Part 2.
PUBLIC UTILITY COMMISSION OF TEXAS
Chapter 26.
SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS
Subchapter G. ADVANCED SERVICES
16 TAC §26.143
The Public Utility Commission of Texas (commission) adopts
new §26.143, relating to Provision of Advanced Services in Rural Areas
with changes to the proposed text as published in the November 9, 2001,
In 1999, as part of Senate Bill 560, the 76th Legislature enacted PURA §55.014
to effectuate the deployment of advanced services in rural areas of the state.
Furthermore, in the same bill, the Legislature enacted PURA §51.001(g)
which pronounced that it is the policy of this state to ensure that customers
in all regions of this state, including low-income customers and customers
in rural and high cost areas, have access to advanced telecommunications and
information services that are reasonably comparable to those services provided
in urban areas and that are available at prices that are reasonably comparable
to prices charged for similar services in urban areas. Accordingly, this section
is adopted in order to effectuate these provisions. This section provides
rural retail customers with a competitive process for the provision of advanced
services and ensures that retail customers in rural areas have access to reasonably
comparable advanced services offered by companies subject to PURA §55.014.
This section sets forth procedures whereby a retail customer within a rural
service area may seek advanced services in order to access the Internet. The
section establishes in subsection (e) a competitive forum for any retail customers
in a rural area to seek advanced services from any advanced services provider,
the "competitive response process." Under this portion of the rule, rural
retail customers may submit a written request to the commission for advanced
services. The commission will post relevant portions of the request on the
commission website so that providers become aware of the customer demand.
Within 50 days after posting, any advanced services provider may submit a
proposal to the rural area's contact person for provision of advanced services.
Based on the proposals, the persons seeking the advanced services will then
negotiate and select a provider for service. This market-based process allows
the rural area and the provider to develop an appropriate strategy for deployment,
including prices, terms, and conditions of service.
If no advanced services agreement is reached in the competitive response
process, this section provides a mechanism in subsections (d) and (f) whereby
retail customers in a rural area may secure access to services that are reasonably
comparable to the advanced telecommunications services offered by companies
within urban service areas. The section also sets forth the Bona Fide Retail
Request (BFRR) procedures that retail customers must utilize in order to request
the reasonably comparable advanced services. The rule defines "rural area"
and addresses the parameters for determining reasonably comparable advanced
telecommunications services, including reasonably comparable prices, terms,
and conditions. This section outlines the requirements of service and establishes
commission proceedings for selection of serving companies after a BFRR.
As part of the drafting process, commission staff conducted several public
workshops to gather information and input from the varied interests that are
potentially affected by this section. After publication of the proposed new
rule in the
Texas Register
, the commission
received written comments from the following: AT&T Communications of Texas,
L.P. (AT&T); the Honorable Susan Combs, Texas Commissioner of Agriculture;
the Honorable Kim Brimer, State Representative; the Honorable Debra Danburg,
State Representative; the Honorable Judy Hawley, State Representative; Southwestern
Bell Telephone Company (SWBT); the State of Texas (State); Texas Cable and
Telecommunications Association (TCTA); Verizon Southwest (Verizon); and XO
Texas, Inc. and Time Warner Telecom of Texas, L.P. (collectively XO and TWTC).
No person, under Government Code § 2001.029, requested a public hearing
on this section.
General Comments
All of the Commenters are in general support of the rule's adoption. Verizon,
however, while supporting many of its provisions takes issue with the rule
because it may mandate advanced services deployment by the company. The remaining
Commenters question specific provisions, but recognize that the rule implements
PURA §55.014 with a flexible structure that takes into account the complex
and varied interests involved in a statewide policy for deployment of advanced
services.
Representative Kim Brimer emphasized that a "one-size-fits-all" approach
to advanced services deployment will not work in a state as geographically
diverse as Texas and that the state must correctly identify the public policy
issues, and where appropriate, design a framework that encourages investment
in rural and urban areas. Representative Brimer stated that the rule effectively
balances many complex interests and preserves the best of previous legislative
work. To that end, Representative Brimer supported adoption of the rule because
it recognizes that multiple technologies will be necessary for a comprehensive
solution. In particular, Representative Brimer supported the competitive response
process, which offers an additional option for communities that are not able
to meet the BFRR threshold defined in the rule.
Representative Debra Danburg stated that the rule will contribute toward
the goal of PURA §55.014, the increased availability of advanced services
in rural areas. Representative Danburg supported the rule as published and
stated that the rule strikes the right balance when considering the public
policy considerations faced by the 77th Texas Legislature, especially given
that PURA §55.014 presents different constraints than existed for the
bills proposed in the Legislature. For example, Representative Danburg stated
that the Legislature was able to mix both "carrots" and "sticks" in the proposed
toolbox to bring additional services to places and people who want them. Because
of the constraints of PURA §55.014, Representative Danburg explained
that the commission has a different mix of available tools, but that the commission's
rule fits the Legislature's intent when adopting the statute. Moreover, Representative
Danburg stated that the competitive response process improves upon the statute
with a competitively neutral mechanism to encourage creative solutions for
communities that have a need for services but that might not otherwise be
able to establish a BFRR. The rule, according to Representative Danburg, carefully
balances the difficult economics involved in the deployment of advanced services
with the real needs of rural communities.
Representative Judy Hawley emphasized the importance of first encouraging
the free market to meet the broadband needs of rural Texans and the necessity
of keeping all proposals technologically neutral. Representative Hawley supported
the competitive response process in the proposed rule, and argued that by
providing communities with an "official bulletin board" from which to solicit
advanced service providers, the community can identify its unique needs and
aggregate purchasing power to entice prospective providers. Representative
Hawley compared this phase to a Request for Proposal that is not limited by
the criteria for a BFRR, as the commission simply facilitates a match between
a community and a potential provider, with the terms of the contract being
worked out by the respective parties. Representative Hawley strongly encouraged
the commission to commit a full time employee to expediting high-speed Internet
access for all communities, and to work closely with the Office of Rural Community
Affairs and other agencies to make sure no funding streams or leveraging opportunities
are overlooked.
Likewise, XO and TWTC pointed out that the proposed rule provides rural
retail customers with a competitive process through which to seek the provision
of advanced services. XO and TWTC expressed their support for the inclusion
of the competitive process in the proposed rule. Specifically, XO and TWTC
support subsection (e) of the rule which provides a mechanism for rural retail
customers to request a competitive response for the provision of advanced
services by submitting a request to the commission for posting on the commission's
website, including the notification of all carriers. XO and TWTC commented
that the rule's competitive process benefits the goal of creating opportunities
in the competitive market to provide advanced services solutions. The State
also expressed support for the rule's flexibility and openness in this regard.
TCTA commented that the proposed rule would accomplish two objectives that
are important in any effort to expand the availability of advanced services.
First, the proposed rule recognizes that a variety of technologies exist and
that the technical means and economics of providing advanced services are
continually evolving. By not presuming that any particular means of delivering
these services will suit all communities, no technology is advantaged or disadvantaged.
Second, the process of posing information on the commission's website creates
an open process under which communities and providers have an opportunity
to explore options. According to TCTA, by making community desires for advanced
services more widely known, the rule would give the marketplace an improved
chance to work.
The commission agrees with these comments and will work to ensure that
the rule is effectively implemented for all providers, that the competitive
response process is utilized, and that opportunities are coordinated. The
commission has a team of employees who work on advanced services issues. Upon
adoption of this rule, the commission will provide a staff member as the contact
person for communities seeking to utilize the competitive response and BFRR
processes. This staff person will be available to answer community questions
about the advanced services' processes. In addition, the team will work with
other state agencies, as appropriate, to facilitate broad-based deployment
of advanced services.
The commission also recognizes the complexity of advanced services deployment
and adopts this section to accommodate the competing and difficult interests
involved. The commission finds that promoting market solutions in the first
instance is ultimately the best solution for customers in Texas. The rule
allows for customers and advanced services providers to reach a mutually agreed
resolution that promotes economic and technological sustainability. Consequently,
the commission agrees with the comments and adopts this section to allow a
competitive forum for all retail customers in rural areas to seek advanced
services from any advanced services provider. As Representative Danburg observed,
the competitive response process allows a competitively neutral mechanism
to encourage creative solutions for communities that have a need for services.
And, as Representative Hawley mentioned, the commission will facilitate a
match between a community and a potential provider to bring a market solution
for the community. The terms of the contract, however, will be worked out
by the respective parties. The competitive response process is adopted because
it will foster communication between companies and communities so that they
may consider and implement the myriad solutions that may be available. Further,
the process will provide all parties flexibility and customization in provisioning.
As communities, technologies, and Internet content advances, the competitive
process will adapt with market changes. Only after this competitive response,
market approach fails will a BFRR process be necessary so that retail customers
in a rural area may secure access to services that are reasonably comparable
to the advanced telecommunications services offered by companies within urban
service areas.
Verizon contended, however, that as a threshold matter PURA §55.014
and this section are preempted by federal law because they attempt to regulate
interstate telecommunications services, as retail services that provide high-speed
access to the Internet - such as digital subscriber line service - are interstate
services, and therefore, cannot be regulated by the state. Verizon argued
that the statute and its implementing rules cannot require Verizon to deploy
interstate services under any condition.
The commission rejects Verizon's claims and adopts this section after carefully
balancing the tensions inherent when promoting statewide rural deployment.
The commission finds that it does have authority to adopt the rule. As noted
in subsection (a) of the rule, PURA §51.001(g) outlines the guiding principle
of this state regarding deployment: it is the policy of this state to ensure
that customers in all regions of this state have access to advanced telecommunications
services that are reasonably comparable to those services provided in urban
areas. PURA §55.014(g) specifically provides the commission with all
jurisdiction to enforce the statute with regard to the provision of advanced
services. Notwithstanding these statutory provisions, the commission points
out that the rule itself does not mandate that an advanced services provider
deploy any particular technology in response to a request for service, and
it allows for great flexibility in the provision of any service. The section
also provides for significant protections for economic sustainability of the
service in the prices, terms, and conditions that a company may require of
rural customers. The commission finds that the rule adequately addresses the
jurisdictional concerns raised by Verizon.
Preamble Questions
In the proposed rule published in the November 9, 2001
Texas Register
, the commission sought comment on three items. The first
two questions posed by the commission are inter-related but distinct. The
first asked for comment on the appropriate number of lines of service necessary
for a BFRR under subsection (f)(2)(A) of the rule and how or why that number
is appropriate or essential. The second sought comment on the economic relationship
between the required number of lines for service and the standards for a reasonably
comparable price, term, and condition for service, including the 140% rebuttable
presumption on price and the availability of a contract term commitment.
Commissioner Susan Combs, Representative Hawley, and the State all argued
that a strict requirement for 150 lines of service in a BFRR is neither realistic
nor appropriate for all rural areas. The number of lines, they contended,
should be lower than 150. The State does not believe that threshold numbers
of customer requests or cost studies should be used as the basis for deciding
that a bona fide request has been made. The State pointed out that the statute
does not provide for cost studies to establish the profitability of service
prior to the acceptance of a BFRR. The State suggested that a single request
for service should be sufficient to trigger the provisioning requirements
of the statute, provided the following five conditions are met: (1) there
is a written record of a request; (2) the customer agrees to a contract for
a minimum term; (3) the reasonably comparable service is technologically flexible;
(4) a customer has the right to a complaint procedure at the commission; and
(5) subsequent customers in the same rural exchange would have the right to
the provisioning of the same service.
Commissioner Combs expressed that the minimum number of lines included
in the BFRR should be reduced from 150 to 75, which, the Commissioner argued,
is a more realistic number for smaller rural areas to meet. Commissioner Combs
contended that the requirement of 150 lines for service might result in some
rural areas being unable to even apply because the population density simply
cannot satisfy the requirement. Commissioner Combs stated that the numerical
change should be made in both subsection (f)(2)(A) and (f)(4)(B) of the rule.
Representative Hawley suggested adding language to subsection (f)(2), which
details the components of a BFRR, to state clearly that the commission may
make exceptions to these provisions for good cause. This would, according
to Representative Hawley, allow the commission flexibility in determining
when a request is a BFRR. Representative Hawley explained that the commission
could find that a request is a BFRR even though it has fewer than 150 line
requests which would create a process that is more realistic for many rural
areas.
AT&T, SWBT, TCTA, and Verizon contended that the requirement of 150
lines for service for a BFRR is appropriate and essential for the success
of rural advanced services deployment.
AT&T maintained that subsection (f)(2)(A), regarding the appropriate
number of service lines for a BFRR request, should recognize current and future
economic realities to avoid disincenting telecommunications providers from
providing basic local service in rural areas or advanced telecommunications
services in urban areas. AT&T stated that the minimum number of service
lines threshold recognizes that customer concentrations are necessary to support
deployment of advanced services. AT&T contended that 150 (generic) digital
subscriber line (xDSL) service lines may provide the economic support necessary
to deploy xDSL service in rural areas. However, due to varying situations
within the state, AT&T argued that 150 xDSL service lines may not always
be sufficient to support economically reasonable deployment. AT&T claimed
subsection (e), regarding the proposed rule's competitive response process,
allows potential customers representing fewer than 150 lines of service that
are willing to pay a premium price for advanced service to make their desire
known to a broad audience of potential providers. Therefore, AT&T maintained
that the commission should not decrease the minimum of 150 lines of service
that would be required to initiate the BFRR process.
Although SWBT supported the 150 number for the BFRR requirement, SWBT proposed
that the BFRR in subsection (f)(2)(A) be stated in terms of "customers" not
"lines for service" because the BFRR should reflect actual retail customers.
The State disagreed with SWBT's proposal that the rule be amended to refer
to number of customers, rather than number of lines. The State claimed that
there is no economic difference between one customer ordering 150 lines and
150 customers ordering the same number of lines.
SWBT added that the 150 minimum number of service lines for a BFRR in the
rule should be adopted. The 150 number is supported by SWBT's study into advanced
services deployment. In fact, SWBT contended that the record would support
a much higher number for an economic "break even." The 150 number recognizes
that the statute is not a "deploy-at-any-cost" law, but should take into account
competitive, legal, technical, and policy issues. For example, SWBT stated
that wireline advanced services deployment to small numbers in a typical rural
environment is not economical; thus, a non-wireline technology is the probable
means for carrier deployment. Any reduction in the number of required customers
will reduce the likelihood of any broadly deployed wireline solution to remain
available and scalable after the original demand is met. Notwithstanding the
propriety of the 150 lines of service requirement, SWBT contended that customers
are also well protected by an additional element in the rule: the "competitive
response" in subsection (e). This mechanism will promote deployment for smaller
groups of customers and mitigates any concern over the 150-line threshold.
As evidence of the need for the 150-line minimum, SWBT stated that its
study data supports a BFRR number significantly higher than 150. SWBT explained
that it examined 69 offices in SWBT's five-state territory where no asymmetric
digital subscriber line (ADSL) equipment has been deployed. The sampled offices
required facilities, Internet service provider (ISP) connectivity, land, building
and equipment for wireline ADSL deployment. SWBT applied these percentages
to its Texas offices where no ADSL is deployed. The study used capital and
expense deployment estimates and historical data; it did not consider ubiquitous
deployment in the wire center or rural area; the analysis approximated cost
of the digital subscriber line access multiplexer (DSLAM) and call transport
to ISP; and assumed a $70 per month subscriber cost and five year "payback"
period. According to SWBT, the costs associated with wireline deployment include:
support costs (network management tools and labor); land, building, and collocation
costs; interoffice transport costs; additional fiber costs; and supporting
network capital costs.
SWBT stated that the "average" rural Texas deployment would require more
than 350 subscribers over a five-year period to obtain an economic "break-even."
SWBT estimated that it would require between 100 and 2000 subscribers for
an economic "break even" depending on the percentage of deployments.
TCTA expressed support for a threshold level of customer demand to trigger
the obligation of a company subject to the statute to provide service under
the rule.
Verizon contended that the provision of 150 lines to begin the BFRR process,
as set forth in subsection (f)(2)(A), is a reasonable number of lines, because
although it is likely that rural communities will need to commit to a significantly
greater number of lines to obtain a price within 140% of the price in urban
areas, companies will negotiate such matters after a BFRR is made.
The commission adopts the rule, particularly subsection (f)(2)(A), with
a requirement that a BFRR contain a request for 150 lines for service. The
commission agrees with the telecommunications providers that economic viability
must be taken into account because the general cost for service in rural areas
is greater and more varied than in urban areas. As evidenced by the companies'
comments, many rural areas of this state would require a significant number
of lines or customers to support an economically viable advanced services
deployment. And, such viability may occur only after a period of years. The
commission seeks to balance the requirements of the statute with the realties
of rural Texas, not least of these that rural Texas differs greatly from one
region to another. There are significant variables to consider when examining
the appropriate number of lines for a BFRR. These include: population density,
distance, terrain, technology, and current carrier deployment and presence.
While 150 lines may prove too large an obstacle for some rural areas to develop,
it may not for other communities. One hundred-fifty may, in fact, represent
a small percentage of total lines in a particular community. Furthermore,
as explained by several Commenters, the rule balances the 150-line requirement
with the competitive response process in subsection (e). This process will
allow any rural area with a forum to solicit offers for deployment. In fact,
this process will offer exposure to myriad technologies and possibilities
that the rural area may not have considered. The forum will enhance an open
marketplace. Consequently, the commission declines to adopt the proposals
to decrease the number of lines for service required for a BFRR. While the
statute does not expressly require a cost analysis or a line of service requirement
for a BFRR, the statute does not define a BFRR either. The commission finds
that a line requirement serves to implement the statute given its structure
and meaning. Likewise, the commission does not specifically adopt a provision
in the rule to allow for exceptions to the 150 lines of service requirement.
A rural area may utilize the competitive response process even if not meeting
the requirement of a BFRR. The commission would point out that §26.3
of this title (relating to Severability Clause) applies to this rule. The
commission, pursuant to §26.3, may make an exception to any substantive
telecommunications rule for good cause. Therefore, if the competitive response
process does not result in a rural area receiving service and that area's
request does not meet the 150 lines of service requirement, the commission
may, without specifically providing so in the rule, grant a good cause exception
when appropriately established. The commission also rejects SWBT's request
to modify the lines of service to instead reflect 150 different customers.
The commission agrees with the State that there is no economic difference
between one customer ordering 150 lines and 150 customers ordering the same
number of lines.
Next, the commission examines the economic relationship between the required
number of lines for services and the standards for a reasonably comparable
price, term, and condition for service. AT&T, SWBT, the State, and Verizon
provided statements on this portion of the rule to reference their general
support for the 140% rebuttable presumption in the rule for a reasonably comparable
price in a rural area.
AT&T maintained that the proposed rule should recognize differences
in cost between providing services to urban and rural customers. AT&T
stated that the proposed rule should recognize that differences in technology
used in deploying advanced services in rural areas could result in different
rates, terms, and conditions than comparable services within urban areas.
AT&T contended that the 140% rebuttable presumption establishes a "safe
harbor" to prevent providers from seeking a commission waiver for any price
differentials. AT&T maintained that there is no prohibition against a
potential provider demonstrating that additional lines of service would need
to be provisioned in order to maintain a retail price within the safe harbor.
Moreover, AT&T claimed that there is no prohibition against a potential
provider demonstrating that higher retail prices would be required to provide
an advanced service to only the requesting customers. AT&T stated that
the 140% rebuttable presumption allows a customer to challenge any price differential,
while allowing a provider to request an additional price differential if appropriate.
AT&T contended that PURA §55.014 does not require a provider to provision
an advanced service in a rural area that has the
same
prices, terms, and conditions of services that exist in urban
areas.
SWBT maintained that rural advanced services deployment is significantly
more expensive and risky than in urban areas. The rebuttable 140% presumption
factor in the proposed rule is well justified. A rule without the 140% rebuttable
presumption could force a carrier to offer a retail service at a cost below
the resale price. A carrier must not be compelled to offer a service at a
loss for an extended period of time. The 140% rebuttable presumption represents
a reasonable balance between pricing and deployment costs. SWBT advanced three
primary reasons for its support. First, the 140% factor was utilized in several
bills of the 77th Texas Legislature, including CSSB 1783, which did not pass.
Second, the factor provides market and economic certainty for carrier deployment
and marketing because any challenge to the pricing will be resolved in the
carrier Selection Proceeding under §26.143(f)(4). Third, the rebuttable
presumption allows use of multiple or substitutable technologies. For example,
an urban ADSL offering at $50 per month would be reasonably comparable to
a rural satellite offering for $70 a month.
The State expressed support of the rebuttable presumption that a rural
price is reasonably comparable to a similar urban service if the rural price
is within 140% of the urban price. The state stressed, however, that the 140%
threshold should not be seen as a license to gouge rural customers if the
price to serve is lower. As the rule will allow, affected persons should be
allowed to rebut the proposed price if it can be proven to actually be lower.
Verizon stated that with the 140% rebuttal presumption in the rule, a carrier
should still be allowed the opportunity to show that its deployment costs
are actually greater. Verizon argued that carriers should be allowed to recover
all their costs. Verizon cited PURA §60.101(3) and Federal Telecommunications
Act (FTA) §254(k) and argued that subsection (d)(2)(A)(iii), allowing
a carrier to rebut the 140% presumption by showing that a higher price is
necessary to recover its reasonable cost, should be retained to give companies
the opportunity to recover all their costs of providing a mandated service.
Verizon asserted that once a BFRR is made, the affected companies must file
a written response with estimated prices, which will depend in part on the
capital costs and expenses for the project, the number of lines requested,
the number of lines capable of being served, and whether end-users will commit
to a specific term. Verizon proposed a scenario in which a community must
commit to 1,000 lines for service to get the cost down to within 140% of the
price in an urban area, and argued that, if the rural community cannot get
1,000 lines to commit for service, it must decide whether to forego service
or pay a significantly higher price with longer term commitments.
The commission finds that to be presumed "reasonably comparable," the rural
price for an advanced service must be within 140% of the price for similar
advanced services in the company's proximate urban areas. This scheme is reasonable
and justified given the lines of service required for a BFRR and other terms
that a company may require of rural customers. The commission recognizes that
deployment costs will vary between different rural areas and will depend largely
on the technology utilized and the number of lines served. Because a telecommunications
provider would be assured 150 lines for service should they be selected to
provision advanced services after a BFRR, the company could also provide a
service economically within the 140% urban differential. The commission finds
that subsection (d)(2)(A)(i), therefore, allows companies to recover their
costs of providing service. Significant to this finding is the additional
provision in subsection (d)(2)(A)(iii) that permits a company to charge a
monthly retail price that is higher than the 140% of an urban price if the
company shows that a higher price is necessary to recover its reasonable costs
in providing the service. Additionally, the rule allows the company to require
a contractual term commitment for service. Within this framework, the commission
will also take into account the distance, terrain, and features of the rural
area when determining whether a rural price, term, or condition is reasonably
comparable. Thus, even though companies may contend that the minimum number
for a BFRR should be higher than 150, the commission finds that the relationship
of the number of lines in conjunction with the price, terms, and conditions
allowed for rural customers justifies the balance reached in the rule. The
commission likewise finds that the rule adequately affords rural customers
reasonable terms for service. Although a rural area must commit 150 lines
of service, the customers are allowed to show that a reasonably comparable
price is below the 140% threshold presumed by the rule. If a rural area can
establish that a company will recover its reasonable costs in providing the
service, the community may show that a price lower than 140% of an urban price
is justified. And, again, if the 150 lines for service is not practical for
a particular rural area, the community may utilize the competitive response
process.
Lastly, the commission elicited statements on the benefits to be gained
by the rule. Commissioner Combs commented that while there are many variables
which impact the ability to deliver advanced services in rural areas, including
the cost of upgrading existing equipment and proximity of the telecommunications
provider to an Internet service provider, the commission should consider the
positive benefits to be derived from high speed access for rural areas, including
new opportunities for e-commerce and improved access to public and private
services. Representative Hawley stressed that deployment of advanced services
is crucial to the economic vitality of the less populated areas of the state.
The commission agrees with these comments and recognizes that there may
be a sustained effect on the local economy of rural areas which have access
to advanced services. Advanced services provided under this section would
allow customers in rural areas to access the Internet more quickly and more
efficiently than is currently the case. Rural areas may experience economic
benefits from advanced services through increased attraction of business and
resident location within the area. Additionally, existing or emerging businesses
in rural areas will have the opportunity to request advanced services. Receipt
and use of advanced services may provide these businesses with the ability
to acquire remote business practices, create a larger customer base, or generate
greater levels of financial performance through e-commerce. These economic
benefits may in turn lead to increased employment in the rural areas. Advanced
services providers may employ additional personnel in the rural area for management
and maintenance; small businesses may create new jobs due to the need for
technical assistance or because of opportunities that are only possible through
Internet transactions; and businesses may increase productivity or customers
due to greater demand for their goods and services. Likewise, new business
enterprises may create added workforce prospects because of the options generated
through increased connectivity to the Internet. The extent of these benefits
will vary greatly across the state and will depend on the population and technical
ability of the population in the rural area, the number of retail lines requested,
the number of customers seeking service, and the types of service provided.
Other Specific Comments to Rule Language
Subsection (d) supplies the requirements for providing an advanced service
by telecommunications providers after a BFRR. Subsection (d)(1) specifically
outlines when a company is subject to the rule's BFRR process and under what
conditions it must provision an advanced service and under what conditions
the company would not be required to provision service.
Verizon asserted that subsection (d)(1)(A) should be clarified to reflect
that a company is not obligated to deploy an advanced service in rural areas
unless it offers that service to its "qualified customers" in
all
urban areas. "Qualified customers," Verizon contended, should mean
those customers capable of receiving advanced services using the company's
existing facilities. Verizon additionally maintained that a company should
be permitted to complete its roll-out of services in its urban markets before
it is required to offer them in rural markets, and that the purpose of the
legislation was to ensure that rural communities can obtain services generally
available in urban communities, not to frustrate deployment of new services
in urban areas by imposing rural build-out requirements on the company as
soon as it offers a new service.
The commission rejects Verizon's suggested change to the rule. While the
commission agrees that the rule should not frustrate new deployment in urban
areas, the commission also recognizes the need for increased deployment to
all Texans. As noted in subsection (a), PURA §51.001(g) outlines, in
relevant part, the guiding principle of this state regarding deployment: it
is the policy of this state to ensure that customers in all regions of this
state have access to advanced telecommunications services that are reasonably
comparable to those services provided in urban areas. The commission finds
that the benefits associated with the application of this rule far outweigh
any potentially unintended consequences that might discourage urban development.
The commission adopts this rule after carefully balancing the tensions between
promoting deployment and discouraging prospective investment. The commission
finds that the rule harmonizes these interests in such a way to foster market
competition and to meet customer demand in rural areas. The rule requires
a minimum threshold of lines of service for a BFRR. Additionally, the rule
provides for specific, significant elements for carrier price, terms, and
conditions that allow a company to reap an economic return in its rural deployment
investment. Thus, the commission finds that urban customers will not be disadvantaged
by the implementation of this rule. The commission further finds that a company
that provides advanced telecommunications services within its urban areas
is obligated to provide advanced services under the statute and the rule even
when the company does not offer advanced services in all of its urban areas.
Subsections (d)(1)(B) and (f)(2)(A) provide that the lines for service
in a BFRR and subsequent requests for service must be located within 14,000
26-gauge cable feet or its equivalent of the same central office in a rural
area. Commissioner Combs urged the commission to re-examine the 14,000-foot
limit from the central office, as the distance is so calibrated as to exclude
those customer farther out of the town center.
The commission adopts a 14,000 26-gauge cable feet or its equivalent as
the proper distance for a customer in a BFRR. This distance recognizes the
technological and deployment limitations of the advanced services generally
offered by the companies obligated to provide services under the rule. This
distance should also be viewed in light of the area encompassing a "rural
area" which is comparatively large. Moreover, any rural area customers not
within 14,000 feet distance may utilize the competitive response process to
obtain advanced services. Finally, the distance limitation also provides certainty
for a company in meeting its obligations once it is selected to provide service
to a rural area. The company will have adequate notice of the customers to
which it is obligated to serve, be they from the original BFRR or from subsequent
requests in the same BFRR area.
Subsection (d)(1)(D) states that a company shall not be required to provide
advanced services if an advanced services provider is already providing service
to the rural area. Subsection (d)(1)(D)(i) - (v) outline the specific criteria
that the commission shall consider when determining if another provider is
already providing advanced services in the rural area.
Verizon argued that subsection (d)(1)(D)(i)-(v) should be deleted because
these provisions reverse an exception to the general rule requiring deployment
of advanced services in rural areas by allowing the possibility of requiring
a company to offer services in an area even if another company is already
providing advanced services in the rural area.
TCTA expressed its support for relieving a company from providing service
if the requesting community is already served by another provider.
In its reply comments, TCTA disagreed with Verizon that the commission
should delete the portion of the rule that sets out the specific tests for
determining whether an existing provider already serves a community. It stressed
that, without these criteria, communities that want advanced services will
not know what the commission will consider "already being served." Also, without
these tests, a provider that is already serving the community may find itself
needlessly drawn into the BFRR case at the commission. As a practical matter,
TCTA contended, if the commission does not define what constitutes the presence
of an existing provider in the rule, the issue will be left open for future
debate, briefing of issues, and potential discovery disputes.
The commission rejects Verizon's suggestion to delete the criteria listed
in subsection (d)(1)(D)(i)-(v). The commission does not find that the criteria
eviscerates the exemption to serve a rural area if a provider is already serving
the rural area. The opposite is the case. The criteria merely outline what
elements may establish the exception. The specific listing gives needed guidance
to companies, communities, and the commission.
Subsection (d)(1)(E) provides that a company shall not be required to provide
advanced services if no Internet service provider is providing or commits
to provide Internet connectivity in the rural area that is compatible with
a company's deployed service. Representative Hawley suggested the following
language for subsection (d)(1)(E): "The absence of an Internet service provider
is a factor to be considered, but not necessarily an exception to requiring
a company to provide advanced services in a rural area."
TCTA expressed its support for subsection (d)(1)(E).
The commission agrees with Representative Hawley's suggested change and
replaces the language for subsection (d)(1)(E). By providing that the absence
of an ISP is a factor to be considered when requiring a company to provide
an advanced service, the commission will have the flexibility to consider
the circumstances surrounding deployment of advanced services in a particular
rural area.
Subsection (d)(2)(A) provides that under a BFRR, a company's rural price
for service is presumed to be reasonably comparable if it is within 140% of
the monthly retail price of the advanced telecommunications service offered
in the same company's proximate urban service area. Subsection (d)(2)(A)(iii)
and (iv) allow a company or interested person to rebut the presumption if
the party can show that the company's reasonable costs in providing the service
are actually higher or lower than the price that falls within the 140% "safe
harbor."
AT&T argued that subsection (d)(2)(A) should state that any challenge
to the 140% rebuttable presumption must be raised and resolved during the
commission selection proceeding described in subsection (f)(4). AT&T stated
that granting a challenge to a provider's pricing structure at a later date
could result in investments for which no return may ever be realized. SWBT,
in its reply comments, agreed with AT&T regarding the challenge to the
company offered pricing in response to a BFRR.
The commission agrees with AT&T's comment and adds new subsection (d)(2)(A)(v)
to provide that a challenge to the presumption must be made during the commission
Selection Proceeding under subsection (f)(4) after notification of the BFRR.
Further, the commission agrees that the company's price for service to rural
customers should be resolved during the commission Selection Proceeding.
Verizon asserted that subsection (d)(2)(A)(iv) should be eliminated because
parties should not be allowed to challenge a price that satisfies the 140%
threshold. Verizon maintained that the purpose of the legislation is to provide
a safety net under which rural areas can receive advanced services if no one
is willing to provide such services voluntarily, not to subject companies
to price regulation. Verizon cited PURA §60.101(b)(3) and FTA §254(k)
in support of its position that in adopting a pricing rule, the commission
shall require that each service recover the appropriate costs of each facility
and function used to provide the service. On the other hand, Verizon maintained
that subsection (d)(2)(A)(iii) should be retained to give companies the opportunity
to recover all their costs of providing a mandated service.
The State countered that affected persons should be allowed to rebut a
company's proposed price if it can be proven to be lower.
The commission rejects Verizon's call to delete subsection (d)(2)(A)(iii).
First, the 140% price term merely allows a company to presumptively establish
that its rural price is reasonably comparable to its urban price. The provision
provides a "safe harbor" for a company to show its compliance with the statute.
Second, the provision Verizon seeks to delete does not allow reduction in
a company's price below its reasonable costs for providing service. On the
contrary, the rule expressly states that to rebut the rule's presumption,
an interested person must show that a lower price will allow a company to
recover its reasonable costs in providing service. The rule does not prohibit
a company from recovering its appropriate costs of each facility and function
used to provide the advanced service.
Subsection (d)(2)(B) outlines the requirements for establishing that a
rural term and condition for service are reasonably comparable to a company's
urban service. Verizon argued that even in urban areas, a large percentage
of customers cannot obtain certain types of advanced service because of technical
limitations and that those technical limitations may be exacerbated in rural
areas. Therefore, Verizon supported subsection (d)(2)(B).
The commission concurs and retains subsection (d)(2)(B) in the rule.
Subsection (f) outlines the BFRR process, including the requirements for
a BFRR and the commission proceedings applicable to the BFRR.
XO and TWTC expressed their support for the notification requirements contained
in subsection (f)(3), which requires the commission to notify all companies
electing under PURA Chapter 58 and all SPCOA and COA holders when the commission
has determined that a request is a BFRR and to post such information on the
commission's website. XO and TWTC stated that this process benefits the goal
of creating opportunities in the competitive market to provide solutions for
advanced services deployment.
AT&T argued that subsection (f)(4)(A)(i) should clarify the level of
detail required for a company proposal in a commission Selection Proceeding.
AT&T stated that non-incumbent local exchange carriers that serve rural
customers through resale or unbundled network element platform may have very
limited or no detailed information relating to the network in place that would
significantly impact their ability to provide an advanced service. The non-ILEC
company may not be able to gain access to such information. Specifically,
AT&T recommended that the commission clarify that the rule is flexible
for a non-ILEC submitting a proposal and is not intended to be unduly burdensome.
After notification of a BFRR is published, subsection (f)(4)(A) requires
each company subject to the rule for the rural area seeking advanced services
to submit a proposal for provision of one or more advanced services to the
retail customer(s) seeking service. The commission agrees with AT&T that
the rule allows for company flexibility in developing a proposal. The rule
merely provides that the proposal must evidence compliance with the requirements
of subsection (d) regarding the provision of advanced services. While the
proposal, at a minimum, must comport with these provisions, the rule does
not specifically govern what the proposal must additionally contain. The commission
finds that this flexible approach is appropriate given the technological complexities
involved in advanced services deployment and the ever-changing methods by
which to provide the services. The commission also recognizes that proposals
by different companies will vary based upon the extent of the company's presence
in the rural area, how the company provides service to the area, and the characteristics
of the rural area. For example, the commission would not anticipate a cost-study
proposal, detailing how the company would build out facilities, from a submitting
company that simply provides local service through the purchase of unbundled
network element platform from the underlying carrier in the rural area making
a BFRR. The commission merely expects a detailed outline of how the company
would comply with the rule and provide advanced services to the rural area.
Because the commission will examine the proposals in order to select a provider
for the rural area, the company should make its best case for provision of
service given its resources and presence in the rural area. The commission
would also require sufficient information to establish the propriety of a
company's 140% price differential. The company submitting a proposal should
also look to the factors under subsection (f)(4)(D) to determine what elements
are expected in the proposal. The commission finds that the rule sufficiently
addresses the requirements for a company proposal and declines to further
clarify the detail of the required proposal.
Subsection (f)(4)(D) contains the criteria that the commission may deem
relevant when selecting a company proposal. AT&T supported these criteria
because they will assist the commission to evaluate a variety of fundamental
market and regulatory issues relevant to the rational and economically practical
deployment of advanced services. AT&T contended, however, that proposed
subsection (f)(4)(D)(viii) should recognize the costs that a company providing
local exchange service through resale or UNE-P would incur if it were able
to purchase advanced services through resale or UNE-P in rural areas. AT&T
contended that the mere availability of advanced services to a competitive
provider through resale or unbundled network element platform is almost meaningless
without simultaneous consideration of the economic practicality of obtaining
the services in that manner and then being able to provide those services
to end use customers at a reasonable price.
The commission declines to add the element AT&T suggested for subsection
(f)(4)(D)(viii). While the commission appreciates AT&T's concern, the
commission finds that the concern is implicitly addressed within the criteria
itself. By considering whether a company can purchase the advanced services
through resale or unbundled network element platform, the commission will
naturally consider all of the attendant circumstances that flow from this
situation. Additionally, the listed factors are a non-exclusive inventory
of the many possible criteria that may be relevant when selecting a company
to serve a rural area. Each BFRR will be distinct and require differing amounts
of inquiry of various factors. The commission may examine any other factors
the company raises in its proposal.
All comments, including any not specifically referenced herein, were fully
considered by the commission. Additionally the commission changes the word
"alternative" in the definitions of advanced telecommunications services and
advanced services in subsection (c)(2) and (3) to "opposite" in order to enhance
the understanding of the commission's intent and to more accurately reflect
the term's meaning. The change is not intended to create any substantive alteration
to the term's applicability or denotation.
This section is adopted under the Public Utility Regulatory Act,
Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2002)
(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. Additionally, PURA §55.014(g)
specifically provides the commission with all jurisdiction necessary to enforce
PURA §55.014 regarding the provision of advanced services within rural
service areas in Texas.
Cross Reference to Statutes: Public Utility Regulatory Act, Utilities Code §§14.002,
51.001(g) and 55.014.
§26.143.Provision of Advanced Services in Rural Areas.
(a)
Purpose. The purpose of this section is to implement Public
Utility Regulatory Act (PURA) §55.014 regarding the provision of advanced
services to facilitate connection of end users to the Internet. This section
is also intended to promote the policy, pursuant to PURA §51.001(g),
that customers in all regions of this state have access to advanced telecommunications
and information services.
(b)
Application. This section applies to a company electing
under PURA Chapter 58 or a company that holds a certificate of operating authority
(COA) or service provider certificate of operating authority (SPCOA).
(c)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Advanced services provider - Any entity that offers or
deploys advanced services, such as a holder of a certificate of convenience
and necessity, a COA, a SPCOA, a cable company, a fixed wireless company,
a satellite company, or any other provider of an advanced service.
(2)
Advanced telecommunications services - Any retail telecommunications
services that, regardless of transmission medium or technology, are capable
of originating and receiving data transmissions for the purpose of accessing
the Internet with a speed of at least 200 kilobits per second in the last
mile in one direction and with a speed of at least 128 kilobits a second in
the last mile in the opposite direction.
(3)
Advanced services - Any retail services that, regardless
of transmission medium or technology, are capable of originating and receiving
data transmissions for the purpose of accessing the Internet with a speed
of at least 200 kilobits per second in the last mile in one direction and
with a speed of at least 128 kilobits a second in the last mile in the opposite
direction. An advanced service includes any advanced telecommunications service.
(4)
Company - A telecommunications utility electing under PURA
Chapter 58 or an entity that holds a COA or a SPCOA that provides advanced
telecommunications services in urban areas of this state and provides local
exchange telephone services in a rural area seeking provision of advanced
services.
(5)
Reasonably comparable or similar services - Any services
that meet the definition of an advanced service. Each advanced service is
substitutable for any other advanced service.
(6)
Rural area or rural service area - Any community located
in a county not included within any Metropolitan Statistical Area (MSA) boundary,
as defined by the United States Office of Management and Budget, and any community
within an MSA with a population of 20,000 or fewer not adjacent to the primary
MSA city.
(7)
Urban area or urban service area - A municipality in this
state with a population of more than 190,000.
(d)
Provision of advanced services.
(1)
Requirement to provide an advanced service.
(A)
A company that provides advanced telecommunications services
within the company's urban service areas shall, on a Bona Fide Retail Request
for service, provide in rural areas served by the company advanced services
that are reasonably comparable to the advanced telecommunications services
provided in urban areas. The company shall provide such advanced services
to the retail customer(s) seeking service through a Bona Fide Retail Request
determined by the commission under this section:
(i)
at reasonably comparable prices, terms, and conditions
to the prices, terms, and conditions for similar advanced telecommunications
services provided by the company in proximate urban areas; and
(ii)
within 15 months after notice of the Bona Fide Retail
Request for those services is published in the
Texas
Register
.
(B)
A company that provides advanced services in a rural area
pursuant to a Bona Fide Retail Request shall provide advanced services to
any subsequent retail customer(s) located within 14,000 26-gauge cable feet
or its equivalent of the same central office as determined for the original
Bona Fide Retail Request under this section:
(i)
at reasonably comparable prices, terms, and conditions
to the prices, terms and conditions for similar advanced services provided
by the company in proximate urban areas; and
(ii)
within a reasonably comparable period of time as the period
of time a company provides advanced telecommunications services to the company's
subsequent retail advanced services customers located in proximate urban areas.
(C)
A company meets the requirement of providing a reasonably
comparable advanced service if the company has provided the requested or a
reasonably comparable advanced service in accordance with this section either:
(i)
directly; or
(ii)
through a business arrangement with an advanced services
provider.
(D)
A company shall not be required to provide advanced services
in a rural area when an advanced services provider is already providing advanced
services in the rural area seeking an advanced service at the time of the
Bona Fide Retail Request or within 15 months after notice of the Bona Fide
Retail Request is published in the
Texas Register
. When determining if another provider is already providing an advanced
service in a rural area, the commission shall, with information available
to the public, consider:
(i)
whether an advanced services provider is actively marketing
an advanced service in the rural area;
(ii)
whether an advanced services provider is offering, directly
or indirectly, installation and repair services for facilities and equipment
necessary for the provision of the advanced service;
(iii)
whether customers in the rural area are able to receive
installation and repair services necessary for facilities and equipment;
(iv)
whether the price of installation and repair services
are reasonably comparable to prices in proximate urban areas; and
(v)
whether an advanced services provider or distributor is
located within or near the rural area.
(E)
The absence of an Internet service provider is a factor
to be considered, but necessarily an exception, when requiring a company to
provide advanced services in a rural area.
(F)
This section may not be construed to require a company
to:
(i)
begin providing services in a rural area in which the company
does not provide local exchange telephone service;
(ii)
provide advanced services in a rural area of this state
unless the company provides advanced telecommunications services in urban
areas of this state; or
(iii)
provide a specific advanced service or technology in
a rural area.
(2)
Reasonably comparable price, terms, and conditions. Advanced
services provided by a company to a rural area pursuant to paragraph (1) of
this subsection must be provided at prices, terms, and conditions that are
reasonably comparable to the prices, terms, and conditions for similar advanced
telecommunications services provided by the company in proximate urban areas.
(A)
Reasonably comparable prices.
(i)
If a monthly retail price for an advanced service is within
140% of the monthly retail price of the advanced telecommunications service
offered in the same company's proximate urban service area, there shall be
a rebuttable presumption that the price is reasonably comparable. A promotional
rate for an advanced telecommunications service shall not be considered a
monthly retail price if it is offered for less than four months.
(ii)
When considering whether a price is reasonably comparable,
the commission shall consider the distance, terrain, and features of the rural
area seeking the advanced service.
(iii)
A company may rebut the 140% presumption by showing that
a higher price is necessary to recover its reasonable costs in providing the
advanced service.
(iv)
Any interested person may rebut the 140% presumption by
showing that a lower price will allow a company to recover its reasonable
costs in providing the advanced service.
(v)
Any company or interested person seeking to rebut the 140%
presumption by showing that a higher or lower price is warranted must do so
during the Commission Selection Proceeding under subsection (f)(4) of this
section. Any dispute regarding a company's reasonably comparable price must
be resolved during the Commission Selection Proceeding under subsection (f)(4)
of this section.
(B)
Reasonably comparable terms and conditions.
(i)
Reasonably comparable terms and conditions are those terms
and conditions applicable to the provision of advanced services in a rural
area that are similar to the terms and conditions for advanced telecommunications
services provided by the same company in proximate urban areas.
(ii)
A company may require a term commitment for all persons
seeking advanced services under a Bona Fide Retail Request. When considering
whether a term commitment is reasonably comparable, the commission shall consider
the distance, terrain, and features of the rural area seeking the advanced
service.
(e)
Requesting competitive response for provision of advanced
services. A person(s) in a rural area seeking provision of an advanced service
shall first submit a request for a competitive response for provision of those
services. The request need not conform to the requirements of a Bona Fide
Retail Request unless the requesting person(s) intends to seek provision of
an advanced service under the Bona Fide Retail Request process in subsection
(f) of this section.
(1)
Requesting advanced services.
(A)
Any person(s) in a rural area seeking the provision of
advanced services shall submit a written request to the commission for posting
on the commission website.
(B)
The written request must include the name, address, and
telephone number of a contact person.
(C)
Within five working days after receipt, the commission
shall post the request for advanced services on the commission's website.
(D)
The commission shall post on the commission website:
(i)
the name, address, and telephone number of the contact
person;
(ii)
the number of lines requested;
(iii)
the number of customers requesting service;
(iv)
the location of the rural area seeking the advanced service;
and
(v)
any other information the commission deems relevant.
(2)
Competitive response.
(A)
After posting on the website, any company or advanced service
provider may submit to the contact person a proposal to provide advanced services
to the person(s) seeking advanced services.
(B)
Proposals must be submitted to the contact person within
50 days after the request was posted and provide for deployment of the advanced
service within 15 months after the request was posted by the commission.
(C)
The person(s) seeking advanced services may negotiate with
and select a provider based upon all of the proposals received.
(D)
If no advanced services provider has committed to provide
advanced services to the person(s) submitting a request within 60 days after
the request was posted by the commission, the contact person shall notify
the commission. Upon notification, the contact person may ask that the commission
establish a proceeding to determine that the request is a Bona Fide Retail
Request.
(f)
Bona Fide Retail Request process.
(1)
Commission proceeding to determine a Bona Fide Retail Request.
(A)
Upon request under subsection (e)(2)(D) of this section,
the commission shall determine whether a request is a Bona Fide Retail Request.
This request may be processed administratively.
(B)
Any interested person may present written comments or objections,
setting forth the basis of any facts in dispute, regarding whether the request
is a Bona Fide Retail Request under this section.
(2)
Bona Fide Retail Request. A Bona Fide Retail Request must:
(A)
include a written request for at least 150 lines for service
within 14,000 26- gauge cable feet or its equivalent of the same central office
in a rural area;
(B)
contain the name, address, telephone number, and signature
of the retail customer(s) seeking service, the advanced service(s) requested,
and the date of the request;
(C)
contain the name, address, and telephone number of a contact
person;
(D)
state whether an advanced services provider is already
providing, is contracted to provide, or is willing to provide advanced services
in the rural area seeking the advanced service; and
(E)
state whether an Internet service provider is providing
or commits to provide functional Internet connectivity in the rural area seeking
the advanced service.
(3)
Notice of Bona Fide Retail Request. After determination
that a request is a Bona Fide Retail Request, the commission shall:
(A)
notify electronically or by mail all companies electing
under PURA Chapter 58 and all COA and SPCOA holders of the Bona Fide Retail
Request;
(B)
post notice of the Bona Fide Retail Request on the commission
website; and
(C)
publish notice of the Bona Fide Retail Request in the
(D)
The commission shall include in the notification, post
on the commission website, and publish in the
Texas
Register
:
(i)
the name, address, and telephone number of the contact
person;
(ii)
the number of lines requested;
(iii)
the number of customers requesting service;
(iv)
the location of the rural area; and
(v)
any other information the commission deems relevant.
(4)
Commission selection proceeding. After notification of
the Bona Fide Retail Request, the commission shall establish a proceeding
to select the company or companies obligated to provide an advanced service.
(A)
Company response. Each company subject to this section
for the rural area seeking advanced services shall submit a proposal for the
provision of one or more advanced services to the retail customer(s) seeking
service through the Bona Fide Retail Request determined by the commission
under this section.
(i)
Each company shall submit its proposal within 30 days after
publication of the Bona Fide Retail Request notice in the
Texas Register
.
(ii)
All proposals shall comply with the requirements of subsection
(d) of this section.
(iii)
A company required to submit a proposal may contest the
obligation to serve by setting forth the basis of its challenge. The company
must, however, file its proposal as required by this subsection.
(B)
Company response exemption. A company subject to this section
for the rural area seeking advanced services is presumed to be exempt from
the requirements of this subsection and is not required to submit a proposal
for the provision of advanced services if, at the time the Bona Fide Retail
Request is published in the
Texas Register
,
the company served fewer than 150 local exchange telephone service lines within
14,000 26- gauge cable feet or its equivalent of the same central office as
determined for the Bona Fide Retail Request under this section in the last
month of the most recent quarterly reporting period submitted to the commission
pursuant to Local Government Code, Chapter 283.
(C)
Commission determination. Within 150 days after notice
of the Bona Fide Retail Request is published in the
Texas Register
, the commission shall determine the selected company
or companies obligated to serve the retail customer(s) seeking service through
the Bona Fide Retail Request determined by the commission under this section.
(D)
Selection criteria. When selecting the company or companies
obligated to serve, among other factors the commission may deem relevant,
the commission shall consider:
(i)
the overall quality of telecommunications service in the
rural area;
(ii)
the characteristics and attributes of network facilities
in the rural area;
(iii)
the terrain and geographic features of the rural area;.
(iv)
the number of local exchange telephone service providers
in the rural area;
(v)
the population and population density of the rural area;
(vi)
the number of local exchange telephone service customers
the company serves in the rural area;
(vii)
the manner or method by which the company provides local
exchange telephone service in the rural area;
(viii)
whether a company that provides local exchange service
through resale or unbundled network element platform can purchase advanced
services through resale or unbundled network element platform in the rural
area;
(ix)
the extent to which the selection may prohibit or have
the practical effect of prohibiting the ability of any company to provide
local exchange telephone service in rural areas;
(x)
a company's planned response for subsequent requests for
service within 14,000 26-gauge cable feet or its equivalent of the same central
office as determined for the original Bona Fide Retail Request under this
section;
(xi)
the method by which the company would provide an advanced
service in the rural area; and
(xii)
whether a company provides service in proximate urban
areas to the rural area seeking advanced services.
This agency hereby certifies that the adoption
has been reviewed by legal counsel and found to be a valid exercise of the
agency's legal authority.
Filed with the Office of
the Secretary of State on April 25, 2002.
TRD-200202546
Rhonda Dempsey
Assistant Rules Coordinator
Public Utility Commission of Texas
Effective date: May 15, 2002
Proposal publication date: November 9, 2001
For further information, please call: (512) 936-7306
16 TAC §26.421, §26.422
The Public Utility Commission of Texas (commission) adopts
new §26.421 relating to Designation of Eligible Telecommunications Providers
to Provide Service to Uncertificated Areas and new §26.422 relating to
Subsequent Petitions for Service in Uncertificated Areas, with changes to
the proposed text as published in the January 4, 2002
Texas Register
(27 TexReg 21). The rule implements Subchapter F, Chapter
56 of the Public Utility Regulatory Act, Texas Utilities Code Annotated (Vernon
1998, Supplement 2002) (PURA) as added by House Bill 2388, 77th Legislature
(HB 2388) which authorizes the commission to designate a telecommunications
provider to provide voice-grade services to permanent residential or business
premises that are not included within the certificated area of a holder of
certificate of convenience and necessity (CCN) and for the reimbursement of
costs from the Texas Universal Service Fund (TUSF). These new sections were
adopted under Project Number 24519.
A workshop for this rulemaking was conducted at the commission's offices
on October 17, 2001, and a public hearing on the proposed sections was held
at commission offices on February 12, 2002. Representatives from Texas Statewide
Telephone Cooperative, Inc. (TSTCI), John Staurulakis, Inc. (JSI), and Southwestern
Bell Telephone, L.P. doing business as Southwestern Bell Telephone Company
(SWBT) attended the hearing and provided comments on the proposed rules. To
the extent that these comments differ from the submitted written comments,
such comments are summarized herein.
The commission received comments on the proposed new sections from TSTCI,
JSI, Verizon Southwest (Verizon), Western Wireless Corporation (Western Wireless),
and SWBT. Reply comments on the proposed new sections were received from TSTCI
and Verizon.
No comments were received on §26.421(a)
Purpose
, (b)
Definitions
, (c)
General Comments
Confidentiality
Western Wireless, in its initial comments, and Verizon, in its reply comments,
proposed that cost data filed by carriers be treated as confidential.
The commission does not find it necessary to make any changes to the rule
to address the concerns of Western Wireless and Verizon. Any material or data
determined to be confidential by the carrier should be filed in accordance
with established processes in §22.71(d) of this title (relating to Filing
of Pleadings, Documents and Other Material) regarding confidential material.
Portability of support
Western Wireless recommended adding a new section to address the concept
of portability of support. Western Wireless stated that as a competitive provider,
it is entitled to exactly that which the incumbent local exchange carriers
(ILEC) would receive in support. Western Wireless argued that once per line
support has been determined by the commission for each uncertificated area,
competitive carriers must have the ability to draw the same level of support
as the ILEC would for serving the uncertificated areas. Western Wireless noted
that the concept of portability has been endorsed by the commission and the
FCC.
Verizon on the other hand disagreed with Western Wireless' proposal to
add a new section that addresses "the concept of portability of support."
Verizon highlighted that the proposed rule indicated that a portion of the
recovery may be provided from the TUSF and that the portability of TUSF funding
is already addressed in §26.403(e)(3)(C) of this title (relating to Texas
High Cost Universal Service Plan (THCUSP)).
TSTCI also took strong exception to Western Wireless' recommendation on
portability of support. TSTCI commented that the support awarded under this
section is based on HB 2388, which provides a mechanism for residents in uncertificated
areas to petition for service. TSTCI commented that to make the support awarded
under this section portable would be inappropriate and contrary to the intent
of the legislation.
The commission agrees with TSTCI and Verizon and refrains from adding a
new subsection to address the concept of portability of per line support.
As Verizon noted, the portability of TUSF funding is already addressed in §26.403(e)(3)(C)
and therefore there is no need to address it in this rule.
Unique identifiers
Western Wireless recommended that the commission attribute unique identifiers
to each uncertificated area in Texas, and overlay these areas with relevant
carriers' coverage. Western Wireless stated this would enable the commission
to make a determination as to which carriers can potentially provide service
in the relevant uncertificated areas.
The commission agrees with Western Wireless that there may be potential
for an overlay map with unique identifiers for each uncertificated area. However,
the commission notes that this would be an administrative function, on an
as needed basis, and does not need to be addressed in the rule.
Unforeseeable circumstances
TSTCI urged the commission to add a provision to the cost recovery section
of the rule to account for situations where a customer may move from the premises,
die or legally discharge their obligation after the provider has been required
to make an investment to serve that premises. TSTCI believes that the rule
should clarify that under these circumstances, a provider is assured of recovering
any investment made to serve that premises as allowed under the law.
The commission recognizes that unforeseeable circumstances may arise. However,
under subsection (j) of the rule, a designated carrier will recover its actual
costs of deployment from a combination of the aid to construction charge and
the TUSF. Additionally, if service is terminated, for whatever reason, there
will be no recurring charges. Therefore, under the rule, the carrier will
not be denied recovery of any actual investment.
Combination with proposed §26.243
TSTCI expressed concern that having two rules for volunteering providers
in uncertificated areas, §26.421 and §26.423 as proposed in Project
Number 24527,
Rulemaking Regarding High Cost Assistance
to a Telecommunications Provider that Volunteers to Provide Voice-Grade Service
, may cause confusion and allow for abuses of the system. TSTCI suggested
that one rule would be better to address the issues. Furthermore, TSTCI urged
the commission to add a provision in the rule to prevent the possibility of
awarding TUSF support simultaneously under both rules to serve the same premises.
Although the commission proposes to have multiple rules applicable to service
in uncertificated areas, one may distinguish between §§26.421, 26.422
and 26.423 by examining the circumstances necessitating the adoption of each
rule. Section 26.421 and §26.422 were proposed in response to HB 2388,
which amended PURA by creating a process whereby consumers may petition the
commission to designate an eligible carrier to provide basic local telephone
service to consumers. Because the commission is mandating that the carriers
serve outside of their service territory, the carriers are guaranteed to recover
their actual costs of deployment and their recurring costs through a commission-determined
combination of funds from the TUSF and the consumers. On the other hand, proposed §26.423
is necessary to fill a gap in TUSF support. Currently, there is no mechanism
in commission rules to calculate and allow for TUSF support for service in
uncertificated areas. Section 26.423 addresses the situation where a carrier,
of its own volition, provides service beyond its service territory, to an
uncertificated area. In such an instance, §26.423 sets up the mechanism
for the commission to determine the TUSF per line support applicable to the
uncertificated area.
Carriers and consumers may determine which rule applies by looking to the
conduct initiating the process. If a consumer initiates the process by filing
a petition under §26.421, even if the carrier "volunteers" in response
to a notice of completeness issued pursuant to §26.421(e)(2), cost recovery
and per line support will be calculated under §26.421. If a carrier initiates
the process by filing a request under proposed §26.423, per line support
will be calculated under proposed §26.423(e). No up-front recovery for
costs of deployment is provided under proposed §26.423(e); instead, recovery
of capital costs is included in the per line support calculation.
Although the commission acknowledges TSTCI's concern about the possibility
of the commission awarding TUSF support simultaneously under both rules, the
commission does not find it necessary to include specific language in the
rule to address this concern. It will be the joint responsibility of the commission,
the carriers, and the TUSF administrator to insure that carriers are receiving
support under the appropriate mechanism only. The commission will address
on a case-by-case basis any circumstances where §26.421 and proposed §26.423
may overlap.
§26.421(d)(2)(C)
Subsection (d)(2)(C) outlines the contents of a petition that will be filed
by a petitioner requesting service in an uncertificated area.
TSTCI noted that HB 2388 provides that if a provider voluntarily agrees
to provide service to the petitioning premises, the provider need not be serving
in a contiguous service area, assuming the provider is designated an eligible
telecommunications provider (ETP). TSTCI commented that in the interest of
including as many carriers as possible, a clarification should be added to
subsection (d)(2)(C) describing the nomination of potential service providers.
The commission does not find it necessary to add clarification to subsection
(d) because subsection (f) already notes that a provider may volunteer to
provide services.
§26.421(e)
Subsection (e) outlines the steps that the commission will undertake upon
receipt of a petition. Specifically, subsection (e)(2) states that the commission
will send a notice of completeness to the petitioner(s) and to all telecommunications
providers identified in the petition and seek volunteers to serve.
SWBT commented that the petitioner(s) may not know the names of all potentially
eligible telecommunications providers providing service in contiguous territories
and as a result, the notice of completeness would be sent only to a limited
set of providers as identified by the petitioner(s). SWBT cautioned that this
could greatly reduce the likelihood of finding a provider who is willing to
volunteer to provide service. Therefore, SWBT recommended that subsection
(e)(2) be modified to indicate that the commission will send the notice of
completeness to all telecommunications providers providing service in contiguous
territories.
Verizon commented that subsection (e)(2) should be clarified to exclude
pure resellers, as §26.421 applies only to those telecommunication providers
that are ETPs.
At the public hearing, Commission Staff and participants discussed the
problems associated with SWBT's proposal, such as the inability of the commission
to know which providers, specifically competitive local exchange carriers
(CLECs), are providing service in the contiguous exchanges. The participants
acceded that the most effective way of expanding the pool of potential carriers
would be to insure that the ILECs were notified and that notice be published
in the
Texas Register
.
The commission agrees with SWBT's concern that the rule limits the number
of carriers receiving the notice of completeness and therefore modifies subsection
(e)(2). In accordance with the discussion at the public hearing, the notice
of completeness will be sent to all carriers identified in the petition and
all ILECs providing service in contiguous exchanges. Additionally, to reach
as many potential providers as possible, the commission amends the rule to
require that the commission publish notice of the petition and of the notice
of completeness in the
Texas Register
.
The commission does not find it necessary to make any changes relating
to resellers. As stated by Verizon, §26.421 only applies to ETPs therefore
pure resellers are automatically excluded. Section 26.417 of this title (relating
to Designation as Eligible Telecommunications Providers to Receive Texas Universal
Service Funds (TUSF)), requires that all ETPs provide service through their
own facilities or through a combination of their own facilities and the resale
of another carrier's services.
§26.421(f)(1)
Subsection (f)(1) states that telecommunications providers shall respond
to the commission's notice of approval and request for volunteers within 21
business days after receipt of the notice.
TSTCI recommended that to attract more providers, the notice provision
in subsection (f)(1) should be extended to 30 or 45 days and a special commission
website be established to facilitate the notice process.
Verizon recommended extending the deadline to 60 calendar days to allow
the volunteering provider to adequately plan, engineer and cost its proposal.
The commission agrees with the parties that more time is needed and revises
the rule to extend the deadline from 21 days to 30 days. The commission finds
that 30 days would be adequate to develop a cost proposal. Additionally, the
commission maintains a website and utilizes it for a variety of projects and
dockets as needed. Therefore, the commission does not find it necessary to
specifically require a website for these types of dockets as suggested by
TSTCI, as this will be addressed by the commission's current practice.
§26.421(f)(1)(A)
Subsection (f)(1)(A) states that a provider may respond to the commission's
notice of approval by stating that it is not eligible to be designated to
serve the premises under this section.
Western Wireless recommended that clarifying language be added to subsection
(f)(1)(A) stating that a Commercial Mobile Radio Service (CMRS) carrier that
has been designated an ETP by the commission may still be unable to provision
service if the uncertificated area is not within the company's Federal Communications
Commission (FCC)-licensed geographical service area.
While the commission agrees with Western Wireless that a CMRS carrier may
not provide service outside of its FCC-licensed area, the commission does
not find that it is necessary to make any changes to the rule. If a CMRS carrier
receives a notice of completeness applicable to a geographic area outside
of its FCC-licensed area, the CMRS carrier would respond to the notice consistent
with §26.421(f)(1)(A).
§26.421(f)(1)(C)
Subsection (f)(1)(C) states that a telecommunications provider may respond
to the notice of approval and request for volunteers by "refusing to provide
service to the premises."
SWBT highlighted that in subsection (f)(1)(C) the commission is only seeking
volunteers and therefore recommended modifying subsection (f)(1)(C) to state
that a provider may respond to the notice by "Refusing to volunteer to provide
services to the premise."
The commission agrees with SWBT that subsection (f)(1)(C) pertains to volunteering
of services and therefore adds the suggested clarification.
§26.421(f)(3)
Subsection (f)(3) outlines the actions that the commission will take upon
receipt of a volunteering provider's proposal.
Western Wireless recommended that an ETP be able to recover its costs,
or alternatively, enable the commission to determine the dollar amounts an
ETP may recover for serving the uncertificated area.
The commission finds that no changes to subsection (f)(3) are necessary
to address Western Wireless' concerns. Carriers volunteering in response to
a notice of completeness will recover their costs of deployment and recurring
costs consistent with subsection (j).
§26.421(i)
Subsection (i) states that the commission will issue an order within 180
days of the filing of the petition granting or denying the filed petition,
and that the order will address, among other things, the estimated costs and
the amount and method of recovery.
Verizon noted that the rules do not explain how the estimated cost will
be "trued up" to reflect the provider's actual costs, which the provider is
entitled to recover under HB 2388. Verizon proposed that the rules be amended
to provide for a subsequent commission order that addresses the recovery of
actual costs as documented by the provider.
The commission agrees with Verizon that a procedure is necessary to address
the recovery of the actual costs incurred by the provider as allowed under
PURA. Accordingly, the commission adds new subsection (k), Submission of actual
costs, which sets forth an administrative process for the commission to review
a providers' actual costs.
§26.421(i)(3)
Subsection (i) outlines the contents of the order granting or denying a
petition. Specifically, in subsection (i)(3), the commission noted that it
shall include in the order the aid to construction fee to be paid by the petitioner.
TSTCI recommended that the language in subsection (i)(3) mirror HB 2388
and limit the fee paid by the petitioner to not more than $3,000.
The commission agrees with TSTCI's recommendation and modifies subsection
(i)(3) to limit the petitioner's contribution to not more than $3,000.
§26.421(i)(8)
Subsection (i)(8) sets forth a schedule of cost recovery.
SWBT contended that this paragraph does not specify which costs are to
be recovered pursuant to the schedule. SWBT noted that PURA §56.209(b)
clearly indicates that recovery of costs should pertain only to a provider's
"original cost of deployment" and not the recovery of any operating costs.
Therefore, SWBT recommended that subsection (i)(8) clearly specify the type
of costs that are to be recovered.
The commission agrees with SWBT that PURA §56.209(b) only allows for
the recovery of the provider's original cost of deployment. Therefore, subsection
(i)(8) has been modified to clearly specify that the schedule of cost recovery
pertains only to the provider's original cost of deployment.
§26.421(j)
Subsection (j) outlines the types of costs a designated provider may recover
from the TUSF. This subsection implements PURA §56.209(b), which specifies
that a provider is entitled to recover only its original cost of deployment
from the TUSF and aid to construction charges pursuant to a specified schedule
based on the original cost of the deployment. A provider is entitled to recover
only its actual recurring costs through the monthly rate charged to the customer
and a monthly per line TUSF payment.
SWBT commented that subsection (j), as proposed, suggests that a provider
may recover through a monthly recurring charge, all, or a portion of the original
cost of deployment. SWBT suggested rewording subsection (j) for clarification.
The commission agrees with SWBT and rewords subsection (j) to clarify that
a designated provider may only ". . . recover from the TUSF the provider's
actual costs of providing service to the premises, including the provider's
original cost of deployment not recovered from the petitioner(s) through an
aid to construction charge and the provider's actual recurring costs not recovered
from the petitioner(s) through a monthly recurring charge."
All comments, including any not specifically referenced herein, were fully
considered by the commission. The commission has made minor conforming changes
to §26.422 concerning the title of referenced §26.421.
These sections are adopted under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement
2002) (PURA) which provides the commission with the authority to make and
enforce rules reasonably required in the exercise of its powers and jurisdiction;
and specifically, §56.202, which grants the commission the authority
to designate a telecommunications provider to provide services in uncertificated
areas of the state.
Cross Reference to Statutes: Public Utility Regulatory Act §§14.002,
56.001, 56.021, 56.023, and 56.201-56.213.
§26.421.Designation of Eligible Telecommunications Providers to Provide Service to Uncertificated Areas.
(a)
Purpose. The provisions of this section establish the procedures
for the commission to designate an eligible telecommunications provider (ETP)
to provide voice-grade services to permanent residential or business premises
that are not included within the certificated area of a holder of a certificate
of convenience and necessity (CCN), and for the reimbursement of costs from
the Texas Universal Service Fund (TUSF).
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meaning unless the context clearly
indicates otherwise:
(1)
Designated provider - A telecommunications provider designated
by the commission to provide services to premises located within an uncertificated
area
(2)
Eligible telecommunications provider (ETP) - A telecommunications
provider designated by the commission pursuant to §26.417 of this title
(relating to Designation as Eligible Telecommunications Providers to Receive
Texas Universal Service Funds (TUSF)).
(3)
Permanent residential or business premises - A premises
that has permanent facilities for water, wastewater, and electricity.
(4)
Preferred provider - A designated provider for any permanent
residential or business premises within reasonable proximity to those petitioning
premises for later petitions filed under §26.422 of this title (relating
to Subsequent Petitions for Service in Uncertificated Areas).
(c)
Application. This section applies to telecommunications
providers that have been designated ETPs by the commission pursuant to §26.417
of this title.
(d)
Petition for service.
(1)
Eligibility. Persons residing in permanent residential
premises or owners of permanent residential or business premises that are
not included within the certificated area of a holder of a CCN may petition
the commission to designate an ETP to provide to those premises voice-grade
services supported by state and federal universal service support mechanisms.
(2)
Contents of petition. A petition for designation of an
ETP must:
(A)
State with reasonable particularity the locations of the
permanent residential or business premises for which the petitioner(s) are
requesting service;
(B)
Establish that the premises are within reasonable proximity
to one another so that the petitioners possess a sufficient community of interest;
(C)
Nominate as potential providers of service, not more than
five telecommunications providers serving territory that is contiguous to
the location of the permanent residential or business premises using wireless
or wireline facilities, resale, or unbundled network elements; and
(D)
Include as an attachment or an appendix, documentation
indicating the required residence or ownership, such as a state-issued license
or identification, tax records, deeds, or voter registration materials.
(3)
Eligibility of petitioner(s). Except as provided by paragraph
(4) of this subsection, the petition must be signed by at least five persons
who:
(A)
Are not members of the same household;
(B)
Reside in the permanent residential premises or are the
owners of the permanent residential or business premises for which service
is sought;
(C)
Desire service to those premises;
(D)
Commit to pay the aid to construction charges for service
to those premises as determined by the commission; and
(E)
Commit to enter into an assignable agreement for subscription
to basic local service to the premises for a period of time determined by
the commission.
(4)
Number of petitioners. The commission may accept a petition
that is signed by fewer than five persons if the petitioner(s) provides an
affidavit stating that the petitioner(s) has taken all reasonable steps to
secure the signatures of the residents of permanent residential premises or
the owners of permanent residential or business premises within reasonably
close proximity to the petitioner's premises who are not receiving telephone
service when the petition is filed and who want telephone service initiated.
(5)
Form. The petitioner(s) shall file the petition using the
commission-approved forms.
(e)
Completeness of petition.
(1)
Commission action. Upon receipt of a petition, the commission
shall review the petition for completeness. Within 15 working days from the
date of receipt of the petition, the commission shall determine if the petition
is complete and has been filed consistent with subsection (d) of this section.
(2)
Petition complete. If the commission determines the petition
is complete, the commission will send a notice of completeness to the petitioner(s),
to all telecommunications providers identified in the petition, and if not
otherwise notified, to the incumbent local exchange carriers serving the contiguous
exchanges. In the notice, the commission shall seek volunteers to provide
telecommunications services in the permanent residential or business premises.
The commission shall also include with the notice a copy of the petition.
The commission shall publish notice of the petition and the notice of completeness
in the
Texas Register
.
(3)
Petition denied. If a petition is denied, the commission
shall send a notice of denial explaining the reason(s) for denial to the petitioner(s).
(f)
Responding to notice of completeness.
(1)
Response. Telecommunication providers shall respond to
the commission's notice of completeness and request for volunteers within
30 days after receipt of the notice. A provider may respond by:
(A)
Stating that it is not eligible to be designated to serve
the premises under this section;
(B)
Volunteering to provide service to the premises; or
(C)
Refusing to volunteer to provide service to the premises.
(2)
Volunteering to serve. A provider volunteering to provide
service to the premises shall respond to the commission by providing a proposal
that includes:
(A)
An affidavit duly signed by an officer of the company;
(B)
A description of the technology proposed for deployment;
(C)
An estimate of the costs for deployment and the recurring
monthly costs of service; and
(D)
An estimated timeline for deployment of facilities and
a date by which service will be extended to the premises.
(3)
Commission action. Upon receipt of a volunteering provider's
proposal, the commission may:
(A)
Approve a proposal administratively and permit the ETP
to serve the uncertificated area and recover its costs pursuant to subsection
(j) of this section; or
(B)
Reject a proposal and proceed to a hearing pursuant to
subsection (g) of this section.
(g)
Evidentiary hearing. If the petition cannot be processed
administratively, the commission shall conduct an evidentiary hearing to determine:
(1)
If an ETP is willing to be designated to provide service
to the petitioner(s); or
(2)
The ETP that is best able to serve the petitioner(s).
(h)
Commission decision. The commission should consider all
relevant factors, including, but not limited to:
(1)
The original cost to be incurred by a designated provider
to deploy service to the petitioning premises, and the effect of reimbursement
of those costs on the state universal service fund;
(2)
The number of access lines requested by the petitioners
for the petitioning premises;
(3)
The size of the geographic territory in which the petitioning
premises are included;
(4)
The proximity of existing facilities and the existence
of a preferred designated provider under the Public Utility Regulatory Act
(PURA) §56.213; and
(5)
Any technical barriers to the provision of service.
(i)
Commission order. The commission shall issue an order granting
or denying a petition within 180 days of the filing of the petition. In any
order granting a petition the commission shall include the following:
(1)
Description of the facilities to be deployed;
(2)
Estimated costs of deployment;
(3)
Aid to construction fee to be paid by the petitioner(s),
not to exceed $3,000;
(4)
Monthly recurring charge to be paid by the petitioner(s);
(5)
Estimated cost to be recovered from the TUSF;
(6)
Recurring, monthly per line fee to be recovered from the
TUSF;
(7)
Date by which services must be extended to the premises;
and
(8)
Schedule of cost recovery for the provider's original cost
of deployment consistent with the following:
(A)
Not later than the third anniversary of the date of the
order, for a deployment with an estimated original cost of $1 million or less;
(B)
Not later than the fifth anniversary of the date of the
order, for a deployment with an estimated original cost of more than $1 million,
but not more than $2 million; and
(C)
Not later than the seventh anniversary of the date of the
order, for a deployment with an estimated original cost of more than $2 million.
(j)
Cost recovery. A designated provider may recover from the
TUSF the provider's actual costs of providing service to the premises, including
the provider's original cost of deployment not recovered from the petitioner(s)
through an aid to construction charge and the provider's actual recurring
costs not recovered from the petitioner(s) through a monthly recurring charge.
(1)
The original cost of deployment includes the cost of the
provider's facilities installed in, or upgraded to permit the provision of
service to, the premises, as determined by the financial accounting standards
applicable to the provider, including an amount for the recovery of all costs
that are typically included as capital costs for accounting purposes.
(2)
The provider is permitted to recover interest at the prevailing
commercial lending rate on its original costs of deployment.
(3)
Actual recurring costs include maintenance and the ongoing
operational costs of providing service after deployment of the facilities
to the premises and a reasonable operating margin.
(k)
Submission of actual costs. Upon completion of the construction,
the designated provider shall file the actual costs with the commission.
(1)
No later than 30 days after filing the actual costs, commission
staff shall file with the presiding officer written comments or recommendations
concerning the actual costs.
(2)
No later than 60 days after filing the actual costs, the
presiding officer shall issue a notice stating whether the costs may be submitted
to the TUSF administrator for recovery consistent with the order issued pursuant
to subsection (i) of this section.
(3)
The designated provider or the commission staff may appeal
to the commission an administrative notice issued 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 changes
to the actual costs submitted, the designated provider shall be ordered to
make those changes within a reasonable period of time before they may be submitted
to the TUSF administrator for recovery.
(l)
Cap on TUSF reimbursements. The commission may not authorize
or require any services to be provided under this section during a fiscal
year if the total amount of required reimbursements, together with interest
and obligations from preceding years, would equal an amount that exceeds 0.02%
of the annual gross revenues reported to the TUSF during the preceding fiscal
year.
§26.422.Subsequent Petitions for Service in Uncertificated Areas.
(a)
If the commission approves a petition requesting service,
residents of permanent residential premises or owners of permanent residential
or business premises in reasonable proximity to the premises that were the
subject of an approved petition who did not sign the prior petition requesting
service are not entitled to receive service under the Public Utility Regulatory
Act (PURA), Chapter 56, Subchapter F, prior to the fifth anniversary of the
date the prior petition was filed, unless the residents or owners file a new
petition and agree to pay aid to construction charges on the same terms as
applicable to the prior petitioner(s).
(b)
The designated provider shall receive reimbursement for
the original cost of deployment and actual recurring costs of providing service
to those additional residents in the same manner as the provider received
reimbursement of those costs in relation to the prior petitioner(s). The provider
may not receive reimbursement for the original cost of deployment under a
subsequent petition if the provider previously received complete reimbursement
for those costs from the Texas Universal Service Fund (TUSF). If the TUSF
has completely reimbursed the original cost of deployment as provided by §26.421
of this title (relating to Designation of Eligible Telecommunications Providers
to Provide Service to Uncertificated Areas), each subsequent petitioner must
pay into the TUSF an amount equal to the aid to construction charge paid by
each prior petitioner.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 22, 2002.
TRD-200202490
Rhonda G. Dempsey
Rules Coordinator
Public Utility Commission of Texas
Effective date: May 12, 2002
Proposal publication date: January 4, 2002
For further information, please call: (512) 936-7308
Chapter 401.
ADMINISTRATION OF STATE LOTTERY ACT
Subchapter D. LOTTERY GAME RULES
16 TAC §401.308
The Texas Lottery Commission adopts amendments to 16 TAC §401.308
relating to "Cash 5" on-line game with changes to the proposed text as published
in the March 22, 2002 issue of the
Texas Register
(27 TexReg 2175). The change is to the name "Cash 5". The Commission
is changing the name from "Cash 5" to "Cash Five" throughout the rule. The
change is non-substantive but is consistent with comment received from players
in focus group testing of the game and its trademark artwork prior to proposing
the amendments for public comment. The amendments provide for a matrix change
from 5/39 to 5/37. The amendments also add a guaranteed prize amount of $2
for a match on the new 2-of-5 prize category. The purpose of these changes
is to make the game easier to win overall and to provide players with more
chances to win. Currently, the overall odds of winning are 1:100 and the new
overall odds of winning will be 1:8. The current game statistically generates
approximately 5,000 to 6,000 winners per draw. The changes will statistically
generate approximately 54,000 winners per draw. The players will benefit from
the new matrix because the new overall odds will be 1:8 instead of 1:100,
the new 2-of-5 prize category has a guaranteed $2 prize amount, and there
will be more winners per draw. The changes also increase the number of draws
a week from four to six. The purpose of the draws per week increase is to
increase sales and also revenue to the State of Texas. Retailers will benefit
because they will be receiving additional monies from the additional Cash
5 sales. The State of Texas will receive additional revenue from the additional
Cash 5 sales. The amendments also eliminate language that indicates unclaimed
prizes go to the prize reserve fund. Pursuant to Government Code, §466.4075,
unclaimed prize money shall be deposited to the credit of the Texas Department
of Health state-owned multicategorical teaching hospital account or the tertiary
care facility account as prescribed in §466.4075. Another proposed change
is to correct a typographical error.
Written comments were received. The Commission conducted a hearing to receive
comment on the proposed amendments. The hearing was properly noticed for April
4, 2002 at 9:00 a.m. at the Texas Department of Housing & Community Affairs,
507 Sabine Street, 4th floor, Board Room, Austin, Texas 78701. No persons
attended the hearing and no comment was received at the hearing.
One commenter supports the rule amendments because the amendments give
all players more favorable odds to have winning tickets, thereby increasing
participation and interest in the game. The Commission agrees with the comments.
One commenter is opposed to the rule amendments because the commenter does
not want the numbers per week increased. The commenter believes the game is
hard to win but the initial jackpot made it worthwhile. The commenter indicates
that he will spend even less money when there are six draws per week. The
commenter also recommended a game plan that the commenter indicates the Commission
might want to consider if the rule changes are not successful in the game
performing as expected. The proposal is to have Pick 3, Cash 5, and a $2 jackpot
game on Monday, Pick 3, Texas Two Step, and a $5 jackpot game on Tuesday,
Pick 3 and Lotto Texas on Wednesday, Pick 3, Cash 5, $5 jackpot game on Thursday,
Pick 3, Texas Two Step, and $2 jackpot game on Friday, and Pick 3 and Lotto
Texas on Saturday. The commenter indicates that the $2 game is played in Australia
and has a total of 180,000 chances sold for each game with 10,147 winners.
The commenter states that there are three top prizes of $100,000, $20,000,
and $5,000. Jackpots start at $500,000. After all winning tickets are determined,
a second drawing is held. If the final ticket matches one of the winning tickets,
that player wins the jackpot. If there is not a match, $50,000 is added to
the jackpot for the next drawing. Drawings are not held until all 180,000
tickets are sold. The commenter states that the $5 jackpot has the same rules
but the major prizes are $200,000, $20,000, and $2,000. There are 12,880 prizes,
including free tickets. If the second drawing fails to match a winning ticket,
the jackpot which starts at $750,000 is increased by $100,000. The commenter
believes he would spend more money on the two proposed games but would not
spend more money other Commission games. The commenter believes that the lottery
operator is telling the Commission what it wants to hear and the Commission
is accepting it "hook, line, and sinker". The commenter doesn't believe that
player views were seriously considered. The commenter believes "it's just
a big con game" and that all the Commission really wants is to "maximize profits
by instituting games that minimize the number of winners and the size of the
payouts". The commenter believes the Commission is changing the game to make
extra money and that the change will occur "regardless of and in spite of
what players want". The commenter believes the decision to change the game
was made months ago when sales started dropping after Texas Two Step was introduced.
The commenter believes that "the Commission will vote 3-0 as always and the
change will be implemented as soon as possible". With regard to the proposed
changes to Cash 5, the commenter uses a system to select his Cash 5 numbers
and believes the change in the number of balls will affect his drawing statistics.
However, the commenter is not suggesting that the Commission change the game
because it will affect the commenter's previous work. The commenter believes
Cash 5 was an interesting and fun game when it was implemented, the two drawings
provided decent jackpots, and the game was popular but the Commission ruined
the game when the number of draws per week was increased to four. The commenter
believes Cash 5 players have switched to Texas Two Step. The commenter believes
that the Commission in adopting the changes to Cash 5 thinks that Cash 5 players
will spend more but the commenter believes that might not happen. The Commission
disagrees with the comments. First, the Commission proposes game changes through
the rulemaking process and part of that process is to receive comment. The
Commission considers the comment and then makes its decision that it believes
is in the best interest of the State based on information available to it
at the time of the decision. Part of the information considered by the Commission
is player comment. The Commission also considers information it receives from
the lottery operator. Part of the lottery operator's contract requirements
are to provide input on improvements/enhancements to the lottery games. With
regard to spending habits by players, the Commission wants players to spend
only that amount of money they can afford. The Commission has a responsibility
to generate revenue for the State of Texas through the sale of lottery tickets.
That revenue is used for public purposes and is currently dedicated to the
Foundation School Fund. Changing a lottery game throughout the life of the
game is one way to refresh the game and renew interest while generating additional
sales and revenue and is not uncommon to what other lotteries do when a game
experiences sales decline. With regard to the game proposal suggested by the
commenter, the Commission appreciates player input and does consider different
game play approaches. The Commission conducts player research where it introduces
new game concepts and may introduce the concepts suggested by the commenter.
However, with regard to Cash 5, the Commission believes that the adopted changes
will increase sales and revenue and have experienced positive feedback from
players when the Commission conducted player research.
One commenter sent comments and also attached surveys regarding the proposed
amendments that were completed by other persons. This commenter also attached
copies of E-mail messages the commenter received from other persons regarding
the proposed rule amendments. Many of the these commenters are opposed to
increasing the number of draws per week from four draws to six draws; indicate
they will not spend more money playing Cash 5 than they do now; do not want
the number of balls to be decreased from 39 to 37; do not want a $2 prize
category; are opposed to playing Pick 3 twice a day and will quit playing
Pick 3 as a result of the Pick 3 rule change to allow for two drawings per
day; did not want four balls added to the Lotto Texas game; are not familiar
with and do not know how to obtain a copy of the Texas Register. Some commenters
support the proposed change to decrease the number of balls in the Cash Five
from 39 to 37. One commenter indicated that she wants to play the numbers
she selects every draw and if she can't, she won't play at all. The commenter
indicates that "normal people don't play golf every day, nor do they bowl,
play cards, go to the horse races or the casinos every day either". The commenters
don't want to play the game six times a week. The Commission disagrees with
the comments. While people don't engage in the activities mentioned by the
commenter every day, such activities are available every day. It's up to the
person to decide how frequently to engage in an activity. The Commission is
offering the game more frequently during the week but the game is intended
for entertainment. People should only play what they can afford. The commenter
is opposed to offering a $2 prize for matching two numbers. The commenter
believes that people won't claim $2 prizes and the prize money will be unclaimed.
The commenter also believes that the $2 prize is in exchange for reducing
the prize level amounts on the 3 of 5 and 4 of 5 prize categories. The Commission
disagrees with the comment because the Commission focus tested this game matrix
and it was favorably received. The change will increase the number of Cash
Five winners. The commenter also believes that the Commission staff didn't
accurately present the proposed game changes to the Commission when the Commission
considered the rule amendments for proposal for public comment. The Commission
disagrees with the commenter because the staff made a comprehensive presentation.
The Commissioners also received, individually, information pertaining to the
focus groups that were conducted. That information was provided prior to the
Commission meeting at which the Commission heard staff's presentation and
considered whether to propose the amendments for public comment. The commenter
is critical that the Commission doesn't make the public aware of its rulemakings
other than through the Texas Register or posting on the Commission's website.
The commission disagrees with the commenter. The Commission noticed its Commission
meeting at which the proposed amendments were considered and also noticed
a rulemaking comment hearing at which comments could be received. The notices
were posted on the Commission website and also submitted to the Texas Register.
No one appeared at either venue. The commenter believes that if the amendments
are adopted, sales will decline. The Commission disagrees with the comment
and believes sales will increase. Sales have been decreasing on the current
Cash 5 game and that is the primary reason the Commission pursued game modifications.
The commenter suggests having two Lotto Texas draws per week, two Cash Five
draws per week, and two Texas Two Step draws per week. The commenter believes
this approach will increase Cash Five jackpots and "reduce competition for
the same dollar". The Commission disagrees because the sales trends for five
digit cash games don't support the suggestion.
Other comments made on the form survey created by a commenter were to leave
the games alone, go back to the original number of balls in the Lotto Texas
game, air the drawings on television stations, join Powerball, and winning
on the 3 of 5 prize is what keeps one commenter going. One commenter indicated
he plays Pick 3 twice per day and has won more money on Pick3 than any other
game. The Commission believes that the games should be reviewed for their
performance and revised, when sales information indicates that the games need
to be refreshed. The Commission has evaluated the suggestion to join Powerball
and currently, doesn't believe that it has the statutory authority to do so.
The Commission agrees that the drawings should be aired on television stations
in Texas but it can't compel a station to do so. The Commission makes the
drawings available via satellite but it is the station's choice to air the
drawings.
One group or association, Joe M. Leonard, Jr. and Associates, Inc. supports
the rule amendments. One group or association, The Lotto Report, is opposed
to the rule amendments.
The amendments are adopted under Government Code, Section 466.015
which authorizes the Commission to adopt all rules necessary to administer
the State Lottery Act and to adopt rules governing the establishment and operation
of the lottery, and under Government Code, Section 467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction.
The amendments implement Government Code, Chapter 466.
§401.308."Cash Five" On-line Game.
(a)
Cash Five. A Texas Lottery on-line game to be known as
"Cash Five" is authorized to be conducted by the executive director under
the following rules and under such further instructions and directives as
the executive director may issue in furtherance thereof. If a conflict arises
between this rule and §401.304 of this title (relating to On-Line Game
Rules (General)), this section shall have precedence.
(b)
Definitions. In addition to the definitions provided in §401.301
of this title (relating to General Definitions), and unless the context in
this rule otherwise requires, the following definitions apply.
(1)
Advance Play--A player may purchase a Cash Five ticket
for any of the five Cash Five drawings immediately following the current drawing.
Example: On Monday, before the drawing, a Cash Five ticket can be purchased
for Tuesday, Wednesday, Thursday, Friday, or Saturday drawings.
(2)
Multi draw--A player may purchase a Cash Five ticket for
up to 12 consecutive drawings beginning with the current draw.
(3)
Number--Any play integer from one through 37 inclusive.
(4)
Play--The five numbers selected on each play board and
printed on the ticket.
(5)
Play board--A field of the 37 numbers found on the playslip.
(6)
Playslip--An optically readable card issued by the Texas
Lottery used by players of Cash Five to select plays. There shall be five
play boards on each playslip identified as A, B, C, D, and E. A playslip has
no pecuniary value and shall not constitute evidence of ticket purchase or
of numbers selected.
(c)
Price of ticket. The price of each Cash Five play shall
be $1.00. A player may purchase up to five plays on one ticket. Multiple draws
are available for up to 12 consecutive draws beginning with the current draw.
A player may purchase a Cash Five ticket for advance play.
(d)
Play for Cash Five.
(1)
Type of play. A Cash Five player must select five numbers
in each play or allow number selection by a random number generator operated
by the computer, referred to as Quick Pick. A winning play is achieved only
when two, three, four, or five of the numbers selected by the player match,
in any order, the five winning numbers drawn by the lottery.
(2)
Method of play. The player may use playslips to make number
selections. The on-line terminal will read the playslip and issue ticket(s)
with corresponding plays. If a playslip is not available, the on-line retailer
may enter the selected numbers via the keyboard. However, the retailer shall
not accept telephone or mail-in requests to manually enter selected numbers.
A player may leave all play selections to a random number generator operated
by the computer, commonly referred to as Quick Pick.
(3)
One prize per play. The holder of a winning ticket may
win only one prize per play in connection with the winning number drawn and
shall be entitled only to the highest prize category won by those numbers.
(e)
Prizes for Cash Five.
(1)
Prize amounts. The first, second, and third prize amounts,
for each drawing, paid to each Cash Five player who selects a matching combination
of numbers will vary due to a pari-mutuel calculation. The calculation of
a prize shall be rounded down so that prizes can be paid in multiples of whole
dollars. Each prize category breakage will carry forward to the next drawing
for each respective prize category. The prize amounts are based on the total
amount in the prize category for that Cash Five drawing distributed equally
over the number of matching combinations in each prize category. The fourth
prize is a guaranteed $2 prize.
Figure: 16 TAC §401.308(e)(1)
(2)
Prize pool. The prize pool for Cash Five prizes shall be
a minimum of 50% of Cash Five sales. This pool will be allocated into two
components. The first component consists of the funds necessary to pay all
the fourth prize category $2 prize winners. The first component is obtained
by an allocation from the Cash Five prize pool to the fourth prize category
so that all of the fourth prize category shares will each receive the guaranteed
$2 prize. The second component contains the remaining prize pool funds after
subtraction of the first component allocation and will be referred to as the
"residual prize pool". The residual prize pool will be allocated to the first,
second, and third prize categories according to the percentages applicable
for each prize category.
(3)
Prize categories.
(A)
First prize--The prize amount shall be calculated by dividing
the prize category contributions by the number of shares for the prize category.
A share is the matching combination, in one play, of all five numbers of the
five numbers drawn (in any order). Each first prize will be paid in one lump
sum payment. The five of five first prize of $600 to $999,999 must be claimed
at a Lottery claim center. Five of five prizes of $1,000,000 or larger must
be claimed at the Lottery Commission headquarters in Austin. The total prize
category contribution for a drawing will include the following.
(i)
The direct prize category contribution shall be 40.15%
of the residual prize pool for the drawing.
(ii)
If the first prize is not won by a Cash Five player from
the drawing, the direct prize category contribution will roll into the second
prize category.
(B)
Second prize--The prize amount shall be calculated by dividing
the prize category contributions by the number of shares for the prize category.
A share is the matching combination, in one play, of any four of the five
numbers drawn (in any order). The total prize category contribution will include
the following.
(i)
The direct prize category contribution shall be 18.08%
of the residual prize pool for the drawing.
(ii)
If the second prize is not won by a Cash Five player from
the drawing, the direct prize category contribution will roll into the third
prize category.
(C)
Third prize--The prize amount shall be calculated by dividing
the prize category contributions by the number of shares for the prize category.
A share is the matching combination, in one play, of any three of the five
numbers drawn (in any order). The total prize category contribution will include
the following.
(i)
The direct prize category contribution shall be 41.77%
of the residual prize pool for the drawing.
(ii)
If the third prize is not won by a Cash Five player from
the drawing, the direct prize category contribution will carry forward to
the prize pool for the next drawing.
(D)
Fourth prize-The prize amount is a guaranteed $2.
(4)
Unclaimed Prize Fund. In the event any player who has a
valid winning ticket does not claim the prize within 180 days after the drawing
in which the prize was won, the prize amount shall be deposited to the credit
of the Texas Department of Health state-owned multicategorical teaching hospital
account or the tertiary care facility account as prescribed in Government
Code, §466.4075.
(f)
Ticket purchases.
(1)
Cash Five tickets may be purchased only at a licensed location
from a lottery retailer authorized by the lottery director to sell on-line
tickets.
(2)
Cash Five tickets shall show the player's selection of
numbers, or Quick Pick (QP) numbers, boards played, drawing date, and serial
numbers.
(3)
It shall be the exclusive responsibility of the player
to verify the accuracy of the player's selection(s) and other data printed
on the ticket. A ticket is a bearer instrument until signed.
(4)
Except as provided in subsection (d)(2) of this section,
Cash Five tickets must be purchased using official Cash Five playslips. Playslips
which have been mechanically completed are not valid. Cash Five tickets must
be printed on official Texas lottery paper stock and purchased at a licensed
location through an authorized Texas lottery retailer's on-line terminal.
(g)
Drawings.
(1)
The Cash Five drawings shall be held each week on Monday,
Tuesday, Wednesday, Thursday, Friday, and Saturday evenings at 9:59 p.m. Central
Time except that the drawing schedule may be changed by the executive director,
if necessary.
(2)
Cash Five tickets will not be sold during the draw break
for the Cash Five game on Monday, Tuesday, Wednesday, Thursday, Friday, and
Saturday nights.
(3)
The drawings will be conducted by lottery officials.
(4)
Each drawing shall determine, at random, five winning numbers
in accordance with Cash Five drawing procedures. Any numbers drawn are not
declared winning numbers until the drawing is certified by the lottery in
accordance with the drawing procedures. The winning numbers shall be used
in determining all Cash Five winners for that drawing.
(5)
Each drawing shall be witnessed by an independent certified
public accountant. All drawing equipment used shall be examined by at least
one lottery security representative, the drawing supervisor, and the independent
certified public accountant immediately prior to a drawing and immediately
after the drawing.
(6)
A drawing will not be invalidated based on the financial
liability of the lottery.
(h)
Announcement of incentive or bonus program. The executive
director shall announce each incentive or bonus program prior to its commencement.
The announcement shall specify the beginning and ending time, if applicable,
of the incentive or bonus program and the value for the award. 1
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 29, 2002.
TRD-200202628
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: July 28, 2002
Proposal publication date: March 22, 2002
For further information, please call: (512) 344-5407
Subchapter P. TEXAS UNIVERSAL SERVICE FUND
Part 9.
TEXAS LOTTERY COMMISSION
Chapter 402.
BINGO REGULATION AND TAX