Recommendation (Regular)

DATE:	November 7, 2007
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Competitive Markets & Enforcement (M. Watts) Office of the General Counsel (McKay)
RE:	Docket No. 070629-TP – Joint petition of PAETEC Communications, Inc., holder of CLEC Certificate No. 5756 and IXC Registration No. TJ132, and US LEC of Florida Inc. d/b/a PAETEC Business Services, holder of CLEC Certificate No. 5311 and IXC Registration No. TJ057, for waiver of carrier selection requirements of Rule 25-4.118, F.A.C., to allow transfer of customers from US LEC to PAETEC due to intra-corporate merger of US LEC into PAETEC.
AGENDA:	11/20/07 – Regular Agenda – Proposed Agency Action – Interested Persons May Participate
COMMISSIONERS ASSIGNED:		All Commissioners
PREHEARING OFFICER:		Administrative
CRITICAL DATES:		None
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\CMP\WP\070629.RCM.DOC

Case Background

On September 27, 2007, PAETEC Communications, Inc. (PAETEC) and US LEC of Florida Inc. d/b/a PAETEC Business Services (US LEC), both competitive local exchange telecommunications companies (CLECs) and intrastate interexchange companies (IXCs), submitted a joint request for a waiver of the carrier selection requirements of Rule 25-4.118, Florida Administrative Code.

PAETEC is acquiring approximately 7,000 business customers currently served by US LEC. PAETEC seeks the waiver so it will not have to obtain each customer’s authorization. With the waiver, PAETEC can protect itself from possible complaints of unauthorized carrier changes (slamming). Customers will benefit because they will not be subject to a loss of service during the transfer. At the end of the transaction, US LEC will request cancellation of its CLEC certificate and IXC registration.

The Commission is vested with jurisdiction in this matter pursuant to Sections 364.02, 364.336, 364.337, and 364.603, Florida Statutes. Accordingly, staff believes the following recommendations are appropriate.

Discussion of Issues

Issue 1:

Should the Commission approve the request for waiver of the carrier selection requirements of Rule 25-4.118, Florida Administrative Code, in the transfer of US LEC of Florida Inc. d/b/a PAETEC Business Services’ customers to PAETEC Communications, Inc.?

Recommendation:

Yes, the Commission should approve the request for waiver of the carrier selection requirements of Rule 25-4.118, Florida Administrative Code. (M. Watts/McKay)

Staff Analysis:

Pursuant to Rule 25-4.118(1), Florida Administrative Code, a customer’s carrier cannot be changed without the customer’s authorization. Rule 25-4.118(2), Florida Administrative Code, provides that a carrier shall submit a change request only if one of the following has occurred:

(a) The provider has a letter of agency (LOA) . . . from the customer requesting the change;

(b) The provider has received a customer-initiated call for service . . . ;

(c) A firm that is independent and unaffiliated with the provider . . . has verified the customer’s requested change . . .

Pursuant to Rule 25-24.475(3), Florida Administrative Code, Rule 25-4.118, Florida Administrative Code, is incorporated into Chapter 25-24, and applies to IXCs.

Rule 25-24.455(2), Florida Administrative Code, states:

An IXC may petition for a waiver of any provision of this Part. The waiver shall be granted in whole, granted in Part or denied based on the following:

(a) The factors enumerated in Section 364.337(4), Florida Statutes;

(b) The extent to which competitive forces may serve the same function as, or obviate the necessity for, the provision sought to be waived;

(d) Whether the waiver is in the public interest.

Pursuant to Rule 25-24.845, Florida Administrative Code, Rule 25-4.118, Florida Administrative Code, is incorporated into Chapter 25-24, and applies to CLECs.

Section 364.337(2), Florida Statutes, states in pertinent part;

A certificated competitive local exchange telecommunications company may petition the commission for a waiver of some or all of the requirements of this chapter, except ss. 364.16, 364.336, and subsections (1) and (5). The commission may grant such petition if determined to be in the public interest.

The authority for Rule 25-4.118, Florida Administrative Code, is found in Section 364.603, Florida Statutes, which is a section the Commission is authorized to waive.

PAETEC has attested that it will provide for a seamless transition while ensuring that the affected customers understand available choices with the least amount of disruption to the customers. Staff has reviewed the notice that will be sent to US LEC’s customers and found it to be adequate. The customers should not experience any interruption of service, rate increase, or switching fees. In addition, PAETEC has agreed to resolve any customer complaints that arise from issues occurring prior to the transfer. As of the filing date of this recommendation, PAETEC has four open complaints and US LEC has one.

Further, neither PAETEC nor US LEC has any outstanding regulatory assessment fees, penalties or interest associated with its IXC registration or CLEC certification.

Staff believes that in this instance it is appropriate to waive the carrier selection requirements of Rule 25-4.118, Florida Administrative Code. If prior authorization is required in this event, customers may fail to respond to a request for authorization, neglect to select another carrier, and lose their local and long distance services. Furthermore, staff believes that granting this waiver will avoid unnecessary slamming complaints during this transition.

Therefore, staff recommends that the Commission approve the waiver of the carrier selection requirements of Rule 25-4.118, Florida Administrative Code, in the transfer of US LEC of Florida Inc. d/b/a PAETEC Business Services’ customers to PAETEC Communications, Inc.

Issue 2:

Should this docket be closed?

Recommendation:

If no person whose substantial interests are affected by the proposed agency action files a protest within 21 days of the issuance of the order, this docket should be closed upon the issuance of a consummating order. (McKay)

Staff Analysis: