DATE:	February 16, 2006
TO:	Director, Division of the Commission Clerk & Administrative Services (Bayó)
FROM:	Division of Competitive Markets & Enforcement (Maduro, Bulecza-Banks, Casey, Fogleman, Mann) Office of the General Counsel (Fordham)
RE:	Docket No. 050542-TX – Petition for designation as eligible telecommunications carrier (ETC) by Ganoco, Inc. d/b/a American Dial Tone.
AGENDA:	02/28/06 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED:		All Commissioners
PREHEARING OFFICER:		Carter
CRITICAL DATES:		None
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\CMP\WP\050542.RCM.DOC

 

 Case Background

On August 11, 2005, Ganoco, Inc. d/b/a American Dial Tone petitioned the Florida Public Service Commission (FPSC or Commission) for designation as an Eligible Telecommunications Carrier (ETC) in the State of Florida.  Specifically, American Dial Tone requested that it be granted ETC status in certain exchanges of BellSouth Telecommunications, Inc. (BellSouth), Sprint-Florida, Inc. (Sprint) and Verizon Florida (Verizon) for purposes of receiving federal universal service support.  This is the third Competitive Local Exchange Carrier (CLEC) ETC petition to be brought before the Commission for consideration.[1]

The Commission has authority under Section 364.10(2), Florida Statutes (2005), to decide a petition by a CLEC seeking designation as an eligible telecommunications carrier pursuant to 47 C.F.R. s. 54.201.

American Dial Tone is a FPSC-certificated CLEC which provides prepaid local exchange services in the BellSouth, Sprint, and Verizon service areas.  In the Verizon and BellSouth areas, these services are provided using a combination of UNE-P services (UNEs) and resale services, whereas in Sprint areas, services are provided via resale.  Upon designation as an ETC, American Dial Tone indicates that it will participate in and offer Lifeline and Link-Up programs to qualified low income consumers.  Additionally, American Dial Tone has committed to publicize the availability of Lifeline and Link-Up services in a manner reasonably designed to reach those likely to qualify for those services.[2]

American Dial Tone is headquartered in Dunedin, Florida and was formed in 1999 to provide prepaid home phone service.  American Dial Tone has approximately 102 agents who market and sell various types of services in 37 cities in Florida.  To date, American Dial Tone has not filed for ETC designation nor is it seeking ETC status in any other state.  American Dial Tone indicates that its accounts with the Federal Communications Commission (FCC) and Universal Service Administrative Company (USAC) are current.  American Dial Tone is not aware of any outstanding complaints or violations from the FCC.

American Dial Tone is requesting that it be granted ETC status in 117 Sprint, 95 Verizon and 182 BellSouth wire centers.  Staff is recommending that American Dial Tone be granted ETC status in the requested BellSouth and Verizon non-rural wire centers.  However, because American Dial Tone has not consummated a UNE or similar agreement with Sprint, and because Sprint’s service is considered rural for universal service support purposes, and no public interest showing has been made for Sprint’s territory as required by law,[3] staff is not recommending that American Dial Tone receive ETC status in Sprint’s service area at this time.

Discussion of Issues

Issue 1: 

 Should American Dial Tone be granted ETC status in the State of Florida?

Recommendation: 

 Staff recommends that American Dial Tone be granted ETC status in the Verizon and BellSouth non-rural wire centers identified in Attachment A.  However, American Dial Tone should not be granted ETC status in Sprint’s service area unless a UNE or equivalent agreement is consummated between American Dial Tone and Sprint, and American Dial Tone makes a showing to the Commission that granting it ETC status in Sprint’s service area is in the public interest.  American Dial Tone should be required, at the time of annual ETC recertification, to demonstrate how it has used the universal service funds within Florida.  American Dial Tone should also be required to adhere to the new certification and reporting requirements as detailed in staff’s analysis should it decide to seek universal service high cost funds.  (Maduro, Mann, Casey, Bulecza-Banks)

Staff Analysis: 

 Federal Communications Commission (FCC) rules provide that carriers designated as ETCs shall, throughout the designated service area: (1) offer the services that are supported by federal universal support mechanisms either using their own facilities or a combination of their own facilities and the resale of another carrier’s services and, (2) advertise the availability of such services and the related charges therefore using media of general distribution.  See CFR §54.201(d).

