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UCAN's ISDN Protest (fwd)
- To: firstname.lastname@example.org
- Subject: UCAN's ISDN Protest (fwd)
- From: James Love <email@example.com>
- Date: Mon, 5 Feb 1996 08:24:18 -0500 (EST)
---------- Forwarded message ----------
Date: Sat, 3 Feb 1996 11:29:16 -0800 (PST)
From: Barry Fraser <firstname.lastname@example.org>
The following was filed with the CPUC on Friday. Please post freely on
Michael Shames, Esq.
Lisa Briggs, Esq.
Barry D. Fraser, Esq.
Utility Consumers' Action Network
1717 Kettner Blvd., #105
San Diego, CA 92101
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of ) Application 95-12-043
Pacific Bell (U 1001 C) for Authority ) (Filed Dec. 5, 1995)
to Increase and Restructure Certain )
Rates of its Integrated Services )
Digital Network Services )
UCAN'S PROTEST AND REQUEST FOR HEARING
On December 5, 1995, Applicant Pacific Bell ("Pacific") served
an application to increase and restructure its rates for
Integrated Services Digital Network ("ISDN") services. ISDN is a
network platform for transmitting digital voice and data services
at high speeds over traditional analog telephone lines.
Pursuant to Public Utilities Commission ("Commission") Rule 8,
UCAN protests the Application and requests that the Commission
conduct an evidentiary hearing to address the issues set forth
below, and provide any other appropriate relief. As a consumer
advocacy group and recognized intervenor in Commission proceedings,
UCAN is concerned that the rate increases proposed in this
Application will adversely affect California ratepayers.
Specifically, Pacific requests that the metered charge for
additional minutes of local daytime ISDN use be doubled from
$0.0105 to $0.0210, that the current practice of waiving
installation charges for a 2-year term agreement be eliminated, and
that Centrex ISDN prices be increased by $8 per month.
Additionally, Pacific seeks to impose upon home ISDN users a
metered rate of $0.0146 for each additional minute for evening use
and $0.0084 for each additional minute for weekend use over and
above an initial 20 hour cap. Currently, home customers have
unlimited, unmetered evening and weekend service.
UCAN has several concerns about this Application. First, the
proposed rate increases will severely inhibit the development of
advanced communications services in California. Second, the rate
increases will harm current ISDN users who have invested heavily in
user-end equipment relying on Pacific's current ISDN rates. Third,
Pacific's specified reasons for requesting the rate increases are
unconvincing and unsupported by sufficient evidence. Finally, even
if Pacific can show that it has incurred higher ISDN costs,
imposition of metered charges for evening and weekend use is not
the proper way to recoup those costs.
As no service list has been established in this matter, this
Protest and Request for Hearing will be served only upon the
Applicant, Pacific Bell. When a service list is established, UCAN
will serve this Protest on the appropriate parties.
II. PACIFIC BELL'S PROPOSED ISDN RATE CHANGES WILL SEVERELY INHIBIT
THE DEVELOPMENT OF ADVANCED COMMUNICATIONS SERVICES IN CALIFORNIA.
Continuing advances in personal computers and communications
technologies have improved the speed, accuracy, and volume of
information transfer between remote sites. These advances have
made possible a variety of new interactive applications, including
access to the Internet, remote access to Local Area Networks
("LANs") and Wide Area Networks ("WANs"), and simultaneous data,
audio, video and multimedia information transfers.
However, there are limits to the ability of traditional analog
telecommunications lines to support such advanced services. Many
of these services become slow and inefficient over analog lines,
even when accessed by the fastest available modems. ISDN service
allows the traditional copper wire infrastructure to support the
high-speed and high-volume data transfer capabilities required by
these advanced communications technologies. ISDN is currently the
only affordable way for small businesses and residential users to
take full advantage of the advanced services now available.
The Commission has acknowledged the benefits to be gained by
California business and residential users from access to these new
services. In its Report to the Governor, Enhancing California's
Competitive Strength: A Strategy for Telecommunications
Infrastructure (November 1993), the Commission notes:
Advanced telecommunications offers California the
opportunity to gain competitive advantage in the global
marketplace. That advantage will strengthen our economy
and create tens of thousands of jobs. Expanded use of
telecommunications will create new products and services,
new businesses, new job opportunities and could increase
the productivity of the state's businesses by billions of
. . .
Many of the benefits will flow beyond the private sector
to enrich our educational system; the health care sector;
libraries; public safety organizations; and other
important institutions. . . . Equally important, public
sector agencies and non-profit organizations can exploit
advanced telecommunications to develop new and valuable
services that would otherwise not be possible using
Today, the ability to take advantage of these advanced
technologies depends in large part upon affordable access to ISDN.
Pacific Bell's proposed rate increase, particularly its proposal to
institute per-minute charges for off-peak usage periods, will
prevent many residential and small business customers from taking
full advantage of new telecommunications services. UCAN expects to
offer evidence that the proposed rate increases will cause some
users' monthly bills to rise by more than $100.00. This will put
such services beyond the financial reach of many customers.
Pacific itself has argued that ISDN price increases will limit
access to advanced services by small businesses and residential
users. In a recent Petition for Waiver of a proposed monthly
$3.00 increase in ISDN Subscriber Line Charges by the Federal
Communications Commission ("FCC"), Pacific Bell made the following
By waiving this rule, the public interest will be served
since affordable and economic ISDN will be made available
to the many small business, residence and large business
customers who need an efficient and effective means of
transmitting information, getting access to the Internet,
and becoming users of the information highway.
Unique circumstances exist in California which underscore
how critical affordable ISDN is to our customers. The
federal Clean Air Act and the California Clean Air Act
require air quality agencies to institute "Employer Based
Employee Trip Reduction" regulations.
. . .
Telecommuting--moving the work to the worker, rather than
the worker to the work--is credited in each region as a
commute alternative to carpooling, vanpooling or riding
Millions of employees telecommute using the existing
telecommunications network. But many are demanding
higher telecommunications speeds in order to be more
productive. Still others tell us they need high speed
access to the workplace before they can even start
. . .
The natural disasters in California have also created a
need for affordable ISDN. The Loma Prieta Quake,
Northridge Quake, Oakland Hills Fire and Sonoma County
floods have all prompted an increased need to telecommute
from home or from telecommuting hubs.
. . .
Pacific has also instituted an aggressive Education First
initiative in order to encourage schools, libraries, and
community colleges to use ISDN to gain access to the
information superhighway. In a state where public
education budgets are severely strained, an increase in
monthly charges could force schools to forgo this
Clearly, Pacific recognizes the potential threat of a mere
$3.00 ISDN price increase to the development and growth of advanced
services. Yet the company would multiply that very same threat
many times over if it is allowed to implement the rate structure
proposed in its Application.
It is a basic economic tenet that an increase in price will
reduce demand for a product. In light of the Commission's interest
in developing access to advanced communications services and the
recognized threat to development posed by Pacific's proposed rate
increases, the Commission should grant this request for a hearing.
III. THE PROPOSED RATE INCREASE WILL HARM EXISTING ISDN BUSINESS
AND RESIDENTIAL CUSTOMERS WHO HAVE MADE SUBSTANTIAL USER-END
EQUIPMENT PURCHASES IN RELIANCE UPON PACIFIC BELL'S CURRENT RATE
Utilizing ISDN to access advanced services entails much more
than simply purchasing ISDN service. Home and business users must
incur various additional costs, including purchase of computer
terminals, modems, routers, and specialized software. Users must
subscribe with various service providers, which often require
advance payments and long-term service agreements. Small business
and institutional users often must invest in LAN or WAN technology
in order to successfully implement telecommuting, Internet access,
videoconferencing, and other services. These initial costs can be
substantial, easily running into the thousands of dollars.
ISDN users making these substantial investments have relied on
the current Pacific price structure in developing their advanced
services plans. If Pacific is allowed to implement the proposed
rate increases, many small business and residential users may be
forced to limit or even cancel their ISDN service, and incur large
losses due to these high start-up costs. UCAN will provide
testimony that many users, especially those who have invested
thousands of dollars in LAN and WAN technology, will be
substantially harmed by the price increases imposed by this rate
Because of this potential for substantial harm to customers
who have made investments in end-user technology relying upon the
current costs of ISDN service, the Commission should grant this
request for a hearing in this matter.
IV. PACIFIC BELL'S SPECIFIED REASONS FOR THE ISDN RATE INCREASE ARE
UNCONVINCING AND NOT SUPPORTED BY SUFFICIENT EVIDENCE.
Pacific seeks to increase ISDN rates because it claims to have
erred with respect to two assumptions when initially calculating
ISDN tariffs. First, Pacific claims that higher percentages of
ISDN customers than originally anticipated live more than 15
kilofeet from the central office. Second, the company claims that
a minority of users are "maximizing their usage on evenings and all
weekend long." Calls during such periods are currently not
subject to metered charges.
Pacific argues that these two miscalculations have resulted in
actual ISDN costs exceeding current revenues. However, the company
provides little evidence to support this claim in its application.
Since Pacific's actual cost studies were submitted under seal and
are unavailable to UCAN, it is impossible to determine whether any
rate increases are justified. Despite this limitation, UCAN
expects to provide testimony from expert witnesses which will show
that Pacific's reasoning in this matter is flawed.
First, Pacific receives a substantial financial benefit from
increased ISDN usage, which more than offsets any additional costs
incurred by this increased use. ISDN customers make more efficient
use of the existing telecommunications infrastructure by
transporting more data at higher speeds without having to
physically expand the system's capacity. Thus, ISDN use actually
saves Pacific substantial costs which might otherwise be incurred
to perform extensive upgrades to handle the same amount of data via
analog methods. This benefit outweighs any additional costs that
Pacific failed to factor into its existing tariff.
Second, Pacific's claim that excessive usage during off-peak
time periods has increased its costs is unconvincing. Off-peak use
of ISDN simply makes more efficient use of telecommunications
infrastructure that would be sitting idle as excess capacity during
these time periods. The total required capacity of ISDN plant is
determined by the level of business-day peak demand. Customers
using ISDN during these peak times justifiably bear the cost of the
high capacity infrastructure (through metered charges for these
peak times). However, during off-peak times, the incremental cost
for supplying ISDN connections is much lower. Users who arrange
their schedules to take advantage of off-peak evening and weekend
rates should not be required to subsidize the costs required to
maintain the infrastructure at peak capacity.
Pacific's specified reasons for requesting these rate changes
are unconvincing and insufficient. Therefore, the Commission
should grant this request for a hearing to determine whether
Pacific's actual costs exceed its estimated costs for ISDN service,
and if so, whether these additional costs are substantial.
V. EVEN IF PACIFIC BELL INCURS HIGHER COSTS AS A RESULT OF
INCREASED ISDN USE, IMPOSITION OF METERED CHARGES FOR EVENING AND
WEEKEND USE IS NOT THE PROPER WAY TO RECOUP THOSE COSTS.
Pacific claims that actual ISDN service costs are higher than
current revenues under the existing rate structure. Even if the
company can establish that a price increase is justified, there is
no evidence that a per-minute charge for local ISDN calls made in
low-peak time periods is the proper way to recoup those additional
One of Pacific's arguments seems to be that users who
establish connections with advanced service providers tend to leave
these connections open continuously during off-peak time periods.
However, UCAN expects to produce evidence that leaving these lines
open takes advantage of other efficiencies, and actually costs less
than making repeated calls to a service provider.
The nature of many advanced communications services, such as
Internet access, often requires lengthy connections to various
service providers. However, the line may not actually be in use
for a large part of this time. Services such as the World Wide Web
("Web") allow the user to "download" large text and data files and
search them on the user's computer device. During this search
period, although there is a connection established between the user
and the service, there is no actual transfer of information through
the lines. The cost of maintaining such an open line is low
compared to a line maintaining a continuous flow of information.
The current rate structure which allows unlimited usage for
off-peak times encourages users to take advantage of Web services
while maintaining an open line with the service. However, if
metered charges are imposed for these off-peak time periods, users
might be encouraged to repeatedly connect and disconnect with their
service provider in order to reduce their per-minute costs. This
continuous dialing and redialing is less efficient than leaving a
line open continuously for a period of time. This practice will be
awkward and time-consuming for the ISDN customer, and may actually
result in increased costs to Pacific.
Additionally, Pacific proposes a set of "toll discount plans"
designed to "mirror the pricing on applications such as Internet
access services." These packages set up a fixed discount for
purchasing a specified amount of service in advance. Pacific
evidently seeks to equate its ISDN service with services offered by
Internet Service Providers ("ISPs") employing similar types of
However, Pacific provides no evidence that its ISDN services
are comparable to Internet access services. In fact, many
significant differences exist between these types of services.
ISDN is primarily a switching and transmission technology, while
ISP service includes access to a "client server," essentially a
computer which can link the customer to various Internet services.
Pacific offers absolutely no evidence that these two diverse types
of services should be priced similarly.
The Commission should grant this request for a hearing because
there is substantial evidence that Pacific's proposed rate
structure will actually encourage activity which is less efficient
and creates higher costs than current usage.
For the foregoing reasons, UCAN requests the following: 1)
that Pacific hold an informational workshop to explain specifically
the necessity of these proposed rate increases; 2) that informal
meetings with the parties be conducted to discuss a resolution of
these issues; and 3) if these meetings do not lead to resolution,
that a hearing be held in the above proceeding to determine the
advisability and necessity of these rate increases, and if such an
increase is actually required, to determine whether Pacific's
proposed tariff is indeed the most efficient way of recovering the
costs of providing ISDN service.
DATED: Friday, February 2, 1996
Michael Shames, Esq.
Lisa Briggs, Esq.
Barry D. Fraser, Esq.
Attorneys for Utility
Consumer's Action Network
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
*Barry D. Fraser, Esq. email@example.com *
*Electronic Communications Advocate 619-999-7596 voice mail *
*UCAN 619-696-6966 *
*1717 Kettner Blvd., # 105 *
*San Diego, CA 92101 *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *