R S C

R S C
REPORT ON THE STATUS
OF COMPETITION
IN THE
TELECOMMUNICATIONS
INDUSTRY
As of December 31, 2008
Florida Public Service Commission
Office of Strategic Analysis and Governmental Affairs
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ii
TABLE OF CONTENTS
LIST OF FIGURES AND TABLES........................................................................................ ix
LIST OF ACRONYMS ........................................................................................................... xi
EXECUTIVE SUMMARY ...................................................................................................... 1
CHAPTER I. INTRODUCTION AND BACKGROUND...................................................... 5
A. Provisions and Goals of Chapter 364, Florida Statutes, and the
Telecommunications Act of 1996................................................................................. 6
1. Chapter 364, Florida Statutes................................................................................... 6
2. Federal Telecommunications Act of 1996............................................................... 6
B. Methodology ................................................................................................................. 7
CHAPTER II. COMMUNICATIONS MARKET OVERVIEW ............................................ 9
A. Economy ....................................................................................................................... 9
B. Incumbent Wireline..................................................................................................... 11
1. Mergers / Acquisitions........................................................................................... 13
a. Embarq / CenturyTel........................................................................................ 13
b. Alltel / Verizon Wireless ................................................................................. 14
c. Verizon / Frontier............................................................................................. 15
d. Birch / Cleartel................................................................................................. 15
C. Wireless....................................................................................................................... 15
D. Voice over Internet Protocol ....................................................................................... 17
E. Broadband.................................................................................................................... 18
F. Regulatory Factors....................................................................................................... 19
1. Federal.................................................................................................................... 19
2. State........................................................................................................................ 20
CHAPTER III. STATUS OF WIRELINE COMPETITION IN FLORIDA ......................... 21
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TABLE OF CONTENTS
A. Wireline Access Lines In Florida................................................................................ 21
1. 2008 Summary of Results...................................................................................... 21
2. Contributing Factors to Access Line Decline ........................................................ 21
3. CLEC Market Composition ................................................................................... 22
B. Wireline Market Share And Access Lines .................................................................. 22
1. CLEC Market Share............................................................................................... 23
a. Florida .............................................................................................................. 23
b. National............................................................................................................ 25
2. Access Line Overview ........................................................................................... 26
3. CLEC Market Penetration by ILEC Territory ....................................................... 28
4. Competitive Presence by Exchange....................................................................... 29
C. Competitive Market Trends ........................................................................................ 29
1. CLEC Access Line Provisioning ........................................................................... 29
2. Residential Access Line Trends............................................................................. 31
3. Business Access Line Trends................................................................................. 32
D. Rural Access Line Trends ........................................................................................... 34
1. Residential Access Lines ....................................................................................... 34
2. Business Access Lines ........................................................................................... 34
E. Pay Telephone Services............................................................................................... 34
F. Prepaid Telecommunications Services ........................................................................ 34
CHAPTER IV. WIRELESS, VOIP, CABLE, AND BROADBAND.................................... 37
A. Wireless....................................................................................................................... 37
1. Wireless-Only Households .................................................................................... 40
2. Florida Trends........................................................................................................ 40
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TABLE OF CONTENTS
B. Voice over Internet Protocol ....................................................................................... 42
1. National Market Analysis ...................................................................................... 43
a. Facilities-Based VoIP Providers ...................................................................... 43
b. Over-the-Top VoIP Providers.......................................................................... 45
2. Florida Market ....................................................................................................... 46
a. Facilities-Based VoIP Providers ...................................................................... 47
b. Over-the-Top VoIP Providers.......................................................................... 48
C. Broadband ................................................................................................................... 49
1. General Broadband Trends in 2008 ....................................................................... 49
2. Broadband and the Economy ................................................................................. 49
3. National Trends...................................................................................................... 51
a. Broadband Speeds............................................................................................ 51
b. National Broadband Subscribership ................................................................ 51
c. Best and Worst States....................................................................................... 52
4. Florida Trends........................................................................................................ 52
5. Deployment of Broadband Technology................................................................. 54
a. Fiber Optics...................................................................................................... 54
b. DSL .................................................................................................................. 55
c. Cable Broadband.............................................................................................. 55
d. Wireless............................................................................................................ 56
e. Broadband Over Power Lines .......................................................................... 57
f. Satellite ............................................................................................................. 57
CHAPTER V. DISCUSSION OF CHAPTER 364, F.S., REQUIREMENTS ...................... 59
A. Introduction................................................................................................................. 59
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TABLE OF CONTENTS
B. Discussion of Six Statutory Issues .............................................................................. 60
1. The impact of competition on the availability of universal service....................... 60
2. The ability of competitive providers to make equivalent service available........... 62
a. Perceived Barriers to Competition ................................................................... 62
b. Competitive Services ....................................................................................... 64
c. CLEC Investment............................................................................................. 64
d. CLEC Complaints Against ILECs ................................................................... 64
e. Comments by Incumbents................................................................................ 65
3. The ability of customers to obtain equivalent services.......................................... 66
4. The impact of price regulation on the maintenance of affordable and reliable
services.................................................................................................................. 70
5. Definition of basic local telecommunications services.......................................... 71
6. Other information and recommendations that may be in the public interest......... 71
CHAPTER VI. STATE ACTIVITIES................................................................................... 73
A. ILEC Requested Rulemaking...................................................................................... 73
B. ILEC Service Quality .................................................................................................. 73
1. Service Guarantee Programs.................................................................................. 74
2. Petition by Attorney General, Office of Public Counsel, and AARP.................... 75
C. Competitive Market Activities .................................................................................... 76
1. Contested Adoption of Sprint AT&T Interconnection Agreement by Nextel....... 76
2. Frontier’s Notice of Election of Price Regulation ................................................. 76
3. Alternative E911 Services..................................................................................... 76
4. AT&T Request for Waiver of Rule 25-4.040(2), F.A.C........................................ 77
5. Comcast / TDS Telecom Arbitration ..................................................................... 77
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TABLE OF CONTENTS
6. Bright House Safety Complaint ............................................................................. 78
7. Bright House and Comcast Retention Marketing Complaint ................................ 78
8. Wholesale Performance Measurement Plans......................................................... 79
D. Lifeline And Link-Up Service For Low-Income Consumers ..................................... 80
1. TracFone Wireless ................................................................................................. 80
2. Bundled Packages .................................................................................................. 81
E. Telecommunications Relay Services........................................................................... 81
F. State Legislation .......................................................................................................... 83
1. CS/CS/SB 2626 Telecommunications Companies ................................................ 83
a. Telecommunications Regulation...................................................................... 83
b. Broadband Deployment Administration .......................................................... 84
2. Carrier-of-Last-Resort Obligation ......................................................................... 85
CHAPTER VII. FEDERAL ACTIVITIES............................................................................ 87
A. Broadband ................................................................................................................... 87
1. FCC Broadband Reporting .................................................................................... 87
2. FCC Proceeding Regarding Internet Network Management ................................. 88
3. American Recovery and Reinvestment Act (ARRA) ............................................ 89
B. Universal Service ........................................................................................................ 90
1. High-Cost Support Reform .................................................................................... 91
2. Universal Service Fund Oversight ......................................................................... 93
3. Effects of Merger Conditions on Competitive ETCs............................................. 94
C. Local Number Portability............................................................................................ 94
D. Forbearance................................................................................................................. 95
1. Access Charges and VoIP...................................................................................... 96
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TABLE OF CONTENTS
2. Accounting and Reporting Requirements.............................................................. 96
3. D.C. Circuit Review of Verizon Forbearance Ruling............................................ 97
E. Voice over Internet Protocol ....................................................................................... 97
F. Provision of Services in Residential Multiple Dwelling Units.................................... 98
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08 ................................. 99
APPENDIX B. CLECS PROVIDING SERVICE IN FLORIDA ....................................... 105
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH EXCHANGE .................. 109
APPENDIX D. CERTIFICATED FLORIDA COMPANIES PROVIDING VoIP
SERVICE PER FPSC DATA REQUEST RESPONSES.......................... 117
APPENDIX E. SUMMARY OF COMPLAINTS FILED BY CLECS............................... 119
APPENDIX F. FLORIDA LIFELINE ELIGIBILITY CRITERIA..................................... 123
GLOSSARY OF TERMS ..................................................................................................... 125
viii
LIST OF FIGURES AND TABLES
Table
Figure
Figure
Figure
Figure
Table
Figure
Figure
3-1.
3-1.
3-2.
3-3.
3-4.
3-2.
3-5.
3-6.
Summary of CLEC Residential Access Line Providers ....................................... 22
Florida CLEC Market Share ................................................................................. 23
Florida Residential & Business CLEC Market Share........................................... 24
Florida CLEC Market Share by ILEC Service Territory...................................... 25
Florida Access Line Trends .................................................................................. 26
Florida Access Line Comparison.......................................................................... 27
Florida CLEC Lines.............................................................................................. 27
Florida CLEC Residential & Business Market Share
by ILEC Service Territory .................................................................................... 28
Table 3-3. Florida Exchanges with the Most CLEC Providers.............................................. 29
Figure 3-7. Total Florida CLEC Residential Line Composition ............................................. 30
Figure 3-8. Florida Residential Line Trends by ILECs and CLECs........................................ 31
Figure 3-9. Percent Change of Florida Residential Access Lines by ILECs and CLECs ....... 32
Figure 3-10. Florida Business Line Trends by ILECs and CLECs ........................................... 33
Figure 3-11. Percent Change of Florida Business Access Lines by ILECs and CLECs ........... 33
Figure
Figure
Figure
Figure
Figure
Table
Figure
4-1.
4-2.
4-3.
4-4.
4-5.
4-1.
4-6.
U.S. Broadband Subscription by Technology Type ............................................. 39
Wireless Subscription as Percentage of Population.............................................. 41
Florida Local Exchange Access Lines and Florida Wireless Subscriptions......... 42
Estimated Florida Residential VoIP Access Lines ............................................... 47
Trends in Home Internet Access: Broadband vs. Dial-up .................................... 50
Broadband Connection by Speed and Technology 2009...................................... 51
Fiber-to-the-Home Deployment............................................................................ 54
Figure
Figure
Figure
Figure
Table
Table
5-1.
5-2.
5-3.
5-4.
5-1.
5-2.
Telephone Service Penetration: Florida vs. Nation ............................................. 61
2008 Telephone Penetration by Income: Florida vs. Nation ............................... 61
Barriers to Competition Reported by CLECs ....................................................... 63
CLEC Complaints Filed Against ILECs............................................................... 65
CLEC Providers by Florida Exchange.................................................................. 67
Local Rates for Selected Florida CLECs and ILECs............................................ 68
Table
7-1.
2007 Federal Universal Service Programs in Florida ........................................... 91
ix
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x
LIST OF ACRONYMS
3G
4G
ADA
ARRA
ADSL
ARMIS
BPL
Bus
CDC
CLEC
C.F.R.
COLR
DCF
DOCSIS
DMS
DSL
ETC
F.A.C.
FCC
FCTA
FiOS
FNPRM
FPSC
F.S.
IBEC
ILEC
IP
ITS
ITIF
IXC
JEDC
kbps
LEC
LTE
MDU
Mbps
NEFCOM
NOI
NPRM
NTIA
OOS
OPC
PSTN
Res
Third Generation (wireless)
Fourth Generation (wireless)
Americans with Disabilities Act
American Recovery and Reinvestment Act
Asynchronous Digital Subscriber Line
Automated Reporting Management Information System
Broadband Over Power Line
Business
Centers for Disease Control
Competitive Local Exchange Company
Code of Federal Regulations
Carrier of Last Resort
Department of Children and Families
Digital Over Cable Service Interface Specifications
Department of Management Services
Digital Subscriber Line
Eligible Telecommunications Carrier
Florida Administrative Code
Federal Communications Commission
Florida Cable Telecommunications Association
Verizon’s trademark name for its fiber-to-the-home package of services
Further Notice of Proposed Rulemaking
Florida Public Service Commission, the Commission
Florida Statutes
International Broadband Electric Communications
Incumbent Local Exchange Company
Internet Protocol
Indiantown Telephone Company
Information Technology and Innovation Foundation
Interexchange Company
Jacksonville Economic Development Council
kilobits per second
Local Exchange Company
Long Term Evolution
Multi-dwelling Unit
Megabits per second
Northeast Florida Communications Company
Notice of Inquiry
Notice of Proposed Rulemaking
National Telecommunications and Information Administration
Out-of-Service
Office of Public Counsel
Public Switched Telephone Network
Residential
xi
LIST OF ACRONYMS
RUS
SGP
TDD
TRO
TRRO
TRS
UNE
UNE-P
USF
VoIP
VRS
WiMAX
Rural Utilities Service
Service Guarantee Program
Telecommunications Devices for the Deaf
Triennial Review Order
Triennial Review Remand Order
Telecommunications Relay Service
Unbundled Network Elements
Unbundled Network Element-Platform
Universal Service Fund
Voice over Internet Protocol
Video Relay Service
Worldwide Interoperability for Microwave Access
xii
EXECUTIVE SUMMARY
This report fulfills the statutory requirements set forth in Section 364.386 and Section
364.161(4), Florida Statutes (F.S.), which require the Florida Public Service Commission (the
Commission or FPSC) to report on “the status of competition in the telecommunications
industry” to the Legislature by August 1 of each year. On February 20, 2009, data requests were
sent to the 10 incumbent local exchange companies (ILECs) and 333 competitive local exchange
companies (CLECs) certificated by the Commission to operate in Florida, requesting data as of
December 31, 2008.
Wireline Competition
The following market share data relates exclusively to the ILEC and CLEC wireline
market and does not reflect the significant number of wireless and voice over Internet protocol
(VoIP) subscribers in Florida. The report addresses changes in the telecommunications market
for the period December 31, 2007, through December 31, 2008. Significant findings relating to
the wireline market as of December 2008 include:
•
CLECs provided service with a combined (residential and business) market share of
12 percent, an increase from 11 percent in December 2007.
•
Total ILEC access lines decreased by 12 percent. This percentage reflects a 14
percent decrease in residential lines and an 8 percent decrease in business lines.
•
Total CLEC access lines decreased by 5 percent. This percentage reflects a 29
percent decrease in residential lines and an increase in business lines of less than 1
percent.
Residential
•
CLEC residential market share remained 3 percent, the same as in December 2007.1
•
Residential access lines decreased 29 percent for the CLECs.2
•
Residential access lines decreased 15 percent for AT&T, 14 percent for Verizon, and
13 percent for Embarq.
•
Residential access lines decreased 7 percent for the rural ILECs. This decline
followed a 5 percent decrease in lines from June 2006 to December 2007.
1
Market share calculations for 2007 were adjusted to correct a misclassification of lines. The impact on the
business market share was immaterial.
2
ILEC-affiliated CLEC access lines are reflected as ILEC lines if provided to end users within the affiliate ILEC’s
territory and as CLEC lines if serving end users outside the affiliate company’s territory.
1
Business
•
CLEC business market share increased 2 percent to 25 percent. This 2 percent
represents a total increase of 5,186 access lines.3
•
Business access lines decreased for all ILECs.
The reduction (less than one percent) of CLEC residential market share and residential
access lines and the increase in the number of CLEC providers can be attributed to several
factors. The first is the growing impact of intermodal competition, manifested by increases in
VoIP service subscribers and by the substitution of wireless service as the only household voice
service. In addition, there are lingering effects of Federal Communications Commission (FCC)
decisions relating to the availability of certain unbundled network elements (UNEs) that were not
fully reflected in the data for 2006. Finally, the acquisitions of large CLECs by both AT&T and
Verizon are reflected in this report. Since 2007, access lines of the acquired CLECs (and those
of the Embarq-affiliated CLEC) are accounted for by assigning them as ILEC lines if they serve
customers within the affiliated ILEC territory or CLEC lines if they serve customers outside the
affiliated ILEC territory.4
Intermodal Competition
Wireless and VoIP services compete with traditional wireline service and represent a
growing portion of today’s communications market in Florida. Broadband service also provides
the basis for some VoIP services. These three services are not subject to FPSC jurisdiction, and
Florida-specific data are not readily available. Forty-four CLECs reported providing VoIP
service and provided VoIP line data in response to the 2009 FPSC Local Competition data
request. However, two certificated CLECs providing VoIP services elected not to provide access
line data, citing the lack of FPSC jurisdiction over VoIP services. One ILEC provided VoIP
data. Highlights relating to VoIP, wireless, and broadband services include:
Wireless
•
Approximately 15.6 million wireless handsets were in service in Florida as of
December 2007, the most current data available.5
3
Market share calculations for 2007 were adjusted to correct a misclassification of lines. The impact on the
business market share was immaterial.
4
No adjustment was made in 2006 since not all of those transitions had been in place throughout the reporting
period.
5
FCC, “Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile
Services, Thirteenth Report,”, DA 09-54, January 16, 2009, Table A-2, <http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-09-54A1.pdf>, accessed on May 21, 2009.
2
•
The Centers for Disease Control (CDC) estimates that nearly 20.2 percent of U.S.
households are wireless-only as of December 2008.6 The CDC estimate for Florida is
16.8 percent as of December 2007, the most current available state-level estimate.7
•
Consumers’ purchases of prepaid phones grew 13 percent in North America in 2008,
representing a growth rate that was nearly 3 times greater than postpaid wireless
phone plans.8
•
An estimated 1.6 million residential VoIP subscribers were in Florida as of December
2008, an increase of 45 percent over the 1.1 million estimated in 2007.
•
Florida CLECs reported 254,006 VoIP lines to the FPSC in response to its 2009
Local Competition data request.
•
The Florida Cable Telecommunications Association (FCTA) reported 1,233,829
residential cable digital voice (VoIP) subscribers as of December 2008, an increase of
65 percent from the number reported for December 2007.
VoIP
Broadband
•
Federal Communications Commission (FCC) statistics show that Florida’s broadband
line count reached approximately 7.4 million as of December 2007, up from 5.3
million the prior year.9
•
In Florida, high-speed DSL connections were available to 89 percent of the
households to which ILECs could provide local telephone service.10
•
High-speed cable modem service was available to 92 percent of the households to
which cable system operators could provide cable TV service.11
•
Florida ranks fourth nationally in terms of states with the most high-speed
connections.
6
S.J. Blumberg, J.V. Luke, “Wireless Substitution: Early Release of Estimates From the National Health Interview
Survey, July-December 2008,” May 6, 2009, p. 1, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/
wireless200905.pdf>, accessed on May 13, 2009.
7
S.J. Blumberg, et al., “Wireless Substitution: State-level Estimates From the National Health Interview Survey,
January-December 2007” March 11, 2009, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/
wireless200805.pdf>, accessed on May 14, 2008.
8
Jenna Wortham, “More Customers Give Up the Cellphone Contract,” The New York Times, February 21,
2009,<http://www.nytimes.com/2009/02/21/technology/21prepaid.html>, accessed June 12, 2009.
9
FCC, “High-Speed Services for Internet Access: Status as of December 31, 2007,” September 2008, Table 9,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287962A1.pdf>, accessed on March 12, 2009.
10
Ibid, Table 14.
11
Ibid, Table 14.
3
•
Wireless broadband services represent the fastest growing segment of the broadband
market.
Florida’s communications market continues to evolve as new technologies and services
become more widely accepted. Estimates of wireless substitution for wireline service have
increased from prior years. In the most recent reporting period, Florida cable companies
expanded the number of markets in which they offer voice services. These facts, coupled with
continued residential access line losses by ILECs, suggest an active market for voice
communications services in many areas of Florida.
4
CHAPTER I. INTRODUCTION AND BACKGROUND
Chapter 364, Florida Statutes (F.S.), sets forth the principles by which the Florida Public
Service Commission (FPSC or Commission) regulates wireline telecommunications companies.
Commission oversight is primarily focused on traditional local telephone companies, known as
incumbent local exchange companies (ILECs). Competitors to the ILECs, known as competitive
local exchange companies (CLECs) and interexchange companies (IXCs), are subject to minimal
regulation. The Commission does not regulate wireless telecommunications, broadband
services, or VoIP services.
Chapter 364, F.S., requires the Commission to prepare and to deliver a report on “the
status of competition in the telecommunications industry” to the President of the Senate, the
Speaker of the House of Representatives, and the majority and minority leaders of the Senate and
the House of Representatives on August 1 each year. Section 364.386, F.S., requires that the
report address the following six issues:
•
The overall impact of local exchange telecommunications competition on the
continued availability of universal service.
•
The ability of competitive providers to make functionally equivalent local exchange
services available to both residential and business customers at competitive rates,
terms, and conditions.
•
The ability of customers to obtain functionally equivalent services at comparable
rates, terms, and conditions.
•
The overall impact of price regulation on the maintenance of reasonably affordable
and reliable high-quality telecommunications services.
•
What additional services, if any, should be included in the definition of basic local
telecommunications services, taking into account advances in technology and market
demand?
•
Any other information and recommendations that may be in the public interest.
A 1997 amendment to Section 364.161(4), F.S., also requires a summary of all
complaints filed by CLECs against ILECs. The list of complaints is found in Appendix E.
As of December 31, 2008, 10 ILECs and 327 CLECs were certificated by the
Commission to operate in Florida.
5
A. PROVISIONS AND GOALS OF CHAPTER 364, FLORIDA STATUTES, AND THE
TELECOMMUNICATIONS ACT OF 1996
1. Chapter 364, Florida Statutes
In 1995, the Florida Legislature amended Chapter 364, F.S., to allow for competition in
the state’s local telecommunications markets. The Legislature found that “the competitive
provision of telecommunications services, including local exchange telecommunications service,
is in the public interest and will provide customers with freedom of choice, encourage the
introduction of new telecommunications services, encourage technological innovation, and
encourage investment in telecommunications infrastructure.”
CLECs are subject to minimal Commission oversight. Unlike ILECs, CLECs are not rate
capped and not required to file tariffs for Commission acknowledgment.12 Instead, each CLEC
is required to file a price list if it offers basic local telecommunications service. In addition,
Section 364.337(2), F.S., states in part, “The basic local telecommunications service provided by
a competitive local exchange telecommunications company must include access to operator
services, ‘911’ services, and relay services for the hearing impaired.” If they provide basic local
telecommunications services, CLECs must provide a flat-rate pricing option for that service.
The statute states that “mandatory measured service for basic local telecommunications services
shall not be imposed.”
2. Federal Telecommunications Act of 1996
The federal Telecommunications Act of 1996 (the 1996 Act) established a national
framework to enable CLECs to enter the local telecommunications marketplace. The Federal
Communications Commission’s (FCC’s) Local Competition Order specified that opening the
local exchange and exchange access markets to competition was “intended to pave the way for
enhanced competition in all telecommunications markets.”13 The FCC expected opening
markets to “blur traditional industry distinctions and bring new packages of services, lower
prices, and increased innovation to American consumers.” Not only have CLECs entered the
local market, but less traditional providers, such as cable, wireless, and broadband
communications providers, have also entered this market using their own facilities or new
technologies to compete against traditional wireline providers for a share of the voice
communications market.
The 1996 Act established three methods by which CLECs could enter the local exchange
market: resale, leasing of unbundled network elements (UNEs), and investing in their own
facilities. Because ILECs dominate the last mile of the traditional wireline networks, CLECs
must either use an ILEC’s local loops, build their own facilities, purchase facilities from other
CLECs, or enable facilities currently in place (for example, cable networks) to provide local
12
Governor Crist signed SB2626 into law on June 24, 2009, relieving ILECs of the obligation to file tariffs with the
Commission. The law became effective July 1, 2009. The text accurately reflects current law for the period covered
by the report.
13
FCC 96-325, CC Docket No. 96-95, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, released August 8, 1996, ¶ 914.
6
telephone service.
competitors.
The 1996 Act did not address market entry strategies for non-wireline
B. METHODOLOGY
As in prior years, the Commission prepared this report using responses to its data
requests from CLECs and ILECs. Commission staff also used additional resources, including
FCC reports, industry reports, and financial analyses.
The response rate for CLECs for this report was 96 percent. The response rate for ILECs
was 100 percent. Companies that did not respond by April 7, 2009, were mailed a second
reminder letter. Commission staff also telephoned and e-mailed the CLECs that did not respond
by the April 15 deadline. Enforcement actions are underway against CLECs that did not respond
to the 2009 data request. It is unlikely that a 100 percent CLEC response rate can be achieved
because some CLECs go out of business but do not notify the Commission; however, the
Commission’s goal is to achieve a response rate as close to 100 percent as possible.
The analyses that follow are based on information provided by the ILECs and the
reporting CLECs. As in previous years, precise market share calculations are not possible
because some CLECs failed to respond. The FPSC believes the collective market share of the
CLECs failing to file is statistically insignificant to have an effect on the analyses.
The Commission recognizes the limitations of its data-gathering authority over wireless,
VoIP, and broadband providers. While some providers of these services voluntarily contributed
data to enhance the accuracy of this report, these providers are beyond the jurisdiction of the
Commission and cannot be compelled to contribute.
7
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8
CHAPTER II. COMMUNICATIONS MARKET OVERVIEW
Florida ILEC residential access lines have been declining since 2001. From December
2007 to December 2008, that decline reached 14 percent.14 In previous periods, wireless
subscriptions15 were increasing and at least some of the decline in ILEC residential access lines
was attributable to wireless substitution. The Centers for Disease Control’s most recent estimate
for wireless-only households in the U.S. reached 20.2 percent as of December 2008.16 The rate
at which wireless companies are adding new subscribers has declined. Bernstein Research
estimates that the decrease in the rate of growth of wireless subscriptions was 34 percent in the
fourth quarter of 2008.17
Wireless subscription and revenue growth may not be able to offset declining wireline
revenues for AT&T and Verizon. As subscriber growth slows, the ability of wireless carriers to
add new customers may depend, in large part, on their ability to lure customers from other
carriers. Enticing a customer to switch carriers is more expensive than simply adding a new
subscriber that previously did not have a wireless phone. Reduced service prices and increased
equipment subsidies may attract customers, but these actions also reduce revenues per
subscriber. In a stressed economy some wireless carriers will find it difficult to be successful.
Two factors will slow or dampen the shrinking wireline and near saturated wireless
markets. The first is that broadband subscription for wireline providers remains steady, and
some subscribers prefer wireline broadband to wireless broadband or cable modem service. Both
Verizon and AT&T are now providing video services over wireline broadband infrastructure,
generating new demand. These other service offerings help the companies maintain traditional
wireline voice customers. The second factor that may aid large wireline and wireless providers
is the continuing evolution of technology and innovation.
The communications industry remains a dynamic market with many new products and
service options encompassing multiple technologies and platforms. However, at least in part
because of competing technologies, certain sectors of the industry are showing signs of strain.
Combined with an uncertain economy those strains may lead to interesting results in the coming
year. An overview of current market developments follows.
A. ECONOMY
Since the last edition of this report, general economic conditions have worsened,
affecting all markets, including telecommunications.18 During the fourth quarter of 2008, the
14
FPSC, “Report on the Status of Competition in the Telecommunications Industry as of December 31, 2007,”
Tallahassee, FL, August 1, 2008; and responses to the FPSC 2009 Local Competition data request.
15
For the purposes of this report, wireless subscription is defined as a wireless handset in service.
16
S.J. Blumberg, et al., “Wireless Substitution: State-level Estimates From the National Health Interview Survey,
January-December 2007” March 11, 2009, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200805.pdf>,
accessed on May 14, 2008.
17
Craig Moffet, “U.S. Wireless ’09: A Recipe for Disaster?” [Conference Call Transcript], Bernstein Research,
March 25, 2009, p. 3.
18
"Gross Domestic Product, 1st quarter 2009 (preliminary), Corporate Profits, 1st quarter 2009 (preliminary)," U.S.
Department of Commerce, Bureau of Economic Analysis News Release, May 29, 2009, <http://bea.gov/
9
economic decline was the worst in 25 years, contracting 6.3 percent. During the first quarter of
2009, the economy contracted another 5.7 percent, as business cutbacks and significant drops in
U.S. exports overshadowed a rebound in consumer spending.19 Consumers played a significant
role in the contracting economy as they cut back spending in the face of rising unemployment,
falling home values, and shrinking investments.
In difficult economic conditions, many consumers will seek to reduce discretionary
spending by forgoing the purchase of some products or services. Telecommunications providers
can be affected not only by lower demand for their services, but also by the availability of
capital. Florida ILECs lost approximately 1 million access lines, or roughly 12 percent of their
wireline market in 2008. Competitive carriers lost approximately 49,000 access lines. This loss
represents a five percent decline in the CLEC wireline market. Some carriers, such as AT&T,
have stated that their wireline losses have been offset to some extent by increases in wireless
services.20
Increased wireless subscription is consistent with data indicating that the percentage of
households with wireless-only service has increased. A small, but growing segment of the
wireless market is the prepaid market. Consumers’ purchases of prepaid phone service grew 13
percent in North America last year.21 This rate is nearly three times faster than for traditional
cell phone plans. Prepaid consumers pay up front for their phones, and they do not have longterm commitments with the service provider. Several companies have begun offering prepaid
plans for $50 that include unlimited voice and data usage.22
Florida’s economy has also struggled during this time. In June 2009, the unemployment
rate in Florida reached 10.6 percent, which is higher than the national average of 9.5 percent.
According to data from the U.S. Department of Labor, Florida’s unemployment rate has not been
this high since March 1976.23
Data shows that through November 2008 there has been a decline in the number of U.S.
residents migrating to Florida.24 While less U.S. residents are moving to Florida, there are more
Floridians moving to other states.25 Some have speculated that this decline may be due in part to
newsreleases/national/gdp/gdpnewsrelease.htm>, accessed on May 29, 2009.
19
“Gross Domestic Product Percent Change from Preceding Period,” U.S. Department of Commerce News Release,
May 29, 2009, <http://www.bea.gov/national/index.htm>, accessed on May 29, 2009.
20
AT&T Forum 10-K, December 31, 2008, EX-13, p. 15, <http://www.sec.gov/Archives/edgar/data/
732717/000073271709000007/ex13.htm>, accessed on June 12, 2009.
21
Jenna Wortham, “More Customers Give Up the Cellphone Contract,” The New York Times, February 21, 2009,
<www.nytimes.com/2009/02/21/technology/21prepaid.html>, accessed on February 26, 2009.
22
Craig Moffett, “U.S. Wireless: Pre-Paid Pricing . . . Fifty is the New One Hundred,” Bernstein Research, April 14,
2009.
23
"Local Area Unemployment Statistics: Unemployment Rates, Seasonally Adjusted: Historical Data: Florida,"
U.S. Department of Labor, Bureau of Labor Statistics, updated June 2009, <http://www.bls.gov/news.release/
laus.nr0.htm>, accessed on July 20, 2009.
24
Luis F. Perez, John Maines, “Non-Hispanic whites leaving Broward, Palm Beach County in large numbers,”
South Florida Sun-Sentinel, August 7, 2008, http://www.sun-sentinel.com/news/local/southflorida/sfl-flbcensus0807
sbaug07,0,6220529,print.story, accessed June 12, 2009.
25
Haya El Nasser, “Fewer Americas move out of state,” USA Today, December 30, 2008, <http://www.usatoday.
com/news/nation/2008-12-30-moving_N.htm>, accessed June 12, 2009.
10
the nationwide housing slump, making it difficult for residents in other states to sell their homes
to move to Florida. The reduction was offset by a net gain of 77,000 new international residents
to the state.26
In February 2009, the President signed the American Recovery and Reinvestment Act of
2009 (ARRA). The ARRA included funding of more than $7 billion for loans and grants to
create broadband deployment incentives and increase adoption by consumers. The $7 billion in
funding was divided between the National Telecommunications and Information Administration
(NTIA)27 and the Rural Utilities Service (RUS)28 for distribution. Several telecommunications
experts have expressed skepticism regarding whether this part of the ARRA will effectively
stimulate the economy. The concern relates to the length of time it will take to approve projects
and create new employment opportunities.29 The first disbursement of stimulus funding is not
expected before the last quarter of 2009.
B. INCUMBENT WIRELINE
AT&T, Verizon, and Embarq are the largest ILECs providing service in Florida. All of
these providers experienced access line loss in both residential and business segments of the
wireline market. Nationally, AT&T reported losses of approximately four million local phone
lines from the end of 2007 to the end of 2008. Residential lines fell 12.6 percent during this
period, while business lines dipped 4.3 percent.30 Residential lines fell by 14.9 percent for
AT&T in Florida, and business lines dropped 7.7 percent.31 Despite these access line losses,
nationally AT&T was able to report overall revenue growth for 2008 due to wireless and data
services.32 AT&T’s C.E.O, Randall Stephenson, has stated that the decline in landline is
inevitable. The Wall Street Journal has quoted him as saying: “You could try to hold back the
tide, but that’s a very frustrating proposition. Or you could say, let’s get ahead of the market;
let’s get ahead of the mobility curve.”33 AT&T’s mobile phone revenue increased 14.7 percent,
or $5.7 billion, from 2007 to 2008. Revenue from the mobile phone market represents more than
26
Mike Schneider, “Census: More people leaving Florida than moving in,” Orlando Sentinel, April 22, 2009,
<http://www.orlandosentinel.com/news/local/breakingnews/orl-bk-florida-population-042209,0,6598614.story>,
accessed on May 18, 2009.
27
The NTIA is an agency in the U.S. Department of Commerce that serves as the executive branch agency
principally responsible for advising the President on telecommunications and information policies.
28
The RUS is one of three agencies that are part of the United States Department of Agriculture's Rural
Development Bureau.
29
Ted Gotsch, “Industry experts see problems with broadband stimulus,” TR Daily, May 4, 2009.
30
AT&T Forum 10-K, December 31, 2008, EX-13, p. 12, <http://www.sec.gov/Archives/edgar/data/
732717/000073271709000007/ex13.htm>, accessed on June 12, 2009.
31
Responses to Local Competition Data Request for 2008 and 2009.
32
AT&T Forum 10-K, December 31, 2008, EX-13, p. 4, <http://www.sec.gov/Archives/edgar/data/
732717/000073271709000007/ex13.htm>, accessed on June 12, 2009.
33
Amol Sharma, “AT&T CEO on Apple, Google and Air Travel,” The Wall Street Journal, April 14, 2009,
<http://blogs.wsj.com/digits/2009/04/14/att-ceo-on-apple-google-and-air-travel/>, accessed on May 22, 2009.
11
a third of the company’s overall revenue.34 Total operating revenues for the first quarter of 2009
declined by less than one percent when compared to the previous year.35
Similarly, Verizon had lost approximately five million access lines nationally by the end
of 2008.36 In Florida, Verizon experienced access line losses that are comparable to that of
AT&T in the residential and business markets.37 However, Verizon increased its number of
wireline broadband subscribers by six percent and doubled its number of FiOS38 TV customers
to almost two million throughout its national footprint.39 With the conclusion of its acquisition
of Alltel, Verizon Wireless now serves more than 80 million customers, making it the largest
wireless service provider in the U.S. in terms of total number of customers.40 During 2008,
revenues from wireless, broadband, and video services offset declining revenue in the traditional
wireline voice market. As a result, total annual revenues for 2008 increased 4.2 percent from
2007.41 Total operating revenue for the first quarter of 2009 increased 11.6 percent when
compared to first quarter 2008.42
Embarq lost approximately 600,000 switched access lines in the U.S in 2008. This figure
represents a 9.8 percent loss in access lines.43 Embarq’s residential access line loss in Florida
was 13.2 percent, while access line losses for business fell only 7.5 percent. Embarq
experienced increased revenue from data services; however, the increase was not enough to
offset the fall in revenues from its wireline voice services. As a result, Embarq’s net operating
revenues declined eight percent nationally.44 Unlike AT&T and Verizon, Embarq must rely on
reselling wireless and video services provided by other companies. As of December 31, 2008,
approximately 297,000 or 8 percent of their customers also subscribed to Embarq’s resold video
services.45 Wireless services are offered through a wholesale arrangement with Sprint Nextel,
although Embarq is phasing out its wireless business. Embarq has curtailed most of its wireless
sales activities while continuing to serve active customers.
34
AT&T Inc., Form 10-K, December 31, 2009, p. 6, <http://www.sec.gov/Archives/edgar/data/
732717/000073271709000007/ye10k08.htm>, accessed on June 12, 2009.
35
AT&T Inc., Form 10-Q, March 31, 2009, p.2, <http://www.sec.gov/Archives/edgar/data/
732717/000073271709000016/att1q0910q.htm>, accessed on June 12, 2009.
36
Verizon Communications Inc., Form 10-K, December 31, 2008, p. 10, <http://www.sec.gov/Archives/edgar/data/
732712/000119312509036349/d10k.htm>
and Verizon Communications Inc., Form 10-K, December 31, 2007, p. 5, <http://www.sec.gov/Archives/edgar/data/
732712/000119312508042027/d10k.htm>, accessed on June 12, 2009.
37
Response to Local Competition Data Request for 2008 and 2009.
38
Verizon’s trademark name of its fiber-to-the-home package of services.
39
Verizon Communications Inc., Form 10-K, December 31, 2008, p. 10, <http://www.sec.gov/Archives/edgar/data/
732712/000119312509036349/d10k.htm>, accessed on June 12, 2009.
40
Ibid, p. 3.
41
Verizon Communications, Inc., From 10-K, Exhibit 13, December 31, 2008, pp. 1-2, <http://www.sec.gov/
Archives/edgar/data/732712/000119312509036349/dex13.htm>, accessed on June 12, 2009.
42
Verizon Communications Inc., Form 10-Q, March 31, 2009, p. 16, <http://www.sec.gov/Archives/edgar/data/
732712/000119312509107317/d10q.htm>, accessed on June 12, 2009.
