that CTCA raises, but is not convinced that the disparity is as severe as nor as unreasonable as CTCA would have the Commission believe. If amended as proposed, Part 730 would subject non-Electing Providers to greater regulation than Electing Providers under the currently proposed version of Part 737. This is clear from a comparison of the two rules, even if there is some overlap between the rules in various areas of regulation. But simply because the proposed Part 737 would be less stringent on Electing Providers than the modified Part 730 would be on other competitive non-Electing Providers does not mean that such disparity is inappropriate.
As Staff mentions, the Act now establishes a different regulatory scheme for Electing Providers and subjects Electing Providers to additional regulatory requirements not applicable to other competitive providers, such as the safe harbor provisions of Section 13-506.2(d). The Commission finds the different regulatory treatment reflected in the proposed revisions to Part 730 appropriate in relation to the regulatory scheme now reflected in the Act. The proposed modifications to Part 730 lessen the overall regulatory burden as contemplated by PA 96-0927 and do not contradict the Act.
Moreover, the Commission observes that telecommunications carriers have it within their power to be regulated pursuant to market regulation and remove all disparity in treatment between them and Electing Providers. By opting to become an Electing 11-0622
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Provider, a carrier could remove itself from under Part 730 (assuming for sake of argument that Part 730 is modified as proposed). Such a carrier would simply need to evaluate the perceived benefits of avoiding Part 730 compared to the somewhat different obligations imposed on Electing Providers by the Act. As for CTCA's modifications to the proposed Part 737, the Commission will address such issues in Docket No. 11-0624.
IV. FINDINGS AND ORDERING PARAGRAPHS
The Commission, having considered the entire record and being fully advised in the premises, is of the opinion and finds that:
(1) the Commission has jurisdiction over the parties hereto and the subject matter herein;
(2) the recitals of fact and law set forth in the prefatory portion of this Second Notice Order are supported by the record and are hereby adopted as findings of fact and conclusions of law; and
(3) the proposed amendments to Part 730, as reflected in the attached Appendix, should be submitted to JCAR to begin the second notice period.
IT IS THEREFORE ORDERED by the Illinois Commerce Commission that the proposed amendments to 83 Ill. Adm. Code 730, as reflected in the attached Appendix, be submitted to the Joint Committee on Administrative Rules, pursuant to Section 5-40(c) of the Illinois Administrative Procedure Act.
IT IS FURTHER ORDERED that this Second Notice Order is not final and is not subject to the Administrative Review Law.
By order of the Commission this 23rd day of February, 2012.
(SIGNED) DOUGLAS P. SCOTT
Chairman
