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Protest by TURN
The following is a protest by TURN that was filed last week with the
California PUC. I am not associated with TURN in any way. I am posting
this solely because I received it in the mail and I have a scanner with OCR
software, so I am doing my part to make this proceeding very open to the
I wish you guys could see the original paper copy that I received. It is
printed on this weird greenish off-color recycled paper that has threads in
it almost like the paper that money is printed on, and the toner or ink,
whatever printing process they are using, doesn't stick very well so the
printing is light and spotty. I bet they spend twice as much to buy this
paper as they would on regular copy paper just to prove they are
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
In the Matter of the Application
of Pacific Bell for Authority to
Increase and Restructure Certain A.95-12-043
Rates of its Integrated Services
Digital Network Services-.
PROTEST OF TOWARD UTILITY RATE NORMALIZATION (TURN)
Pursuant to Article 12 of the Commission's Rules of Practice and Procedure,
Toward Utility Rate Normalization (TURN) hereby protests the Application of
Pacific Bell for Authority to Increase and Restructure Certain Rates of its
Integrated Services Digital Network (ISDN) Services ("Application"). On
December 5, 1995, Pacific Bell filed an application to restructure and
increase the rates for its ISDN services. The Application appeared in the
Commission's Daily Calendar on December 20, 1995. The deadline for
protesting the Application was extended to February 2, 199 6 by ALJ Malcom.
I. PACIFIC PROPOSES SUBSTANTIAL CHANCES TO ITS ISDN RATES
The desired changes are substantial, with significant implications for
Pacific's customers. Pacific proposes to:
- Increase the monthly recurring charge for Centrex ISDN by $8.00;
- Double the price for additional minutes of use for both Home and Business
- Eliminate the wavier of installation charges for customers who commit to a
two year term agreement;
- Cap currently unlimited local usage for Home ISDN at 20 hours per month;
- Eliminate the $4.00 charge for certain optional ISDN features (Hold,
Consultation Hold, Three-way Conferencing and Call Transfer);
- Establish new volume and term discounts; and
- Implement a toll discount plan designed to give large toll discounts to
Pacific claims that these changes are needed to assure that ISDN services
better reflect their costs and are attractive and marketable to customers.
The changes proposed are significant. It is unclear to TURN, how the
proposal to significantly increase rates and eliminate unlimited usage for
Home ISDN (analogous to residential ISDN) will make the service more
attractive and marketable to customers. Moreover, there has been no
opportunity to assess Pacific's claim that the restructured prices will
better reflect the costs of ISDN services because the cost studies were
filed under seal.
When Pacific filed its Application, it also filed a companion ex-parte
motion asking the Commission to accept its cost studies under seal.
Administrative Law Judge Econome granted Pacific's motion on January 3. TURN
has contacted Pacific to request the cost information and has been told that
we may receive the information under the terms of a nondisclosure agreement
if we are a party to the proceeding. The need to review Pacific's cost
information is one reason that TURN is protesting the Application and is
obtaining party status to the proceeding.
II. THE PROPOSED CHANGES TO ISDN RATES COULD DAMPEN USE OF INNOVATIVE
TELECOMMUNICATION AND INFORMATION SERVICES.
The proposed changes to ISDN rates have the potential to dampen the use of
innovative telecommunications and information services. Customers who use
ISDN do so because they need the ability-to rapidly transfer and receive
information. ISDN is used to access the Internet, for various on-line
services and for telecommunications-dependent activities such as
telecommuting. Companies and individuals who have subscribed to ISDN did so
under a substantially lower set of prices than those Pacific is proposing.
The proposed rate increases may force customers to either curtail their use
of telecommunications and information services, or abandon ISDN altogether
and opt to use a less expensive, although technically less desirable,
At the present time, interim local competition rules not-withstanding,
customers have no other options for receiving a service comparable to ISDN.
Until there is demonstrable competition, customers desiring faster speeds.
and more bandwidth will be held captive by Pacific. If the proposed rate
increases were approved, customers would have two choices: either pay the
higher rates or use a less effective service.
Pacific's request to significantly raise price of ISDN service is ironic
given the company's claim in several proceeding that it is facing tremendous
competition. The decision to double the usage rate for ISDN service does
not appear to be the act of a, firm that is worried about competition. The
possibility exists that Pacific is attempting to extract monopoly profits
from its ISDN service as a means of leveraging its position in other markets
or subsidizing competitive services.
Such anticompetitive activity would be harmful to customers because Pacific
would be able to use its deep pockets to discourage or stifle competition.
If this were to happen, telecommunications companies with unique and
innovative telecommunications services would be unable to compete and such
services might never be available to customers.
III. THE PROPOSED CHANGES MAY BE ANTICOMPETITIVE AND DISCRIMINATORY.
The proposed volume discounts for ISDN services are cause for concern. From
the public information provided to support the application, it is impossible
to tell whether the proposed volume discounts are justified by the cost
data. Pacific's proposal to provide large toll discounts tied to ISDN
service may be discriminatory. Moreover, ISDN services are currently
classified as Category I services. Pacific should not be granted permission
to flexibly price these services unless and until they are reclassified as
Category II services. Furthermore, such price floors should be supported by
cost data which is examined and tested by interested parties, and the
IV. PACIFIC'S CLAIMS MUST BE CAREFULLY SCRUTINIZED.
Pacific asserts that the proposed increases to ISDN service are necessary
because two assumptions underlying its original ISDN tariff have proved to
be inaccurate. First, Pacific claims that its original studies incorrectly
estimated the percentage of ISDN customers who would be located more than 15
kilofeet from a central office. Pacific asserts that this percentage proved
to be higher than expected. Second, Pacific claims that the price for Home
ISDN was designed to cover costs associated with a lower level of average
usage than exists in actual practice. (Application, p. 4-5) The Commission
and interested parties should have the opportunity to carefully scrutinize
The Commission should look carefully at Pacific's proposal to double ISDN
rates and limit flat rate residential ISDN service at a time when the demand
for internet access is increasing. TURN believes that such a proposal
should not be approved in the absence of a thorough and critical review of
the Company's justifications for its proposed changes. Pacific's cost data
and proposed rates must be carefully scrutinized to ensure that customers
are not subjected to unfair and prohibitive rate increases which could harm
the development and provision of innovative telecommunications and
Dated: February 2, 1996
Toward Utility Rate Normalization
625 Polk St., Ste. 403
San Francisco, CA 94102