Part 2. PUBLIC UTILITY COMMISSION OF TEXAS

Chapter 26. SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS

Subchapter A. GENERAL PROVISIONS

16 TAC §26.5

The Public Utility Commission of Texas (commission) proposes an amendment to §26.5 relating to Definitions.

The proposed amendment seeks to incorporate changes and additions required as a result of rulemakings in Project Number 21155, Rulemaking to Implement PURA Chapter 58 provisions relating to Customer Specific Contracts, Packaging Flexibility and Promotional Offerings ; Project Number 21156, Rulemaking to Implement PURA Chapter 58 provisions to Withdrawal of Election, Rate Caps and Rate Adjustments, Packaging Flexibility and Pricing for Non-Basic Services ; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings, Pricing and Packaging Flexibility Tariffs pursuant to PURA Chapters 52, 58 and 59 . This proposed amendment, through the aforementioned integration, will provide continuity with the provisions implemented by the 76th Legislature in Senate Bill 560 and the Public Utility Regulatory Act (PURA). Project Number 21169 is assigned to this proceeding. Project Number 21169 also will be employed to make later changes to the commission's substantive rules related to Senate Bill 560.

The proposed amendment also: (1) removes references to Chapter 23 as a result of the commission's reorganization of its rules and the move of the telecommunications-related substantive rules to Chapter 26, and; (2) modifies the definition of the term "electric utility" to comply with the new definition of electric utility in PURA and the commission's rules in Chapter 25, Substantive Rules Applicable to Electric Service Providers.

Rick Akin, Chief Policy Analyst, Office of Policy Development, has determined that for each year of the first five-year period the proposed amendment is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Akin has determined that for each year of the first five years the proposed amendment is in effect the public benefit anticipated as a result of enforcing the section will be to provide clear definitions for terms employed within the substantive rules that are consistent with the provisions of Senate Bill 560 and the Public Utility Regulatory Act. Such consistency in the definition of terms proposed by this amendment will facilitate understanding of the mandates imposed by Senate Bill 560 and PURA. There will be no effect on small businesses or micro-businesses as a result of enforcing this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Mr. Akin has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

Comments on the proposed amendment (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. All comments should refer to Project Number 21169.

This amendment is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998 and Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002.

§26.5. Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1)

Access customer -- Any user of access services which are obtained from a certificated telecommunications utility. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(2)

Access services -- Certificated telecommunications utility services which provide connections for or are related to the origination or termination of intrastate telecommunications services that are generally, but not limited to, interexchange services. [ In Chapter 23 of this title (relating to Substantive Rules), this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(3) - (11)

(No change.)

(12)

Basic network services (BNS) -- Those services identified [ as defined ] in PURA §58.051[ , and any other service the commission subsequently categorizes as a basic network service ].

(13) - (38)

(No change.)

(39)

Competitive exchange service -- Any of the following services, when provided on an inter- or intrastate basis within an exchange area: central office based PBX-type services for systems of 75 stations or more; billing and collection services; [ ( ]high speed private line services of 1.544 megabits or greater; customized services; private line and virtual private line services; resold or shared local exchange telephone services if permitted by tariff; dark fiber services; non-voice data transmission service when offered as a separate service and not as a component of basic local telecommunications service; dedicated or virtually dedicated access services; services for which a local exchange company has been granted authority to engage in pricing flexibility pursuant to §26.211 of this title (relating to Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges) [ §23.27 of this title (relating to Rate-Setting Flexibility) ]; any service initially provided within an exchange after October 26, 1992, if first provided by an entity other than the incumbent local exchange company (companies) certificated to provide service within that exchange; and any other service the commission declares is not local exchange telephone service.

(40) - (58)

(No change.)

(59)

Dedicated signaling transport -- Transmission of out-of-band signaling information between an access customer's common channel signaling network and a certificated telecommunications utility's signaling transport point on facilities dedicated to the use of a single customer. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(60)

(No change.)

(61)

Direct-trunked transport -- Transmission of traffic between the serving wire center and another certificated telecommunications utility's office, without intermediate switching. It is charged on a flat-rate basis.[ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(62) - (70)

(No change.)

(71)

Electric utility -- Except as provided in Chapter 25, Subchapter I, Division 1 of this title (relating to Substantive Rules Applicable to Electric Service Providers), an electric utility is:

[ (A) ]

A person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state. The term includes a lessee, trustee, or receiver of an electric utility and a recreational vehicle park owner who does not comply with Texas Utilities Code, Chapter 184, Subchapter C, with regard to the metered sale of electricity at the recreational vehicle park. The term does not include:

(A)

[ (i) ] a municipal corporation;

(B)

[ (ii) ] a qualifying facility;

(C)

a power generation company

(D)

[ (iii) ] an exempt wholesale generator;

(E)

[ (iv) ] a power marketer;

(F)

[ (v) ] a corporation described by Public Utility Regulatory Act §32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer; [ or ]

(G)

an electric cooperative;

(H)

a retail electric provider;

(I)

the state of Texas or an agency of the state; or

(J)

[ (vi) ] a person not otherwise an electric utility who:

(i)

[ (I) ] furnishes an electric service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others;

(ii)

[ (II) ] owns or operates in this state equipment or facilities to produce, generate, transmit, distribute, sell or furnish electric energy to an electric utility, if the equipment or facilities are used primarily to produce and generate electric energy for consumption by that person; or

(iii)

[ (III) ] owns or operates in this state a recreational vehicle park that provides metered electric service in accordance with Texas Utilities Code, Chapter 184, Subchapter C.

[ (B)

With respect to transmission service and ancillary service, the term includes municipally owned utilities and river authorities that are not otherwise subject to the commission's ratesetting authority.]

(72)

(No change.)

(73)

Eligible telecommunications provider (ETP) service area -- The geographic area, determined by the commission, containing high cost rural areas which are eligible for Texas Universal Service Funds support under §26.403 or §26.404 [ §23.133 or §23.134 ] of this title (relating to Texas High Cost Universal Service Plan (THCUSP) and Small and Rural Incumbent Local Exchange Company (ILEC) Universal Service Plan).

(74) - (82)

(No change.)

(83)

Extended local calling service (ELCS) -- Service provided pursuant to §26.219 and §26.221 of this title (relating to Administration of Expanded Local Calling Requests; and Applications to Establish or Increase Expanded Local Calling Scope Surcharges) [ §23.49(c) of this title (relating to Telephone Extended Area Service and Expanded Toll-free Local Calling Areas) ].

(84) - (95)

(No change.)

(96)

High cost assistance (HCA) -- A program administered by the commission in accordance with the provisions of §26.403 [ §23.133 ] of this title (relating to Texas High Cost Universal Service Plan (THCUSP) ) .

(97) - (99)

(No change.)

(100)

Informational notice -- That notice required to be filed in connection with nonbasic services, new service offerings, and pricing and packaging flexibility pursuant to PURA Chapters 52, 58, or 59.

(101)

[ (100) ] Information sharing program -- Instruction, learning, and training that is transmitted from one site to one or more sites by telecommunications services that are used by a library predominantly for such instruction, learning, or training, including video, data, voice, and electronic information.

(102)

[ (101) ] Integrated services digital network (ISDN) -- a digital network architecture that provides a wide variety of communications services, a standard set of user-network messages, and integrated access to the network. Access methods to the ISDN are the Basic Rate Interface (BRI) and the Primary Rate Interface (PRI).

(103)

[ (102) ] Interactive multimedia communications -- Real-time, two-way, interactive voice, video, and data communications conducted over networks that link geographically dispersed locations. This definition includes interactive communications within or between buildings on the same campus or library site.

(104)

[ (103) ] Intercept service -- A service arrangement provided by the local exchange carrier whereby calls placed to a disconnected or discontinued telephone number are intercepted and the calling party is informed by an operator or by a recording that the called telephone number has been disconnected, discontinued, changed to another number, or otherwise is not in service.

(105)

[ (104) ] Interconnection - Generally means: The point in a network where a customer's transmission facilities interface with the dominant carrier's network under the provisions of this section. More particularly [ particularily ] it means: The termination of local traffic [ ( ]including basic telecommunications service as delineated in §24.32 of this title (Relating to Universal Service) or integrated services digital network (ISDN) as defined in this section and/or extended area service/extended local calling service traffic of a certificated telephone utility (CTU) using the local access lines of another CTU, as described in section §26.272(d)(4)(A) [ §23.97(d)(4)(A)(i) ] of this title (relating to Interconnection). Interconnection shall include non-discriminatory access to signaling systems, databases, facilities and information as required to ensure interoperability of networks and efficient, timely provision of services to customers without permitting access to network proprietary information or customer proprietary network information, as defined in this section [ §23.57 of this title (relating to Telecommunications Privacy) ], unless otherwise permitted in §26.272 [ §23.97 ] of this title.

(106)

[ (105) ] Interconnector -- A customer that interfaces with the dominant carrier's network under the provisions of §26.271 [ §23.92 ] of this title (relating to Expanded Interconnection).

(107)

[ (106) ] Interexchange carrier (IXC) -- A carrier providing any means of transporting intrastate telecommunications messages between local exchanges, but not solely within local exchanges, in the State of Texas. The term may include a certificated telecommunications utility (CTU) or CTU affiliate to the extent that it is providing such service. An entity is not an IXC solely because of:

(A)

the furnishing, or furnishing and maintenance of a private system;

(B)

the manufacture, distribution, installation, or maintenance of customer premises equipment;

(C)

the provision of services authorized under the FCC's Public Mobile Radio Service and Rural Radio Service rules; or

(D)

the provision of shared tenant service.

(108)

[ (107) ] Interoffice trunks -- Those communications circuits which connect central offices.

(109)

[ (108) ] IntraLATA equal access -- The ability of a caller to complete a toll call in a local access and transport area (LATA) using his or her provider of choice by dialing "1" or "0" plus an area code and telephone number.

(110)

[ (109) ] Intrastate -- Refers to communications which both originate and terminate within Texas state boundaries.

(111)

[ (110) ] Least cost technology -- The technology, or mix of technologies, that would be chosen in the long run as the most economically efficient choice. The choice of least cost technologies, however, shall:

(A)

be restricted to technologies that are currently available on the market and for which vendor prices can be obtained;

(B)

be consistent with the level of output necessary to satisfy current demand levels for all services using the basic network function in question; and

(C)

be consistent with overall network design and topology requirements.

(112)

[ (111) ] License -- The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law.

(113)

[ (112) ] Licensing -- The commission process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license.

(114)

[ (113) ] Lifeline Service -- A program certified by the Federal Communications Commission to provide for the reduction or waiver of the federal subscriber line charge for residential consumers.

(115)

[ (114) ] Line -- A circuit or channel extending from a central office to the customer's location to provide telecommunications service. One line may serve one customer, or all customers served by a multiparty line.

(116)

[ (115) ] Local access and transport area (LATA) -- A geographic area established for the provision and administration of communications service. It encompasses one or more designated exchanges, which are grouped to serve common social, economic and other purposes. For purposes of these rules, market areas, as used and defined in the Modified Final Judgment and the GTE Final Judgment, are encompassed in the term local access and transport area.

(117)

[ (116) ] Local call -- A call within the certificated telephone utility's toll-free calling area including calls which are made toll-free through a mandatory extended area service (EAS) or expanded local calling (ELC) proceeding.

(118)

[ (117) ] Local calling area -- The area within which telecommunications service is furnished to customers under a specific schedule of exchange rates. A local calling area may include more than one exchange area.

(119)

[ (118) ] Local exchange company (LEC) -- A telecommunications utility that has been granted either a certificate of convenience and necessity or a certificate of operating authority to provide local exchange telephone service, basic local telecommunications service, or switched access service within the state. A local exchange company is also referred to as a local exchange carrier.

(120)

[ (119) ] Local exchange telephone service or local exchange service -- A telecommunications service provided within an exchange to establish connections between customer premises within the exchange, including connections between a customer premises and a long distance provider serving the exchange. The term includes tone dialing service, service connection charges, and directory assistance services offered in connection with basic local telecommunications service and interconnection with other service providers. The term does not include the following services, whether offered on an intraexchange or interexchange basis:

(A)

central office based PBX-type services for systems of 75 stations or more;

(B)

billing and collection services;

(C)

high-speed private line services of 1.544 megabits or greater;

(D)

customized services;

(E)

private line or virtual private line services;

(F)

resold or shared local exchange telephone services if permitted by tariff;

(G)

dark fiber services;

(H)

non-voice data transmission service offered as a separate service and not as a component of basic local telecommunications service;

(I)

dedicated or virtually dedicated access services;

(J)

a competitive exchange service; or

(K)

any other service the commission determines is not a "local exchange telephone service."

(121)

[ (120) ] Local message -- A completed call between customer access lines located within the same local calling area.

(122)

[ (121) ] Local message charge -- The charge that applies for a completed telephone call that is made when the calling customer access line and the customer access line to which the connection is established are both within the same local calling area, and a local message charge is applicable.

(123)

[ (122) ] Local service charge -- The charge for furnishing facilities to enable a customer to send or receive telecommunications within the local calling area. This local calling area may include more than one exchange area.

(124)

[ (123) ] Local telecommunications traffic --

(A)

Telecommunications traffic between a dominant certificated telecommunications utility (DCTU) and a telecommunications carrier other than a commercial mobile radio service (CMRS) provider that originates and terminates within the mandatory single or multi-exchange local calling area of a DCTU including the mandatory extended area service (EAS) areas served by the DCTU; or

(B)

Telecommunications traffic between a DCTU and a CMRS provider that, at the beginning of the call, originates and terminates within the same major trading area.

(125)

[ (124) ] Long distance telecommunications service -- That part of the total communication service rendered by a telecommunications utility which is furnished between customers in different local calling areas in accordance with the rates and regulations specified in the utility's tariff.

(126)

[ (125) ] Long run -- A time period long enough to be consistent with the assumption that the company is in the planning stage and all of its inputs are variable and avoidable.

(127)

[ (126) ] Long run incremental cost (LRIC) -- The change in total costs of the company of producing an increment of output in the long run when the company uses least cost technology. The LRIC should exclude any costs that, in the long run, are not brought into existence as a direct result of the increment of output.

(128)

[ (127) ] Mandatory minimum standards -- The standards established by the Federal Communications Commission, outlining basic mandatory telecommunication relay services.

(129)

[ (128) ] Meet point billing -- An access billing arrangement for services to access customers when local transport is jointly provided by more than one certificated telecommunications utility. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(130)

[ (129) ] Message -- A completed customer telephone call.

(131)

[ (130) ] Message rate service -- A form of local exchange service under which all originated local messages are measured and charged for in accordance with the utility's tariff.

(132)

[ (131) ] Minor change -- A change, including the restructuring of rates of existing services, that decreases the rates or revenues of the small local exchange company (SLEC) or that, together with any other rate or proposed or approved tariff changes in the 12 months preceding the date on which the proposed change will take effect, results in an increase of the SLEC's total regulated intrastate gross annual revenues by not more than 5.0%. Further, with regard to a change to a basic local access line rate, a minor change may not, together with any other change to that rate that went into effect during the 12 months preceding the proposed effective date of the proposed change, result in an increase of more than 10%.

(133)

[ (132) ] Municipality -- A city, incorporated village, or town, existing, created, or organized under the general, home rule, or special laws of the state.

(134)

[ (133) ] National integrated services digital network (ISDN) -- the standards and services promulgated for integrated services digital network by Bellcore.

(135)

[ (134) ] Negotiating party -- A certificated telecommunications utility (CTU) or other entity with which a requesting CTU seeks to interconnect in order to complete all telephone calls made by or placed to a customer of the requesting CTU.

(136)

[ (135) ] New service -- Any service not offered on a tariffed basis prior to the date of the application relating to such service and specifically excludes basic local telecommunications service including local measured service. If a proposed service could serve as an alternative or replacement for a service offered prior to the date of the new-service application and does not provide significant improvements (other than price) over, or significant additional services not available under, a service offered prior to the date of such application, it shall not be considered a new service.

(137)

Nonbasic services -- Those services identified in PURA §58.151, including any service reclassified by the commission pursuant to PURA §58.024.

(138)

[ (136) ] Non-discriminatory -- Type of treatment that is not less favorable than that an interconnecting certificated telecommunications utility (CTU) provides to itself or its affiliates or other CTUs.

(139)

[ (137) ] Non-dominant certificated telecommunications utility (NCTU) -- A certificated telecommunications utility (CTU) that is not a dominant certificated telecommunications utility (DCTU) and has been granted a certificate of convenience and necessity (CCN) (after September 1, 1995, in an area already certificated to a DCTU), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA) to provide local exchange service.

(140)

[ (138) ] Nondominant carrier --

(A)

An interexchange telecommunications carrier (including a reseller of interexchange telecommunications services).

(B)

Any of the following that is not a dominant carrier:

(i)

a specialized communications common carrier;

(ii)

any other reseller of communications;

(iii)

any other communications carrier that conveys, transmits, or receives communications in whole or in part over a telephone system; or

(iv)

a provider of operator services that is not also a subscriber.

(141)

[ (139) ] Open network architecture -- The overall design of an incumbent local exchange company's (ILEC's) network facilities and services to permit all users of the network, including the enhanced services operations of an ILEC and its competitors, to interconnect to specific basic network functions on an unbundled and non-discriminatory basis.

(142)

[ (140) ] Operator service -- Any service using live operator or automated operator functions for the handling of telephone service, such as local collect, toll calling via collect, third number billing, credit card, and calling card services. The transmission of "1-800" and "1-888" numbers, where the called party has arranged to be billed, is not operator service.

(143)

[ (141) ] Operator service provider (OSP) -- Any person or entity that provides operator services by using either live or automated operator functions. When more than one entity is involved in processing an operator service call, the party setting the rates shall be considered to be the OSP. However, subscribers to customer-owned pay telephone service shall not be deemed to be OSPs.

(144)

[ (142) ] Originating line screening (OLS) -- A two digit code passed by the local switching system with the automatic number identification (ANI) at the beginning of a call that provides information about the originating line.

(145)

[ (143) ] Out-of-service trouble report -- An initial customer trouble report in which there is complete interruption of incoming or outgoing local exchange service. On multiple line services a failure of one central office line or a failure in common equipment affecting all lines is considered out of service. If an extension line failure does not result in the complete inability to receive or initiate calls, the report is not considered to be out of service.

(146)

[ (144) ] Partial deregulation -- The ability of a cooperative to offer new services on an optional basis and/or change its rates and tariffs under the provisions of the Public Utility Regulatory Act, §§53.351 - 53.359.

(147)

[ (145) ] Pay-per-call-information services -- Services that allow a caller to dial a specified 1-900-XXX-XXXX or 976-XXXX number. Such services routinely deliver, for a predetermined (sometimes time-sensitive) fee, a pre-recorded or live message or interactive program. Usually a telecommunications utility will transport the call and bill the end-user on behalf of the information provider.

(148)

[ (146) ] Pay telephone access service (PTAS) -- A service offered by a certificated telecommunications utility which provides a two-way, or optionally, a one-way originating-only business access line composed of the serving central office line equipment, all outside plant facilities needed to connect the serving central office with the customer premises, and the network interface; this service is sold to pay telephone service providers.

(149)

[ (147) ] Pay telephone service (PTS) -- A telecommunications service utilizing any coin, coinless, credit card reader, or cordless instrument that can be used by members of the general public, or business patrons, employees, and/or visitors of the premise's owner, provided that the end user pays for local or toll calls from such instrument on a per call basis. Pay per call telephone service provided to inmates of confinement facilities is PTS. For purposes of this section, coinless telephones provided in guest rooms by a hotel/motel are not pay telephones. A telephone that is primarily used by business patrons, employees, and/or visitors of the premise's owner is not a pay telephone if all local calls and "1-800" and "1-888" type calls from such telephone are free to the end user.

(150)

[ (148) ] Per-call blocking -- A telecommunications service provided by a telecommunications provider that prevents the transmission of calling party information to a called party on a call-by-call basis.

(151)

[ (149) ] Per-line blocking -- A telecommunications service provided by a telecommunications utility that prevents the transmission of calling party information to a called party on every call, unless the calling party acts affirmatively to release calling party information.

(152)

[ (150) ] Percent interstate usage (PIU) -- An access customer-specific ratio or ratios determined by dividing interstate access minutes by total access minutes. The specific ratio shall be determined by the certificated telecommunications utility (CTU) unless the CTU's network is incapable of determining the jurisdiction of the access minutes. A PIU establishes the jurisdiction of switched access usage for determining rates charged to switched access customers and affects the allocation of switched access revenue and costs by CTUs between the interstate and intrastate jurisdictions.[ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(153)

[ (151) ] Person -- Any natural person, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or public or private organization of any character other than an agency.

(154)

[ (152) ] Pleading -- A written document submitted by a party, or a person seeking to participate in a proceeding, setting forth allegations of fact, claims, requests for relief, legal argument, and/or other matters relating to a proceeding.

(155)

[ (153) ] Prepaid local telephone service (PLTS) -- Prepaid local telephone service means:

(A)

voice grade dial tone residential service consisting of flat rate service or local measured service, if chosen by the customer and offered by the dominant certificated telecommunications utility (DCTU);

(B)

if applicable, mandatory services, including extended area service, extended metropolitan service, or expanded local calling service;

(C)

tone dialing service;

(D)

access to 911 service;

(E)

access to dual party relay service;

(F)

the ability to report service problems seven days a week;

(G)

access to business office;

(H)

primary directory listing;

(I)

toll blocking service; and

(J)

non-published service and non-listed service at the customer's option.

(156)

[ (154) ] Premises -- A tract of land or real estate including buildings and other appurtenances thereon.

(157)

[ (155) ] Pricing flexibility -- Discounts and other forms of pricing flexibility may not be preferential, prejudicial, or discriminatory. Pricing flexibility includes:

(A)

customer specific contracts;

(B)

volume, term, and discount pricing;

(C)

zone density pricing;

(D)

packaging of services; and

(E)

other promotional pricing flexibility.

(158)

[ (156) ] Primary interexchange carrier (PIC) -- The provider chosen by a customer to carry that customer's toll calls.

(159)

[ (157) ] Primary interexchange carrier (PIC) freeze indicator -- An indicator that the end user has directed the certificated telecommunications utility to make no changes in the end user's PIC.

(160)

[ (158) ] Primary rate interface (PRI) integrated services digital network (ISDN) -- One of the access methods to ISDN, the 1.544-Mbps PRI comprises either twenty-three 64 Kbps B-channels and one 64 Kbps D-channel (23B+D) or twenty-four 64 Kbps B-channels (24B) when the associated call signaling is provided by another PRI in the group.

(161)

[ (159) ] Primary service -- The initial provision of voice grade access between the customer's premises and the switched telecommunications network. This includes the initial connection to a new customer or the move of an existing customer to a new premises but does not include complex services.

(162)

[ (160) ] Print translations -- The temporary storage of a message in an operator's screen during the actual process of relaying a conversation.

(163)

[ (161) ] Privacy issue -- An issue that arises when a telecommunications provider proposes to offer a new telecommunications service or feature that would result in a change in the outflow of information about a customer. The term privacy issue is to be construed broadly. It includes, but is not limited to, changes in the following:

(A)

the type of information about a customer that is released;

(B)

the customers about whom information is released;

(C)

the entity or entities to whom the information about a customer is released;

(D)

the technology used to convey the information;

(E)

the time at which the information is conveyed; and

(F)

any other change in the collection, use, storage, or release of information.

(164)

[ (162) ] Private line -- A transmission path that is dedicated to a customer and that is not connected to a switching facility of a telecommunications utility, except that a dedicated transmission path between switching facilities of interexchange carriers shall be considered a private line.

(165)

[ (163) ] Proceeding -- A hearing, investigation, inquiry, or other procedure for finding facts or making a decision. The term includes a denial of relief or dismissal of a complaint. It may be rulemaking or nonrulemaking; rate setting or non-rate setting.

(166)

[ (164) ] Promotional rate -- A temporary tariff, fare, toll, rental or other compensation charged by a certificated telecommunications utility (DCTU) to new or new and existing customers and designed to induce customers to test a service. A promotional rate shall incorporate a reduction or a waiver of some rate element in the tariffed rates of the service, or a reduction or waiver of the service's installation charge and/or service connection charges, and shall not incorporate any charge for discontinuance of the service by the customer. Such rates may not be offered for basic local telecommunications service, including local measured service.

(167)

[ (165) ] Provider of pay telephone service -- The entity that purchases pay telephone access service (PTAS) from a certificated telecommunications utility (CTU) and registers with the Public Utility Commission as a provider of pay telephone service (PTS) to end users.

(168)

[ (166) ] Public utility or utility -- A person or river authority that owns or operates for compensation in this state equipment or facilities to convey, transmit, or receive communications over a telephone system as a dominant carrier. The term includes a lessee, trustee, or receiver of any of those entities, or a combination of those entities. The term does not include a municipal corporation. A person is not a public utility solely because the person:

(A)

furnishes or furnishes and maintains a private system;

(B)

manufactures, distributes, installs, or maintains customer premise communications equipment and accessories; or

(C)

furnishes a telecommunications service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others.

(169)

[ (167) ] Public Utility Regulatory Act (PURA) -- The enabling statute for the Public Utility Commission of Texas, located in the Texas Utilities Code Annotated, §§11.001 - 64.158 [ 63.063 ], (Vernon 1998 , Supplement 2000 ).

(170)

[ (168) ] Qualifying low-income consumer -- A consumer that participates in one of the following programs: Medicaid, food stamps, Supplemental Security Income, federal public housing assistance, or Low-Income Home Energy Assistance Program.

(171)

[ (169) ] Qualifying services --

(A)

residential flat rate basic local exchange service;

(B)

residential local exchange access service; and

(C)

residential local area calling usage.

(172)

[ (170) ] Rate -- Includes:

(A)

any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a public utility for a service, product, or commodity, described in the definition of utility in the Public Utility Regulatory Act §§31.002 or 51.002; and

(B)

a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification.

(173)

[ (171) ] Reciprocal compensation -- An arrangement between two carriers in which each of the two carriers receives compensation from the other carrier for the transport and termination on each carrier's network facilities of local telecommunications traffic that originates on the network facilities of the other carrier.

(174)

[ (172) ] Reclassification area -- The geographic area within the electing ILEC's territory, consisting of one or more exchange areas, for which it seeks reclassification of a service.

(175)

[ (173) ] Redirect the call -- A procedure used by operator service providers (OSPs) that transmits a signal back to the originating telephone instrument that causes the instrument to disconnect the OSP's connection and to redial the digits originally dialed by the caller directly to the local exchange carrier's network.

(176)

[ (174) ] Regulatory authority -- In accordance with the context where it is found, either the commission or the governing body of a municipality.

(177)

[ (175) ] Relay Texas Advisory Committee (RTAC) -- The committee authorized by the Public Utility Regulatory Act, §56.110 and 1997 Texas General Laws Chapter 149.

(178)

[ (176) ] Relay Texas -- The name by which telecommunications relay service in Texas is known.

(179)

[ (177) ] Relay Texas administrator -- The individual employed by the commission to oversee the administration of statewide telecommunications relay service.

(180)

[ (178) ] Repeated trouble report -- A customer trouble report regarding a specific line or circuit occurring within 30 days or one calendar month of a previously cleared trouble report on the same line or circuit.

(181)

[ (179) ] Residual charge -- The per-minute charge designed to account for historical contribution to joint and common costs made by switched transport services.

(182)

[ (180) ] Retail service -- A telecommunications service is considered a retail service when it is provided to residential or business end users and the use of the service is other than resale. Each tariffed or contract offering which a customer may purchase to the exclusion of other offerings shall be considered a service. For example: the various mileage bands for standard toll services are rate elements, not services; however, individual optional calling plans that can be purchased individually and which are offered as alternatives to each other are services, not rate elements.

(183)

[ (181) ] Return-on-assets -- After-tax net operating income divided by total assets.

(184)

[ (182) ] Reversal of partial deregulation -- The ability of a minimum of 10% of the members of a partially deregulated cooperative to request, in writing, that a vote be conducted to determine whether members prefer to reverse partial deregulation. Ten percent shall be calculated based upon the total number of members of record as of the calendar month preceding receipt of the request from members for reversal of partial deregulation.

(185)

[ (183) ] Rule -- A statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the commission. The term includes the amendment or repeal of a prior rule but does not include statements concerning only the internal management or organization of the commission and not affecting private rights or procedures.

(186)

[ (184) ] Rulemaking proceeding -- A proceeding conducted pursuant to the Administrative Procedure Act, Texas Government Code, §§2001.021 - 2001.037 to adopt, amend, or repeal a commission rule.

(187)

[ (185) ] Rural incumbent local exchange company (ILEC) -- An ILEC that qualifies as a "rural telephone company" as defined in 47 United States Code §3(37) and/or 47 United States Code §251(f)(2).

(188)

[ (186) ] Selective routing -- The feature provided with 311 service by which 311 calls are automatically routed to the 311 answering point for serving the place from which the call originates.

(189)

[ (187) ] Separation -- The division of plant, revenues, expenses, taxes, and reserves applicable to exchange or local service if these items are used in common to provide public utility service to both local exchange telephone service and other service, such as interstate or intrastate toll service.

(190)

[ (188) ] Service -- Has its broadest and most inclusive meaning. The term includes any act performed, anything supplied, and any facilities used or supplied by a public utility in the performance of the utility's duties under the Public Utility Regulatory Act to its patrons, employees, other public utilities, and the public. The term also includes the interchange or facilities between two or more public utilities. The term does not include the printing, distribution, or sale of advertising in a telephone directory.

(191)

[ (189) ] Service connection charge -- A charge designed to recover the costs of non-recurring activities associated with connection of local exchange telephone service.

(192)

[ (190) ] Service provider -- Any entity that offers a product or service to a customer and that directly or indirectly charges to or collects from a customer's bill an amount for the product or service on a customer's bill received from a billing telecommunications utility.

(193)

[ (191) ] Service provider certificate of operating authority (SPCOA) reseller -- A holder of a service provider certificate of operating authority that uses only resold telecommunications services provided by an incumbent local exchange company (ILEC) or by a certificate of operating authority (COA) holder or by a service provider certificate of operating authority (SPCOA) holder.

(194)

[ (192) ] Service restoral charge -- A charge applied by the DCTU to restore service to a customer's telephone line after it has been suspended by the DCTU.

(195)

[ (193) ] Serving wire center (SWC) -- The certificated telecommunications utility designated central office which serves the access customer's point of demarcation. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(196)

[ (194) ] Signaling for tandem switching -- The carrier identification code (CIC) and the OZZ code or equivalent information needed to perform tandem switching functions. The CIC identifies the interexchange carrier and the OZZ digits identify the call type and thus the interexchange carrier trunk to which traffic should be routed.

(197)

[ (195) ] Small certificated telecommunications utility (CTU) -- A CTU with fewer than 2.0% of the nation's subscriber lines installed in the aggregate nationwide.

(198)

[ (196) ] Small local exchange company (SLEC) -- Any incumbent certificated telecommunications utility as of September 1, 1995, that has fewer than 31,000 access lines in service in this state, including the access lines of all affiliated incumbent local exchange companies within the state, or a telephone cooperative organized pursuant to the Telephone Cooperative Act, Texas Utilities Code Annotated, Chapter 162.

(199)

[ (197) ] Small incumbent local exchange company (Small ILEC) -- An incumbent local exchange company that is a cooperative corporation or has, together with all affiliated incumbent local exchange companies, fewer than 31,000 access lines in service in Texas.

(200)

[ (198) ] Spanish speaking person -- a person who speaks any dialect of the Spanish language exclusively or as their primary language.

(201)

[ (199) ] Special access -- A transmission path connecting customer designated premises to each other either directly or through a hub or hubs where bridging, multiplexing or network reconfiguration service functions are performed and includes all exchange access not requiring switching performed by the dominant carrier's end office switches.

(202)

[ (200) ] Specialized Telecommunications Assistance Program (STAP) -- The program described in Substantive Rule §26.415 of this title (relating to Specialized Telecommunications Assistance Program).

(203)

[ (201) ] Specialized Telecommunications Assistance Program (STAP) voucher -- A voucher issued by the Texas Commission for the Deaf and Hard of Hearing under the equipment distribution program, in accordance with its rules, that an eligible individual may use to acquire eligible specialized telecommunications devices from a vendor of such equipment.

(204)

[ (202) ] Stand-alone costs -- The stand-alone costs of an element or service are defined as the forward-looking costs that an efficient entrant would incur in providing only that element or service.

(205)

[ (203) ] Station -- A telephone instrument or other terminal device.

(206)

[ (204) ] Study area -- An incumbent local exchange company's (ILEC's) existing service area in a given state.

(207)

[ (205) ] Supplemental services -- Telecommunications features or services offered by a certificated telecommunications utility for which analogous services or products may be available to the customer from a source other than a dominant certificated telecommunications utility. Supplemental services shall not be construed to include optional extended area calling plans that a dominant certificated telecommunications utility may offer pursuant to §26.217 of this title (relating to Administration of Extended Area Service (EAS) Requests) [ §23.49 of this title (relating to Telephone Extended Area Service (EAS) and Expanded Toll-free Local Calling Area) ], or pursuant to a final order of the commission in a proceeding pursuant to the Public Utility Regulatory Act, Chapter 53. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(208)

[ (206) ] Suspension of service -- That period during which the customer's telephone line does not have dial tone but the customer's telephone number is not deleted from the central office switch and databases.

(209)

[ (207) ] Switched access -- Access service that is provided by certificated telecommunications utilities (CTUs) to access customers and that requires the use of CTU network switching or common line facilities generally, but not necessarily, for the origination or termination of interexchange calls. Switched access includes all forms of transport provided by the CTU over which switched access traffic is delivered. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(210)

[ (208) ] Switched access demand -- Switched access minutes of use, or other appropriate measure where not billed on a minute of use basis, for each switched access rate element, normalized for out of period billings. For the purposes of this section, switched access demand shall include minutes of use billed for the local switching rate element.

(211)

[ (209) ] Switched access minutes -- The measured or assumed duration of time that a certificated telecommunications utility's network facilities are used by access customers. Access minutes are measured for the purpose of calculating access charges applicable to access customers. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(212)

[ (210) ] Switched transport -- Transmission between a certificated telecommunications utility's central office (including tandem-switching offices) and an interexchange carrier's point of presence.

(213)

[ (211) ] Tandem-switched transport -- Transmission of traffic between the serving wire center and another certificated telecommunications utility office that is switched at a tandem switch and charged on a usage basis. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(214)

[ (212) ] Tariff -- The schedule of a utility containing all rates, tolls, and charges stated separately by type or kind of service and the customer class, and the rules and regulations of the utility stated separately by type or kind of service and the customer class.

(215)

[ (213) ] Tel-assistance service -- A program providing eligible consumers with a 65% reduction in the applicable tariff rate for qualifying services.

(216)

[ (214) ] Telecommunications relay service (TRS) -- A service using oral and print translations by either live or automated means between individuals who are hearing-impaired or speech-impaired who use specialized telecommunications devices and others who do not have such devices. Unless specified in the text, this term shall refer to intrastate telecommunications relay service only.

(217)

[ (215) ] Telecommunications relay service (TRS) carrier -- The telecommunications carrier selected by the commission to provide statewide telecommunications relay service.

(218)

[ (216) ] Telecommunications utility -

(A)

a public utility;

(B)

an interexchange telecommunications carrier, including a reseller of interexchange telecommunications services;

(C)

a specialized communications common carrier;

(D)

a reseller of communications;

(E)

a communications carrier who conveys, transmits, or receives communications wholly or partly over a telephone system;

(F)

a provider of operator services as defined by §55.081, unless the provider is a subscriber to customer-owned pay telephone service; and

(G)

a separated affiliate or an electronic publishing joint venture as defined in the Public Utility Regulatory Act, Chapter 63.

(219)

[ (217) ] Telephones intended to be utilized by the public -- Telephones that are accessible to the public, including, but not limited to, pay telephones, telephones in guest rooms and common areas of hotels, motels, or other lodging locations, and telephones in hospital patient rooms.

(220)

[ (218) ] Telephone solicitation -- An unsolicited telephone call.

(221)

[ (219) ] Telephone solicitor -- A person who makes or causes to be made a consumer telephone call, including a call made by an automatic dialing/announcing device.

(222)

[ (220) ] Test year -- The most recent 12 months, beginning on the first day of a calendar or fiscal year quarter, for which operating data for a public utility are available.

(223)

[ (221) ] Texas Universal Service Fund (TUSF) -- The fund authorized by the Public Utility Regulatory Act, §56.021 and 1997 Texas General Laws Chapter 149.

(224)

[ (222) ] Tier 1 local exchange company -- A local exchange company with annual regulated operating revenues exceeding $100 million.

(225)

[ (223) ] Title IV-D Agency -- The office of the attorney general for the state of Texas.

(226)

[ (224) ] Toll blocking -- A service provided by telecommunications carriers that lets consumers elect not to allow the completion of outgoing toll calls from their telecommunications channel.

(227)

[ (225) ] Toll control -- A service provided by telecommunications carriers that allows consumers to specify a certain amount of toll usage that may be incurred on their telecommunications channel per month or per billing cycle.

(228)

[ (226) ] Toll limitation -- Denotes both toll blocking and toll control.

(229)

[ (227) ] Total element long-run incremental cost (TELRIC) -- The forward-looking cost over the long run of the total quantity of the facilities and functions that are directly attributable to, or reasonably identifiable as incremental to, such element, calculated taking as a given the certificated telecommunications utility's (CTU's) provision of other elements. [ In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. ]

(230)

[ (228) ] Transport -- The transmission and/or any necessary tandem and/or switching of local telecommunications traffic from the interconnection point between the two carriers to the terminating carrier's end office switch that directly serves the called party, or equivalent facility provided by a carrier other than a dominant certificated telecommunications utility.

(231)

[ (229) ] Trunk -- A circuit facility connecting two switching systems.

(232)

[ (230) ] Two-primary interexchange carrier (Two-PIC) equal access -- A method that allows a telephone subscriber to select one carrier for all 1+ and 0+ interLATA calls and the same or a different carrier for all 1+ and 0+ intraLATA calls.

(233)

[ (231) ] Unauthorized charge -- Any charge on a customer's telephone bill that was not consented to or verified in compliance with §26.32 of this title (relating to Protection Against Unauthorized Billing Charges ("Cramming")).

(234)

[ (232) ] Unbundling -- The disaggregation of the ILEC's network/service to make available the individual network functions or features or rate elements used in providing an existing service.

(235)

[ (233) ] Unit cost -- A cost per unit of output calculated by dividing the total long run incremental cost of production by the total number of units.

(236)

[ (234) ] Usage sensitive blocking -- Blocking of a customer's access to services which are charged on a usage sensitive basis for completed calls. Such calls shall include, but not be limited to, call return, call trace, and auto redial.

(237)

[ (235) ] Virtual private line -- Circuits or bandwidths, between fixed locations, that are available on demand and that can be dynamically allocated.

(238)

[ (236) ] Voice carryover -- A technology that allows an individual who is hearing-impaired to speak directly to the other party in a telephone conversation and to use specialized telecommunications devices to receive communications through the telecommunications relay service operator.

(239)

[ (237) ] Volume insensitive costs -- The costs of providing a basic network function (BNF) that do not vary with the volume of output of the services that use the BNF.

(240)

[ (238) ] Volume sensitive costs -- The costs of providing a basic network function (BNF) that vary with the volume of output of the services that use the BNF.

(241)

[ (239) ] Wholesale service -- A telecommunications service is considered a wholesale service when it is provided to a telecommunications utility and the use of the service is to provide a retail service to residence or business end-user customers.

(242)

[ (240) ] Working capital requirements -- The additional capital required to fund the increased level of accounts receivable necessary to provide telecommunications service.

(243)

[ (241) ] "0-" call -- A call made by the caller dialing the digit "0" and no other digits within five seconds. A "0-" call may be made after a digit (or digits) to access the local network is (are) dialed.

(244)

[ (242) ] "0+" call -- A call made by the caller dialing the digit "0" followed by the terminating telephone number. On some automated call equipment, a digit or digits may be dialed between the "0" and the terminating telephone number.

(245)

[ (243) ] 311 answering point -- A communications facility that:

(A)

is operated, at a minimum, during normal business hours;

(B)

is assigned the responsibility to receive 311 calls and, as appropriate, to dispatch the non-emergency police or other governmental services, or to transfer or relay 311 calls to the governmental entity;

(C)

is the first point of reception by a governmental entity of a 311 call; and

(D)

serves the jurisdictions in which it is located or other participating jurisdictions.

(246)

[ (244) ] 311 service -- A telecommunications service provided by a certificated telecommunications provider through which the end user of a public telephone system has the ability to reach non-emergency police and other governmental services by dialing the digits 3-1-1. 311 service must contain the selective routing feature or other equivalent state-of-the-art feature.

(247)

[ (245) ] 311 service request -- A written request from a governmental entity to a certificated telecommunications utility requesting the provision of 311 service. A 311 service request must:

(A)

be in writing;

(B)

contain an outline of the program the governmental entity will pursue to adequately educate the public on the 311 service;

(C)

contain an outline from the governmental entity for implementation of 311 service;

(D)

contain a description of the likely source of funding for the 311 service (i.e., from general revenues, special appropriations, etc.); and

(E)

contain a listing of the specific departments or agencies of the governmental entity that will actually provide the non-emergency police and other governmental services.

(248)

[ (246) ] 311 system -- A system of processing 311 calls.

(249)

[ (247) ] 911 system -- A system of processing emergency 911 calls, as defined in Tex. Health & Safety Code §772.001, as may be subsequently amended.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003137

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.212, §26.213

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Public Utility Commission of Texas or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Public Utility Commission of Texas (commission) proposes the repeal of §26.212, relating to Procedures Applicable to Chapter 58-Electing Incumbent Local Exchange Companies (ILECs) and §26.213, relating to Telecommunications Pricing. The proposed repeal will delete sections made unnecessary by proposed new §26.224, relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies. Project Number 21156 has been assigned to this proceeding.

Ms. Jenny Kambhampati, Senior Policy Analyst, Office of Policy Development, has determined that for each year of the first five-year period the proposed repeal is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeal.

Ms. Kambhampati has determined that for each year of the first five years the proposed repeal is in effect the public benefit anticipated as a result of deleting the sections will be the replacement of §26.212 and §26.213 with a rule that implements changes enacted as part of Senate Bill 560, Act of May 30, 1999, 76th Legislature, Regular Session, Chapter 1212, 1999 Texas Session Law, 4210 (codified at scattered sections of the Texas Utilities Code Annotated §§58.051, 58.054, 58.055, 58.060, 58.063, and 58.153). There will be no effect on small businesses or micro-businesses as a result of enforcing this repeal. There is no anticipated economic cost to persons who are required to comply with the repeal as proposed.

Ms. Kambhampati has also determined that for each year of the first five years the proposed repeal is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21157, 21159, and 21161 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas, 78701, on Tuesday, June 27, 2000, at 9:30 a.m. in the Commissioners' Hearing Room.

Comments on the proposed repeal (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas, 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. Parties are also requested to e-mail an electronic copy of comments to jennifer.kambhampati@puc.state.tx.us, if possible. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed repeal. The commission will consider the costs and benefits in deciding whether to repeal the section. All comments should refer to Project Number 21156.

This repeal is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 and §14.052 (Vernon 1998) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002 and §14.052.

§26.212.Procedures Applicable to Chapter 58-Electing Incumbent Local Exchange Companies (ILECs).

§26.213.Telecommunications Pricing.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003130

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.214

The Public Utility Commission of Texas (commission) proposes new §26.214, relating to Long Run Incremental Cost (LRIC) Methodology for Services Provided by Certain Incumbent Local Exchange Companies (ILECs). Proposed new §26.214 clarifies the substantive and procedural requirements for filing LRIC studies for ILECs regulated under the Public Utility Regulatory Act (PURA) Chapters 52 and 59. Project Number 21159 has been assigned to this proceeding.

The commission staff received comments from parties about the scope and draft rules created in this project at two workshops convened on November 15, 1999, and March 28, 2000. Commission staff coordinated the product of Project Number 21159 with Project Number 21155, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Customer Specific Contracts, Packing Flexibility, and Promotional Offerings; Project Number 21156, Rulemaking to Implement PURA Chapter 58 Withdrawal of Election, Rate Caps, and Rate Adjustments; Project Number 21157, Rulemaking to Implement PURA Chapter 58 Provision of New Services; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings, and Pricing and Packaging Flexibility Provisions for PURA Chapters 52, 58, and 59.

Ms. Anne McKibbin, Senior Economist, Office of Regulatory Affairs, has determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. McKibbin has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing this section will be the clarification of the substantive requirements and procedures relating to the filing of LRIC studies by Chapter 52 and 59 companies. There will be no effect on small businesses or micro-businesses resulting from the enforcement of these sections. There is no anticipated economic cost to persons who are required to comply with the sections as proposed.

Ms. McKibbin has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21156, 21157, and 21161 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas, 78701, on Tuesday, June 27, 2000, at 9:30 a.m. in the Commissioners Hearing Room.

Comments on the proposed new section (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas, 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. Parties are also requested to e-mail an electronic copy of comments to Anne.McKibbin@puc.state.tx.us, if possible. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the proposed section. All comments should refer to Project Number 21159 and Proposed Rule §26.214.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §52.0583, regarding new services for non-electing companies; §52.0584, regarding pricing and packaging flexibility requirements for non-electing companies; §52.0585, regarding customer promotional offering requirements for non-electing companies; §59.030, regarding new services for Chapter 59 electing companies; §59.031, regarding pricing and packaging flexibility for Chapter 59 electing companies; and §59.032, regarding customer promotional offering requirements for Chapter 59 electing companies.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 52.0583, 52.0584, 52.0585, 59.030, 59.031, and 59.032.