American Dial Tone has identified  a total of 394 wire centers (117 Sprint, 95 Verizon and 182 BellSouth) in which it wishes to offer the services that are supported by federal universal support mechanisms.

ETC Certification Requirements

CFR Rule 54.201(c), addresses a state commission’s responsibilities related to ETC designation, stating:

Upon request and consistent with the public interest, convenience, and necessity, the state commission may, in the case of an area served by a rural telephone company, and shall, in the case of all other areas, designate more than one common carrier as an eligible telecommunications carrier for a service area designated by the state commission, so long as each additional requesting carrier meets the requirements of paragraph (d) of this section.  Before designating an additional eligible telecommunications carrier for an area served by a rural telephone company, the state commission shall find that the designation is in the public interest.

To qualify as an ETC, telecommunications carriers must provide nine services identified in CFR Rule 54.201(d)(1).

1)     Voice grade access to the public switched network  Voice grade access is defined as a functionality that enables a user of telecommunications services to transmit voice communications, including signaling the network that the caller wishes to place a call, and to receive voice communications, including receiving a signal indicating there is an incoming call;

2)     Local Usage Local usage indicates the amount of minutes of use of exchange service, provided free of charge to end users;

3)     Dual tone multi-frequency signaling or its functional equivalent  Dual tone multi-      frequency ("DTMF") is a method of signaling that facilitates the transportation of signaling through the network, thus shortening call set-up time;

4)     Single-party service or its functional equivalent  Single party service is telecommunications service that permits users to have exclusive use of a wireline subscriber loop or access line for each call placed, or in the case of wireless telecommunications carriers, which use spectrum shared among users to provide service, a dedicated message path for the length of a user's particular transmission;

5)     Access to emergency services  Access to emergency services includes access to   services, such as 911 and enhanced 911, provided by local governments or other public safety organizations;

6)     Access to operator services  Access to operator services is defined as access to any automatic or live assistance to a consumer to arrange for billing and/or completion, of a telephone call;

7)     Access to interexchange service  Access to interexchange service is defined as the use of the loop, as well as that portion of the switch that is paid for by the end user, or the functional equivalent of these network elements in the case of a wireless carrier, necessary to access an interexchange carrier’s network;

8)     Access to directory assistance  Access to directory assistance is defined as access to a service that includes, but is not limited to, making available to customers, upon request, information contained in directory listings; and

9)     Toll limitation for qualifying low-income consumers  Toll limitation or Blocking restricts all direct dial toll access.

In addition to providing the above services, ETC’s must advertise the availability of such services and the associated charges using media of general distribution.

New Certification and Reporting Requirements

The FCC’s rules currently require all ETCs to make an annual certification, on or before October 1, that high-cost universal service support will be used for its intended purposes.[4]  By Order No. FCC 05-46, the FCC maintained and augmented this requirement.  The FCC now requires every ETC designated by the FCC who desires high cost support to submit the following information on an annual basis starting October 1, 2006:

(1)       progress reports on the ETC’s five-year service quality improvement plan, including maps detailing progress towards meeting its plan targets, an explanation of how much universal service support was received and how the support was used to improve signal quality, coverage, or capacity; and an explanation regarding any network improvement targets that have not been fulfilled.  The information should be submitted at the wire center level;

(2)       detailed information on any outage lasting at least 30 minutes, for any service area in which an ETC is designated for any facilities it owns, operates, leases, or otherwise utilizes that potentially affect at least ten percent of the end users served in a designated service area, or that potentially affect a 911 special facility (as defined in subsection (e) of section 4.5 of the Outage Reporting Order).  An outage is defined as a significant degradation in the ability of an end user to establish and maintain a channel of communications as a result of failure or degradation in the performance of a communications provider’s network.  Specifically, the ETC’s annual report must include: (1) the date and time of onset of the outage; (2) a brief description of the outage and its resolution; (3) the particular services affected; (4) the geographic areas affected by the outage; (5) steps taken to prevent a similar situation in the future; and (6) the number of customers affected;

(3)       the number of requests for service from potential customers within its service areas that were unfulfilled for the past year.  The ETC must also detail how it attempted to provide service to those potential customers;

(4)       the number of complaints per 1,000 handsets or lines;

(5)       certification that the ETC is complying with applicable service quality standards and consumer protection rules;

(6)       certification that the ETC is able to function in emergency situations;[5]

(7)       certification that the ETC is offering a local usage plan comparable to that offered by the incumbent LEC in the relevant service areas; and

(8)       certification that the carrier acknowledges that the Commission may require it to provide equal access to long distance carriers in the event that no other eligible telecommunications carrier is providing equal access within the service area.

