Arizona Telecommunications & Information Council (ATIC) Multitenant Building Telecommunications Access Study PREVIOUS CONTENTS APPENDIX 5
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National Association of Regulatory Utility Commissioners (NARUC)Appendix 5: Excerpts from Selected Resource Documents
U.S. Senate Committee on Commerce, Science, and Transportation
Letter from Senator John McCain, Chairman, to the Arizona Corporation Commissioners, January 16, 1998
Dear (Arizona Corporation) Commissioners,
I am very concerned about the local rates established by the Arizona Corporation Commission (ACC) on Thursday, January 8, 1998, for local telephone resale and access to unbundled local loops. (See) US WEST Rivals Drop Out, The Arizona Republic, Friday, January 9, 1998, (Section) A1. The resale discount appears so low, and the unbundled local loop rate so high, that they may effectively prevent competitive local telephone service in the State of Arizona.
The ACC set the resale discount at 18% for all services, except for residential, which was set at 12%. The unbundled loop rate was set at approximately $22.65. The rates for residential resale and unbundled loops differ dramatically from those established by the Federal Communications Commission (FCC) and by many state commissions.
The FCC set the unbundled loop benchmark rate for Arizona at $12.85 and established a discount range of between 17-25% for resale service. The New York PUC set the deaveraged interim unbundled rate at between $12.29 and $19.24 and established the resale discount at between 19.1% and 21.7%. The Texas PUC established an unbundled loop rate of $14.15 and a resale discount for all services of $21.64%. Minnesota and Oregon, two states served by US WEST, have established interim loop rates of $12.03 and $17.20, respectively, and interim resale discounts of 21.50% and 21.00%, respectively.
Naturally, these prices will vary from state to state, because the incumbent telephone company's costs vary, and therefore one state's rates cannot definitively show what another state's rates should be. Nevertheless, the unbundled loop rates established by the FCC and by (other) state commissions are substantially lower and the resale discounts are substantially higher, than the rates and discounts established by the ACC. I am therefore concerned that the cost methodology and the assumptions made in Arizona will result in harming consumers by strangling competition before it can begin.
As you are aware, I have long supported giving state commissions greater authority to set rates, terms, and conditions for competitive entry into local telecommunications markets. I do believe, however, that state commissions must work to create an environment that promotes competition. Because the rates established by the ACC are dramatically out of line with those of the FCC and other states, it raises concern that the residents of Arizona may not see the benefits of local competition in the near future. Major potential competitors such as AT&T and MCI have already announced that they cannot hope to enter the local market in Arizona given the relatively high unbundled loop rate and the low resale discount for residential service.
I hope that the ACC will consider these concerns in its further efforts to promote competition
Sincerely,
John McCain, Chairmancc: Wayne Alcott, US WEST Vice President for Arizona
Multitenant Building Telecommunications Access Study PREVIOUS CONTENTS APPENDIX 5
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National Association of Regulatory Utility Commissioners (NARUC)