The Minnesota PUC is meeting on Tuesday (September 13). The final two agenda items may be of interest to some readers:

First the Local Exchange Companies item

*P999/PR-11-329 Local Exchange Companies;
Eligible Telecommunications Carriers
In the Matter of Annual Certifications Related to Eligible Telecommunications Carriers’ (ETCs) Use of the Federal Universal Service Support.
A. Should the Commission approve all petitioning ETCs’ requests for certification?
B. Should the Commission direct all Petitioning ETCs to supply USF support received in the previous year as public information? (PUC: Briefing Papers – Brion)

The short answer: The recommendation is that those who applied for certification to receive Universal Service Funds (USF) receive certification. They also recommend that the ETCs agree to make data public or provide addition information explaining why that data should be allowed to remain private.

Here are a couple of highlights from the briefing paper:

Based on the documentation filed by the ETCs and from USAC data, Staff learned that in 2010, Minnesota ETCs received approximately $105 million in High Cost support, up from $81 million of the earlier year.

Staff recommends that the Commission certify that, based on the information provided, that all the petitioning ETCs will use Federal High-Cost USF support received in 2011 only for the provision, maintenance and upgrading of facilities and services for which the support is intended. Attachment 1 contains a draft of the Commission’s certification to the FCC and the USAC, with the list of the petitioning ETCs.

Second Frontier – even the PUC notes indicate that this item will be “a disputed item or significant legal or procedural issue to be resolved.”

**6 P405/AR-11-562 Frontier Communications of Minnesota, Inc.
In the Matter of Frontier Communications of Minnesota’s Proposal to Join an Existing AFOR Plan of its Corporate Affiliate Citizens Telecommunications of Minnesota.
What action should the Commission take regarding Frontier’s proposal to join an existing AFOR plan of Citizens Telecommunications of Minnesota? (PUC: Briefing Papers – Krishnan)

Frontier (a wholly owned subsidiary of Citizens Communications Company) has been operating under its own Alternative Form of Regulation (AFOR) since approved in 2007. They would like to join Citizens’ currently active AFOR plan, which was approved in 2008. Apparently Citizens’ AFOR plan was actually adopted from Frontier’s AFOR plan and is active until 2012. Frontier wants to join it and extend it until 2014. One hiccup is that there is supposed to be an expiration date of sorts on these plans, which sounds like 3 years with an option of a one-year extension. The idea being that it requires companies (and interested partied) to reassess the AFOR plan periodically.

Here’s an excerpt from the briefing paper that helped me track the issue…

The DOC noted that while an AFOR plan may be extended only once during its tenure, as Minn. Stat. §237.766 subd. 3(a) provides that “a plan may only be extended once,” there is no statutory limit as to the number of times one company may adopt the AFOR plan of another company. An affiliated company is not subject to tenure limitation and, as affiliated companies, Citizens and Frontier could continue, as their AFORs expire, to adopt one another’s AFOR plan into perpetuity, effectively extending their existing AFORs again and again.

The issue is restated…

The DOC observed that for Citizens and Frontier to have what constitutes a ‘life-term” for their AFOR plans, at their own discretion, is not in the public interest.

The DOC argued that if Frontier’s current petition is approved, Frontier will essentially be permitted to extend its own AFOR Plan for a period of three years (with an option to extend for a fourth year), for a total of eight years from the date that the Frontier Plan was initially approved on September 25, 2007. Further, conceivably, as affiliated companies, Citizens and Frontier could continue, as their AFORs terminate, to adopt one another’s AFOR plan into perpetuity, effectively extending their existing AFORs again and again, whereas Minn. Stat. 237.766, Subd. 3 (b) places a limit of one-time extension for a new AFOR plan.

The  plan also leaves some issues that may not be in the public’s interest…

The DOC noted that the adoption of Citizens’ investment plan by Frontier leaves the investment plan old (and as such no plan for the future at all) and concluded that Frontier is essentially stating that its investment plan has not changed and will not change for an additional four years. The DOC faulted Frontier’s investment plan for not making future commitments.

Another public interest issue raised by the DOC concerns access charges. The DOC argued that while reductions in access charges may be addressed in another forum, an AFOR plan that guarantees recovery of lost access revenue with an increase to basic local rates or the imposition of a flat monthly end-user charge or surcharge of equivalent value may not be in the public interest when extended over an eight year (or more) period of time. The DOC further asked that the Commission weigh the impact on ratepayers of the continuation, potentially ad infinitum, of a plan which contains guarantees of revenue neutrality to the Company, but no corresponding, measurable commitments of any significance, and determine whether such a plan is beneficial to the public.

Frontier rebutted DOC’s assertions. They also pointed out that outside of the DOC, no one has commented on the proposal, the DOC’s comments did not identify failings in past performance and Frontier has exceeded service quality obligations under the current AFOR.

The PUC Staff recommendation lean towards the DOC remarks. (You can read through the briefing papers for the specifics.) There was one section that caught my eye…

Regarding the proposed investment plan, Staff does not believe Frontier has fully incorporated the telecommunications goals as framed in Minn. Stat. 237.011 or the broadband goals in Minn. Stat. 237.012.

237.011 TELECOMMUNICATIONS GOALS.
The following are state goals that should be considered as the commission executes its regulatory duties with respect to telecommunication services:
(3) encouraging economically efficient deployment of infrastructure for higher speed telecommunication services and greater capacity for voice, video, and data transmission;
(4) encouraging fair and reasonable competition for local exchange telephone service in a competitively neutral regulatory manner;
… [Also includes speed and ranking goals, which I’ve omitted in deference to space]

Staff agrees with the DOC that the Commission should convene a settlement process and encourage Frontier and the DOC to reach a settlement/stipulation. If the Commission so decides, the Commission may also refer the Staff’s concern regarding access charge recovery proposal and investment goals to be discussed in the negotiations.

I can see the significance of the issues as noted by the PUC. I think the procedural issue is a biggie especially with an industry that is ever-changing like telecommunications. I think this will also be an opportunity to encourage a private provider to invest or at least engage in discussion of the Minnesota Broadband Goals.

My plan is to attend the PUC meeting and take notes.