This newly required information will initially be due on October 1, 2006, and thereafter annually on October 1 of each year, at the same time as the carrier’s certification that the universal service funds are being used consistent with the Act.[6]  However, if the ETC does not seek high cost funding, this additional criterion is not required.

By Order No. PSC-05-0824-FOF-TL, issued August 15, 2005, Docket No. 010977-TL, In Re: State certification of rural telecommunications carriers pursuant to 47 C.F.R. 54.314, the FPSC adopted these new high-cost annual certification and reporting requirements established in Order No. FCC 05-46 for all FPSC designated ETCs desiring high cost support.  In the Order, the Commission noted that to the extent a Florida ETC believes that it has already submitted a report or information to us that would comply with the list above, it may certify in its annual letter which proceeding and on what date such report or information was provided to us, in lieu of resubmitting the required information.  However, if a company is not seeking high cost reimbursement, this additional criteria is not required.

Definition of “Rural” for Universal Service Purposes

Based on a Joint Board recommendation, in 1997, the FCC adopted for universal service purposes, a definition of rural carrier that mirrored the definition of “rural telephone company” found in section 3(37) of the Telecommunications Act (Act).  Pursuant to this definition, a rural telephone company is a local exchange carrier operating entity to the extent that the entity:

(A) provides common carrier service to any local exchange carrier study area that does not include either--

(i) any incorporated place of 10,000 inhabitants or more, or any part thereof, based on the most recently available population statistics of the Bureau of the Census; or

(ii) any territory, incorporated or unincorporated, included in an urbanized area, as defined by the Bureau of the Census as of August 10, 1993;

(B) provides telephone exchange service, including exchange access, to fewer than 50,000 access lines;

(C) provides telephone exchange service to any local exchange carrier study area with fewer than 100,000 access lines; or

(D) has less than 15 percent of its access lines in communities of more than 50,000 on February 8, 1996.

The FCC required carriers serving study areas with more than 100,000 access lines to file rural self-certifications in 2000 explaining how they met the criteria in subsections 3(37)(A) or (D).  Thereafter, such carriers were required to file only in the event of a change in their status.  On July 26, 2000, Sprint-Florida self-certified to the FCC as a rural carrier for purposes of universal service under subsection 3(37)(D) of the Act (See Attachment B).  Sprint explained that it serves three communities in Florida with populations greater than 50,000, Cape Coral, Deltona, and Tallahassee.  Sprint indicated that the total number of access lines served by Sprint in Florida was 2,160,161, and only 12.01% of Sprint’s Florida access lines were located in communities of more than 50,000.

The FCC is examining whether it should continue to use the statutory definition of “rural telephone company” to determine which carriers are rural carriers for high cost universal service purposes.  As noted in a October 7, 2004 Briefing Memorandum to Commissioners, the Joint Board sought comment on whether the statutory definition of “rural telephone company” should still be used.  To date, the FCC has received comments and reply comments, but no Order has been issued.

Since Sprint is presently classified as a rural carrier for purposes of universal service, any carrier requesting ETC status within Sprint’s territory must make a showing that it is in the public interest to do so.  CFR Rule 54.201(c) states that “Before designating an additional eligible telecommunications carrier for an area served by a rural telephone company, the state commission shall find that the designation is in the public interest.”

Congress did not establish specific criteria to be applied under the public interest tests. The public interest benefits of a particular ETC designation must be analyzed in a manner that is consistent with the purposes of the Act itself, including the fundamental goals of preserving and advancing universal service; ensuring the availability of quality telecommunications services at just, reasonable, and affordable rates; and promoting the deployment of advanced telecommunications and information services to all regions of the nation, including rural and high-cost areas.[7]

When initiating a public interest test for an ETC designation in a rural area, the FCC considers a variety of factors in the overall ETC determination, including a cost-benefit analysis of the benefits of increased consumer choice, and the unique advantages and disadvantages of the competitor’s service offering.  They also perform an examination to detect the potential for creamskimming effects if the applicant requests ETC status below the service area level.  The potential for creamskimming arises when an ETC seeks designation in a disproportionate share of the higher-density wire centers in an incumbent LEC’s service area.  By serving a disproportionate share of the high-density portion of a service area, an ETC may receive more support than is reflective of the rural incumbent LEC’s costs of serving that wire center because support for each line is based on the rural telephone company’s average costs for serving the entire service area unless the incumbent LEC has disaggregated its support. The FCC also considers if the designation of an ETC will affect the size and sustainability of the fund.  The FCC strongly encourages state commissions to consider the same factors in their public interest reviews.[8]

By Order No. PSC-05-0824-FOF-TL, issued August 15, 2005, Docket No. 010977-TL, In Re: State certification of rural telecommunications carriers pursuant to 47 C.F.R. 54.314, the FPSC certified to the FCC that ALLTEL Florida, Inc., Frontier Communications of the South, Inc., GTC, Inc., ITS Telecommunications Systems, Inc., Northeast Florida Telephone Company, Inc., d/b/a NEFCOM Communications, TDS Telecom, and Smart City Telecom will be using interstate high-cost universal service support in 2006 in a manner that complies with Section 254(e) of the federal Telecommunications Act of 1996.

Conclusion

The Commission has authority under Section 364.10(2), Florida Statutes (2005), to decide a petition by a CLEC seeking designation as an eligible telecommunications carrier pursuant to 47 C.F.R. s. 54.201.

American Dial Tone is a pre-paid telephone company and does not own any facilities in the State of Florida.  However, the FCC considers the provisioning of service through UNEs as meeting its requirement of using its own facilities.  American Dial Tone has the ability to meet the nine-point list of services that are supported by federal universal support mechanisms using its own facilities (as defined/clarified by the FCC)[9] or a combination of its own facilities and the resale of another carrier’s services.  American Dial Tone provided data to staff indicating that approximately 823 (or 20.02%) of its customers are being provided service through unbundled network elements, and also provided affidavits showing commercial agreements had been signed with BellSouth and Verizon.  American Dial Tone has not executed an agreement with Sprint to serve customers in the Sprint service area.  Therefore, American Dial Tone cannot meet the FCC’s requirement of using its own facilities in Sprint’s territory, making it ineligible to receive ETC status in Sprint’s area.  However, should American Dial Tone consummate a UNE or equivalent contract with Sprint, and make a showing to the Commission that granting American Dial Tone ETC status in Sprint’s service area is in the public interest, it should be granted ETC status in Sprint’s wire centers.

American Dial Tone has acknowledged the requirements of the Florida Lifeline program and has agreed to adhere to the program which provides qualified customers a total of $13.50 in Lifeline assistance credits consisting of: $6.50 in federal subscriber line charges, $1.75 in federal support for states that have approved the credit, and $1.75 which is a 50% match of federal support for having a state lifeline program requiring a $3.50 credit under the Florida eligibility criteria.  American Dial Tone indicates that it will provide the $3.50 credit to qualified clients, advertise the availability of Lifeline, and begin offering these services within 90 days of receiving ETC status.

American Dial Tone commits to use federal universal support only for the provision and maintenance of facilities used for telecommunications services.  Staff believes that American Dial Tone should be required, at the time of annual ETC recertification, to demonstrate how it has used the universal service funds within Florida.  Additionally, American Dial Tone has indicated that it will abide by all Florida Statutes, Rules, and Commission Orders regarding ETCs.

Based on the above, staff recommends that American Dial Tone be granted ETC status in the Verizon and BellSouth wire centers identified in Attachment A.  However, American Dial Tone should not be granted ETC status in Sprint’s service area unless it consummates a UNE or equivalent agreement between American Dial Tone and Sprint and American Dial Tone makes a showing to the Commission that granting it ETC status in Sprint’s service area is in the public interest.  American Dial Tone should be required, at the time of annual ETC recertification, to demonstrate how it has used the universal service funds within Florida.  American Dial Tone should also be required to adhere to the new certification and reporting requirements as detailed in staff’s analysis should it decide to seek universal service high cost funds.

Issue 2: 

 Should this docket be closed?

Recommendation: 

 Yes.  If no person whose substantial interests are affected files a protest to the Commission’s Proposed Agency Action within 21 days of the issuance of the Commission Order, this docket should be closed upon issuance of a consummating order.  (L. Fordham, P. Wiggins)

Staff Analysis: 

 If no person whose substantial interests are affected files a protest to the Commission’s Proposed Agency Action within 21 days of the issuance of the Commission Order, this docket should be closed upon issuance of a consummating order.

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Sprint	BLVWFLXADS0		Sprint	KSSMFLXADS0		Sprint	SBNGFLXADS1
Sprint	BNFYFLXARS0		Sprint	KSSMFLXBDS1		Sprint	SCPKFLXARS0
Sprint	BNSPFLXADS1		Sprint	KSSMFLXDRS0		Sprint	SGBHFLXARS0
Sprint	BSHNFLXARS0		Sprint	LBLLFLXADS0		Sprint	SHLMFLXADS0
Sprint	BVHLFLXADS0		Sprint	LDLKFLXARS0		Sprint	SLHLFLXARS0
Sprint	BWLGFLXARS0		Sprint	LEE FLXARS0		Sprint	SNANFLXARS0
Sprint	CHLKFLXARS0		Sprint	LHACFLXADS0		Sprint	SNDSFLXARS0
Sprint	CLMTFLXADS0		Sprint	LKBRFLXADS1		Sprint	SNISFLXARS0
Sprint	CLTNFLXARS0		Sprint	LKHLFLXARS0		Sprint	SNRSFLXARS0
Sprint	CPCRFLXADS0		Sprint	LKPCFLXARS0		Sprint	STCDFLXARS0
Sprint	CPCRFLXBDS1		Sprint	LSBGFLXADS1		Sprint	STRKFLXADS0
Sprint	CPHZFLXADS0		Sprint	MALNFLXARS0		Sprint	SVSPFLXARS0
Sprint	CRRVFLXARS0		Sprint	MDSNFLXADS0		Sprint	SVSSFLXARS0
Sprint	CRVWFLXADS0		Sprint	MNTIFLXADS0		Sprint	TLCHFLXARS0
Sprint	CSLBFLXADS1		Sprint	MRDCFLXARS0		Sprint	TLHSFLXADS0
Sprint	CYLKFLXADS0		Sprint	MRHNFLXARS0		Sprint	TLHSFLXBDS0
Sprint	CYLKFLXBRS0		Sprint	MRNNFLXADS0		Sprint	TLHSFLXCDS0
Sprint	DDCYFLXADS1		Sprint	MTDRFLXARS0		Sprint	TLHSFLXDDS0
Sprint	DESTFLXADS0		Sprint	MTLDFLXADS1		Sprint	TLHSFLXFDS0
Sprint	DFSPFLXADS0		Sprint	MTVRFLXARS0		Sprint	TLHSFLXGRL0
Sprint	ESTSFLXARS0		Sprint	NFMYFLXADS0		Sprint	TLHSFLXHDS0
Sprint	EVRGFLXARS1		Sprint	NFMYFLXBRS0		Sprint	TVRSFLXADS0
Sprint	FTMBFLXARS0		Sprint	NNPLFLXADS1		Sprint	UMTLFLXARS0
Sprint	FTMDFLXARS0		Sprint	NPLSFLXCDS0		Sprint	VLPRFLXADS0
Sprint	FTMYFLXADS0		Sprint	NPLSFLXDDS0		Sprint	WCHLFLXADS0
Sprint	FTMYFLXBRS0		Sprint	OCALFLXADS0		Sprint	WLSTFLXARS0
Sprint	FTMYFLXCDS2		Sprint	OCALFLXBDS0		Sprint	WLWDFLXARS0
Sprint	FTWBFLXADS0		Sprint	OCALFLXCRS0		Sprint	WNDRFLXARS0
Sprint	FTWBFLXBDS0		Sprint	OCALFLXJRS0		Sprint	WNGRFLXADS0
Sprint	GDRGFLXADS0		Sprint	OCNFFLXARS0		Sprint	WNPKFLXADS1
Sprint	GLGCFLXADS0		Sprint	OKCBFLXADS1		Sprint	WSTVFLXARS0
Sprint	GLRDFLXADS0		Sprint	OKLWFLXADS0		Sprint	ZLSPFLXARS0