§26.214.Long Run Incremental Cost (LRIC) Methodology for Services Provided by Certain Incumbent Local Exchange Companies (ILECs).

(a)

Application. This section shall apply to ILECs with annual revenues from regulated telecommunications operations in Texas of less than $100 million for five consecutive years.

(b)

Purpose. This section shall be used to determine the long run incremental costs incurred by ILECs in the provision of telecommunications services in those instances in which the ILEC chooses to establish LRIC studies.

(c)

LRIC studies. An ILEC may establish a service's LRIC by submitting a LRIC cost study that conforms to the following general requirements:

(1)

A LRIC study must identify the ILEC's investment in all facilities that reflect forward looking least cost technology, as set forth in §26.215(f)(3) of this title (relating to Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility (DCTU) Services), used in the provision of the service.

(2)

A LRIC study must apply appropriate loading and fill factors associated with the service.

(3)

A LRIC study must apply appropriate annual cost factors, including but not limited to depreciation and cost of money, associated with the service.

(4)

A LRIC study must identify non-capital costs associated with the service, including but not limited to maintenance, billing and collection, and marketing costs.

(d)

Procedures for review of LRIC studies filed under subsection (c) of this section. A LRIC study considered under this section shall be reviewed administratively to determine whether the ILEC's LRIC study is consistent with the requirements of this section.

(1)

Notice. At least ten days before an ILEC files any LRIC study pursuant to this section, the ILEC shall file with the commission and the Office of Public Utility Counsel a notice of its intent to file such LRIC study and the expected filing date. The ILEC's notice shall indicate that the filing is being made pursuant to this section. The commission shall then publish notice of the ILEC's intent to file the LRIC study in the Texas Register.

(2)

Sufficiency. The LRIC study shall be examined for sufficiency. To be sufficient, the LRIC study shall conform to the requirements of this section.

(A)

Except as required under subparagraph (B) of this paragraph, if the commission staff concludes that material deficiencies exist in the LRIC study, the ILEC shall be notified by the commission staff of the specific deficiency within three working days after the filing date of the LRIC study. The ILEC shall have two working days after the date it is notified of the deficiency to file a corrected LRIC study. On or before five working days after the date of the ILEC response, the presiding officer shall issue an order with regard to the sufficiency.

(B)

If the LRIC study filed for approval pursuant to this section is also filed simultaneously as part of an informational notice filing and a contested case arises as a result of the dispute regarding sufficiency of the LRIC study filed as part of the informational notice filing, the review of LRIC study pursuant to this section shall be abated pending the resolution of the contested case.

(3)

Time Schedule.

(A)

No later than 45 days after the filing date of the sufficient LRIC study, any party that demonstrates a justiciable interest may file with the presiding officer written comments or recommendations concerning the LRIC study.

(B)

No later than 55 days after the filing date of the sufficient LRIC study, Office of Public Utility Counsel (OPUC) may file with the presiding officer written comments or recommendations concerning the LRIC study.

(C)

No later than 65 days after the filing date of the sufficient LRIC study, the commission staff shall file with the presiding officer written comments or recommendations concerning the LRIC study.

(D)

No later than 75 days after the filing date of the sufficient LRIC study, any party that demonstrates justiciable interest, OPUC, or the ILEC may file with the presiding officer a written response to the commission staff's recommendation.

(E)

No later than 85 days after the filing date of the sufficient LRIC study, the presiding officer shall issue a notice stating whether the ILEC's LRIC study is consistent with the requirements of this section. In this notice, the presiding officer shall approve the LRIC study or order the ILEC to refile the LRIC study incorporating all modifications recommended by the presiding officer.

(F)

Any party may appeal to the commission an administrative notice by a presiding officer within seven days after the date the notice is issued. The commission shall rule on any appeal, added to an open meeting agenda, within 30 days after the date the appeal is filed. If the commission or a presiding officer orders a cost study to be changed, the ILEC shall be ordered to make those changes within a period that is commensurate with the complexity of the LRIC study.

(G)

Requests for information. While the LRIC study is being administratively reviewed, the commission staff, OPUC, and any party that demonstrates a justiciable interest may submit requests for information to the ILEC. Copies of all answers to such requests for information shall be provided within ten days after receipt of the request by the ILEC to the commission staff, OPUC, and any party that demonstrates a justiciable interest.

(H)

Suspension. At any point within the first 45 days of the review process, the presiding officer, the commission staff, OPUC, the ILEC, or any party that demonstrates a justiciable interest may request that the review process be suspended for 30 days. The presiding officer may grant a request for suspension only upon determination that the party has demonstrated a good cause exists for the suspension.

(I)

Effective date of the LRIC study. The effective date of the LRIC study shall be the date it is approved by the presiding officer.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003131

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.224

The Public Utility Commission of Texas (commission) proposes new §26.224, relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies.

The commission has also proposed the repeal of §26.212, relating to Procedures Applicable to Chapter 58-Electing Incumbent Local Exchange Companies (ILECs), and §26.213, relating to Telecommunications Pricing in this issue of the Texas Register .

The proposed new section clarifies the substantive and procedural requirements relating to rate changes for basic network services for Chapter 58 companies and will replace §26.212 and §26.213. Project Number 21156 has been assigned to this proceeding.

The commission staff received comments from parties about the scope and draft rule created in this project at two workshops convened on December 15, 1999, and March 28, 2000. Since the December workshop, commission staff coordinated the product of this project with Project Number 21155, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Customer Specific Contracts, Packaging Flexibility, and Promotional Offerings and in conjunction with Project Number 21159, Rulemaking to Implement New Services and Promotional Offerings and Pricing and Packaging Flexibility for PURA Chapter 52 and 59 Companies ; Project Number 21157, Rulemaking to Implement PURA Chapter 58 Provisions of New Services ; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings, and Pricing and Packaging Flexibility Provisions for PURA Chapters 52, 58, and 59 .

The language herein describes the requirements relating to basic network services for Chapter 58 companies. Several other projects propose rules pertaining to Chapter 58 companies. Project Number 21157 will propose P.U.C. Substantive Rule §26.225, relating to Requirements Applicable to Nonbasic Services for Chapter 58 Electing Companies. Project Number 21155 will propose P.U.C. Substantive Rule §26.226, relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies. Finally, Project Number 21161 will propose P.U.C. Substantive Rule §26.227, relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies.

Ms. Jenny Kambhampati, Senior Policy Analyst, Office of Policy Development, has determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. Kambhampati has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section will be clarification of the procedures relating to rate increases and decreases for basic network services of Chapter 58 companies. There will be no effect on small businesses or micro-businesses as a result of enforcing this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Ms. Kambhampati has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21157, 21159, and 21161 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas, 78701, on Tuesday, June 27, 2000, at 9:30 a.m. in the Commissioners' Hearing Room.

Comments on the proposed new section (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas, 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. Parties are also requested to e-mail an electronic copy of comments to jennifer.kambhampati@puc.state.tx.us, if possible. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. All comments should refer to Project Number 21156.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §58.051, which delineates basic network services for Chapter 58 companies, §58.054 which sets forth the cap on rates for basic network services for Chapter 58 companies, §58.055 which sets forth the circumstances under which Chapter 58 companies may adjust rates for basic network services during the rate cap period, §58.060 which sets forth the requirements for adjusting the rate for a basic network service after the rate cap period, §58.153 requires that certain notice be provided by Chapter 58 companies with more than five million access lines in the state.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 58.051, 58.054, 58.055, 58.060, 58,153.

§26.224.Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies.

(a)

Application. This section applies to any electing company, as the term is defined in the Public Utility Regulatory Act (PURA) §58.002. Other sections applicable to an electing company, include, but are not limited to, §26.225 of this title (relating to Requirements Applicable to Nonbasic Services for Chapter 58 Electing Companies), §26.226 of this title (relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies), and §26.227 of this title (relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies).

(b)

Purpose. This section establishes requirements and procedures relating to the provision of basic network services.

(c)

Basic network services.

(1)

Services included in basic network services. Unless reclassified pursuant to PURA §58.024, the following are classified as basic network services:

(A)

Flat rate residential local exchange telephone service, including primary directory listings and the receipt of a directory and any applicable mileage or zone charges;

(B)

Residential tone dialing service;

(C)

Lifeline and tel-assistance service;

(D)

Service connection for basic residential services;

(E)

Direct inward dialing service for basic residential services;

(F)

Private pay telephone access service;

(G)

Call trap and trace service;

(H)

Access for all residential and business end users to 9-1-1 service provided by a local authority and access to dual party relay service;

(I)

Mandatory residential extended area service arrangements;

(J)

Mandatory residential extended metropolitan service or other mandatory residential toll-free calling arrangements; and

(K)

Residential call waiting service.

(2)

Separate tariff requirement. A basic network service offered by an electing company to a customer as a component of a package or other pricing flexibility offering shall also be offered by the electing company as a separately tariffed service.

(3)

Basic network service rates capped. The rates for basic network services for an electing company may not increase before September 1, 2005, except as provided for in subsection (f) of this section, relating to rate increases prior to the rate cap expiration.

(4)

Basic network service rates charged. The rates an electing company may charge during the period in which rates are capped are the rates charged by the company on June 1, 1995, or, for a company that elects after September 1, 1999, the rates charged on the date of its election.

(5)

Pricing flexibility. An electing company may offer pricing flexibility for basic network services pursuant to the requirements of §26.226 of this title.

(d)

Requirement for changes to terms of a tariff offering. Prior to being offered, a change in the terms of the tariff offering, including rate increases and decreases of a basic network service, must receive commission approval. Section 26.207 of this title (relating to Form and Filing of Tariffs) and §26.208 of this title (relating to General Tariff Procedures) shall apply to tariffs offering a basic network service.

(e)

Establishment of a long run incremental cost floor. For purposes of this section, long run incremental cost (LRIC) shall be consistent with §26.215 of this title (relating to relating to Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility (DCTU) Services). Establishment of a LRIC floor requires commission approval of a cost study prepared by an electing company pursuant to the standards in §26.215 of this title. After commission approval of a LRIC floor for a particular service, an electing company may change the rates of that service in accordance with the procedures in this section. The procedures in subsection (i) of this section, relating to rate decreases for basic network services, may not be available to an electing company for a service that does not have a LRIC floor.

(f)

Rate increase prior to rate cap expiration. For a four-year period following Chapter 58 election or September 1, 2005, whichever occurs later, an increase in the rate for a basic network service is permitted only after commission approval and only within the following parameters:

(1)

A rate increase for changes made by the Federal Communications Commission, as provided by PURA §58.056;

(2)

A rate increase for companies with fewer than five million access lines that are complying with infrastructure commitments, as provided by PURA §58.057;

(3)

A rate group reclassification, as provided by PURA §58.058.

(g)

Procedure for a rate increase prior to rate cap expiration.

(1)

Prior to the rate cap expiration, an application is required to increase the rate for a basic network service. The application shall refer to this section, and must provide sufficient documentation to demonstrate that the rate increase meets the criteria prescribed in PURA Chapter 58, shall describe the increase, and shall identify the classes of customers and competitors to be affected by the electing company's application. The application shall also include any tariff sheets reflecting the proposed basic network service rate increase, as well as all data necessary to support the application. The application shall include a copy of the text of any proposed notice to customers. The proposed notice to customers shall comply with §26.208 of this title and shall meet the criteria prescribed in PURA §58.059 and §53.103. The application shall also state the electing company's preferred effective date, which shall be no earlier than 90 days after completion of notice.

(2)

The commission shall cause notice of the application to be published in the Texas Register. The published notice shall state the intervention deadline, which shall be no earlier than 40 days following publication of notice. After publication of notice in the Texas Register , the presiding officer shall establish a deadline for the filing of a staff recommendation, which shall be no earlier than five days following the intervention deadline.

(3)

Within 20 days of filing of the application, the presiding officer shall notify the applicant if material deficiencies exist in the application and if the proposed notice is inadequate.

(4)

Within 50 days of filing of the application, the applicant shall file an affidavit attesting to the fact that notice to customers was published in accordance with the requirements of PURA §58.059 and §53.103. The affidavit shall contain a copy of all notice given.

(5)

Following receipt of a request for intervention filed by an affected party, or on the recommendation of commission staff, or on the commission's own motion, the commission may suspend the effective date of the rate increase and may hold a hearing. Within 185 days of the filing of a sufficient application, the commission shall issue an order approving or modifying the rate increase, or rejecting the rate increase, if it is not in compliance with this section and PURA §§58.056, 58.057 or 58.058. Any order modifying or rejecting the proposed rate increase shall specify why the proposed increase is not in compliance with the applicable provisions of PURA §§58.056, 58.057 or 58.058 and the means by which the proposed increase may be brought into compliance.

(h)

Rate increase after rate cap expiration. After a four-year period following Chapter 58 election or September 1, 2005, whichever occurs later, a rate increase following the rate cap expiration may be made pursuant to PURA §58.060.

(i)

Rate decrease. An electing company may decrease a rate for a basic service at any time. The electing company may decrease the rate for a basic service rate to an amount above the service's long run incremental cost. If the electing company has been required to perform or has elected to perform a long run incremental cost study, the appropriate cost for the service is the service's long run incremental cost.

(1)

After commission approval of a LRIC floor, an electing company shall follow the procedures in this subsection to decrease a rate for a basic network service or to change the tariff terms of a basic network service.

(2)

An electing company shall file an application to decrease the rate for or change the tariff terms of a basic network service. On the same date, an electing company shall file one or more tariff sheets to decrease a rate for or change the terms of a basic network service with the application and all data necessary to support the application shall accompany the tariff sheets.

(3)

The commission shall cause a notice of the application to be published in the Texas Register . The published notice shall state the intervention deadline, which shall be no earlier than 15 days following publication of notice. On or before five days after the intervention deadline of the application, commission staff may file a recommendation to suspend, docket or reject the application. If either a request for intervention or a recommendation to docket is filed, the expedited administrative procedures in this subsection shall no longer apply. If neither an intervention request nor a staff recommendation to suspend, docket or reject the application is filed, the tariff sheets shall be approved by the commission effective ten days following the intervention deadline.

(j)

Proprietary or confidential information.

(1)

Information filed pursuant to this rule is presumed to be public information. An electing company shall have the burden of establishing that information filed pursuant to this rule is proprietary or confidential.

(2)

Nothing in this subsection shall be construed to change the presumption that information filed pursuant to this rule is public information. An electing company that intends to rely upon data it purports is poprietary or confidential in support of an application mad pursuant to this section shall submit one copy of the proprietary or confidential data to the Office of Regulatory Affairs subject to a commission-approved protection agreement. An electing company that intends to rely upon proprietary or confidential data has the burden of providing such data on the same date the associated tariff sheets are filed. In the event an electing company's proprietary or confidential data is not provided with the associated tariff sheets, the procedural schedule shall be adjusted day-for-day to reflect the number of days the proprietary or confidential data is delayed.

(k)

Additional notice requirement for an electing company serving more than five million access lines. In addition to the notice requirements of §26.208 of this title and those applicable to informational notice filings, until September 1, 2003, an electing company serving more than five million access lines in this state shall:

(1)

Comply with the following notice requirements when proposing any changes in the generally available prices and terms under which the electing company offers basic telecommunications services regulated by the commission at retail rates to subscribers that are not telecommunications providers, including:

(A)

Introduction of any new features or functions of basic services;

(B)

Promotional offerings of basic services; or

(C)

Discontinuation of then-current features or services.

(2)

Notice shall be provided to the following persons:

(A)

A person who holds a certificate of operating authority in the electing company's certificated area or areas; or

(B)

A person who has an effective interconnection agreement with the electing company.

(3)

The following timelines shall apply to the additional notice requirement:

(A)

If the electing company is required to give notice to the commission, at the same time the company provides that notice; or

(B)

If the electing company is not required to give notice to the commission, at least 45 days before the effective date of a price change or 90 days before the effective date of a change other than a price change, unless the commission determines that the notice should not be given.

(l)

Semi-annual notice for rates or terms of service. Semi-annually, an electing company shall notify affected persons, either by bill insert, bill message, or direct mail, that proposed changes in the rates or terms of basic network services are regularly published in the Texas Register through the Office of the Secretary of State. Such notification shall also appear in the public information pages of all telephone directories published in Texas. The notification shall identify the Internet address for the Texas Register (www.sos.state.tx.us) and shall provide a toll-free phone number for affected persons to request direct notice from an electing company of proposed changes in the rates or terms of service. For purposes of notice, affected persons include the applicant's Texas customers, persons registered with the commission to offer long distance service, and persons certificated by the commission to provide local exchange telephone service.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003129

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.225

The Public Utility Commission of Texas (commission) proposes new §26.225 relating to Requirements Applicable to Nonbasic Services for Chapter 58-Electing Companies.

The proposed new section establishes substantive requirements affecting nonbasic services offered by Chapter 58 companies. Project Number 21157 is assigned to this proceeding.

The commission staff received comments on proposed §26.225 from interested persons at workshops held on November 15, 1999 and March 28, 2000. The November 15, 1999 workshop focused on Senate Bill 560 implementation. The March 28, 2000 workshop focused on several rules drafted for discussion.

In addition, the commission staff coordinated the end product of Project Number 21157 with Project Number 21155, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Customer Specific Contracts, Packaging Flexibility, and Promotional Offerings ; Project Number 21156, Rulemaking to Implement PURA Chapter 58 Withdrawal of Election, Rate Caps and Rate Adjustments ; Project Number 21159, Rulemaking to Implement New Services and Promotional Offerings and Pricing and Packaging Flexibility for PURA Chapter 52 and 59 Companies ; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings and Pricing and Packaging Flexibility Provisions for PURA Chapters 52, 58, and 59.

The language herein describes requirements relating to nonbasic services for Chapter 58 companies. Several other projects propose rules pertaining to Chapter 58 companies. Project Number 21155 proposes §26.226 of this title (relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies). Project Number 21156 proposes §26.224 of this title (relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies). Finally, Project Number 21161 proposes §26.227 of this title (relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies).

Ms. Lynne LeMon, Senior Utility Specialist, Office of Regulatory Affairs, has determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. LeMon has determined that, for each year of the first five years the proposed section is in effect, the public benefit anticipated as a result of enforcing the proposed section will be establishment of the commission's requirements relating to nonbasic services so that nonbasic services are offered by Chapter 58-electing companies to customers in a manner that is not anticompetitive, discriminatory, prejudicial, predatory or preferential. There will be no effect on small businesses or micro-businesses as a result of enforcing this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Ms. LeMon has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21156, 21159, and 21161 under Government Code §2001.029 at the commission's offices located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Tuesday, June 27, 2000, at 9:30 a.m. in the Commissioners' Hearing Room.

Comments on the proposed new section (16 copies) may be submitted to the commission's Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 30 days after publication in the Texas Register . Reply comments may be submitted within 45 days after publication in the Texas Register . In addition, the commission staff requests that commentors e-mail an electronic copy of comments and reply comments to 21157mail@puc.state.tx.us.

The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. The commission also invites comments on whether it is appropriate that proposed subsection (d)(1)(C) contain an anti-competitive standard with respect to pricing, or whether such a standard should be developed through the facts determined in individual contested cases. All comments should refer to Project Number 21157.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA, Chapter 58, Subchapter E, pertaining to nonbasic services and PURA, Chapter 60, pertaining to competitive safeguards.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 51.002 and 51.004; Chapter 58 and Chapter 60.

§26.225. Requirements Applicable to Nonbasic services For Chapter 58 Electing Companies.

(a)

Application. This section applies to any electing company as the term is defined in the Public Utility Regulatory Act (PURA) §58.002. Other sections applicable to an electing company include, but are not limited to, §26.224 of this title (relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies), §26.226 of this title (relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies), and §26.227 of this title (relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies.)

(b)

Purpose. The purpose of this section is to establish requirements for nonbasic services.

(c)

Nonbasic services.

(1)

Consistent with PURA §58.151 and §58.024, these services are nonbasic services:

(A)

flat rate business local exchange telephone service, including primary directory listings and the receipt of a directory, and any applicable mileage or zone;

(B)

business tone dialing service;

(C)

service connection for all business services;

(D)

direct inward dialing (DID) for basic business services;

(E)

public pay telephone services, 0+ and 0- operator services and directory assistance services;

(F)

call forwarding, call return, caller identification, call waiting and other custom calling services and call control options, except that residential call waiting is a basic network service;

(G)

speed dialing and three-way calling;

(H)

central office based PBX-type services;

(I)

billing and collection services, including installment billing and late payment plans for electing company customers;

(J)

integrated services digital network (ISDN) services;

(K)

new services;

(L)

1-plus intraLATA message toll service (MTS);

(M)

services described in the WATS tariff of an electing company as the tariff existed on January 1, 1995;

(N)

800 service and foreign exchange service;

(O)

private line services and special access services;

(P)

paging services and mobile services (IMTS);

(Q)

911 service provided to a local authority, if the service is available from a provider other than the electing company;

(R)

all other services subject to the commission's jurisdiction that are not specifically classified as basic network services in PURA §58.051;

(S)

any basic network service reclassified by the commission as a nonbasic service pursuant to PURA §58.024.

(2)

Consistent with PURA §58.155, neither interconnection to competitive providers nor interconnection for commercial mobile service providers is addressed in this section.

(d)

Substantive requirements. An electing company that seeks to introduce or modify rates, terms or conditions of a nonbasic service tariff shall follow the substantive requirements in this section and the procedural requirements in §26.227 of this title. Additionally, an electing company that seeks to flexibly price a nonbasic service shall follow the requirements in §26.226 of this title.

(1)

Pricing standards. The price of a nonbasic service may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.

(A)

Price ceilings. This subparagraph specifies the price ceilings for certain nonbasic services. Except as specified in this subparagraph, nonbasic services have no price ceiling.

(i)

Until September 1, 2005, a nonbasic service listed in subsection (c)(1)(A)-(D) of this section shall be priced at or below the price in effect on September 1, 1999.

(ii)

Until September 1, 2005, a Basic Rate Interface (BRI) ISDN service, which comprises up to two 64 Kbps B-channels and one 16 Kbps D-channel, shall be priced at or below the price in effect on September 1, 1999.

(iii)

Until an electing company that serves more than five million access lines implements the reductions in switched access rates described in PURA §58.301(2), residential nonbasic services listed in subsection (c)(1)(F) of this section shall be priced at or below the prices in effect on September 1, 1999.

(iv)

An electing company shall provide to a residential customer the first three directory assistance inquiries in a monthly billing cycle at a maximum price of zero dollars ($.00).

(v)

Consistent with PURA §58.302, switched access services shall be priced at or below the lesser of the rates in effect on September 1, 1999, or the applicable rates described in PURA §58.301, either of which may be further reduced via the Texas universal service fund.

(B)

Price floors. A price that is set at or above the long run incremental cost of providing a service is presumed not to be a predatory price. The long run incremental cost of a nonbasic service must be established before the price floor of a nonbasic service can be determined, pursuant to PURA §58.152. Establishment of a long run incremental cost requires commission approval of a cost study prepared by an electing company pursuant to §26.215 of this title (relating to Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility (DCTU) Services). Any application to establish or modify a long run incremental cost shall be filed by an electing company with the commission's Filing Clerk on or before the date a related informational notice is filed. Such an application shall be filed separately from the related informational notice. The minimum price of a nonbasic service shall be the lesser of:

(i)

the price for the service in effect on September 1, 1999, except that this clause shall not be considered for services that had either a rate of zero or no existing rate on September 1, 1999; or

(ii)

the long run incremental cost of the service in accordance with the imputation rules and requirements prescribed by or under PURA, Chapter 60, Subchapter D.

(C)

Anticompetitive price. There is a rebuttable presumption that the price of a nonbasic service is anticompetitive against a competitor if an electing company's retail price for a nonbasic service is less than the sum of the total element long run incremental cost (TELRIC)-based wholesale prices of components needed to provide the nonbasic service.

(2)

Separately tariffed services. Any nonbasic service offered by an electing company to customers as a component of a package or other pricing flexibility offering shall also be offered by the electing company as a separately tariffed service.

(e)

New service.

(1)

A new service, as the term is defined in §26.5 of this title (relating to Definitions), is a nonbasic service under subsection (c)(1)(K) of this section.

(2)

To introduce a new service tariff, an electing company shall follow the requirements in this section and the procedures in §26.227 of this title. If a new service is offered by an electing company as a component of a package, the new service shall also be offered as a separately tariffed service and the separately tariffed service shall be subject to the pricing standards in subsection (d) of this section.

(3)

A package of services that includes one or more new services and one or more existing services shall not be considered a new service. To introduce such a package, an electing company shall follow the requirements in this section, the requirements in §26.226 of this title and the procedures in §26.227 of this title.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003135

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.226

The Public Utility Commission of Texas (commission) proposes new §26.226, relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies.

The proposed new rule will establish substantive requirements governing pricing flexibility offerings by Chapter 58 companies. The proposed new rule defines pricing flexibility, establishes pricing standards for flexibly priced offerings, and sets forth requirements for customer-specific contracts, packaging and promotional offerings, and term and volume discounts. Project Number 21155 has been assigned to this proceeding.

The commission staff received comments from parties about the scope and draft rule created in this project at two workshops convened on November 15, 1999, and March 28, 2000. The November 15, 1999 workshop focused on implementation of Senate Bill 560, while the March 28, 2000 workshop focused on several rules drafted for discussion.

Commission staff coordinated the product of this project with Project Number 21156, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Withdrawal of Election, Rate Caps and Rate Adjustments, Packaging Flexibility, and Pricing for Nonbasic Services and in conjunction with Project Number 21159, Rulemaking to Implement New Services and Promotional Offerings and Pricing and Packaging Flexibility for PURA Chapter 52 and 59 Companies ; Project Number 21157, Rulemaking to Implement PURA Chapter 58 Provisions of New Services ; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings, and Pricing and Packaging Flexibility Tariffs Pursuant to PURA Chapters 52, 58, and 59.

The language herein describes the requirements relating to pricing flexibility for Chapter 58 Companies. Several other projects propose rules pertaining to Chapter 58 companies. Project Number 21156 will propose §26.224, relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies. Project Number 21157 will propose §26.225, relating to Requirements Applicable to Nonbasic Services for Chapter 58 Electing Companies. Finally, Project Number 21161 will propose §26.227, relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies.

Martin Wilson, Attorney, Office of Regulatory Affairs, and Diana Zake, Chief Policy Analyst, Office of Policy Development, have determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Martin Wilson and Diana Zake have determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section will be establishment of the conditions by which companies electing under PURA Chapter 58 may exercise pricing flexibility, which is one of the benefits afforded such companies by statute in return for their acceptance of additional specified obligations. There will be no effect on small businesses or micro-businesses as a result of enforcing this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Martin Wilson and Diana Zake have also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21156, 21157, 21159, and 21161 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Tuesday, June 27, 2000, at 9:30 in the Commissioners Hearing Room.

Comments on the proposed new rule (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. The commission also invites comments on whether it is appropriate that proposed subsection (d)(3) contain an anti-competitive standard with respect to pricing, or whether such a standard should be developed through the facts determined in individual contested cases. All comments should refer to Project Number 21155.

This new rule is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; specifically, PURA §58.003 contains provisions for customer specific contracts, §58.004 outlines requirements for packaging, term and volume discounts, and promotional offerings, §58.063 sets forth requirements for pricing and packaging flexibility, §58.152 sets forth pricing standards, and §58.153 requires that certain notice be provided by Chapter 58 companies with more than five million access lines in the state.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 51.002(7), 51.004(a) and (b), 58.003, 58.004, 58.063(a)-(c), 58.152(b), 58.153(b).

§26.226. Requirements Applicable to Pricing Flexibility for Chapter 58-Electing Companies.

(a)

Application. This section applies to any electing company as the term is defined in the Public Utility Regulatory Act (PURA) §58.002. Other sections applicable to an electing company, include, but are not limited to §26.211 of this title (relating to Rate-Setting for Services Subject to Significant Competitive Challenges), §26.224 of this title (relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies), §26.225 of this title (relating to Requirements Applicable to Nonbasic Services for Chapter 58 Electing Companies) and §26.227 of this title (relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies).

(b)

Purpose. The purpose of this section is to establish requirements for a Chapter 58 electing incumbent local exchange companies (ILECs) to exercise pricing flexibility.

(c)

Pricing flexibility. An electing ILEC shall offer pricing flexibility in accordance with subsections (d)-(g) of this section and §26.227 of this title.

(1)

Pricing flexibility includes:

(A)

customer specific contracts;

(B)

packaging of services;

(C)

volume, term, and discount pricing;

(D)

zone density pricing, with a zone to be defined as an exchange; and

(E)

other promotional pricing.

(2)

A discount or other form of pricing flexibility for a basic or nonbasic service may not be preferential, prejudicial, discriminatory, predatory or anticompetitive.

(3)

This section does not prohibit a volume discount or other discount based on a reasonable business purpose.

(4)

Notwithstanding PURA §58.052(b) or PURA, Chapter 60, Subchapter F, an electing company may exercise pricing flexibility for basic network services, including the packaging of basic network services with any other regulated or unregulated service or any service of an affiliate.

(5)

Except as provided by subsection (f) of this section, an electing company may flexibly price a package that includes a basic network service in any manner provided by paragraph (1) of this subsection.

(6)

An electing company may use pricing flexibility for a basic or nonbasic service.

(d)

Pricing standards. An electing company exercising pricing flexibility shall price its offerings pursuant to this subsection.

(1)

The electing ILEC shall set the price of a package of services containing basic network services and nonbasic services at any level at or above the lesser of:

(A)

the sum of the long run incremental costs of any basic network services and nonbasic services contained in the package; or

(B)

the sum of tariffed prices of any basic network services contained in the package and the long run incremental costs of nonbasic services contained in the package.

(2)

A price that is set at or above the long run incremental cost of a service is presumed not to be a predatory price.

(3)

There is a rebuttable presumption that the price of the service or package is anti-competitive against a competitor if an electing company's retail price for the service or package of services is less than the sum of the total element long run incremental cost (TELRIC)-based wholesale prices of components needed to provide the service or package of services, respectively.

(4)

The price of a package of services that includes unregulated products or services, or an affiliate's products or services, shall, in addition to the requirements of paragraph (1) of this subsection, recover the cost to the electing company of acquiring and providing the unregulated products or services or the affiliate's products or services.

(e)

Requirements for customer-specific contracts. An electing ILEC may enter into customer-specific contracts for certain non-basic services as provided in §26.211 of this title. For all basic services and non-basic services not addressed in §26.211 of this title, an electing ILEC must offer customer-specific contracts pursuant to this section.

(1)

An electing company serving fewer than five million access lines may offer customer-specific contracts in accordance with this subsection.

(A)

An electing company serving fewer than five million access lines shall not offer customer-specific contracts until it notifies the commission of the company's binding commitment to make the following infrastructure improvements not later than September 1, 2000:

(i)

install Common Channel Signaling 7 capability in each central office; and

(ii)

connect all of the company's serving central offices to their respective local access and transport area (LATA) tandem central offices with optical fiber or equivalent facilities.

(B)

The commitments described by subparagraph (A) of this paragraph do not apply to exchanges of the company sold or transferred before, or for which contracts for sale or transfer are pending on, September 1, 2001. In the case of exchanges for which contracts for sale or transfer are pending as of March 1, 2001, where the purchaser withdrew or defaulted before September 1, 2001, the company shall have one year from the date of withdrawal or default to comply with the commitments.

(2)

An electing company serving more than five million access lines may offer customer specific contracts in accordance with this subsection.

(A)

Unless the other party to the contract is a federal, state, or local governmental entity, an electing company serving more than five million access lines may not offer in an exchange a service, or an appropriate subset of a service, listed in PURA §58.051(a)(1)-(4) or §58.151(1)-(4) in a manner that results in a customer-specific contract:

(i)

until the earlier of September 1, 2003; or

(ii)

the date on which the commission finds that at least 40% of the total access lines for that service or appropriate subset of that service in that exchange are served by competitive alternative providers that are not affiliated with the electing company.

(B)

Pursuant to subparagraph (A)(ii) of this paragraph, the commission may find that the following subsets of services are served by an alternative provider that is not affiliated with an ILEC serving more than five million access lines:

(i)

flat residential rate local exchange telephone service;

(ii)

residential primary directory listings;

(iii)

residential tone dialing service;

(iv)

lifeline and tel-assistance service;

(v)

service connection for basic residential services;

(vi)

flat business rate local exchange telephone service;

(vii)

business primary directory listings;

(viii)

business tone dialing service;

(ix)

service connection for all business services;

(x)

direct inward dialing for basic business services; and

(xi)

receipt of a directory.

(3)

This subsection does not preclude an electing company from offering a customer-specific contract to the extent allowed by PURA as of August 31, 1999.

(f)

Requirements for packaging and promotional offerings. An electing company that has more than five million access lines in this state may not offer in an exchange a service listed in PURA §58.151(1)-(4) as a component of a package of services or as a promotional offering until the company makes the reduction in switched access service rates required by PURA §58.301(2), unless the customer of one of the pricing flexibility offerings described in this subsection is a federal, state, or local governmental entity. An electing ILEC serving more than five million access lines shall provide notice of promotional offerings of basic or nonbasic services pursuant to PURA §58.153(b), by filing notice pursuant to §26.227 of this title.

(g)

Requirements for term and volume discounts. Until September 1, 2000, an electing ILEC serving more than five million access lines shall not offer term or volume discounts on any service listed in PURA §58.151(1)-(4) to entities that are not federal, state or local governments.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003136

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.227

The Public Utility Commission of Texas (commission) proposes new §26.227, relating to Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58 Electing Companies.

The proposed new section establishes the procedures for a Public Utility Regulatory Act (PURA) Chapter 58 electing company to introduce nonbasic services, including new services, and to exercise pricing flexibility for basic and nonbasic services and for complaints regarding service offerings introduced through informational notice filings. Project Number 21161 has been assigned to this proceeding.

The commission staff received comments on proposed §26.227 from interested persons at workshops held on November 15, 1999 and March 28, 2000. The November 15, 1999 workshop focused on implementation of Senate Bill 560, while the March 28, 2000 workshop focused on several rules drafted for discussion.

In addition, the commission staff coordinated the end product of Project Number 21161 with Project Number 21155, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Customer Specific Contracts, Packaging Flexibility, and Promotional Offerings ; Project Number 21156, Rulemaking to Implement PURA Chapter 58 Withdrawal of Election, Rate Caps and Rate Adjustments; Project Number 21157, Rulemaking to Establish Requirements Applicable to Nonbasic Services for Chapter 58-Electing Companies , and Project Number 21159, Rulemaking to Implement New Services and Promotional Offerings and Pricing and Packaging Flexibility for PURA Chapters 52 and 59 companies .

Melene R. Dodson, Administrative Law Judge, Office of Policy Development and Martin Wilson, Senior Attorney, Office of Regulatory Affairs, have determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. Dodson and Mr. Wilson have determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the proposed section will be establishment of the commission's procedural requirements relating to nonbasic services and pricing flexibility for basic and nonbasic services offered by Chapter 58-electing companies. There will be no effect on small businesses or micro-businesses as a result of enforcing this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Ms. Dodson and Mr. Wilson have also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

The language herein describes the procedural requirements relating to nonbasic services and pricing flexibility for basic and nonbasic services offered by Chapter 58 companies. Several other projects propose rules pertaining to Chapter 58 companies. Project Number 21155 proposes §26.226, relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies. Project Number 21156 proposes §26.224, relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies. Finally, Project Number 21157 proposes §26.225, relating to Requirements Applicable to Nonbasic Services for Chapter 58 Electing Companies.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21156, 21157, and 21159 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas, 78701, on Tuesday, June 27, 2000, at 9:30 a.m. in the Commissioners' Hearing Room.

Comments on the proposed new section (16 copies) may be submitted to the commission's Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas, 78711-3326, within 30 days after publication in the Texas Register . Reply comments may be submitted within 45 days after publication in the Texas Register . The commission staff requests that commentors e-mail an electronic copy of comments and reply comments to 21161mail@puc.state.tx.us.

The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. All comments should refer to Project Number 21161.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA, Chapter 58, Subchapter E, pertaining to nonbasic services and pricing flexibility for basic and nonbasic services and PURA, Chapter 60 pertaining to competitive safeguards.

Cross Reference to Statutes: PURA §§14.002, 51.002 and 51.004; PURA, Chapter 58 and Chapter 60.

§26.227.Procedures Applicable to Nonbasic Services and Pricing Flexibility for Basic and Nonbasic Services for Chapter 58-Electing Companies.

(a)

Application. This section applies to any electing company as the term is defined in the Public Utility Regulatory Act (PURA) §58.002 who choose to offer nonbasic services and exercise pricing flexibility for basic and nonbasic services through informational notice filings. Other sections applicable to an electing company include, but are not limited to, §26.224 of this title (relating to Requirements Applicable to Basic Network Services for Chapter 58 Electing Companies), §26.225 of this title (relating to Requirements Applicable to Nonbasic Services for Chapter 58-Electing Companies) and §26.226 of this title (relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies).

(b)

Purpose. The purpose of this section is to establish procedures for an electing company to introduce non-basic services, including new services, and to exercise pricing flexibility for basic and non-basic services, and for complaints regarding service offerings introduced through informational notice filings.

(c)

Informational notice filing and notice requirements related to pricing flexibility and non-basic services, including new services.

(1)

Notice requirements:

(A)

General notice requirements. An electing company shall provide the informational notice in compliance with this section to the commission, to the Office of Public Utility Counsel (OPUC), and to any person who holds a certificate of operating authority in the electing company's certificated area or areas, or who has an effective interconnection agreement with the electing company.

(B)

Additional notice requirements for an electing company serving more than five million access lines. In addition to the notice requirements in subparagraph (A) of this paragraph, an electing company serving more than five million access lines in this state shall:

(i)

comply with the following notice requirements when proposing any changes in the generally available prices and terms under which the electing company offers basic or nonbasic telecommunications services regulated by the commission at retail rates to subscribers that are not telecommunications providers, including:

(I)

introduction of any new nonbasic services;

(II)

and new features or functions of nonbasic services;

(III)

promotional offerings of nonbasic services; or

(IV)

discontinuation of then-current features or services.

(ii)

Notice shall be provided to any person who

(I)

holds a certificate of operating authority in the electing company's certificate area or areas; or

(II)

has an effective interconnection agreement with the electing company.

(iii)

The following timelines shall apply to the provisions of notice pursuant to this subsection:

(I)

If the electing company is required to give notice to the commission, at the same time the company provides that notice; or

(II)

If the electing company is not required to give notice to the commission, at least 45 days before the effective date of a price change or 90 days before the effective date of a change other than a price change, unless the commission determines that the notice should not be given.

(C)

The requirement for additional notice under subparagraph (B) of this paragraph expires on September 1, 2003.

(2)

Filing requirements:

(A)

At the time the informational notice is filed in Central Records, a copy of the informational notice, including confidential information, shall be delivered to both OPUC and the commission's Director - Policy Analysis, Telecommunications Industry Analysis Division.

(i)

The commission shall assign each informational notice a unique control number and shall stamp the tariff sheets "received".

(ii)

Staff of the commission's Office of Regulatory Affairs (ORA) shall file any notice of deficiencies for incomplete filings not in compliance with this section or pleading alleging that the service offering is inappropriately filed as an informational notice filing within three working days after the date of the filing of the informational notice.

(iii)

Within two working days after the date of ORA's filing, the applicant shall file an explanation of the actions it has taken or intends to take in response to a notice or pleading filed under clause (ii) of this subparagraph.

(B)

Effective date. A service offering shall be effective no earlier than ten days after the electing company files a complete informational notice with the commission.

(C)

Access to confidential information filed with the commission as part of an informational notice filing shall be available to commission staff, upon execution of a commission approved protective agreement, at the time the informational notice is filed.

(D)

Format of filing. An informational notice under this section must include the following elements:

(i)

name of company;

(ii)

PURA chapter under which company operates;

(iii)

date of submission;

(iv)

effective date;

(v)

new and/or revised tariff pages, written in plain language and conforming with §26.207 of this title (relating to Form and Filing of Tariffs), governing the form and filing of tariffs;

(vi)

proposed implementation date (if different from effective date);

(vii)

affidavit of notice to OPUC, COA holders, and parties to interconnection agreements;

(viii)

type of filing (new service; pricing flexibility involving basic service; non-basic only pricing flexibility; packaging, term and volume discount or promotional offering regulated by PURA §58.004; customer specific contract; customer specific contract regulated by PURA §58.003; promotional offering);

(ix)

relevant Long Run Incremental Cost (LRIC) study or LRIC study reference, and relevant support materials (confidential/proprietary/protected materials provided to commission only). When LRIC studies for which commission approval has not been obtained are provided with an informational notice filing, an application for approval of that LRIC study pursuant to §26.215 of this title (relating to Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility (DCTU) Services), to establish a LRIC floor shall be filed before or simultaneously with the informational filing. The electing company shall file a notice of intent to file LRIC studies pursuant to §26.215 of this title no later than ten days prior to the filing of the informational notice filing.

(x)

A response of "yes", "no", or "not applicable", with explanatory language to the following question: "Is the sum of the Total Element Long Run Incremental Cost (TELRIC)-based wholesale prices of components needed for provision of the retail service at or below the retail price set forth in this filing?" If the response is "yes" or "no", the filing must identify the components needed for the provision of the retail service, along with a list of relevant wholesale and retail prices;

(xi)

A response of "yes" or "no" to the following question: "Is the service available for resale by a competitor?" If the answer is "no", does the proposed price meet the standards set forth in §26.274(f) - (h) of this title (relating to Imputation)? For purposes of this question, "available for resale" means:

(I)

the service is not subject to tariffed resale restrictions; and

(II)

the electing company is not aware of any constraints that would prevent a competitor from functionally provisioning the service to the competitor's customers in parity with the electing company's provisioning of the service to the electing company's customers;

(xii)

For package offerings that include any unregulated product or service or an affiliate's product or service, an affidavit indicating that the price of the package, in addition to the requirements of §26.226(e)(1) of this title (relating to Requirements Applicable to Pricing Flexibility for Chapter 58 Electing Companies), also recovers the cost to the electing company, of offering the unregulated products or services or an affiliate's products or services.

(xiii)

description of offering's terms and conditions, including location of service or a statement that it is to be provided state-wide; and

(xiv)

a privacy concerns statement.

(d)

Disputes as to sufficiency or appropriateness of informational notice filing.

(1)

If the electing company advises the commission by written filing that a dispute exists with respect to a notice of deficiency or the inappropriateness of an informational notice, and requests the assignment of an administrative law judge to resolve the dispute, the commission will consider the dispute to be a contested case.

(2)

A contested case will also exist if the commission files a complaint addressing sufficiency or appropriateness of an informational notice filing.

(3)

Parties other than ORA may not challenge the sufficiency of an informational notice filing.

(e)

Complaints regarding service offerings introduced by informational notice filings. An affected person, OPUC, or the commission may file a complaint at the commission on or after the date the informational notice has been filed. The filing of a complaint will be considered to initiate a contested case.

(1)

A complaint addressing an informational notice filing may challenge whether the filing is in compliance with PURA and/or commission substantive rules.

(2)

If a complaint challenging the price of a new service is resolved in a final order issued by this commission in favor of the complainant, the electing company shall either:

(A)

not later than the tenth day after the date the complaint is finally resolved, amend the price of the service as necessary to comply with the final resolution; or

(B)

discontinue the service.

(3)

The commission shall dismiss a complaint filed prior to the filing of an informational notice on the grounds that the commission lacks jurisdiction to hear the complaint.

(4)

All complaints shall be docketed and governed by the commission's procedural rules and shall be filed and reviewed pursuant to the following requirements:

(A)

Complaints shall be captioned: COMPLAINT BY {NAME OF COMPLAINANT} REGARDING TARIFF CONTROL NUMBER(S) {NUMBER(S)} {STYLE OF TARIFF CONTROL NUMBER}.

(B)

Processing. The commission shall assign each complaint filed with respect to an informational notice a unique control number. The presiding officer shall cause a copy of each complaint, bearing the assigned control number, to be filed in the relevant tariff control number(s) for the related informational notice filings.

(5)

The commission's Office of Regulatory Affairs shall have standing in all proceedings related to informational notice filings before the commission and need not file a motion to intervene.

(6)

A complaint filed pursuant to this section shall be considered to be an exception to the informal resolution requirements of commission Procedural Rule §22.242(c) of this title (relating to Complaints).

(f)

Interim relief. A tariff for a new service introduced by an informational notice may not be suspended during the pendency of any complaint. All other tariffs introduced by informational notice filings will remain in effect during the pendency of any complaint unless interim relief suspending the tariff is granted pursuant to this subsection.

(1)

Any request that a tariff be suspended during the pendency of a complaint must meet the following requirements:

(A)

the pleading must state an appropriate and bona fide cause of action;

(B)

the pleading must be verified or supported with affidavits based on personal knowledge; and

(C)

the pleading must set forth the following elements: probable right of recovery, probable and irreparable injury in the interim, and no adequate alternative remedy.

(2)

The presiding officer shall schedule a hearing on interim relief in the form of suspension of a tariff on an expedited basis.

(3)

The burden of proof shall be upon the complainant with respect to each element of proof necessary to obtain any interim relief requested by the complainant.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003128

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.228

The Public Utility Commission of Texas (commission) proposes new §26.228, relating to Requirements Applicable to Chapter 52, Companies.

Proposed new §26.228 clarifies the substantive and procedural requirements relating to new services and packaging and pricing flexibility, including customer promotional offerings, offered by incumbent local exchange companies (ILECs) regulated under Public Utility Regulatory Act (PURA) Chapter 52. Project Number 21159 has been assigned to this proceeding.

The commission staff received comments from parties about the scope and draft rules created in this project at two workshops convened on November 15, 1999, and March 28, 2000. Commission staff coordinated the product of Project Number 21159 with Project Number 21155, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Customer Specific Contracts, Packing Flexibility, and Promotional Offerings; Project Number 21156, Rulemaking to Implement PURA Chapter 58 Withdrawal of Election, Rate Caps, and Rate Adjustments; Project Number 21157, Rulemaking to Implement PURA Chapter 58 Provision of New Services; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings, and Pricing and Packaging Flexibility Provisions for PURA Chapters 52, 58, and 59.

Ms. Anne McKibbin, Senior Economist, Office of Regulatory Affairs, has determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. McKibbin has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing this section will be the clarification of the substantive requirements and procedures relating to the offering of new services and pricing and packaging flexibility, including customer promotional offerings and the filing of LRIC studies by Chapter 52 and 59 companies. There will be no effect on small businesses or micro-businesses resulting from the enforcement of this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Ms. McKibbin has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21156, 21157, and 21161 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Tuesday, June 27, 2000, at 9:30 a.m. in the Commissioners Hearing Room.

Comments on the proposed new section (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. Parties are also requested to e-mail an electronic copy of comments to Anne.McKibbin@puc.state.tx.us, if possible. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed sections. The commission will consider the costs and benefits in deciding whether to adopt the proposed section. The commission also invites comments on whether it is appropriate that proposed subsections (c)(1)(D) and (d)(2)(D) contain an anti-competitive pricing standard, or whether such a standard should be developed through the facts determined in individual contested cases. All comments should refer to Project Number 21159 and Proposed Rule §26.228.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §52.0583, regarding new services for non-electing companies; §52.0584, regarding pricing and packagng flexibility requirements for non-electing companies; and §52.0585, regarding customer promotional offering requirements for non-electing companies.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 52.0583, 52.0584, and 52.0585.

§26.228. Requirements Applicable to Chapter 52 Companies.

(a)

Application. This provision applies to incumbent local exchange companies (ILECs), as defined in the Public Utility Regulatory Act (PURA) §51.002(3), which have not elected to be regulated pursuant to PURA Chapters 58 and 59.

(b)

Purpose. This section establishes the substantive and procedural requirements for a Chapter 52 ILEC to introduce new services and to exercise pricing and packaging flexibility, including customer promotional offerings, and for complaints regarding service offerings introduced by informational notice offerings.

(c)

New services. The term "new services" has the meaning assigned in §26.5 of this title (relating to Definitions) and shall include services for which no rate was in effect on September 1, 1999. An ILEC may file an informational notice to introduce a new service. An ILEC filing an informational notice pursuant to this subsection shall file the appropriate information in accordance with subsection (g)(2) of this section.

(1)

Pricing standards.

(A)

An ILEC shall price each new service at or above the service's long run incremental cost (LRIC).

(B)

The price of a new service may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.

(C)

A price that is set at or above the service's LRIC is presumed not to be predatory.

(D)

There is a rebuttable presumption that the price of a new service is anticompetitive against a competitor if an ILEC's retail price for a new service is less than the sum of the total element long run incremental cost (TELRIC)-based wholesale prices of components needed to provide the new service.

(2)

LRIC studies. An ILEC may establish a service's LRIC by submitting a LRIC cost study, as specified in subsection (g)(2)(D)(ix), that conforms to the requirements of §26.214 of this title (relating to Long Run Incremental Cost (LRIC) Methodology for Services Provided by Certain Incumbent Local Exchange Companies (ILECs)).

(3)

LRIC adoption. An ILEC serving fewer than one million access lines in Texas may establish a service's LRIC by adopting the commission-approved cost studies of a larger company for the same service.

(4)

Rate adoption. In lieu of filing a LRIC study or adopting the LRIC studies of a larger company, an ILEC with less than one million access lines may adopt a rate that is identical to or higher than a larger company's tariffed rate for the same service.

(5)

Packaging of new services. If an ILEC offers a new service as a component of a package, the ILEC shall also offer the new service as a separately tariffed service.

(d)

Pricing and packaging flexibility. An ILEC may file an informational notice to exercise pricing and packaging flexibility by filing the appropriate information in accordance with subsection (g)(2) of this section.

(1)

General requirements.

(A)

Pricing flexibility includes:

(i)

customer specific contracts;

(ii)

packaging of services;

(iii)

volume, term, and discount pricing;

(iv)

zone density pricing, with a zone defined as an exchange; and

(v)

other promotional pricing.

(B)

A discount or other form of pricing flexibility may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.

(C)

An ILEC may exercise pricing flexibility, including the packaging of any regulated services with any other regulated or unregulated services or any service of an affiliate.

(2)

Pricing standards.

(A)

An ILEC shall price each regulated service offered separately or as part of a package at either the service's tariffed rate or at a rate not lower than the service's LRIC.

(B)

An ILEC shall price each service at or above the service's LRIC.

(C)

A price that is set at or above the service's LRIC is presumed not to be predatory.

(D)

There is a rebuttable presumption that the price of the service or package is anti-competitive against a competitor if an ILEC's retail price for the service or package of services is less than the sum of the TELRIC-based wholesale prices of components needed to provide the service or package of services, respectively.

(E)

The price of a package of services that includes unregulated products or services or an affiliate's products or services shall recover the cost, to the ILEC, of acquiring and providing the unregulated products or services or the affiliate's products or services.

(3)

LRIC studies. An ILEC may establish a service's LRIC by submitting a LRIC cost study, as specified in subsection (g)(2)(D)(ix), that conforms to the requirements of §26.214 of this title.

(4)

LRIC adoption. An ILEC serving fewer than one million access lines in Texas may establish a service's LRIC by adopting the commission-approved cost studies of a larger company for the same services.

(5)

Rate adoption. In lieu of filing a LRIC study or adopting the LRIC studies of a larger company, an ILEC with less than one million access lines may adopt a rate that is identical to or higher than a larger company's tariffed rate for the same service.

(e)

Customer promotional offerings. An ILEC may file an informational notice to offer customer promotional offerings by filing the appropriate information in accordance with subsection (g)(2) of this section.

(1)

An ILEC may offer a promotion for a regulated service for not more than 90 days in any 12-month period.

(2)

Customer promotional offerings may consist of:

(A)

a waiver of installation charges or service order charges, or both, for not more than 90 days in a 12-month period; or

(B)

a temporary discount of not more than 25% from the tariffed rate for not more than 60 days in a 12-month period.

(3)

Although ILECs are not required to file LRIC studies with informational notices regarding these customer promotional offerings, the offerings are subject to the standards for pricing flexibility in subsection (d) of this section, in the event of a complaint.

(f)

Requirements for customer specific contracts. An ILEC may enter into customer-specific contracts for certain services as provided in §26.211 of this title (relating to Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges). For all services not addressed in §26.211 of this title, an ILEC must offer customer-specific contracts pursuant to this section.

(g)

Procedures related to the filing of informational notices and associated tariffs. The provisions of this subsection apply to ILECs choosing to introduce new services and exercise pricing and packaging flexibility including customer promotional offerings through informational notice filings.

(1)

Notice requirements. An ILEC shall provide the informational notice in compliance with this section to the commission, to the Office of Public Utility Counsel (OPUC), and to any person who holds a certificate of operating authority in the ILEC's certificated area or areas, or who has an effective interconnection agreement with the ILEC.

(2)

Filing requirements:

(A)

At the time the informational notice is filed in Central Records, a copy of the informational notice, including confidential information, shall be delivered to both OPUC and the commission's Director - Policy Analysis, Telecommunications Industry Analysis Division.

(i)

The commission shall assign each informational notice a unique control number and shall stamp the tariff sheets "received".

(ii)

Staff of the commission's Office of Regulatory Affairs (ORA) shall file any notice of deficiencies (including deficiencies in LRIC studies submitted) for incomplete filings not in compliance with this section or pleading alleging that the service offering is inappropriately filed as an informational notice filing within three working days after the date of the filing of the informational notice.

(iii)

Within two working days after the date of ORA's filing, the applicant shall file an explanation of the actions it has taken or intends to take in response to a notice or pleading filed under clause (ii) of this subparagraph.

(B)

Effective date. A service offering shall be effective no earlier than ten days after the ILEC files a complete informational notice with the commission.

(C)

Access to confidential information filed with the commission as part of an informational notice filing shall be available to commission staff, upon execution of a commission approved protective agreement, at the time the informational notice is filed.

(D)

Format of filing. An informational notice under this section must include the following elements:

(i)

name of company;

(ii)

PURA chapter under which company operates;

(iii)

date of submission;

(iv)

effective date;

(v)

new and/or revised tariff pages, written in plain language and conforming to the requirements of §26.207 of this title (relating to Form and Filing of Tariffs);

(vi)

proposed implementation date (if different from effective date);

(vii)

affidavit of notice to the Office of Public Utility Counsel, certificate of operating authority holders, and parties to interconnection agreements;

(viii)

type of filing (new service; pricing flexibility; packaging, or promotional offering; customer specific contract);

(ix)

except for customer promotional offerings, relevant LRIC study or LRIC study reference, and relevant support materials (confidential/proprietary/protected materials provided to commission only). When LRIC studies for which commission approval has not been obtained are provided with an informational notice filing, an application for approval of that LRIC study pursuant to §26.214 of this title to establish a LRIC floor shall be filed before or simultaneously with the informational notice filing. The ILEC shall file a notice of intent to file LRIC studies pursuant to §26.214 of this title no later than ten days before the filing of the informational notice filing.

(x)

Except for customer promotional offerings, relevant LRIC study or LRIC study reference, and relevant supporting materials (confidential/proprietary/protected materials provided to commission only), if an ILEC chooses to adopt LRIC studies of a larger company pursuant to the requirements of subsection (c)(3) or (d)(4) of this section, as applicable.

(xi)

Except for customer promotional offerings, relevant tariff rates or specific tariff references, if the ILEC chooses to adopt rates of a larger company pursuant to requirements of subsection (c)(4) or (d)(5) of this section, as applicable.

(xii)

A response of "yes", "no", or "not applicable", with explanatory language, to the following question: "Is the sum of the TELRIC-based wholesale prices of components needed for provision of the retail service at or below the retail price set forth in this filing?" Except for customer promotional offerings, if the response is "yes" or "no", the filing must identify the components needed for the provision of the retail service, along with a list of relevant wholesale and retail prices;

(xiii)

A response of "yes" or "no" to the following question: "Is the service available for resale by a competitor?" If the answer is "no", does the proposed price meet the standards set forth in §26.274(f)-(h) of this title (relating to Imputation)? For purposes of this question, "available for resale" means:

(I)

the service is not subject to tariffed resale restrictions; and

(II)

the ILEC is not aware of any constraints that would prevent a competitor from functionally provisioning the service to the competitor's customers in parity with the ILEC's provisioning of the service to the ILEC's customers;

(xiv)

For package offerings that include any unregulated product or service or an affiliate's product or service, an affidavit indicating that the price of the package recovers the cost, to the ILEC, of offering the unregulated product or service or an affiliate's product or service.

(xv)

description of offering's terms and conditions, including location of service or a statement that it is to be provided state-wide; and

(xvi)

a privacy concerns statement.

(E)

For customer promotional offerings:

(i)

Affidavit that a promotion for this service has not exceeded 90 days for the previous 12-month period.

(ii)

Promotional tariff or letter identifying the promotional service and whether it is for a waiver of installation or service order charges, or both (90 days) or a discount of 25% or less (60 days).

(3)

Disputes as to sufficiency or appropriateness of informational notice filing.

(A)

If the ILEC advises the commission by written filing that a dispute exists with respect to a notice of deficiency or the inappropriateness of an informational notice, and requests the assignment of an administrative law judge to resolve the dispute, the commission will consider the dispute to be a contested case.

(B)

A contested case will also exist if the commission files a complaint addressing sufficiency or appropriateness of an informational notice filing.

(C)

Parties other than ORA may not challenge the sufficiency of an informational notice filing.

(4)

Complaints regarding service offerings introduced by informational notice filings.

(A)

Subject to subparagraph (E) of this paragraph, an affected person, the OPUC, or the commission may file a complaint at the commission on or after the date the informational notice has been filed. The filing of a complaint will be considered to initiate a contested case.

(B)

A complaint addressing an informational notice involving pricing flexibility, including customer promotions, may challenge whether the filing is in compliance with PURA and the commission substantive rules.

(C)

A complaint addressing an informational notice involving a new service may challenge whether the tariff is in compliance with the pricing standards of PURA and commission substantive rules. If the complaint is finally resolved in a final order issued by the commission in favor of the complainant, the ILEC shall either:

(i)

not later than the tenth day after the date the complaint is finally resolved, amend the price of the service as necessary to comply with the final resolution; or

(ii)

discontinue the service.

(D)

The commission shall dismiss a complaint filed prior to the filing of an informational notice on the grounds that the commission lacks jurisdiction to hear the complaint.

(E)

The commission shall consider any complaint alleging that the pricing of a regulated service does not meet the pricing standards of PURA and commission substantive rules, which is filed 31 or more days after the implementation date of the tariff, to be untimely.

(F)

All complaints shall be docketed and governed by the commission's procedural rules and shall be filed and reviewed pursuant to the following requirements:

(i)

Complaints shall be captioned: COMPLAINT BY {NAME OF COMPLAINANT} REGARDING TARIFF CONTROL NUMBER(S) {NUMBER(S)} {STYLE OF TARIFF CONTROL NUMBER}.

(ii)

Processing. The commission shall assign each complaint filed with respect to an informational notice a unique control number. The presiding officer shall cause a copy of each complaint, bearing the assigned control number, to be filed in the relevant tariff control number(s) for the related informational notice(s).

(G)

The commission's Office of Regulatory Affairs shall have standing in all proceedings related to informational notice filings before the commission and need not file a motion to intervene.

(H)

A complaint filed pursuant to this section shall be considered to be an exception to the informal resolution requirements of procedural rule §22.242(c) of this title (relating to Complaints).

(5)

Interim relief. A tariff for a new service introduced by an informational notice may not be suspended during the pendency of any complaint. All other tariffs introduced by informational notice filings will remain in effect during the pendency of any complaint unless interim relief suspending the tariff is granted pursuant to this subsection.

(A)

Any request that a tariff be suspended during the pendency of a complaint must meet the following requirements:

(i)

the pleading must state an appropriate and bona fide cause of action;

(ii)

the pleading must be verified or supported with affidavits based on personal knowledge; and

(iii)

the pleading must set forth the following elements: probable right of recovery, probable and irreparable injury in the interim, and no adequate alternative remedy.

(B)

The presiding officer shall schedule a hearing on interim relief in the form of suspension of a tariff on an expedited basis.

(C)

The burden of proof shall be upon the complainant with respect to each element of proof necessary to obtain any interim relief requested by the complainant.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003133

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308

16 TAC §26.229

The Public Utility Commission of Texas (commission) proposes new §26.229, relating to Requirements Applicable to Chapter 59 Electing Companies.

Proposed new §26.229 clarifies the substantive and procedural requirements relating to new services and packaging and pricing flexibility, including customer promotional offerings, offered by incumbent local exchange companies (ILECs) regulated under the Public Utility Regulatory Act (PURA) Chapter 59. Project Number 21159 has been assigned to this proceeding.

The commission staff received comments from parties about the scope and draft rules created in this project at two workshops convened on November 15, 1999, and March 28, 2000. Commission staff coordinated the product of Project Number 21159 with Project Number 21155, Rulemaking to Implement PURA Chapter 58 Provisions Relating to Customer Specific Contracts, Packing Flexibility, and Promotional Offerings; Project Number 21156, Rulemaking to Implement PURA Chapter 58 Withdrawal of Election, Rate Caps, and Rate Adjustments; Project Number 21157, Rulemaking to Implement PURA Chapter 58 Provision of New Services; and Project Number 21161, Rulemaking to Establish Process for New Services and Promotional Offerings, and Pricing and Packaging Flexibility Provisions for PURA Chapters 52, 58, and 59.

Ms. Anne McKibbin, Senior Economist, Office of Regulatory Affairs, has determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. McKibbin has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing this section will be the clarification of the substantive requirements and procedures relating to the offering of new services and pricing and packaging flexibility, including customer promotional offerings and the filing of long run incremental cost (LRIC) studies by Chapter 52 and 59 companies. There will be no effect on small businesses or micro-businesses resulting from the enforcement of this section. There is no anticipated economic cost to persons who are required to comply with the sections as proposed.

Ms. McKibbin has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a joint public hearing on this rulemaking and Project Numbers 21155, 21156, 21157, and 21161 under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Tuesday, June 27, 2000, at 9:30 in the Commissioners Hearing Room.

Comments on the proposed new section (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. Parties are also requested to e-mail an electronic copy of comments to Anne.McKibbin@puc.state.tx.us, if possible. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the proposed section. The commission also invites comments on whether it is appropriate that proposed subsection (c)(1)(D) and (d)(2)(D) contain an anti-competitive pricing standard, or whether such a standard should be developed through the facts determined in individual contested cases. All comments should refer to Project Number 21159 and Proposed Rule §26.229.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §59.030, regarding new services for Chapter 59 electing companies; §59.031, regarding pricing and packaging flexibility for Chapter 59 electing companies; and §59.032, regarding customer promotional offering requirements for Chapter 59 electing companies.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 59.030, 59.031, and 59.032.

§26.229. Requirements Applicable to Chapter 59 Electing Companies.

(a)

Application. This provision applies to electing companies as defined in the Public Utility Regulatory Act (PURA) §59.002(1).

(b)

Purpose. This section establishes the substantive and procedural requirements for a Chapter 59 electing company to introduce new services and to exercise pricing and packaging flexibility, including customer promotional offerings, and for complaints regarding service offerings introduced by informational notice offerings.

(c)

New services. The term "new services" has the meaning assigned in §26.5 of this title (relating to Definitions) and shall include services for which no rate was in effect on September 1, 1999. An electing company may file an informational notice to introduce a new service. An electing company filing an informational notice pursuant to this subsection shall file the appropriate information in accordance with subsection (g)(2) of this section.

(1)

Pricing standards.

(A)

An electing company shall price each new service at or above the service's long run incremental cost (LRIC).

(B)

The price of a new service may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.

(C)

A price that is set at or above the service's LRIC is presumed not to be predatory.

(D)

There is a rebuttable presumption that the price of a new service is anticompetitive against a competitor if an electing company's retail price for a new service is less than the sum of the total element long run incremental cost (TELRIC)-based wholesale prices of components needed to provide the new service.

(2)

LRIC studies. An electing company may establish a service's LRIC by submitting a LRIC cost study, as specified in subsection (g)(2)(D)(ix) that conforms to the requirements of §26.214 of this title (relating to Long Run Incremental Cost (LRIC) Methodology for Services Provided by Certain Incumbent Local Exchange Companies (ILECs)).

(3)

LRIC adoption. An electing company serving fewer than one million access lines in Texas may establish a service's LRIC by adopting the commission-approved cost studies of a larger company for the same service.

(4)

Rate adoption. In lieu of filing a LRIC study or adopting the LRIC studies of a larger company, an electing company with less than one million access lines may adopt a rate that is identical to or higher than a larger company's tariffed rate for the same service.

(5)

Packaging of new services. If an electing company offers a new service as a component of a package, the electing company shall also offer the new service as a separately tariffed service.

(d)

Pricing and packaging flexibility. An electing company may file an informational notice to exercise pricing and packaging flexibility by filing the appropriate information in accordance with subsection (g)(2) of this section.

(1)

General requirements.

(A)

Pricing flexibility includes:

(i)

customer specific contracts;

(ii)

packaging of services;

(iii)

volume, term, and discount pricing;

(iv)

zone density pricing, with a zone defined as an exchange; and

(v)

other promotional pricing.

(B)

A discount or other form of pricing flexibility may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.

(C)

An electing company may exercise pricing flexibility, including the packaging of any regulated services with any other regulated or unregulated services or any service of an affiliate.

(2)

Pricing standards.

(A)

An electing company shall price each regulated service offered separately or as part of a package at either the service's tariffed rate or at a rate not lower than the service's LRIC.

(B)

An electing company shall price each service at or above the service's LRIC.

(C)

A price that is set at or above the service's LRIC is presumed not to be predatory.

(D)

There is a rebuttable presumption that the price of the service or package is anticompetitive against a competitor if an electing company's retail price for the service or package of services is less than the sum of the TELRIC-based wholesale prices of components needed to provide the service or package of services, respectively.

(E)

The price of a package of services that includes unregulated products or services or an affiliate's products or services shall recover the cost, to the electing company, of acquiring and providing the unregulated products or services or the affiliate's products or services.

(3)

LRIC studies. An electing company may establish a service's LRIC by submitting a LRIC cost study, as specified in subsection (g)(2)(D)(ix) that conforms to the requirements of §26.214 of this title.

(4)

LRIC adoption. An electing company serving fewer than one million access lines in Texas may establish a service's LRIC by adopting the commission-approved cost studies of a larger company for the same services.

(5)

Rate adoption. In lieu of filing a LRIC study or adopting the LRIC studies of a larger company, an electing company with less than one million access lines may adopt a rate that is identical to or higher than a larger company's tariffed rate for the same service.

(e)

Customer promotional offerings. An electing company may file an informational notice to offer customer promotional offerings by filing the appropriate information in accordance with subsection (g)(2) of this section.

(1)

An electing company may offer a promotion for a regulated service for not more than 90 days in any 12-month period.

(2)

Customer promotional offerings may consist of:

(A)

waiver of installation charges or service order charges, or both, for not more than 90 days in a 12-month period; or

(B)

a temporary discount of not more than 25% from the tariffed rate for not more than 60 days in a 12-month period.

(3)

Although electing companies are not required to file LRIC studies with informational notices regarding these customer promotional offerings, the offerings are subject to the standards for pricing flexibility in subsection (d) of this section, in the event of a complaint.

(f)

Requirements for customer specific contracts. An electing company may enter into customer-specific contracts for certain services as provided in §26.211 of this title, (relating to Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges). For all services not addressed in §26.211 of this title, an electing company must offer customer-specific contracts pursuant to this section.

(g)

Procedures related to the filing of informational notices and associated tariffs. The provisions of this subsection apply to electing companies choosing to introduce new services and exercise pricing and packaging flexibility including customer promotional offerings through informational notice filings.

(1)

Notice requirements. An electing company shall provide the informational notice in compliance with this section to the commission, to the Office of Public Utility Counsel (OPUC), and to any person who holds a certificate of operating authority in the electing company's certificated area or areas, or who has an effective interconnection agreement with the electing company.

(2)

Filing requirements:

(A)

At the time the informational notice is filed in Central Records, a copy of the informational notice, including confidential information, shall be delivered to both OPUC and the commission's Director - Policy Analysis, Telecommunications Industry Analysis Division.

(i)

The commission shall assign each informational notice a unique control number and shall stamp the tariff sheets "received".

(ii)

Staff of the commission's Office of Regulatory Affairs (ORA) shall file any notice of deficiencies (including deficiencies in LRIC studies submitted) for incomplete filings not in compliance with this section or pleading alleging that the service offering is inappropriately filed as an informational notice filing within three working days after the date of the filing of the informational notice.

(iii)

Within two working days after the date of ORA's filing, the applicant shall file an explanation of the actions it has taken or intends to take in response to a notice or pleading filed under clause (ii) of this subparagraph.

(B)

Effective date. A service offering shall be effective no earlier than ten days after the electing company files a complete informational notice with the commission.

(C)

Access to confidential information filed with the commission as part of an informational notice filing shall be available to commission staff, upon execution of a commission approved protective agreement, at the time the informational notice is filed.

(D)

Format of filing. An informational notice under this section must include the following elements:

(i)

name of company;

(ii)

PURA chapter under which company operates;

(iii)

date of submission;

(iv)

effective date;

(v)

new and/or revised tariff pages, written in plain language and conforming to the requirements of §26.207 of this title (relating to Form and Filing of Tariffs);

(vi)

proposed implementation date (if different from effective date);

(vii)

affidavit of notice to OPUC, certificate of operating authority holders, and parties to interconnection agreements;

(viii)

type of filing (new service; pricing flexibility; packaging, or promotional offering; customer specific contract);

(ix)

except for customer promotional offerings, relevant LRIC study or LRIC study reference, and relevant support materials (confidential/proprietary/protected materials provided to commission only). When LRIC studies for which commission approval has not been obtained are provided with an informational notice filing, an application for approval of that LRIC study pursuant to §26.214 of this title to establish a LRIC floor shall be filed before or simultaneously with the informational notice filing. The electing company shall file a notice of intent to file LRIC studies pursuant to §26.214 of this title no later than ten days before the filing of the informational notice filing.

(x)

Except for customer promotional offerings, relevant LRIC study or LRIC study reference, and relevant supporting materials (confidential/proprietary/protected materials provided to commission only), if an electing company chooses to adopt LRIC studies of a larger company pursuant to the requirements of subsection (c)(3) or (d)(4) of this section, as applicable.

(xi)

Except for customer promotional offerings, relevant tariff rates or specific tariff references, if the electing company chooses to adopt rates of a larger company pursuant to requirements of subsection (c)(4) or (d)(5) of this section, as applicable.

(xii)

A response of "yes", "no", or "not applicable", with explanatory language, to the following question: "Is the sum of the TELRIC-based wholesale prices of components needed for provision of the retail service at or below the retail price set forth in this filing?" Except for customer promotional offerings, if the response is "yes" or "no", the filing must identify the components needed for the provision of the retail service, along with a list of relevant wholesale and retail prices;

(xiii)

A response of "yes" or "no" to the following question: "Is the service available for resale by a competitor?" If the answer is "no", does the proposed price meet the standards set forth in §26.274(f) - (h) of this title (relating to Imputation)? For purposes of this question, "available for resale" means:

(I)

the service is not subject to tariffed resale restrictions; and

(II)

the electing company is not aware of any constraints that would prevent a competitor from functionally provisioning the service to the competitor's customers in parity with the electing company's provisioning of the service to the electing company's customers;

(xiv)

For package offerings that include any unregulated product or service or an affiliate's product or service, an affidavit indicating that the price of the package recovers the cost, to the electing company, of offering the unregulated product or service or an affiliate's product or service.

(xv)

description of offering's terms and conditions, including location of service or a statement that it is to be provided state-wide; and

(xvi)

a privacy concerns statement.

(E)

For customer promotional offerings:

(i)

Affidavit that a promotion for this service has not exceeded 90 days for the previous 12-month period.

(ii)

Promotional tariff or letter identifying the promotional service and whether it is for a waiver of installation or service order charges, or both (90 days) or a discount of 25% or less (60 days).

(3)

Disputes as to sufficiency or appropriateness of informational notice filing.

(A)

If the electing company advises the commission by written filing that a dispute exists with respect to a notice of deficiency or the inappropriateness of an informational notice, and requests the assignment of an administrative law judge to resolve the dispute, the commission will consider the dispute to be a contested case.

(B)

A contested case will also exist if the commission files a complaint addressing sufficiency or appropriateness of an informational notice filing.

(C)

Parties other than ORA may not challenge the sufficiency of an informational notice filing.

(4)

Complaints regarding service offerings introduced by informational notice filings.

(A)

Subject to subparagraph (E) of this paragraph, an affected person, OPUC, or the commission may file a complaint at the commission on or after the date the informational notice has been filed. The filing of a complaint will be considered to initiate a contested case.

(B)

A complaint addressing an informational notice involving pricing flexibility, including customer promotions, may challenge whether the filing is in compliance with PURA and commission substantive rules.

(C)

A complaint addressing an informational notice involving a new service may challenge whether the tariff is in compliance with the pricing standards of PURA and commission substantive rules. If the complaint is finally resolved in a final order issued by the commission in favor of the complainant, the electing company shall either:

(i)

not later than the tenth day after the date the complaint is finally resolved, amend the price of the service as necessary to comply with the final resolution; or

(ii)

discontinue the service.

(D)

The commission shall dismiss a complaint filed prior to the filing of an informational notice on the grounds that the commission lacks jurisdiction to hear the complaint.

(E)

The commission shall consider any complaint alleging that the pricing of a regulated service does not meet the pricing standards of PURA and commission substantive rules, which is filed 31 or more days after the implementation date of the tariff, to be untimely.

(F)

All complaints shall be docketed and governed by the commission's procedural rules and shall be filed and reviewed pursuant to the following requirements:

(i)

Complaints shall be captioned: COMPLAINT BY {NAME OF COMPLAINANT} REGARDING TARIFF CONTROL NUMBER(S) {NUMBER(S)} {STYLE OF TARIFF CONTROL NUMBER}.

(ii)

Processing. The commission shall assign each complaint filed with respect to an informational notice a unique control number. The presiding officer shall cause a copy of each complaint, bearing the assigned control number, to be filed in the relevant tariff control number(s) for the related informational notice(s).

(G)

The commission's Office of Regulatory Affairs shall have standing in all proceedings related to informational notice filings before the commission and need not file a motion to intervene.

(H)

A complaint filed pursuant to this section shall be considered to be an exception to the informal resolution requirements of procedural rule §22.242 (c) of this title (relating to Complaints).

(5)

Interim relief. A tariff for a new service introduced by an informational notice may not be suspended during the pendency of any complaint. All other tariffs introduced by informational notice filings will remain in effect during the pendency of any complaint unless interim relief suspending the tariff is granted pursuant to this subsection.

(A)

Any request that a tariff be suspended during the pendency of a complaint must meet the following requirements:

(i)

the pleading must state an appropriate and bona fide cause of action;

(ii)

the pleading must be verified or supported with affidavits based on personal knowledge; and

(iii)

the pleading must set forth the following elements: probable right of recovery, probable and irreparable injury in the interim, and no adequate alternative remedy.

(B)

The presiding officer shall schedule a hearing on interim relief in the form of suspension of a tariff on an expedited basis.

(C)

The burden of proof shall be upon the complainant with respect to each element of proof necessary to obtain any interim relief requested by the complainant.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 4, 2000.

TRD-200003134

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: June 18, 2000

For further information, please call: (512) 936-7308