43
Embarq Corporation, Form 10-K, December 31, 2008, p. 26, <http://www.sec.gov/Archives/edgar/data/
1350031/000119312509028860/d10k.htm>, accessed on June 12, 2009.
44
Ibid, p. 31.
45
Ibid, pp. 4, 26. Embarq sells video services through sales agency relationships with DIRECTV for certain business
customers and DISH Network Corporation for residential customers.
12
Rural carriers also experienced contraction in their respective markets. In the aggregate,
rural carriers in Florida saw their access lines fall by seven percent in 2008. In Florida,
Windstream is the largest of the “rural” ILECs. As of December 31, 2008, Windstream served
more than 3 million communications customers in 16 states. Additionally, Windstream provides
data services to approximately one million high-speed Internet customers.46 Total access lines
nationwide declined by approximately 44,000, or 5.3 percent, in 2008.47 The company also
reported that total revenues for the first quarter of 2009 were down 5.6 percent. Other rural
carriers, such as FairPoint Communications (FairPoint), have been able to increase revenues
from other services, including broadband, to offset reductions from traditional wireline voice
service. In the first quarter of 2009, FairPoint was able to increase its total revenue nationwide
by ten percent, even while revenue from local calling services declined by two percent.48
Smaller wireline carriers have been able to adapt their networks to provide consumers with
services they want, even as competitive and economic pressures increase.
1. Mergers / Acquisitions
Nationally, merger and acquisition activity for telecommunication carriers peaked in
2006 with more than 90 companies consolidating their networks and management.49 Sixty-three
mergers and acquisitions occurred in 2008.50 Future merger activity may face greater scrutiny.
The Obama Administration has announced its desire for a more aggressive posture on issues
relating to antitrust enforcement.51 Notable transactions of interest to Florida for 2008/2009 are
described below.
a. Embarq / CenturyTel
On October 26, 2008, CenturyTel, Inc. (CenturyTel) agreed to acquire Embarq in a stockfor-stock transaction. By the end of 2008, CenturyTel operated approximately 2 million
telephone access lines, primarily in rural areas and small to mid-size cities in 23 states. More
than 68 percent of CenturyTel’s lines are located in Missouri, Wisconsin, Alabama, Arkansas,
and Washington.52 Embarq serves approximately 5.7 million access lines nationwide, with a
significant presence in Florida, North Carolina, Nevada, and Ohio.53 By the end of 2008,
46
Windstream Corp., Form 10-K, December 31, 2008, p. 4, <http://www.sec.gov/Archives/edgar/data/
1282266/000119312509032904/d10k.htm>, accessed on June 12, 2009.
47
“Windstream Reports First-Quarter Earnings Results,” Windstream News Release, May 8, 2009,
<http://www.windstream.com/about/NewsDetail.aspx?NewsID=117>, accessed on May 14, 2009.
48
FairPoint Communication, Form 10-Q/A, March 31, 2009, p. 7. <http://www.sec.gov/Archives/edgar/data/
1062613/000104746909005282/a2192974z10-qa.htm>, accessed on June 12, 2009.
49
FCC, "2006 Completed Domestic Section 214 Transfer of Control Transactions," updated February 3,
2009, <http://www.fcc.gov/wcb/cpd/214Transfer/214completed2006.html>, accessed on April 20, 2009.
50
FCC, 2008 Completed Domestic Section 214 Transfer of Control Transactions, <http://www.fcc.gov/wcb/
cpd/214Transfer/214completed2008.html>, accessed on April 20, 2009.
51
Elizabeth Williamson and Matthew Karnitschnig, “U.S. Signals More Scrutiny of Mergers, Antitrust,” The Wall
Street Journal, May 12, 2009, <http://online.wsj.com/article/SB124204508513206525.html>, accessed on May 15,
2009.
52
CenturyTel, Inc., Form 10-K, December 31, 2008, p. 4, <http://www.sec.gov/Archives/edgar/data/
18926/000001892609000008/form10-k.htm>, accessed on June 12, 2009.
53
Embarq Corporation, Form 10-K, December 31, 2008, pp. 2-3, <http://www.sec.gov/Archives/edgar/data/
1350031/000119312509028860/d10k.htm>, accessed on April 20, 2009.
13
Embarq had 1.5 million access lines in Florida.54 All of the affected 33 state regulatory agencies
have approved the merger.55 The FPSC approved the joint application for the transfer of control
of Embarq to CenturyTel on March 23, 2009.56 The FCC approved the merger with conditions
on June 25, 2009.57 The merged company agrees not to increase special access for a year and
provides CLECs with a period of stability in their interconnection agreements. The broadband
commitment promises 100 percent coverage for single-line residential and business lines, with
90 percent to be reached using wireline technologies within 3 years.58 The broadband-speed
commitments include promises to reach 87 percent of lines with 1.5 Megabits per second (Mbps)
within 2 years and 78 percent of lines with 3 Mbps.59 CenturyTel announced that the newly
merged company will be called CenturyLink.60 For the purposes of this report, we will continue
to refer to the company as Embarq.
b. Alltel / Verizon Wireless
The FCC approved the transfer of control of Alltel to Verizon Wireless on November 4,
2008.61 Once completed, Verizon Wireless will be the nation’s largest wireless carrier,
surpassing AT&T in wireless subscribers.62 Alltel serves more than 13 million customers in 34
states, including 57 primarily rural markets that Verizon Wireless does not serve. The approval
of this merger was conditioned on:
•
Divestiture of assets in 100 markets (all outside Florida).63
•
Extension of existing roaming commitments to competitive wireless providers for 4
years.
•
Acceptance of a 5-year phase out of high-cost universal service support received.
54
Embarq’s Redacted Response to FPSC’s 2009 ILEC Local Competition Data Request.
Kevin Olin, “CenturyTel and Embarq Receive All Necessary State Approvals for Merger,” Embarq Press Release,
May 29, 2009, http://www.centurytelembarqmerger.com/pdf/pressreleases/WA%20and%20PA%20FINAL%205_
29_09.pdf, accessed on June 1, 2009.
56
FPSC Order No. PSC-09-0126-PAA-TP, Docket No. 080692-TP, Joint application for approval of indirect
transfer of control of telecommunications facilities by Embarq Corporation, CenturyTel, Inc., Embarq Florida, Inc.,
and Embarq Payphone Services, Inc., issued March 3, 2009.
57
FCC 09-54, WC Docket No. 08-238, Applications Filed for the Transfer of Control of Embarq Corporation to
CenturyTel, Inc., Memorandum Opinion and Order, June 25, 2009,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-54A1.pdf>, accessed June 25, 2009.
58
Ibid, Appendix C.
59
Ibid.
60
“CenturyTel and EMBARQ Receive All Necessary State Approvals for Merger,” CenturyTel Press Release, May
29, 2009, <http://ir.centurytel.com/phoenix.zhtml?c=112635&p=irol-newsArticle_Print&ID=1293827&highlight=>,
accessed on June 1, 2009.
61
FCC 08-258, WT Docket No. 08-95, Applications of Cellco Partnership d/b/a/ Verizon Wireless and Atlantis
Holding LLC, Memorandum Opinion and Order and Declaratory Ruling, released November 10, 2009.
62
Ibid. ¶ 6.
63
AT&T has purchased the spectrum licenses and cell towers in 79 of these markets in a deal that is expected to
close in the fourth quarter of 2009.
55
14
•
Implementation of improved wireless E911 location accuracy measures within 2
years.
c. Verizon / Frontier
Verizon has entered into an agreement to sell its wireline network in 14 states to
Frontier.64 The transaction has been approved by the Boards of Directors of Frontier and
Verizon, and is expected to be completed within approximately 12 months, contingent upon
regulatory approvals. This transaction is similar to Verizon’s deal to sell network assets and
local exchanges to FairPoint last year. Upon completion, Frontier will become the nation’s fifth
largest ILEC. Both Frontier and Verizon are incumbent providers in Florida; however, this
transaction does not directly affect their Florida operations.65
d. Birch / Cleartel
In May 2009, Birch Communications announced a definitive agreement to acquire the
customers and network assets of Cleartel Communications.66 Included in the acquisition are over
50,000 business and residential access lines in Florida.67 The transaction is expected to close in
the third quarter of 2009 and is subject to, among other conditions, receipt of approvals of the
FCC and 22 applicable state regulatory authorities.
C. WIRELESS
The wireless market in 2008 was shaped by the mainstream adoption of smartphones, the
growing acceptance of prepaid wireless options, and the decline in the price of service plans and
equipment. Wireless subscription continued to expand through the first quarter of 2009, but at a
decreasing rate. One market analyst pegged the rate of decline at 34 percent for the fourth
quarter of 2008.68 The rate of growth declined sharply throughout 2008, suggesting that market
saturation, predicted by many market analysts in early 2008, may finally be reflected in reported
results. In addition to market saturation, the slowdown in the U.S. economy also likely
contributed to the decline in the rate of wireless subscription growth, especially in the second
half of 2008 and the first six months of 2009.
The wireless industry has thus far managed to counter negative market indicators through
the introduction of smartphones and through decreased prices. In the first quarter of 2009,
AT&T’s wireless business experienced a 9.6 percent growth in subscribers from the first quarter
64
David Whitehouse, “Frontier Communications to Acquire Verizon Assets Creating Nation’s Largest Pure Rural
Communications Services Provider,” Frontier Press Release, May 13, 2009, <http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MzM3NTc3fENoaWxkSUQ9MzIyMTk2fFR5cGU9MQ==&t=1>,
accessed on May 15, 2009.
65
Frontier will acquire Verizon access lines in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina,
Ohio, Oregon, South Carolina, Washington, West Virginia, and Wisconsin as well as some assets in California.
66
Allan Samson, “Birch Communications Announces Acquisition of Cleartel Communications’ Customer and
Network Assets,” May 12, 2009, <http://www.birch.com/about/05122009.aspx>, accessed on June 3, 2009.
67
Responses to the FPSC 2009 Local Competition data request by subsidiaries of Cleartel Communications.
68
Craig Moffet, “U.S. Wireless ’09: A Recipe for Disaster?” [Conference Call Transcript], Bernstein Research,
March 25, 2009, p. 3.
15
of 2008.69 Approximately three-fourths of those new subscribers chose the iPhone.70 Verizon
Wireless also experienced first quarter subscribership growth of 8.9 percent from the fourth
quarter of 2008, some of which was attributable to new BlackBerry Storm subscribers.71
Price decreases have occurred not only through increased subsidies for equipment, but
also through reductions in prices for unlimited calling plans, both pre- and postpaid. Sprint has
led the industry in handset subsidies, increasing subsidies from approximately $60 per handset at
the beginning of 2008 to more than $112 per handset by year end.72 Subsequently, AT&T
reduced the price of the iPhone to $199, effectively forcing Verizon to price the BlackBerry
Storm in the same range. Some smartphones, including the LG View and other keyboard
equipped phones can now be purchased for as little as $49.99.73 Postpaid plans usually require
service contracts and may require repayment of equipment subsidies and/or early termination
fees to discontinue the contract.
Prepaid wireless offerings by Leap Wireless and MetroPCS offering unlimited calling for
$50 per month are pressuring mid-tier carriers like Sprint and T-Mobile. T-Mobile has matched
these plans with a $50 unlimited plan of its own, but only for existing T-Mobile customers.
Boost Mobile, Sprint’s prepaid affiliate, also offers an unlimited $50 plan. At the high end of the
market, Sprint initiated the $99 unlimited everything plan, and Verizon Wireless and AT&T
have each responded with similar plans.
While growth in the wireless sector has continued, it seems increasingly likely that the
market is nearing the end of its expansionary phase. Sprint experienced significant subscriber
losses over the last several years but managed through its aggressive pricing strategies to
stabilize customer loss in the fourth quarter of 2008. According to one analyst, Sprint leads the
industry in handset subsidies and has been forced to slash prices for both high volume consumers
and budget conscious prepaid consumers.74 Prepaid providers Leap Wireless and MetroPCS
have expanded their market shares and are also aggressively pursuing a shrinking pool of
available new subscribers. It is unlikely that every wireless carrier can sustain subscriber growth
through the remainder of 2009.75
Despite declining growth rates in wireless subscribership, the Centers for Disease Control
(CDC) recently reported that wireless-only households reached 20.2 percent as of December
2008, an increase of 2.7 percentage points since the first half of 2008. This increase is the largest
six-month change since the CDC began collecting data on wireless substitution in 2003. In
69
“AT&T's First-Quarter Results Highlighted by Wireless Gains, U-verse TV Growth, Double-Digit Increase,”
AT&T Press Release, April 22, 2009, <http://www.att.com/Investor/Financial/Earning_Info/docs/
Supp_IB_1Q09.xls>, accessed on May 13, 2009.
70
Peter Svensson, “AT&T earnings fall, but iPhone helps it beat estimates,” USA Today, April 22, 2009,
<http://www.usatoday.com/money/companies/earnings/2009-04-22-att_N.htm>, accessed on May 12, 2009.
71
“Verizon Wireless – Pro Forma Selected Financial Results and Operational Metrics,” April 27, 2009,
<http://investor.verizon.com/financial/quarterly/index.aspx >, accessed on May 13, 2009.
72
Craig Moffet, “U.S. Wireless ’09: A Recipe for Disaster?” [Conference Call Transcript], Bernstein Research,
March 25, 2009, p. 16.
73
Ibid, p. 17.
74
Ibid, p. 16-17.
75
Ibid, p. 30.
16
addition, the CDC reported that 14.5 percent of U.S. households with both a landline and
wireless phone received all or almost all calls on a wireless phone.76
As wireless providers invest in future network capabilities to meet the growing demand
for mobile data services, there is an increasing likelihood of a transition to Internet Protocol or
IP-based wireless voice services. Gartner, Inc., a market research company, predicts that “over
time traditional network-based mobile carriers face the real prospect of losing a major slice of
their voice traffic and revenue to new non-infrastructure players that use VoIP.”77 A number of
third party providers, including Skype, Truphone, and fring,78 have begun offering VoIP service
via mobile phones using Wi-Fi and/or the carriers’ own wireless voice networks. Gartner
suggests that the implementation of 4G networks79 and open architecture networks will provide
the springboard for entirely IP-based mobile services in the future.80 The rollout of 4G on a
widespread basis sufficient to support end-to-end IP-based wireless voice service is likely five to
eight years away. Efficiencies and cost savings generated by IP-based services will be a major
factor driving the transition.81
D. VOICE OVER INTERNET PROTOCOL
Voice over Internet protocol (VoIP) trends identified in the 2008 edition of this report
established that cable telephony providers were the leaders in residential VoIP subscribership.
Growth for over-the-top providers, such as Vonage, slowed dramatically in 2008. Cable
providers currently dominate the VoIP market, so much so that Comcast surpassed Embarq to
become the third largest residential voice communications provider in the U.S. as of the first
quarter of 2009.82 In addition, several large cable providers, including Comcast and Bright
House, are now actively pursuing medium and small business customers in an effort to increase
growth opportunities.
The news worsened for Vonage in the first quarter of 2009 as it lost 6,000 net subscriber
lines and finished the quarter with 2.6 million lines in service.83 Contributing to the struggles of
76
S.J. Blumberg, et al., “Wireless Substitution: State-level Estimates From the National Health Interview Survey,
January-December 2007” March 11, 2009, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200805.pdf>,
accessed on May 14, 2008.
77
“Gartner Says Mobile VoIP Poses a Huge Challenge for Traditional Mobile Voice Providers,” Gartner, Inc. Press
Release, May 5, 2009, < http://www.gartner.com/it/page.jsp?id=963712>, accessed on May 15, 2009.
78
fring (spelled with a small f) is a trademarked name for a mobile Internet company offering IP-based voice, text,
chat, and other IP-based communications services, <http://www.fring.com/>, accessed on May 28, 2009.
79
Worldwide interoperability for microwave access (WiMAX) and Long Term Evolution (LTE).
80
“Gartner Says Mobile VoIP Poses a Huge Challenge for Traditional Mobile Voice Providers,” Gartner, Inc. Press
Release, May 5, 2009, < http://www.gartner.com/it/page.jsp?id=963712>, accessed on May 15, 2009.
81
Doug Mahoney, “Gartner: More than 50% of mobile voice traffic will be VoIP by 2019,” May 6,
2009, <http://www.fiercevoip.com/story/gartner-more-50-mobile-voice-traffic-will-be-voip-2019/2009-05-06>,
accessed on May 14, 2009.
82
“Comcast Now the Third Largest Residential Phone Services Provider in the U.S.,” Comcast Press Release,
March 11, 2009, <http://www.cmcsk.com/phoenix.zhtml?c=118591&p=irol-newsArticle&ID=1265311&
highlight=>, accessed on March 13, 2009.
83
“Vonage Holdings Corp. Reports First Quarter 2009 Results,” Vonage News Release, May 7, 2009, <http://files.
shareholder.com/downloads/VAGE/640909879x0x293039/3fb93742-acea-41b0-af0f-3deaa57e765c/Press_release
_Q109_FINAL_07MAY09.pdf>, accessed on May 14, 2009.
17
Vonage and other over-the-top providers is the fact that the price of cable VoIP offerings have
dropped, especially when bundled with video and broadband services. In addition, cable VoIP
service is more widely available as a competitive option than two years ago at the peak of
Vonage’s popularity. When the price of separate broadband service necessary for Vonage
subscribers is factored into the price of Vonage’s service, the amount of savings is much less
than several years ago.
Traditional telecommunications providers are also redirecting and intensifying efforts
relating to VoIP service. AT&T discontinued CallVantage, its Internet-based VoIP service, but
has begun offering U-verse Voice service through its U-verse offering, as well as HomeManager,
a data/voice interface device for the home similar to a smartphone. Verizon has also
discontinued VoiceWing, its over-the-top VoIP offering, and Verizon Wireless has begun
offering Verizon Hub. Verizon Hub is a media phone service, similar to AT&T’s
HomeManager, that can be used with any broadband connection.
E. BROADBAND
This year, President Obama signed the ARRA. As part of the ARRA, Congress provided
more than $7 billion for grants and loans to stimulate broadband deployment and adoption. This
funding was divided between the NTIA and the RUS for distribution. In addition, the FCC is
required to develop a national broadband plan by February 17, 2010. These federal agencies are
working together to develop policy that will help all participants direct their efforts in a
productive manner. Furthermore, the FCC has taken action to collect more detailed information
regarding areas where broadband is currently available and at what speeds.84
Just as wireless voice service became a significant segment of the voice market, wireless
broadband services represent an important component of the data market. Continued innovations
in handsets such as smartphones and applications have helped increase sales, even in a declining
economy. Most notable of these handsets is the iPhone, which was further refined in 2009.85 In
addition, the underlying technology to deliver such services is evolving. Both Verizon and
AT&T have announced the adoption of Long Term Evolution (LTE) wireless transmission
standards that promise to provide significantly faster wireless data speeds than what is currently
available.86
Traditional telecommunications providers continue to deploy fiber optic cable further into
their networks to compete with cable companies for broadband customers. Such investments in
infrastructure are designed to increase the ability to provide faster broadband speeds and enable
84
FCC 08-148, WC Docket No. 07-38, Development of Nationwide Broadband Data to Evaluate Reasonable and
Timely Deployment of Advanced Services to All Americans, Improvement of Wireless Broadband Subscribership
Data, and Development of Data on Interconnected Voice over Internet Protocol (VoIP) Subscribership, Order on
Reconsideration, released June 12, 2008.
85
Released July 11, 2008, the iPhone 3G supports faster 3G data speeds and the Assisted Global Positioning System
compared to the original iPhone. On March 17, 2009, Apple announced the iPhone firmware version 3.0, due to be
released in mid-2009.
86
Published estimated LTE data speeds indicate that it would be up to 100 Megabits per second (Mbps). Erik Palm,
“4G Race Gaining Speed, Data Says,” March 5, 2009, <http://news.cnet.com/8301-1035_3-1019021894.html?tag=newsEditorsPicksArea.0>, accessed on March 10, 2009.
18
applications such as video services. Carriers have adopted different strategies depending on their
market characteristics. AT&T has adopted a strategy to deploy fiber facilities to a node within a
neighborhood, whereas Verizon has been deploying fiber to the consumer’s home. In order to
compete with faster data speeds offered by traditional telephone companies, cable companies
have also had to invest in network improvements. A more detailed discussion of broadband and
broadband technologies can be found in Chapter IV.
F. REGULATORY FACTORS
Changes to state and federal regulatory policy, as well as changes in state and federal
law, continue to influence telecommunications markets. While there may not be immediate
measurable impacts on the Florida telecommunications market because of these changes, the
changes are significant because they signal a growing recognition by regulatory and legislative
bodies of the changing nature of the telecommunications industry.
1. Federal
The FCC was in a state of transition beginning in 2008. The term of one Commissioner
expired at the end of the year. As a result of the Presidential election in November, the
Chairman of the Commission and a majority of Commissioners will be Democratic appointees
for the next four years. Chairman Martin resigned as of January 20, 2009. In addition, the FCC
was focused on the transition to digital television and the reallocation of spectrum related to
analog broadcast television. Consequently, FCC actions in the second half of 2008 were limited
to noncontroversial items for which an easy majority could be achieved.
Since the last report, the FCC has not finalized comprehensive reform of either the
Universal Service program or intercarrier compensation (ICC). Each of these proceedings has
lasted multiple years with numerous comment cycles. On November 5, 2008, the FCC released
an Order on Remand and sought comment on three options to amend the Universal Service
High-Cost Support mechanism.
This order was intended to represent a more comprehensive reform of both the High-Cost
programs and existing ICC mechanisms. However, as reflected in the separate Commissioners’
comments, the FCC was not able to form a consensus regarding these issues. In addition,
significant pressure from Congress and interested parties provided the impetus for the FCC to put
its new ICC proposal out for comment. Reluctantly, the Chairman acquiesced, and the resulting
order narrowly addressed the D.C. Circuit Court of Appeals’ remand of the FCC’s rules
regarding ICC paid to Internet service providers.
Congress, by comparison, expanded the role of the FCC, NTIA, and RUS to stimulate
broadband deployment and adoption. In the Food, Conservation, and Energy Act of 2008
Congress directed the FCC, in consultation with the Department of Agriculture, to develop a
comprehensive rural broadband strategy. This directive was expanded within the ARRA, which
mandated that the FCC must deliver a national broadband plan to Congress by February 17,
2010. The FCC issued a Notice of Inquiry (NOI) to seek comment on the development of the
19
broadband policy.87 Acting FCC Chairman Copps released a report to Congress outlining a rural
broadband strategy on May 22, 2009.88 This rural broadband strategy will act as a precursor to
the development of the national broadband strategy mandated by ARRA. These issues are
discussed in more detail in Chapter VII.
2. State
The FPSC addressed a petition by Verizon, AT&T, Embarq, TDS Telecom, and
Windstream (Petitioners) regarding the adoption of a new rule on competition, and to clarify,
repeal, or amend numerous FPSC rules.89 The new proposed rule included a market competition
test that would trigger streamlined regulation of price-cap ILECs.90 During the proceeding, the
Petitioners withdrew their request for the new rule as well as amendments to or repeal of seven
other rules. In response to the petitions, the Commission exempted the price-regulated ILECs
from 33 rules, repealed 16 rules, amended 20 rules, and took no action on 1 rule.
Governor Crist signed a bill into law on June 24, 2009, (CS/CS/SB 2626), which makes
reforms to the existing regulatory framework for telecommunications. The bill redefines basic
service to include only single-line, flat-rate residential service. The addition of nonbasic or
unregulated services, either priced individually or as part of a combination of services (including
unregulated services), are reclassified as nonbasic. Affected consumers will not have the same
degree of price91 or service quality protection92 that was previously available for basic service.
All customers who subscribe to single-line business service are also redefined as nonbasic. In
addition, the bill expands the income eligibility criterion for Lifeline services for the 3 largest
ILECs from 135 percent to 150 percent of the federal poverty guidelines. The bill also
designates the Department of Management Services (DMS) as the primary agency for the
purpose of coordinating the development of a broadband strategy for Florida. Additional
information on these topics can be found in Chapter VI.
87
FCC 09-31, GN Docket No. 09-51, A National Broadband Plan for Our Future, Notice of Inquiry, released April
8, 2009, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-31 A1.pdf>, accessed on April 23, 2009.
88
Michael J. Copps, “Bringing Broadband to Rural America: Report on a Rural Broadband Strategy,” FCC, May 22,
2009, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-291012A1.pdf>, accessed on May 28, 2009.
89
Rulemaking Dockets 080159-TP, Joint petition to initiate rulemaking to adopt new rule in Chapter 25-24, F.A.C.,
amend and repeal rules in Chapter 25-4, F.A.C., and amend rules in Chapter 25-9, F.A.C., by Verizon Florida LLC,
BellSouth Telecommunications, Inc. d/b/a AT&T Florida, Embarq Florida, Inc., Quincy Telephone Company d/b/a
TDS Telecom, and Windstream Florida, Inc., and 080641-TP, Initiation of rulemaking to amend and repeal rules in
Chapters 25-4 and 25-9, F.A.C., pertaining to telecommunications.
90
Streamlined regulation would be triggered when two-thirds or more of the households in the market have access
to at least three different providers using any local service access alternative.
91
Consumers are subject to a maximum 10 percent rate hike in a 12-month period. Previously, the level of a rate
increase in any 12-month period was limited to the change in inflation less 1 percent. Basic customers as of July1,
2009 will be grandfathered under previous provisions.
92
The FPSC will no longer have authority to resolve service quality complaints of nonbasic customers.
20
CHAPTER III. STATUS OF WIRELINE COMPETITION IN FLORIDA
A. WIRELINE ACCESS LINES IN FLORIDA
1. 2008 Summary of Results
Traditional wireline access lines, ILEC and CLEC combined, declined 30 percent, from
approximately 12 million in 2001 to 8.4 million as of December 2008. The decline began in
2001, and has occurred each year except for a slight gain in 2004. Through December 2008,
residential access lines have declined by approximately 3.6 million lines, to a combined CLEC
and ILEC total of 4.8 million. A decline of more than 828,000 residential lines occurred in 2008.
Combined wireline residential access lines have declined by 42 percent since 2001.93
Combined ILEC and CLEC business access lines have decreased by approximately
132,000 lines to a total of 3.6 million lines from May 2001 to December 2008, a decrease of
approximately 4 percent. Between June 2001 and June 2006, business access lines increased
slightly each year. Beginning in June 2007, business access lines began to decline and decreased
by more than 220,000 lines between December 2007 and December 2008. All of the ILECs
experienced business access line loss in 2008. During the same time period, CLECs gained more
than 5,000 business lines, representing an increase of less than 1 percent. The last time business
access line totals increased for CLECs was between June 2004 and June 2005.
The composition of ILEC and CLEC access lines served has also undergone a noticeable
shift since 2001. As of December 2008, total ILEC business lines were 37 percent of total ILEC
lines served, compared to 28 percent in 2001. CLEC business access lines were 87 percent of
total CLEC access lines served, compared to 64 percent in 2008. This shift in composition is
likely a result of multiple factors including increased competition for residential subscribers by
wireless and cable providers and a CLEC business strategy to target larger business customers in
order to establish a foothold in the market.
2. Contributing Factors to Access Line Decline
The primary reason for the decline in residential access lines is the substitution of
wireless and VoIP services for traditional wirelines. In addition, there may be lingering effects
related to the restructuring in the CLEC residential market as a result of FCC decisions embodied
in the Triennial Review Order (TRO) and Triennial Review Remand Order (TRRO) in 2005.
The current recession has also likely contributed to the decline.
As addressed more thoroughly in Chapter IV, the FPSC estimates 1.6 million residential
VoIP subscribers are in Florida as of December 2008. The growth of residential VoIP
subscribers, especially for cable-provided voice, reflects mainstream acceptance of wireline
VoIP telephone service as a viable substitute for traditional wireline service.
93
Market share calculations for 2007 were adjusted to correct a misclassification of lines. The impact on the
business market share was immaterial.
21
3. CLEC Market Composition
Table 3-1 represents a distribution of the number of CLECs by ranges of residential
access lines for 2007 and 2008. Two CLECs serve more than 20,000 residential access lines,
representing approximately 47 percent of the CLEC residential market for 2008. Only 1 CLEC
serves between 10,000 and 20,000 residential access lines. The 3 largest residential providers
constitute 55 percent of the CLEC residential market. The remaining CLECs represent 45
percent of the residential CLEC market. There are 53 CLECs that serve less than 1,000
residential access lines each.
Despite the reduction in residential access lines served by CLECs, there is an increase in
the number of CLECs reporting access line data from 65 in 2007 to 74 in 2008. CLEC access
lines in the residential wireline residential market have continued to diminish as a result of
intermodal competition and federal regulatory decisions that have altered CLEC business plans,
as well as the declining economy.
Table 3-1. Summary of CLEC Residential Access Line Providers
Number of Lines
20,000 +
10,000 - 20,000
1,000 - 10,000
Less than 1,000
2007
% of Total
Number of
CLEC Res
Providers
Lines
3
65
0
0
22
28
40
7
2008
% of Total
Number of
CLEC Res
Providers
Lines
2
47
1
8
18
32
53
13
Source: Responses to 2008-2009 FPSC data requests.
B. WIRELINE MARKET SHARE AND ACCESS LINES
Charts and graphs in this section of the report show a gap in 2007 data due to a statutory
change in the timeline of the report. Data collected for this year’s edition of the report is as of
December 31, 2008.94
Graphic figures and tables are arranged to provide market share, (expressed as a
percentage), and actual line counts, (presented as raw numbers). Market share data are presented
first followed by actual line counts.
94
The methodology for counting ILEC-affiliated CLEC access lines in the affiliated ILEC’s territory changed
starting with the 2008 report. The access lines of a CLEC related to AT&T, Verizon, or Embarq are accounted for
as competitive lines only when those access lines are outside of the parent company’s footprint.
22
1. CLEC Market Share
a. Florida
Calculations based on responses to the Commission’s data request indicated the overall
CLEC market share was 12 percent as of December 2008. Figure 3-1 provides the CLEC market
share percentages for total access lines (combined residential and business lines) from 2002
through 2008.
Figure 3-1. Florida CLEC Market Share
20%
17%
18%
17%
16%
15%
13%
12%
11%
10%
5%
0%
Jun-02
Jun-03
Jun-04
Jun-05
Source: Responses to 2002-2009 FPSC data requests.
23
Jun-06
Dec-07
Dec-08
Figure 3-2 shows the CLEC residential and business market shares for the same period.
•
CLEC residential market share remained steady at 3 percent as of December 2008.
•
CLEC business market share increased by 2 percentage points to 25 percent, up from
23 percent in 2007.
The market share percentages mask the fact that both ILEC and CLEC residential access
lines declined over the reporting period. CLECs now have a larger share of a smaller residential
wireline market.
Figure 3-2. Florida Residential & Business CLEC Market Share
40%
34%
35%
30%
30%
33%
30%
26%
25%
23%
25%
20%
15%
10%
7%
9%
10%
9%
7%
3%
5%
3%
0%
Jun-02
Jun-03
Jun-04
Jun-05
Residential
Jun-06
Dec-07
Dec-08
Business
Source: Responses to 2002-2009 FPSC data requests.
Figure 3-3 displays the CLEC market share of combined residential and business lines
within the service territories of AT&T, Verizon, Embarq, and the combined rural ILECs for 2005
through 2008. CLEC market share increased in AT&T, Embarq, and Verizon territories but
remained relatively unchanged from last year in rural ILEC territories.
24
Figure 3-3. Florida CLEC Market Share by ILEC Service Territory
25%
22%
21%
20%
15%
15% 15%
13%
12%
15%
13%
10%
10%
9%
8%
9%
5%
3%
2% 2% 2%
0%
AT&T
Verizon
Jun-05
Embarq
Jun-06
Dec-07
Rural ILECs
Dec-08
Source: Responses to 2005-2009 FPSC data requests.
b. National
According to the FCC’s most recent report on local competition, the nationwide CLEC
market share was 18 percent as of December 31, 2007. The FCC reports Florida’s CLEC market
share at 13 percent as of December 2007, which is 2 percentage points greater than what the
FPSC reports as of December 2007.95
95
FCC, "Local Telephone Competition: Status as of December 31, 2007," September 2008, Table 8,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-285509A1.pdf>, accessed on May 15, 2009.
25
2. Access Line Overview
Based on responses to the FPSC’s 2009 Local Competition data request, local exchange
companies were serving approximately 8.4 million lines in Florida as of December 31, 2008, a
decline of 3.6 million lines from June 30, 2001. As Figure 3-4 illustrates, the number of
residential lines has declined every year since 2001. The number of business lines now appears
to be declining, after a slight increasing trend from 2001 through 2006.
Figure 3-4. Florida Access Line Trends
9
8
8.3
Access Lines (millions)
7
8.1
7.9
7.6
7.2
6.7
6
5.7
5
4.8
4
3
3.7
4.2
3.7
3.8
Jun-02
Jun-03
4.3
4.2
3.8
3.6
Dec-07
Dec-08
2
1
0
Jun-01
Jun-04
Jun-05
Total Residential
Jun-06
Total Business
Source: Responses to 2001-2009 FPSC data requests.
Table 3-2 displays the residential and business access line counts for ILECs and CLECs
from 2005 to 2008. Between December 2007 and December 2008:
•
Total access lines in Florida declined 11 percent.
•
Total ILEC access lines decreased by 12 percent, reflecting a 14 percent decrease in
residential lines and an 8 percent decrease in business lines.
•
ILEC business access lines accounted for 37 percent of total ILEC lines in December
2008, compared to 28 percent in June 2001.
•
CLEC business access lines accounted for 87 percent of total CLEC lines in
December 2008, compared to 64 percent in June 2001.
•
Total CLEC access lines decreased approximately 5 percent.
26
Table 3-2. Florida Access Line Comparison
Jun-05
ILECs
CLECs
Total
Res
Bus
6,641,069
2,789,512
629,869
7,270,938
Total
Res
Bus
9,430,581
6,218,002
2,863,989
9,081,991
-4%
1,456,162
2,086,031
453,039
1,417,276
1,870,315
-10%
4,245,674
11,516,612
6,671,041
4,281,265
10,952,306
-5%
Dec-07
ILECs
CLECs
Total
Change
from
‘05-‘06
Jun-06
Res
Bus
5,428,994
2,928,128
185,586
5,614,580
Total
Change
from
‘07-‘08
Dec-08
Total
Res
Bus
Total
8,357,122
4,654,512
2,702,144
7,356,656
-12%
894,806
1,080,392
131,725
899,992
1,031,717
-5%
3,822,935
9,437,514
4,786,237
3,602,136
8,388,373
-11%
Source: Responses to 2006-2009 FPSC data requests.
Figure 3-5 graphically displays CLEC access line counts from 2004 to 2008.
•
CLEC residential access lines declined by almost 54,000 from December 2007 to
December 2008, or 29 percent in 2008.
•
CLEC business access lines increased by more than 5,000 from December 2007 to
December 2008, or less than 1 percent.
•
CLEC business access lines as a percentage of the total, increased to 87 percent, a 4
percent climb from 83 percent in 2007.
Figure 3-5. Florida CLEC Lines
2,500,000
2,000,000
2,086,031
1,985,875
1,870,315
1,456,162
1,500,000
1,417,276
1,255,781
1,080,392
1,000,000
894,806
730,094
1,031,717
899,992
629,869
453,039
500,000
185,586
131,725
0
Jun-04
Jun-05
Residential
Jun-06
Business
Source: Responses to 2004-2009 FPSC data requests.
27
Dec-07
Total
Dec-08
3. CLEC Market Penetration by ILEC Territory
Figure 3-6 displays the CLEC residential and business wireline market share by ILEC
territory for 2007 and 2008. CLEC residential market shares declined in AT&T’s territory and
remained relatively static in the territories of Verizon, Embarq, and the rural ILECs. CLEC
business market share increased in all ILEC territories. CLECs have their highest penetration
rates in the business market, with a 33 percent share in Verizon’s territory, a 24 percent share in
AT&T’s territory, and a 21 percent share in Embarq’s territory. A more thorough analysis of
factors influencing where CLECs choose to offer services is contained in Chapter V, subsection
2.
Figure 3-6. Florida CLEC Residential & Business Market Share
by ILEC Service Territory
45%
40%
35%
33%
30%
25%
24%
25%
21%
20%
20%
16%
15%
10%
5%
5%
4%
3%
1% 1%
1%
1%
5%
1% 1%
0%
AT&T
Verizon
Res Dec-07
Embarq
Res Dec-08
Bus Dec-07
Source: Responses to 2008-2009 FPSC data requests.
28
Rural ILECs
Bus Dec-08
4. Competitive Presence by Exchange
Table 3-3 lists the five Florida exchanges with the greatest number of CLEC providers,
all in AT&T’s territory. Verizon’s Tampa exchange and Embarq’s Tallahassee exchange are
listed for comparison. The number of CLEC residential providers increased from 2007 levels in
all seven exchanges, and five out of the seven exchanges reflected an increase in CLEC business
providers. The number of overall providers has increased in all exchanges. CLECs gained
residential access lines in one of the seven exchanges and gained business access lines in two of
the seven.
Table 3-3. Florida Exchanges with the Most CLEC Providers
Residential
Business
Total CLECs
Rank by Total
Access Lines
Dec-07
Dec-08
Dec-07
Dec-08
Dec-07
Dec-08
Miami
1
40
49
52
50
73
78
Orlando
6
41
47
47
51
70
77
Fort Lauderdale
4
42
47
47
47
68
72
Exchange
West Palm Beach
5
44
47
42
44
67
69
Jacksonville
3
38
42
38
42
61
64
Tampa (Verizon)
2
18
22
33
34
45
48
Tallahassee (Embarq)
10
20
23
20
23
37
41
Source: Responses to 2007-2009 FPSC data requests.
C. COMPETITIVE MARKET TRENDS
1. CLEC Access Line Provisioning
The 2006 report noted the impact of the FCC’s decision to eliminate certain UNEs that
many CLECs had previously relied on to provide service to end-users. The FCC’s decision has
had a continuing negative effect on the Florida CLEC community.
29
Figure 3-7 displays CLEC residential access lines by provisioning method from 2005 to
2008. The figure highlights the change in provisioning after the Unbundled Network ElementPlatform (UNE-P) was eliminated, as well as the overall decline in CLEC residential access
lines. From 2007 to 2008, CLEC-switched access lines increased while lines provisioned
through resale and local platforms declined. The composition of CLEC business access lines has
not changed significantly since 2007.
Figure 3-7. Total Florida CLEC Residential Line Composition
700,000
600,000
Access Lines
500,000
65,939
94,529
102,317
400,000
300,000
200,000
151,137
469,401
79,075
100,000
199,585
41,096
51,205
58,524
32,105
55,306
0
Jun-05
Jun-06
UNE-P/Local Platform
Dec-07
CLEC Switched Lines
Source: Responses to 2005-2009 FPSC data requests.
30
Dec-08
Resale
2. Residential Access Line Trends
Figure 3-8 displays the residential access line trends separately for AT&T, Verizon,
Embarq, the rural ILECs (in the aggregate), and the CLECs. CLECs in the aggregate reported a
decline in total residential access lines. All of the ILECs reported a decline in residential access
lines. CLEC residential access lines declined by almost 54,000 lines, or 29 percent, between
December 2007 and December 2008.
Figure 3-8. Florida Residential Line Trends by ILECs and CLECs
4,000
3,500
3,725
3,599
3,437
Access Lines (thousands)
3,000
3,094
2,500
2,000
2,633
1,580
1,488
1,326
1,500
1,073
1,411
1,452
1,000
730
985
1,321
1,135
630
918
453
500
143
142
134
127
185
132
118
0
Jun-04
Jun-05
AT&T
Verizon
Jun-06
Embarq
Dec-07
Rural ILECs
Dec-08
CLECs
Source: Responses to 2004-2009 FPSC data requests.
Analysis of exchange level residential access line data reveals:
•
CLECs gained residential access lines in 64 of 278 exchanges in 2008.
o Gains exceeded 100 access lines in 9 exchanges.
•
CLECs lost residential access lines in 168 out of 278 exchanges.
o Losses exceeded 100 access lines in 29 exchanges and 1,000 access lines in 9
exchanges.
•
In 7 of 9 exchanges where CLECs lost more than 1,000 lines, AT&T residential
access line loss was greater than 10,000 lines.
o ILECs lost residential access lines in every exchange statewide.
31
o ILEC losses exceeded 10,000 access lines in 11 AT&T exchanges, 3 Embarq
exchanges, and 5 Verizon exchanges.
o Losses exceeding 1,000 access lines occurred in 10 Embarq exchanges, 4 Verizon
exchanges, and 1 AT&T exchange.
Figure 3-9 presents the percentage changes of residential lines for the ILECs and CLECs.
ILEC residential access lines declined for AT&T, Embarq, and the CLECs at a slower rate in
2008 than in 2007. CLECs experienced a 29 percent decline from December 2007 to December
2008, compared with a 59 percent drop from June 2006 to December 2007.
Figure 3-9. Percent Change of Florida Residential Access Lines
by ILECs and CLECs
0%
-10%
-4%
-10%
-11%
-14%
-20%
-30%
-7%
-5%
-6% -7%
-15% -14%
-19%
-28%
-13%
-29%
-40%
-50%
-60%
-59%
-70%
Jun 05 - Jun 06
AT&T
Jun 06 - Dec 07
Verizon
Embarq
Rural ILECs
Dec 07 - Dec 08
CLECs
Source: Responses to 2005-2009 FPSC data requests.
3. Business Access Line Trends
Figure 3-10 displays the business line trends for AT&T, Verizon, Embarq, the rural
ILECs, and CLECs. All of the ILECs experienced a decrease in business access lines between
2007 and 2008. CLEC business access lines increased for the first time since 2005. The
percentage change went from a 37 percent decline in 2007 to a 1 percent increase in 2008.
32
Figure 3-10. Florida Business Line Trends by ILECs and CLECs
2,000
1,678
1,800
1,702
Access Lines (thousands)
1,600
1,841
1,739
1,456
1,699
1,256
1,400
1,417
1,200
1,000
800
599
597
400
200
560
526
600
503
502
51
58
63
Jun-04
Jun-05
Jun-06
895
900
536
496
497
456
55
51
Dec-07
Dec-08
0
AT&T
Verizon
Embarq
Rural ILECs
CLECs
Source: Responses to 2004-2009 FPSC data requests.
Figure 3-11 displays the annual percentage changes for business lines for ILECs and
CLECs.96
Figure 3-11. Percent Change of Florida Business
Access Lines by ILECs and CLECs
25%
11%
15%
5%
-5%
9%
6%
2%
1%
-4%
-1%
-3%
-4%
-15%
-7% -7%
-8% -8%
-13%
-25%
-35%
-37%
-45%
Jun 05 - Jun 06
AT&T
Jun 06 - Dec 07
Verizon
Embarq
Rural ILECs
Dec 07 - Dec 08
CLECs
Source: Responses to 2005-2009 FPSC data requests.
96
Reclassification of ILEC-affiliated CLEC lines as ILEC lines accounts for 12 percent of the loss of CLEC
business lines between June 2006 and December 2007.
33
D. RURAL ACCESS LINE TRENDS
Total ILEC rural access lines declined by approximately 13,000 in the period from
December 2007 to December 2008, a 7 percent decline. No rural ILECs experienced access line
growth for either residential or business access lines.
1. Residential Access Lines
Rural residential access lines declined by almost 8,000 lines in the period from December
2007 to December 2008, a 7 percent decline. Each rural ILEC experienced some residential
access line decline. TDS Telecom lost 23 percent of their residential access lines in Florida, the
largest percentage decline of any incumbent carrier.
2. Business Access Lines
Rural business access lines declined by more than 4,000 lines in the period from
December 2007 to December 2008, a 7 percent decline. FairPoint and Northeast Florida
Communications Company (NEFCOM) reported the greatest percentages of business access line
loss.
E. PAY TELEPHONE SERVICES
The pay telephone industry has undergone significant contraction in the availability of
pay telephone service in Florida during the past several years. According to the most recent FCC
pay telephone data, the number of pay telephones in Florida continues to decline. Current
industry estimates provided by the Florida Public Telecommunications Association indicate that
the number of Florida pay telephones has dropped to approximately 20,000 as of December 31,
2008, a decline of nearly 4,000 since March 28, 2008. The number of certificated pay telephone
service providers in Florida has dropped from 233 as of December 31, 2007, to 183 as of
December 31, 2008. These trends are an inevitable impact of the significant growth in wireless
services over this period.
Despite the proliferation of wireless phones, pay telephones still fill a need in many
communities. A recent decision by the Jacksonville City Council (Council) to remove 11
payphones from downtown Jacksonville has focused attention on pay telephones in the area.
The Council determined that the phones created an environment for nuisance crime such as
loitering and panhandling. However, local social service organizations raised concern about
their removal, citing lack of cell phones and the need for access to emergency and social services
for low-income residents and the homeless.97
F. PREPAID TELECOMMUNICATIONS SERVICES
There is also a segment of the market served by CLECs that provide only prepaid
services. CLECs that provide only prepaid residential wireline telephone service account for 17
97
“Pay Phones Disappear from Downtown; Is it Premature?” July 8, 2009, <http://www.firstcoastnews.com/
news/local/news-article.aspx?storyid=141265&provider=rss>, accessed on July 20, 2009.
34
of the 53 CLECs with fewer than 10,000 access lines, or 32 percent. Prepaid-only carriers serve
24 percent of the access lines of those carriers below 10,000 lines and 11 percent of total
residential CLEC access lines.
35
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36
CHAPTER IV. WIRELESS, VOIP, CABLE, AND BROADBAND
A. WIRELESS
The wireless industry has experienced shifts in growth, market share, and technology this
year. Company strategies have changed and consumer perception of the market now includes
both a simple wireless device for voice communication and all-in-one combined data and voice
communications tools. As the wireline voice market is shrinking, wireless subscriber numbers
are increasing, but at a slower rate than in past years.98
U.S. national wireless subscription increased from 249 million to 264 million in 2008.99
This jump of 15 million handsets represents an increase of almost 6 percent.100 Not only has
subscribership grown, but availability has also increased. The FCC reports that approximately
99.6 percent of the total U.S. population has at least 1 wireless provider offering service within
the census block where they live.101
According to a report released by financial analysts at Bernstein Research, wireless
subscription growth at the beginning of 2008 was decreasing at a rate of 16.1 percent. By the
fourth quarter of 2008, the rate of decline reached 33.9 percent.102 Bernstein analysts suggest
that the recession may be contributing to slower growth, but believe the biggest obstacle is that
most people already have phones and services. The estimated saturation point for the wireless
market is 91 percent of the U.S. population. The market now stands at 86 percent of the
population, leaving scant room for growth in the future.103 Going forward, wireless companies
will likely focus on reducing customer turnover and increasing acquisition of customers from
other carriers.
Analysts have identified a trend in the wireless market called bifurcating. Growth is
concentrated at the low and high ends of the market, while the middle is being hollowed out.104
98
Craig Moffet, “U.S. Wireless ’09: A Recipe for Disaster,” Bernstein Research, March 5, 2009,
<http://reports.bernsteinresearch.com/researchlinks/view.aspx?eid=tftQBmPVV6rzJwXtOwPWGyZK072jarNmdb7
xg8umW4ZWmhqh2k9g1thEcJtRl5j1>, accessed on March 11, 2009.
99
FCC Wireless data has not been released for December 2008. To get a reasonable estimate for wireless handsets
as of December 2008, the Commission reviewed CTIA wireless data and analyzed the percent change from 2001 to
2008. We compared the percent change of FCC data from 2001 to 2007 and determined that the year-over-year
percent change was within a reasonable difference from the CTIA year-over-year percent change. We then applied
the CTIA data percent change from 2007 to 2008 (6 percent) to the FCC 2007 data to calculate a 2008
subscribership number.
100
FCC, “Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile
Services,” DA 09-54, January 15, 2009, p. 6, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-0954A1.pdf>, accessed on May 4, 2009.
101
Ibid, p. 5.
102
Craig Moffett, “U.S. Wireless ’09: A Recipe for Disaster,” Bernstein Research, March 5, 2009,
<http://reports.bernsteinresearch.com/researchlinks/view.aspx?eid=tftQBmPVV6rzJwXtOwPWGyZK072jarNmdb7
xg8umW4ZWmhqh2k9g1thEcJtRl5j1>, accessed on March 11, 2009.
103
FCC, “Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile
Services,” DA 09-54, January 15, 2009, p. 6, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-0954A1.pdf>, accessed on May 4, 2009.
104
Craig Moffett, “U.S. & European Telecommunications: Stuck in the Middle . . . Will T-Mobile USA Be the Next
Sprint?,” Bernstein Research, February 5, 2009, <http://reports.bernsteinresearch.com/researchlinks/
37
High-end customers are those purchasing smartphones and additional features such as Internet
access while low-end customers are those seeking budget conscious options such as prepaid
plans.
Smartphone technology is driving the high end of the wireless market. In 2008, Verizon
released the BlackBerry Storm to compete with AT&T’s iPhone. While sales of the Storm have
not equaled the levels of the iPhone, Storm sales have reached one million consumers.
Smartphones are now an important element in acquiring and keeping customers. Wireless data
service demands are increasing and becoming a more integral part of everyday life for many
Americans. Text messaging increased from 18.7 billion messages in 2006 to 48.1 billion in
2007, an increase of 157 percent. Photo messaging also grew an impressive 126 percent from
2.7 billion picture messages in 2006 to 6.1 billion in 2007. In addition, 13 percent of U.S.
subscribers accessed the Internet using a mobile device in January 2008. Fifty-eight percent of
smartphone users and 85 percent of iPhone users accessed Internet content in January 2008.105
Prepaid carriers, which operate in mostly smaller urban areas, have nearly doubled their
subscription rates from first quarter 2007 to first quarter 2008.106 With the economy in a
deepening recession, more people are seeking the most value for their dollar and consider
prepaid plans as an economical choice. Sprint’s prepaid affiliate, Boost Mobile, which added
about 764,000 customers from first quarter 2007 to first quarter 2008,107 now offers a plan of
unlimited voice, messaging, data, and walkie-talkie service for only $50 a month.108 MetroPCS,
Leap Wireless, and Virgin Mobile have all followed suit offering unlimited plans in the $50
range depending on the options a customer selects.109 Overall, prepaid subscribers have
increased from 15 percent of the wireless market in 2006 to 17 percent in 2007, representing
more than 42 million subscribers.110 Because of the success of the prepaid plans, carriers
offering these plans are branching out into larger metropolitan areas putting pressure on larger
carriers to offer competitive pricing.111 AT&T recently announced a plan to offer prepaid users
view.aspx?eid=U3FGzp006GEhjUZDnTMWzJy7Qmbwa%2fGMoZNuyeDnKYAqubkSdkHXGz1DBvltStRv>,
accessed on March 11, 2009.
105
FCC, “Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile
Services,” DA 09-54, January 15, 2009, pp. 7-8, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-0954A1.pdf>, accessed on May 4, 2009.
106
Marguerite Reardon, “Boom times for prepaid cell phone operators,” May 7, 2009, <http://news.cnet.com/83011035_3-10236078-94.html?tag=mncol>, accessed on May 20, 2009.
107
Marguerite Reardon, “Boom times for prepaid cell phone operators,” May 7, 2009, <http://news.cnet.com/83011035_3-10236078-94.html?tag=mncol>, accessed on May 20, 2009.
108
Philip Elmer-Dewitt, “Analyst:
iPhone benefits from carrier rate war,” February 23, 2009,
<http://telephonyonline.com/external.html?q=http://apple20.blogs.fortune.cnn.com/2009/02/23/analyst-iphonebenefits-from-carrier-rate-war/>, accessed on March 11, 2009.
109
Peter Svensson, “Cut-rate prepaid plans shake up wireless industry,” Associated Press, April 20, 2009,
<http://hosted.ap.org/dynamic/stories/T/TEC_PREPAID_PRICE_FIGHT?SITE=AP&SECTION=HOME&TEMPL
ATE=DEFAULT&CTIME=2009-04-20-13-35-47>, accessed on April 24, 2009.
110
FCC, “Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile
Services,” DA 09-54, January 15, 2009, p. 8, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-09-54A1.
pdf>, accessed on May 4, 2009.
111
Marguerite Reardon, “Boom times for prepaid cell phone operators,” May 7, 2009, <http://news.cnet.com/83011035_3-10236078-94.html?tag=mncol>, accessed on May 20, 2009.
38
unlimited voice for 1 day for $3.112 Net additions for prepaid companies combined have
experienced a 70 percent year-over-year growth. However, these companies, with a total of 15
million subscribers, are only one tenth of the size of AT&T and Verizon combined.113
Sprint and T-Mobile, middle-market carriers, have lost subscribers or experienced very
little growth. Changes in the wireless market and the national economy have forced these
companies to develop new marketing plans and incentives to entice consumers to spend their
dollars more effectively. Unlimited voice and data plans are emerging to compete with
sophisticated technology and economical prepaid options. T-Mobile is testing a new $50
unlimited voice plan with a $25 additional charge for unlimited data/Internet to customers in San
Francisco. Customers qualify for the test offering if they have subscribed to T-Mobile for at
least 22 months. T-Mobile is also offering a $135 credit to customers who switch from a
competitor’s service. 114 Figure 4-1 shows broadband subscription rates by technology and
demonstrates the large increase over the last three years in consumers using wireless broadband
connection.
Figure 4-1. U.S. Broadband Subscription by Technology Type
140
End-users (millions)
120
100
80
60
40
20
0
Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07
Cable
ADSL
Other
Mobile Wireless
Source: FCC High-Speed Services for Internet Access Report, various years, Table 1.
112
Matt Richtel, “AT&T Has a Prepaid Twist: Talk All Day for $3,” New York Times, May 8, 2009
<http://bits.blogs.nytimes.com/2009/05/08/att-has-a-prepaid-twist-talk-all-day-for-3/?pagemode=print>, accessed on
May 20, 2009.
113
Craig Moffett, “U.S. Telecommunications: It’s the Economy Calling . . . TelCo Q4 ’08 Preview,” Bernstein
Research, January 21, 2009, <http://reports.bernsteinresearch.com/researchlinks/view.aspx?eid=
scwyj%2bIza63pB3YfzELRp2XXmdaRGQGu4d%2bdOx1oeyXlPCtsEjPfZ9QfGMLB5P6l>, accessed on March
11, 2009.
114
Sinead Carew, “T-Mobile USA Tests $50 Unlimited Call Plan,” February 19, 2009. <http://www.fiercewireless.
com/story/t-mobiles-50-unlimited-voice-plan-goes-nationwide/2009-03-02>, accessed on March 11, 2009.
39
1. Wireless-Only Households
According to the CDC, during the second half of 2008, 20.2 percent of U.S. adults lived
in a household that used at least 1 wireless phone and had no active wireline telephone (dubbed
“wireless-only households” by the CDC), an increase from 17.5 percent in the first half of
2008.115 The CDC also reported that 16.8 percent of households in Florida are wireless only.116
Adults between the ages of 18 and 29, at 34.5 percent, represent the largest segment of the
population that has forgone wireline phones.117 The CDC also reported that of those surveyed:
•
41.5 percent of adults between the ages of 25 and 29 live in wireless-only households.
•
Non-Hispanic white adults (16.6 percent) are less likely to give up a landline than
Hispanic adults (25 percent).
•
Adults in the South (21.3 percent) and Midwest (20.8 percent) are more likely to live
in wireless-only households than adults in other parts of the country.118
2. Florida Trends
Florida wireless subscription trends mirror those of the U.S. Florida subscriptions grew
in 2007, but at a much slower rate than in 2006. Florida experienced an increase of 843,190
subscribers in 2007, a 5 percent increase compared to a 21.4 percent increase in 2006. Total
wireless subscribers in Florida in 2007 reached 15.6 million handsets.
115
S.J. Blumberg, J.V. Luke, “Wireless Substitution: Early Release of Estimates From the National Health
Interview Survey, July-December 2008,” May 6, 2009, p. 1, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/
wireless200905.pdf>, accessed on May 13, 2009.
116
S.J. Blumberg, et al., “Wireless Substitution: State-level Estimates From the National Health Interview Survey,
January-December 2007” March 11, 2009, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200805.pdf>,
accessed on May 14, 2008.
117
FCC, “Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile
Services,” DA 09-54, January 15, 2009, p. 10, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-09-54A1.
pdf>, accessed on May 4, 2009.
118
S.J. Blumberg, et al., “Wireless Substitution: State-level Estimates From the National Health Interview Survey,
January-December 2007” March 11, 2009, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200805.pdf>,
accessed on May 14, 2008.
40
Total subscribership results as of December 2007 show that Florida exceeds the national
subscription levels by three percent, as seen in Figure 4-2. However, this difference is the
smallest since 2001.
Figure 4-2. Wireless Subscription as Percentage of Population
100%
90%
Percentage of Population
80%
60%
60%
50%
71%
69%
70%
46%
40%
52%
45%
79%
73%
84%
86%
79%
83%
65%
57%
51%
40%
30%
20%
10%
0%
June-01
June-02
June-03
June-04
Florida
June-05
June-06
June-07
Dec-07
Nation
Source: FCC, Local Telephone Competition: Status as of December 31, 2007; U.S. Census Bureau, State
Population Estimates.
41
Figure 4-3 shows that Florida wireless subscriptions have continued to surpass Florida
wireline access lines. The number of wireless handsets in Florida has increased significantly
over the number of wireline access lines in the state, and the gap appears to be widening. Local
exchange company access lines in Florida have declined 18 percent since the end of 2005, while
wireless subscriptions have increased by 24 percent during the same time period.119, 120 Wireless
handsets outnumbered wireline access lines by 5.5 million as of December 2007.121, 122 Florida
wireless subscribership increased by 1.4 million subscribers from June 2006 to December
2007.123
Figure 4-3. Florida Local Exchange Access Lines and
Florida Wireless Subscriptions
17
16
15.3
15.6
9.8
9.4
Access Lines (millions)
15
14
13
12.6
12.0
11.8
12
11.8
11
10
14.2
11.9
11.8
11.5
11.0
10.3
9
8.4
8
7
8.6
7.5
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
FL Local Exchange Company Lines
Jun-06
Jun-07
Dec-07
Dec-08
FL Wireless Subscription
Source: FCC, Local Telephone Competition: Status as of December 31, 2007; Responses to 2009 FPSC data
requests .
B. VOICE OVER INTERNET PROTOCOL
VoIP service124 has rapidly become a major competitive alternative challenging wireless
and traditional wireline service for a significant share of the communications market. VoIP data
119
FCC, “Local Telephone Competition: Status as of December 31, 2007,” Table 14, <http://www.fcc.gov/
wcb/iatd/comp.html>, accessed on May 29, 2009.
120
FPSC, responses to 2001-2009 Local Competition data requests.
121
FCC, “Local Telephone Competition: Status as of December 31, 2007,” Table 14, <httpp://www.fcc.gov/
wcb/iatd/comp.html>, accessed on May 29, 2009.
122
FPSC, responses to 2001-2008 Local Competition data requests.
123
FCC, “Local Telephone Competition: Status as of December 31, 2007,” Table 14, <httpp://www.fcc.gov/
wcb/iatd/comp.html>, accessed on May 29, 2009.
124
47 C.F.R. § 9.3; see also IP-Enabled Services and E911 Requirements for IP-Enabled Service Providers, First
Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 10245, 10257-58, ¶ 24 (2005) (“VoIP 911
42
from the Yankee Group, a market research firm specializing in communications, shows that
VoIP-based services have experienced impressive growth, increasing from 0.1 percent of U.S.
telephone lines in 2003 to 24 percent at the end of 2008.125 The end-of-year line totals equate to
an increase from 129,000 VoIP-connected households in 2003, to 19.4 million in 2008.126
Based on information provided to the FPSC, an estimated 1.6 million Florida residential
consumers subscribe to VoIP service. A precise estimate for the business market is not possible
because of limited data, but promotional campaigns and financial reports of publicly traded
companies suggest that the business sector is a target market for some cable VoIP providers.127
The following market analysis relies on nationally available data and limited Floridaspecific data. The analysis focuses on facilities-based, interconnected VoIP services provided by
cable companies, wireline telephone companies, and over-the-top VoIP providers.128
1. National Market Analysis
The market research firm Pike & Fischer forecasts that the number of VoIP-connected
households will exceed 25 million in the U.S. by the end of 2010, with growth at about 14
percent annually over the next few years.129 Forecasts of VoIP growth vary, as the Yankee
Group anticipates 30.2 million subscribers by the end of 2010.130
a. Facilities-Based VoIP Providers
The traditional telephone companies and facilities-based cable VoIP providers continue
to place an increased emphasis on offering feature-rich, discounted bundled services, including
digital voice (VoIP) services over managed-IP networks. These providers offer high call quality
and reliability. The cable companies dominated digital phone service with an estimated 14.9131
Order”), aff’d sub nom. Nuvio v. FCC, 473 F.3d 302 (D.C.Cir. 2006), <http://www.fcc.gov/cgb/voip911order.pdf>,
accessed on February 12, 2009.
125
Justin Neville-Rolfe, “Top 8 Communications Surprises,” Yankee Group Research, Inc., January 19, 2009,
<http://blogs.yankeegroup.com/2009/01/19/top-8-communications-surprises/>, accessed on March 4, 2009.
126
Yankee Group Research, Inc., “U.S. VoIP Consumer Forecast, December 2003-2012,” received on March 4,
2009.
127
Comcast Corporation, “4th Quarter 2008 Earnings Presentation,” Slide 14, <http://media.corporate-ir.net/media_
files/irol/11/118591/Earnings_4Q08/4Q08Slides.pdf>; Cablevision Systems, Corp., <http://www.
cablevision.com/about/index.jsp> and <http://www.optimum.com/voice/index.jsp> all accessed on April 27, 2009.
128
FCC 06-189, WC Docket No. 06-74, AT&T Inc. and BellSouth Corporation Application for Transfer of Control,
Memorandum Opinion and Order, released March 26, 2007, ¶92-¶93, <http://hraunfoss.fcc.gov/edocs_public/
attachmatch/FCC-06-189A1.pdf>, accessed on February 12, 2009.
129
Pike & Fischer, Inc., “Residential VoIP Market Outlook,” October 2008, <http://www.pf.com/marketResearch
PDInd.asp?repId=630>, accessed on March 4, 2009.
130
Yankee Group Research, Inc., “U.S. VoIP Consumer Forecast, December 2003-2012,” received on March 4,
2009.
131
Mike Paxton, “34 Million Subscribers: Worldwide Cable Telephony Services Continue to Expand,” In-Stat,
August 2008, <http://www.instat.com/abstract.asp?id=288&SKU=IN0804053MBS>, accessed on March 2, 2009.
43
to 15.7132 million VoIP subscribers at the end of 2008. The top cable VoIP telephony providers,
based on number of subscribers, are:
•
Comcast Corp.
6.47 million subscribers133
•
Time Warner Cable
3.75 million subscribers134
•
Cablevision Systems Corp.
1.88 million subscribers135
•
Cox Communications
0.64 million subscribers136
Comcast is now the third-largest residential telephone service provider in the U.S. behind
AT&T and Verizon.137 However, the growth rate of cable phone subscribers fell sharply in the
fourth quarter of 2008, with the nation’s top cable companies collectively adding only 877,000
net subscribers. This fourth quarter decrease marks the first time since 2006 that net additions
have dropped below 1.1 million.138
As the cable companies penetrate the VoIP market, traditional telephone companies have
responded with their own deployments of facilities-based VoIP services with an estimated
251,000 VoIP subscribers at the end of 2008.139 AT&T first launched U-verse Voice service, its
facilities-based VoIP service offering, in Detroit.140 U-verse Voice service is now available in
multiple states, including Florida.141 Verizon also launched its facilities-based VoIP service with
132
Yankee Group Research, Inc., “U.S. VoIP Consumer Forecast,” December 2003-2012, received on March 4,
2009.
133
Comcast Corporation, “Financial Tables,” Comcast Reports Fourth Quarter and Year End Results, February 18,
2009, <http://www.cmcsk.com/phoenix.zhtml?c=118591&p=irol-newsArticle&ID=1257468&ID=1257468&
highlight=>, accessed on February 20, 2009.
134
Time Warner Inc, Form 10-K, 2008, February 20, 2009, <http://files.shareholder.com/downloads/TWX/
596089154x0xS950144-09-1481/1105705/filing.pdf>, accessed on March 3, 2009.
135
Cablevision Systems Corporation, Form 10-K, Fourth Quarter 2008, February 26, 2009, <http://www.
cablevision.com/investor/sec.jsp>, accessed on February 26, 2009.
136
Mike Paxton, “34 Million Subscribers: Worldwide Cable Telephony Services Continue to Expand,” (noting an
estimated 1.83 million circuit-switched subscribers as of July 2008), In-Stat, August 2008, <http://www.instat.com/
abstract.asp?id=288&SKU=IN0804053MBS>, accessed on March 2, 2009.
137
Comcast Investor Relations Homepage, “Comcast Now the Third Largest Residential Phone Services
Provider in the U.S.,” March 11, 2009, <http://www.cmcsk.com/phoenix.zhtml?c=118591&p=irol-newsArticle&
ID=1265311&highlight=>, accessed on March 13, 2009.
138
Pike & Fischer, Inc.’s Broadband Advisory Services, “Cable Suffers Dip in Phone Uptake,” March 15, 2009,
<http://www.broadbandadvisoryservices.com/>, accessed on March 15, 2009.
139
Yankee Group Research, Inc., “U.S. VoIP Consumer Forecast,” December 2003-2012, received on March 4,
2009.
140
“AT&T U-verse Voice Debuts in Detroit,” AT&T Press Release, January 22, 2008, <http://www.att.com/gen/
press-room?pid=4800&cdvn=news&newsarticleid=25068>, accessed on March 13, 2009.
141
“AT&T Launches U-verse Voice,” AT&T Press Release, February 2008-March 2009,<http://www.att.com/gen/
pressroom?pid=4800&cdvn=news&newsfunction=searchresults&beginning_month=12&beginning_year=2008&en
ding_month=2&ending_year=2009>, accessed on March 29, 2009.
44
a limited deployment in Virginia and Maryland. The service will be marketed to new customers
across the 14 states, including Florida, where it offers FiOS TV and Internet services.142
b. Over-the-Top VoIP Providers
For consumers looking for ways to save money, competitive over-the-top VoIP providers
continue to provide options for low-priced telephone services. The phrase “over-the-top VoIP”
refers to a VoIP service that requires a consumer to obtain broadband access from another
company. Various providers offer over-the-top VoIP services such as Vonage, Packet8, Skype,
magicJack,143 and Google. The Yankee Group estimates 3.4 million consumers had subscribed
to over-the-top interconnected VoIP services at the end of 2008.144
Vonage, Packet8, magicJack, and Skype are the leading over-the-top VoIP providers
based on the number of subscribers. Some wireless carriers are also offering competitive overthe-top VoIP service. T-Mobile, for example, offers an over-the-top VoIP service called
“@Home” service.145 Vonage remains the leader of this sector of the market with a reported
2.48 million U.S. subscribers as of fourth quarter 2008.146 Packet8 (8x8, Inc.) reported 86,992
subscribers as of fourth quarter 2008, down 25,237 from the previous year.147
Skype reports more than 405 million registered users worldwide and is focused on
product strategies to enhance customer engagement.148 Skype offers several levels of service
including interconnected subscription services, SkypeIn and SkypeOut, as well as its free peerto-peer service. The number of Skype’s U.S. subscribers relative to its free peer-to-peer VoIP
service is unknown.
142
Doug Mohney, “Verizon FiOS getting VoIP in early 2009,” FierceVoIP, December 14, 2008, <http://www.
fiercevoip.com/story/verizon-fios-getting-voip-early-2009/2008-12-14?utm_medium=nl&utm_source=internal&
cmp-id=EMC>, accessed on March 13, 2009.
143
The trade name “magicJack” uses a lowercase “m.” Note that when the company name appears in this report at
the beginning of a sentence, the “m” is capitalized.
144
Yankee Group Research, Inc., “U.S. VoIP Consumer Forecast,” December 2003-2012, received on March 4,
2009.
145
Olga Kharif, “Home Phone Service for $10 a month?” BusinessWeek, June 25, 2008, <http://www.businessweek.
com/technology/content/jun2008/tc20080624_332393.htm?campaign_id=alerts>, accessed on February 24, 2009.
146
Vonage Holdings Corp., Form 10-K, Fourth Quarter 2008 (noting that 95 percent, or 2.48 million, of the 2.61
million represents U.S. subscriber lines with the remaining 5 percent, or 130,500, lines serving customers in Canada
and the U.K.), March 3, 2009, <http://files.shareholder.com/downloads/VAGE/39395851x3989576xS1193125-0943745/1272830/filing.pdf>, accessed on March 5, 2009.
147
8x8, Inc., Form 10-Q, for Fourth Quarter 2008, <http://ccbn.10kwizard.com/cgi/image?ipage=6099277&doc=3&
cik=1023731&odef=8&rid=12&quest=1&xbrl=0&dn=2>, accessed on March 14, 2009.
148
EBay, Inc. (purchased Skype for $2.6 billion in September 2005), “eBay, Inc. Reports Fourth Quarter and Full
Year 2008 Results,” eBay, Inc.’s Fourth Quarter 2008 Report, January 21, 2009, <http://files.shareholder.com/
downloads/ebay/578163169x0x266606/581a206a-78df-4c3c-81c4-4a8b57e62440/eBay_FINALQ42008
EarningsRelease.pdf>, accessed on February 27, 2009.
45
AT&T has stopped offering its over-the-top VoIP service, AT&T CallVantage, to new
customers149 and has begun offering AT&T U-verse Voice.150 U-verse Voice is a VoIP offering,
but is provided through AT&T’s U-verse broadband offering and is more similar to cable digital
voice service than over-the-top VoIP service. Similarly, Verizon issued notice that it
discontinued VoiceWing, its over-the-top VoIP service, on March 31, 2009.151 Verizon’s
VoiceWing over-the-top VoIP service is replaced by FiOS-based service, similar to U-verse
Voice and cable digital voice services.
Vonage seems to be maintaining its lead in the over-the-top VoIP segment of the market.
However, its 2008 year-end growth is significantly lower than that experienced by its facilitiesbased competitors. Vonage added only 329,187 net subscribers,152 while Comcast and Time
Warner Cable added 2.1 million153, 154 and 850,000155 net subscribers, respectively.
2. Florida Market
Some limitations exist in arriving at an accurate estimate of VoIP subscribers in Florida
because the Commission does not have jurisdiction over VoIP service. However, the FCTA
reported residential data for its six largest member providers. Vonage also reported its Florida
subscribers, and a number of CLECs and ILECs responded to the Commission’s data request.
Based on a review of all data, an estimated 1.6 million residential VoIP subscribers are in Florida
as of December 2008. This total represents a significant increase from the estimated 662,000
subscribers as of May 31, 2006, and a 45 percent increase over the 1.1 million residential VoIP
subscribers as of December 31, 2007. The number of estimated VoIP subscribers in Florida is
149
“AT&T Stops Selling CallVantage VoIP To New Customers,” Broadband DSLReports.com, August 15, 2008,
<http://www.dslreports.com/shownews/ATT-Stops-Selling-CallVantage-VoIP-To-New-Customers-97006?
nocomment=1>, and AT&T, < http://www.usa.att.com/callvantage/consumer_redirect.jsp>, all accessed on April
28, 2009.
150
“AT&T U-verse Launches a New Kind of Home Phone Service in Jacksonville with AT&T U-verse Voice,”
AT&T Press Release, January 26, 2009, <http://www.att.com/gen/press- room?pid=4800&cdvn=news&news
articleid=26495>, accessed on April 28, 2009.
151
Doug Mohney, “Verizon Officially Pulls Plug on VoiceWing VoIP Service,” January 26, 2009,
<http://www.fiercevoip.com/story/verizon-officially-pulls-plug-voicewing-voip-service/2009-01-26>, accessed on
April 28, 2009.
152
Vonage Holdings Corp., Form 10-K, Fourth Quarter 2008 (noting that 95 percent, or 2.48 million, of the 2.61
million represents U.S. subscriber lines with the remaining 5 percent, or 130,500, lines serving customers in Canada
and the U.K.), <http://files.shareholder.com/downloads/VAGE/39395851x3989576xS1193125-09-43745/1272830/
filing.pdf>, accessed on March 5, 2009.
153
Comcast Corporation, “Financial Tables,” Comcast Reports Fourth Quarter and Year End Results, February 18,
2009, <http://www.cmcsk.com/phoenix.zhtml?c=118591&p=irol-newsArticle&ID=1257468&ID=
1257468&highlight=>, accessed on February 20, 2009.
154
“Time Warner Cable Reports 2008 Full-Year And Fourth-Quarter Results,” Time Warner Press Release,
February 4, 2009, <http://files.shareholder.com/downloads/TWX/596089154x0xS950144-09-1481/1105705/
filing.pdf>, p. 4, accessed on April 28, 2009.
155
“Time Warner Cable Reports 2008 Full-Year and Fourth-Quarter Results,” Time Warner Press Release, February
4, 2009, <http://files.shareholder.com/downloads/TWX/596089154x0xS950144-09-1481/1105705/
filing.pdf>, p. 4, and Time Warner Cable Reports 2007 Full-Year And Fourth-Quarter Results, Time Warner Press
Release, February 6, 2008, <http://files.shareholder.com/downloads/TWC/626775554x0x166410/9f2f505d-77bb4a96-8d26-4029c5ecee0c/q407earningsrelease.pdf>, p. 7, accessed on April 28, 2009.
46
now 12 times the CLEC-reported residential wireline access lines in the state. As noted, a
precise estimate for the business market is not possible because of limited data.
Figure 4-4 shows the composition of the Florida residential VoIP market, based on the
Commission’s estimates, as of December 2008.
Figure 4-4. Estimated Florida Residential VoIP Access Lines
1,800,000
1,600,000
275,000
1,400,000
1,233,829
1,200,000
300,000
1,000,000
748,143
800,000
600,000
400,000
275,000
300,000
200,000
59,037
52,885
Jun-06
CLEC
Dec-07
Cable Over-the-top
91,320
Dec-08
Source: Responses to 2006-2009 FPSC data request.
a. Facilities-Based VoIP Providers
The FCTA provided a count of its member companies’ residential cable telephony
subscribers. FCTA’s response revealed that 6 of its member companies collectively have
1,233,829 Florida residential cable VoIP subscribers, as of December 2008.156 This service is
usually marketed as digital voice service. Florida cable VoIP subscribership increased by
485,686 subscribers from the number reported to the FPSC in 2007, an increase of nearly 65
percent.157
156
Florida Cable Telecommunications Association response to FPSC 2009 Competition Report Data Request,
received April 21, 2009.
157
Florida Public Service Commission, “2008 Report on the Status of Competition in the Telecommunications
Industry,” released August 1, 2008, p.48.
47
AT&T’s VoIP service, U-verse Voice, was launched in the Jacksonville area on January
26, 2009,158 the first market in the Southeast to get the service.159 AT&T expanded U-verse
Voice availability to areas in Volusia, Orange, Palm Beach, Martin, Seminole, and St. Lucie
counties through May 2009.160 Verizon is not yet offering its VoIP product, FiOS Voice, in
Florida.161
In response to the Commission’s data request, 44 CLECs and 1 ILEC provided VoIP line
counts. A total of 91,320 residential VoIP lines and 162,686 business VoIP lines were reported
for 2008, an increase of nearly 73 percent and 400 percent, respectively, from 2007. Line growth
and an increase in the number of CLECs providing VoIP services contributed to the large
increases in reported lines. Two CLECs reported that they provided VoIP services to end users
but elected not to provide subscription data, citing Florida law that exempts VoIP from
Commission jurisdiction.
b. Over-the-Top VoIP Providers
Vonage continues to be the largest non-facilities-based, over-the-top VoIP service
provider in Florida based on its voluntary reporting of its subscriber numbers in Florida. Skype,
magicJack, and Packet8 are some of the other competitive providers in this segment of the VoIP
market. As noted previously, Verizon and AT&T have discontinued their respective over-thetop offerings. Over-the-top VoIP providers are not certificated in Florida, limiting the
Commission’s ability to collect Florida-specific data. For the third consecutive year, Vonage has
filed Florida-specific subscribership data for the report. Vonage’s Florida subscription data for
2007 and 2008 was filed confidentially. Vonage experienced growth of approximately four
percent in Florida-based subscriptions for 2008, exceeding its national performance.162 As of
December 2007, the FPSC estimated that there were approximately 300,000 over-the-top VoIP
subscribers based on the number of Florida subscribers reported by Vonage and national
estimates of the remainder of that market segment. That estimate has been revised downward for
2008 to 275,000 recognizing that while Vonage has managed to maintain its customer base in
Florida, other providers have experienced nationwide declines.163
158
“AT&T U-verse Launches a New Kind of Home Phone Service in Jacksonville with AT&T U-verse Voice,”
AT&T Press Release, January 26, 2009, <http://www.att.com/gen/press-room?pid=4800&cdvn=news&news
articleid=26495>, accessed on February 16, 2009.
159
Mark Basch, “AT&T Launches New VoIP Services in Jacksonville through U-verse,” January 26, 2009, The
Florida Times Union, <http://www.jacksonville.com/business/2009-0126/story/att_launches_new_voip_services_in
_jacksonville_through_u_verse>, accessed on January 26, 2009.
160
“AT&T U-verse Launches a New Kind of Home Phone Service in Palm Beach County and the Treasure Coast
with AT&T U-verse Voice,” AT&T Press Release, April 14, 2009, <http://www.att.com/gen/press-room?pid=
4800&cdvn=news&newsarticleid=26721> accessed on May 18, 2009 and “AT&T U-verse Voice Launches in
Greater Orlando and Volusia County,” Wall Street Journal, May 11, 2009, <http://online.wsj.com/article/PR-CO20090511-905201.html?mod=wsjcrmain>, accessed on May 18, 2009.
161
E-mail correspondence from Verizon received by FPSC staff April 30, 2009.
162
Vonage provided Florida-specific subscribership data on a confidential basis on February 26, 2009.
163
"8x8, Inc. Announces 2009 Fiscal Year-End Operating Results," 8x8, Inc. Press Release, May 21, 2009,
<http://investors.com/releasedetail.cfm?ReleaseID=385604>, accessed on May 27, 2009.
48
Overall, the number of residential VoIP subscribers in Florida is estimated to be 1.6
million, an increase of 45 percent from 2007. The substantial growth in residential VoIP
subscribers has been driven by the remarkable growth reported by cable VoIP providers.
C. BROADBAND
Broadband is now generally considered by policy-makers as less of a luxury and more of
a necessity.164 A great deal of focus has been placed on the ability of everyone in the U.S. to
have access to high-speed Internet. President Barak Obama’s campaign promised to eliminate
the “digital divide” and to deliver the economic benefits of high-speed Internet access to poor
and rural Americans. As part of the ARRA, Congress provided more than $7 billion over the
next 2 years for grants and loans to bring broadband to unserved and underserved areas of the
U.S.
1. General Broadband Trends in 2008
National broadband subscribership increased by 8 percent from the spring of 2008 to
April 2009 (from 55 percent to 63 percent).165 Much attention has been given to studies
portraying the economic and social benefits that can be derived from having quality high-speed
Internet access. Experts agree that some of the benefits to Americans that will accompany faster,
more ubiquitous broadband are:
•
Enhanced medical care through telemedicine.
•
Better quality of life for disadvantaged and disabled Americans.
•
Improved efficiency of business transactions.
•
Accelerated participation in government.
•
More accessible education for a wider range of students.
•
Improved emergency responses.
•
Multiple entertainment and social benefits.166
2. Broadband and the Economy
Several studies have attempted to estimate the economic gains of broadband deployment
at various levels. The Information Technology and Innovation Foundation (ITIF) claims that a
$10 billion investment in broadband networks would sustain 498,000 U.S. jobs for 1 year, at
164
Stephen Ezell, Robert D. Atkinson, et al., “The Need for Speed: The Importance of Next Generation Broadband
Networks,” Washington, D.C., March 2009, p. 24.
165
John B. Horrigan, “Home Broadband Adoption 2009,” Pew Internet & American Life Project, Washington, D.C.,
June 2009, p. 3.
166
Stephen Ezell, Robert D. Atkinson, et al., pp. 3,18.
49
wages 84 percent above average.167 Connected Nation, a nonprofit entity focusing on expanding
broadband access in rural areas, estimates that broadband initiatives could have a national
economic impact of $134 billion and create 2.35 million jobs.168 The Brookings Institute posits
that for every 1 percentage point increase in broadband penetration in a state, employment is
expected to grow 0.2-0.3 percent.169
Although specific data are not yet available, some dial-up providers claim that the
economy has forced some Americans to switch back to dial-up, which is about a third of the
price of high-speed Internet access. With broadband growth expected to slow by approximately
12 percent in 2009,170 several dial-up providers are taking advantage of the downturn to promote
their low-cost service.171 Figure 4-5 shows both the increase in broadband adoption and the drop
in dial-up subscription beginning to level out.
Figure 4-5. Trends in Home Internet Access: Broadband vs. Dial-up
60%
50%
40%
30%
20%
10%
0%
Jun 00
Apr 01
Mar 02
Mar 03
Apr 04
Mar 05
Broadband at home
Mar 06
Mar 07
Dec 07
Apr 08
Dialup
Source: Pew Internet and American Life Project, Home Broadband Adoption 2008.
167
Robert D. Atkinson et al., “The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity
and Revitalize America,” January 2009, <http://www.itif.org/files/roadtorecovery.pdf>, accessed on March 25,
2009.
168
Brian Mefford, “Broadband Stimulus: What States Need to Know,” Connected Nation, February 13, 2009.
169
Robert Crandall et al., “The Effects of Broadband on Output and Employment: A Cross-sectional Analysis of
U.S. Data,” Number 6, July 2007, <http://www.brookings.edu/~/media/Files/rc/papers/2007/06labor_crandall/
06labor_crandall.pdf>, accessed on March 25, 2009.
170
Roy Mark, “Telcos to Lose in Broadband Slowdown,” January 7, 2009, <http://www.eweek.com/index2.php?
option=content&task=view&id=51097&pop=1&hide_ads=1&page=0&hide_js=1>, accessed on March 15, 2009.
171
Andrew Lavallee, “Postponing Dial-Up’s Demise,” The Wall Street Journal, February 26 2009, <http://online.
wsj.com/article/SB123561717378378657.html>, accessed on March 13, 2009.
50
3. National Trends
a. Broadband Speeds
The FCC defines broadband as having speeds of at least 200 kilobits per second (kbps)
downstream,172 a speed that has been criticized as too slow. Studies have shown a sizable rise in
the number of consumers paying extra for faster speeds. The Pew American Life Project found
that 29 percent of broadband users pay a higher price for a faster Internet connection.173
Deployment of fiber optic networks closer to consumers and the implementation of technologies
such as DOCSIS (Digital Over Cable Service Interface Specifications) 3.0 by cable companies
will significantly increase the speeds available to Americans to access the Internet. Table 4-1
shows the speeds achievable by various types of technology.
Table 4-1. Broadband Connection by Speed and Technology 2009
ADSL
Cable
Mobile Wireless
Fiber
Satellite
Other
Exceeding
200 kbps in only 1
direction
10.3%
0.8%
87.0%
0.0%
1.8%
0.1%
Exceeding 200 kbps in both directions, and
Greater than 200 kbps
Greater than or
equal to 2.5 Mbps in
and less than 2.5 Mbps
in the faster direction
the faster direction
40.1%
24.8%
11.1%
71.2%
43.9%
0.0%
0.4%
3.8%
0.2%
0.0%
4.2%
0.2%
Source: FCC High-Speed Services for Internet Access Report, Tables 1 and 5.
b. National Broadband Subscribership
As of April 2008, broadband had been adopted by the majority of U.S. households (55
percent).174 Subscribership then increased a further 8 percent, reaching 63 percent of Americans
as of June 2009.175 Other significant characteristics of U.S. broadband subscribership in 2009
include:
•
Americans aged 65 and older had one of the largest increases in subscribership, 11
percent from April 2008 to June 2009.
172
“Rural Broadband at a Glance 2009 Edition,” U.S. Department of Agriculture, Washington, D.C., February 2009,
Number 47.
173
John B. Horrigan, “Home Broadband Adoption 2008,” Pew Internet and American Life Project, Washington,
D.C., July 2008, p. 8.
174
Ibid, p. i.
175
John B. Horrigan, “Home Broadband Adoption 2009,” Pew Internet and American Life Project, Washington,
D.C., June 2009, p. 3.
51
•
Rural subscribership increased from 38 percent in 2008 to 46 percent in 2009.176
•
Men were 4 percent more likely than women to subscribe to broadband.
•
Households with incomes between $75,000-$100,000 annually, were more than 3
times as likely to have broadband in their homes as households making less than
$20,000.177
Despite the fact that the price of broadband has decreased marginally during the last
several years, approximately 29 million households in the U.S. are currently not subscribers.178
Price is the most significant reason dial-up users say they do not switch to broadband. Between
nine to ten million households did not have a single broadband provider in their areas in spring
of 2008.179
c. Best and Worst States
A 2008 study conducted by ITIF ranked states on broadband deployment and median
speeds. The study found that the states with the highest percentage of broadband users and
enjoying the fastest speeds were New Jersey, Rhode Island, and Delaware. States in the South
and Midwest regions typically scored the poorest on broadband availability and speeds,
including Mississippi, Arkansas, and Louisiana. The states that made the biggest improvements
in broadband technology and deployment between 2007 and 2008 were South Dakota, Utah, and
Delaware.180 The states with the most wireless broadband coverage were the District of
Columbia, New Jersey, and Rhode Island. States with the least wireless broadband coverage
were Alaska, Montana, and Wyoming.181
4. Florida Trends
The ITIF study ranked Florida tenth in the nation in broadband availability and speed.
Florida ranked twenty-second in wireless broadband coverage. The total number of high-speed
lines in December 2007 was 7.4 million, placing Florida fourth after Texas, New York, and
California. Approximately 2.3 million of Florida’s high-speed lines are subscribed to by
businesses.182
176
John B. Horrigan, “Home Broadband Adoption 2009,” Pew Internet and American Life Project, Washington,
D.C., June 2009, p. 14.
177
Ibid.
178
Ibid, p. 3.
179
John B. Horrigan, “Home Broadband Adoption 2008,” Pew Internet and American Life Project, Washington,
D.C., July 2008, pp. 10-13.
180
ITIF, “The 2008 State New Economy Index,” November 2008, p. 42, <http://www.itif.org/files/
2008_State_New_Economy_Index.pdf>, accessed on March 13, 2009.
181
“Study Ranks Mobile Broadband Coverage by State,” CostQuest Associates, Washington, D.C., July 21, 2008,
p. 1.
182
Ibid, pp. 5-6.
52
In January 2009, the FCC released its annual report on the deployment of advanced
services, which contains state-specific data through the end of 2007.183 The FCC found that
there were 78 different providers of broadband service within the state of Florida, the
overwhelming majority of which were traditional wireline telephone (Digital Subscriber Line
service or DSL) or cable carriers (cable modem service). The study also found that 89 percent of
Florida residents had access to broadband via a telephone carrier where telephone service was
available, and 92 percent had access to broadband provided by a cable company, where cable
service was available. The FCC determined that every ZIP Code within the state had at least one
broadband subscriber.184 The majority of consumers living in Florida had at least seven different
broadband providers in their ZIP Code at the end of 2007, including multiple satellite
providers.185
183
FCC, “High-Speed Services for Internet Access: Status as of December 31, 2007,” Released January 16, 2009,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287962A1.pdf>, accessed on March 12, 2009.
184
The FCC uses ZIP Codes rather than census tract information to obtain data on broadband penetration. If one
customer in a particular ZIP Code has access to broadband, that entire area is considered to be “served.” Also,
provider numbers are discovered using this same methodology.
185
FCC, “High-Speed Services for Internet Access: Status as of December 31, 2007,” Released January 16, 2009,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287962A1.pdf>, accessed on March 12, 2009.
53
5. Deployment of Broadband Technology
a. Fiber Optics
The two largest telecommunications carriers in the U.S., Verizon and AT&T, have made
significant investments in fiber optic infrastructure during 2008 and through early 2009. Verizon
is deploying fiber to individual homes with its FiOS offering. AT&T deploys fiber to the
“node,” a centralized point in a neighborhood or subdivision and then relies on copper wire to
the premises. AT&T implements this deployment strategy in order to provide its U-verse
services. Figure 4-6 shows the current status of fiber-to-the-home deployment.
Figure 4-6. Fiber-to-the-Home Deployment
16,000
15,171
13,825
14,000
11,763
Homes (thousands)
12,000
9,552
10,000
2,000
7,996
6,099
6,643
6,000
4,000
13,875
10,082
8,003
8,000
12,369
4,089
2,697
4,422
5,080
2,913
3,219
1,754
671
323
1,011
1,479
3,760
2,142
Sep-05
Mar-06
Sep-06
Passed
Mar-07
Sep-07
Marketed
Mar-08
Sep-08
Mar-09
Connected
Source: RVA Market Research and Consulting.
FiOS is currently available in 19 states, including Florida, where it has been deployed in
the Tampa Bay area. Broadband through FiOS can achieve up to 50 Mbps, and Verizon provides
several speed tiers.186 Despite the economic downturn, Verizon has been aggressively investing
in its fiber build-out. In the fourth quarter of 2008, Verizon added 282,000 FiOS Internet
subscribers, for a total of 2.5 million Internet subscribers and 1.9 million television customers.
FiOS now passes more than 12.7 million homes and businesses and covers 40 percent of
Verizon’s landline footprint.187
186
Verizon FiOS, <http://www22.verizon.com/Residential/FiOSInternet/Plans/Plans.htm>, accessed on March 12,
2009.
187
“Expansion Drives Growth for Verizon’s Telecom Unit in 2008,” Verizon Press Release, January 28, 2009,
<http://newscenter.verizon.com/press-releases/verizon/2009/expansion-drives-growth-for.html>, accessed on March
17, 2009.
54
AT&T projects that its U-verse offering will be available to as many as 30 million homes
by 2010.188 U-verse is currently available in Florida in the greater Orlando area, as well as Palm
Beach, Broward, Miami Dade, and Volusia counties.189 AT&T has stated that the company
intends to invest $1 billion in 2009 to continue deploying the U-verse network, matching the $1
billion spent in 2008.190 Broadband through U-verse is available at speeds from 1.5 to 18
Mbps.191
AT&T, Embarq, and Verizon have each released a new broadband device that may rival
the wireless phone for convenient broadband. The “media phone” is a VoIP phone with a touch
screen panel that will provide access to local vendors, e-mail, and basic Internet functions like
weather, news, and short video streams. AT&T’s HomeManager, Embarq’s eGo, and Hub,
offered by Verizon Wireless, first became available in limited urban markets in early 2009. The
eGo operates on Embarq’s existing broadband network. The HomeManager and Hub devices
can be used in conjunction with the fiber offerings of the two companies (AT&T’s U-verse and
Verizon’s FiOS), but are also compatible with other broadband connections. The media phone is
meant to bridge the gap between the personal landline phone and the wireless phone, and it is
also being marketed as a business service that can replace many high-end office phones.192
b. DSL
As of the second quarter of 2008, there were 29.7 million DSL subscribers in the U.S.193
DSL remains the primary broadband platform for telephone companies. DSL and cable are the
two most popular choices among consumers for broadband access. Current research using
bonded copper pairs has generated DSL speeds of up to 500 Mbps. Although there are still
limitations involving distance, this technology will probably be most beneficial when combined
with fiber optic technology to span the last mile to the customer’s premises.194
c. Cable Broadband
The cable broadband offering analogous to fiber optics is DOCSIS 3.0, which is capable
of speeds in excess of 50 Mbps. Nearly 15 million consumers in the U.S. already have access to
188
Tim Connelly, “AT&T: 1 Million U-verse Subscribers by End of ’08,” December 11, 2007, <http://
www.betanews.com/article/ATT-1-million-Uverse-subscribers-by-end-of-08/1197413756>, accessed on March 19,
2009.
189
Etan Horowitz, “AT&T Launches U-verse Phone Service in Greater Orlando and Volusia County,” May 11,
2009, <http://blogs.orlandosentinel.com/etan_on_tech/2009/05/att-launches-uverse-phone-service-in-orlando-andvolusia-county.html>, accessed on May 14, 2009.
190
Lisa LaMotta, “AT&T Maintains High-Fiber Diet,” Forbes, February 24, 2009, <http://www.forbes.com/2009/
02/23/att-verizon-telecom-markets-equity_wireless_18.html>, accessed on March 13, 2009.
191
AT&T U-verse, <https://uversecentral1.att.com/uvp/home/explore?umaurl=/uma/RetrieveGeneralContent%
3FCONTENTID%3D1496%26APPID%3DAMSS%26FORMAT%3DIFRAME%26DMA%3DX%26CU.S.TSUBT
YPE%3DX>, accessed on March 19, 2009
192
“The Media Phone has Arrived,” February 2009, In-Stat, <http://www.instat.com/promos/09/dl/
media_phone_3ufewaCr.pdf >, accessed on May 12, 2009.
193
Mike Farrell, “Will DSL Survive?” November 15, 2008, <http://www.multichannel.com/article/85756Cover_Story_Will_DSL_Survive_.php>, accessed on March 19, 2009.
194
Telecompetitor, “500 Mbps Over DSL?” March 17, 2009, <http://www.telecompetitor.com/node?page=2>,
accessed on March 17, 2009.
55
this technology, and analysts predict that by 2011, a minimum of 65 million homes will have
access to this service.195 The cable companies are able to deploy this technology quickly due to
its relatively low cost. The upgrade to DOCSIS 3.0 costs $100 per home, compared to the
$4,000 per household cost to deploy FiOS.196 Comcast, the nation’s largest cable company,
projects that it will have deployed DOCSIS 3.0 to 100 percent of its footprint by 2010, reaching
an estimated 50 million homes.197 Cablevision, another large U.S. cable carrier, projects that it
will begin to offer the fastest Internet service in the country in 2009. Cablevision is deploying
DOCSIS 3.0, reaching speeds of 101 Mbps and the company plans to offer the service to
consumers for less than $100 a month.198 Mediacom, a smaller cable provider, has also
announced its intentions to roll out DOCSIS 3.0 technology. Mediacom, which offers service in
Florida, focuses on smaller cities and towns, including a considerable amount of rural
territory.199
d. Wireless
A major development in wireless broadband is the deployment of WiMAX200 technology.
WiMAX is a broadband technology that provides wireless data over a significantly larger area
and at faster rates than Wi-Fi. Sprint Nextel, and Clearwire merged at the end of 2008 to create
the nation’s largest WiMAX network provider.201 Cable companies including Comcast and
Time Warner Cable have invested in WiMAX technology in order to compete with the wireless
broadband offerings of the major telephone companies. Other partners in the Clearwire WiMAX
project include Google and Intel. Clearwire anticipates being able to provide its wireless
broadband service to as many as 120 million people by 2010.202 Service from Clearwire is
already available in Portland and Baltimore. Comcast will be using the Clearwire network in
Portland as its first cable WiMAX market.203
195
Dave Burstein, “U.S. DOCSIS 3.0: 10% Today, 50+% 2010, 80% Soon After,” February 6, 2009,
<http://www.dslprime.com/docsisreport/163-c/731-us-docsis-30-10-today-50-2010-80-soon-after>, accessed on
March 12, 2009.
196
Craig Moffett, et al., “Verizon (VZ): Project FiOS . . . Great for Consumers, but What About Investors?,”
Bernstein Research, New York, NY, January 14, 2008, p. 1.
197
Dave Burstein, “U.S. DOCSIS 3.0: 10% Today, 50+% 2010, 80% Soon After,” February 6, 2009,
<http://www.dslprime.com/docsisreport/163-c/731-us-docsis-30-10-today-50-2010-80-soon-after>, accessed on
March 12, 2009.
198
Saul Hansell, “Cablevision Goes for U.S. Broadband Speed Record,” The New York Times, April 28, 2009,
<http://bits.blogs.nytimes.com/2009/04/28/cablevision-goes-for-us-broadband-speed-record/?pagemode=print>,
accessed on March 15, 2009.
199
“Mediacom: DOCSIS 3.0 on the Way,” May 11, 2008, Telecompetitor, <http://telecompetitor.com/node/1241>,
accessed on May 12, 2009.
200
WiMAX stands for worldwide interoperability for microwave access.
201
FCC 08-259, WT Docket No. 08-94, Sprint Nextel Corporation and Clearwire Corporation, Memorandum,
Opinion, and Order, released November 7, 2008.
202
Marguerite Reardon, “Clearwire Stays the Course Despite Losses,” March 5, 2009, <http://news.cnet.com/83011035_3-10190068-94.html?tag=newsEditorsPicksArea.0>, accessed on March 14, 2009.
203
“Comcast Selects Portland as First WiMAX Market,” Telecompetitor, March 15, 2009, <http://telecompetitor.
com/node?page=2>, accessed on March 19, 2009.
56
In 2007, 68 percent of all broadband subscribers added in the U.S. were mobile
connections.204 Wireless broadband technology is improving and with demand increasing for
Internet access on mobile devices, several telephone companies have pushed forward with plans
to deploy a fourth generation (4G) wireless standard known as LTE. As many as 6 operators in
the U.S. have agreed to adopt the LTE platform, which promises speeds of up to 100 Mbps.205
LG and Ericsson are developing devices for release in 2009 and 2010 that will be LTE-enabled.
e. Broadband Over Power Lines
Broadband-over-power-line (BPL) technology has thus far failed to generate significant
momentum as a viable broadband option. However, IBM has recently entered this market on a
limited basis. IBM has partnered with International Broadband Electric Communications (IBEC)
to provide broadband to rural customers in Alabama, Indiana, Michigan, and Virginia.206 IBEC
currently offers broadband service over power lines with plans ranging from 256 kbps for $29.95
to 3 Mbps for $69.95 per month for residential users, and the same speeds at a higher rate for
business customers. BPL can also support VoIP and real time interactive gaming.207
f. Satellite
Another option for those who live outside of the scope of DSL or cable broadband is
satellite broadband. There are several large providers of high-speed Internet access via satellite
in the U.S., including Skyway U.S.A, WildBlue, and HughesNet. The maximum speed of
satellite broadband varies between one and five Mbps. 208, 209 However, satellite broadband has a
characteristic known as “latency” which makes using bandwidth-intensive applications such as
VoIP, interactive gaming, and video streaming difficult, if not impossible.210, 211
In an effort to solve the latency problem associated with satellite broadband, AlphaStar
International, Inc. and Computers and Tele-Comm, Inc. have partnered to create a satelliteWiMAX hybrid that uses the satellite for storage and backhaul and delivers signals via WiMAX
transmitters. Although this technology is still in the early stages, the companies are claiming that
the product can achieve 4G speeds (50-100 Mbps). Their initial market will be remote areas of
204
Phoenix Center for Advanced Legal & Economic Public Policy Studies, “Written Statement of George S. Ford,
Ph.D. Before the House of Representatives Committee on Energy and Commerce,” May 7, 2009. p. 5.
205
Erik Palm, “4G Race Gaining Speed, Data Says,” March 5, 2009, <http://news.cnet.com/8301-1035_310190218-94.html?tag=
newsEditorsPicksArea.0>, accessed on March 10, 2009.
206
“IBM Eyes Stimulus Funds for Broadband Over Power Lines,” Reuters, February 17, 2009, <http://www.
reuters.com/articlePrint?articleId=U.S.N1738980420090217>, accessed on March 14, 2009.
207
IBEC Services, <http://www.ibec.net/services.php>, accessed on March 19, 2009.
208
The 5 Mbps offering was added in April of 2009, so it is currently unknown if latency will still be a problem at
this speed tier.
209
HughesNet, <http://go.gethughesnet.com/plans.cfm>, accessed on March 19, 2009.
210
Skyway U.S.A, <http://www.skywayusa.com/faq.php>, accessed on March 19, 2009.
211
HughesNet, <http://go.gethughesnet.com/plans.cfm>, accessed on March 19, 2009.
57
Hawaii.212
212
Erika Engle, “WiMAX May Provide Services to Remote Areas,” Star Banner, March 13, 2009, <http://
www.printthis.clickability.com/pt/cpt?action=cpt&title=WiMAX+may+provide+services+to+remote+areas++Business+-+Starbulletin.com&expire=&urlID=34712963&fb=Y&url=http%3A%2F%2Fwww.starbulletin.com%
2Fbusiness%2F20090313_WiMAX_may_provide_services_to_remote_areas.html&partnerID=356559>, accessed
on March 14, 2009.
58
CHAPTER V. DISCUSSION OF CHAPTER 364, F.S., REQUIREMENTS
A. INTRODUCTION
Section 364.386(1), F.S., requires the Commission to address the following six points in
its evaluation of the status of local wireline telecommunications competition in Florida:
1. The overall impact of local exchange telecommunications competition on the
continued availability of universal service.
2. The ability of competitive providers to make functionally equivalent local exchange
services available to both residential and business customers at competitive rates,
terms, and conditions.
3. The ability of customers to obtain functionally equivalent services at comparable
rates, terms, and conditions.
4. The overall impact of price regulation on the maintenance of reasonably affordable
and reliable high-quality telecommunications services.
5. What additional services, if any, should be included in the definition of basic local
telecommunications services, taking into account advances in technology and market
demand?
6. Any other information and recommendations that may be in the public interest.
The FPSC sent data requests to all CLECs and ILECs certificated as of February 20,
2009, designed to address these and other issues. The request included a qualitative
questionnaire, which sought information on various service offerings of ILECs and CLECs. The
CLEC questionnaire sought information on the effects of approved federal forbearance petitions,
Florida-specific capital investments, barriers to entry, intermodal competition, and other
comments. The ILEC questionnaire sought general comments on the status of competition in
Florida. This chapter addresses the statutory questions and summarizes the responses provided
by CLECs and ILECs to the qualitative questions.
The Commission recognizes that for many consumers, wireless and VoIP services are
substitutes for traditional wireline services. Only wireline telecommunications providers are
under the regulatory authority of the Commission. The Commission is, therefore, unable to
gather certain types of information from providers of nonjurisdictional services. Wireless
carriers and providers of VoIP service are not obligated to provide data to the FPSC. However, a
number of VoIP providers have voluntarily provided line counts. With this partial information,
the Commission’s ability to present a complete analysis of the required statutory issues is
limited. Through sources available in the public domain, the FPSC is able to reach what it
believes are reasonable conclusions regarding wireless and VoIP service providers and their
impact on the analysis of these statutory issues.
59
B. DISCUSSION OF SIX STATUTORY ISSUES
1. The impact of competition on the availability of universal service
Universal service refers to the longstanding policy that a specified set of
telecommunications services should be available to all customers at affordable rates. Section
364.025, F.S., provides a number of guidelines designed to maintain universal service objectives
with the introduction of competition in the local exchange market. Section 364.025(1), F.S.,
previously required ILECs to furnish basic local exchange telecommunications service within a
reasonable time to any person requesting such service within a company’s service territory until
January 1, 2009. Section 364.025(4), F.S., states that, prior to January 1, 2009, “the Legislature
shall establish a permanent universal service mechanism upon the effective date of which any
interim recovery mechanism for universal service objectives or carrier-of-last-resort obligations
imposed on competitive local exchange telecommunications companies shall terminate.” This
Section of the Florida Statutes sunset on January 1, 2009.
According to the FCC, as of year-end 2008, 94 percent of Florida’s almost 9 million
households had access to voice communication service in the home.213 Figure 5-1. shows the
annual percent telephone penetration as of March of each year since 1997. Income is a
significant factor in predicting telephone subscribership, as shown in Figure 5-2. Eighty-nine
percent of households with total incomes of less than $10,000 have voice communication
service, compared to 96 percent of households with incomes of more than $40,000. Figure 5-2
also reveals an anomaly regarding telephone penetration and income. Florida penetration peaks
in the $30,000-$40,000 per year income range and decreases for incomes in excess of $40,000
per year.
213
Preliminary information for March 2009 was provided by Alex Belinfante of the Industry Analysis and
Technology Division, Wireline Competition Bureau, FCC, via telephone on May 19, 2009.
60
Figure 5-1. Telephone Service Penetration: Florida vs. Nation
99
Percent of Households
97
96
95
94
95
94
96
94
93
92
94
94
93
93
93
93
95
95
95
93
95
94
92
91
92
91
Florida
-0
9
M
ar
-0
8
-0
7
M
ar
-0
6
M
ar
M
ar
M
ar
-0
5
-0
4
M
ar
-0
2
-0
3
M
ar
M
ar
-0
1
M
ar
-0
0
M
ar
-9
9
M
ar
M
ar
M
ar
-9
7
-9
8
89
Nation
Source: FCC, Telephone Penetration by Income by State.
Figure 5-2. 2008 Telephone Penetration by Income: Florida vs. Nation
100%
98%
Percent of Households
98%
97% 97%
96% 96%
96%
96%
94%
94%
93%
92%
90%
90%
89%
88%
86%
84%
Less than $10K
$10K-$20K
$20K-$30K
Florida 2008
$30K-$40K
$40K or More
Nation 2008
Source: FCC, Telephone Penetration by Income by State.
Conclusion: FCC subscribership data for Florida reflected a decline from 95 percent in
2002 to 91 percent in 2005. This decline was followed by an increase in Florida telephone
subscribership to 94 percent in 2007 and 2008. It is unclear if this information represents normal
variations due to the economic cycle, or whether the data is a reflection that the survey
61
instrument has become more accurate at accounting for the substitution of new technologies for
wireline telephone service. It is premature to assume that recently observed fluctuations in
measured telephone penetration rates are cause for alarm. Based on data presented elsewhere in
this report, wireless, prepaid telephone services, and VoIP services are providing viable
consumer alternatives. The FPSC concludes that local exchange competition has had little if any
impact on the availability of universal service.
2. The ability of competitive providers to make equivalent service available
The size of a particular market, as well as subscriber density, are key factors affecting a
carrier’s market entry decision. As a result, more competitive carriers are offering service in
urban areas than in rural areas. Provisions in the 1996 Act influence these differences. For
example, the availability of UNEs in a given area may also affect market entry. Section
251(c)(3) of the 1996 Act, as implemented by the FCC, requires that ILECs provide UNEs to
requesting carriers at prices based on forward-looking costs. Similarly, Section 251(c)(4)
requires that ILECs “offer for resale at wholesale rates any telecommunications service that the
carrier provides at retail to subscribers who are not telecommunications carriers.” However,
Section 251(f)(1), known as the rural exemption, provides that the requirements of Sections
251(c)(1) through 251(c)(6) do not apply to a rural telephone company until the rural company
receives a bona fide request for interconnection, services, or network elements. Once a request
has been made, a state commission determines whether the request “is not unduly economically
burdensome, is technically feasible, and is consistent with Section 254 (other than subsections
(b)(7) and (c)(1)(D) thereof).”
While AT&T, Verizon, and Embarq are currently required to adhere to the various
provisions of Section 251(c), the remaining ILECs in Florida are still exempt because the FPSC
has yet to lift a rural ILEC’s exemption. Since UNEs and resale of the ILEC’s services at a
wholesale discount are presently not required in Florida’s rural ILEC service areas, wireline
CLECs considering entry in a rural area will face higher costs as compared to entry in a nonrural
area.
Further distinctions exist between nonrural carriers. Specifically, the unbundled loop
rates in Florida for AT&T, Verizon, and Embarq were geographically deaveraged, as required by
FCC rules. The deaveraging reflects differences in the cost associated with providing loops.
Thus, the price for a UNE loop in AT&T’s UNE Zone 1 (e.g., most Miami exchanges) is less
than a UNE loop in AT&T’s UNE Zone 3 (e.g., Homestead exchange). Consequently, carriers
entering into urban areas will face lower costs when compared to entering more rural areas.
a. Perceived Barriers to Competition
To evaluate the ability of competitive carriers to provide service, the Commission
surveyed all certificated CLECs. CLECs were asked to discuss any perceived barriers to
competition in Florida and describe any significant obstacles that might impede the growth of
local competition in the state. Thirty-three CLECs reported barriers to competition; the primary
issues identified by the respondents are shown in Figure 5-3.
62
Figure 5-3. Barriers to Competition Reported by CLECs
TRRO
15%
Other
15%
Service
18%
UNERates
37%
Pricing
12%
Interconnection
3%
Source: Responses to 2009 FPSC data requests.
UNE Rates. High pricing of UNEs was the most frequently reported barrier to entry.
CLECs alleged unjust fees and UNE rates made competing with ILECs economically unfeasible.
Service. The second most commonly reported type of barrier to entry relates to service
problems. This category includes allegations of poor service from ILECs to CLECs and to
CLECs’ customers. Issues reported include ILEC delays in processing orders and resolving
service issues.
Triennial Review Remand Order (TRRO). In 2005, the FCC released its TRRO
which, among other things, established a transition period after which the ILECs would no
longer be required to unbundle local switching at wholesale prices based on the total element
long-run incremental cost methodology. This decision had the effect of increasing the price of
UNEs to CLECs. Some CLECs continue to identify the high cost of interconnection directly
associated with the TRRO as a barrier. CLEC allegations include lack of access to certain kinds
of UNE lines, lack of ILEC cooperation in negotiating commercial agreements, and increased
costs resulting from the TRRO.
Pricing. Several CLECs reported that ILECs were offering promotional rates to the
CLECs’ retail customers that were below wholesale rates available to CLECs.
Interconnection Agreements. A few CLECs listed interconnection agreements as a
barrier to entry. CLEC allegations include ILEC refusal to negotiate and refusal by ILECs to
interconnect with CLEC networks on fair, reasonable, and nondiscriminatory terms.
63
Other. CLECs identified other issues as barriers that do not necessarily fit into one of
the major categories. These issues included the variety of fees charged to the CLEC at the
initiation of CLEC service at a customer’s premises, competition from cable companies,
deregulation, ILEC market power, excessive paperwork, and the existence of exclusive contracts
between developers and other communications companies.
b. Competitive Services
The Commission asked the CLECs to report services they offer.
providing local service reported offering:
•
Bundles including services other than local voice (66 CLECs).
•
VoIP (57 CLECs).
•
Prepaid only (19 CLECs) / Prepaid and Non-prepaid (12 CLECs).
•
Residential broadband Internet access (25 CLECs).
•
Fiber to end users (11 CLECs).
•
Video Service (9 CLECs).
The 139 CLECs
c. CLEC Investment
The Commission also asked the CLECs to report how much money they had invested in
their networks that directly serve Florida’s local service customers. In order to gather as much
information as possible, ranges of dollars were provided so that the CLECs did not need to report
a specific dollar amount. As of May 26, 2009, 145 CLECs responded to this question, compared
to 111 in the previous year. Of the responses provided:
•
35 CLECs reported investing nothing.
•
80 CLECs reported investing $1-$249,999.
•
9 CLECs reported investing $250,000-$999,999.
•
16 CLECs reported investing $1 million-$10 million.
•
5 CLECs reported investing more than $10 million.
d. CLEC Complaints Against ILECs
Pursuant to Section 364.161(4), F.S., the Commission handles CLEC complaints filed
against ILECs. As illustrated in Figure 5-4, the number of complaints has generally declined
during the past few years. However, 16 complaints were filed from January 1, 2008, to
December 31, 2008. Of those 15, 13 were resolved in 2008. The complaints generally focused
64
on service-related issues. Eleven of the 16 complaints were filed by the same CLEC against 1
particular ILEC. The list of complaints is found in Appendix E.
Figure 5-4. CLEC Complaints Filed Against ILECs
90
81
80
70
Complaints Received
60
50
40
30
19
15
20
10
10
0
Jul 01 - Jun 02
Jun 05 - May 06
Jun 06 - Dec 07
Jan 08 - Dec 08
Source: FPSC Consumer Activity Tracking System for January 2008 – December 2008.
The Commission received 120 negotiated agreements and 2 requests for arbitration
between January 1, 2008, and December 31, 2008. Since June 1996, the Commission has
reviewed and approved 4,391 negotiated interconnection agreements. The general ability of
competitive providers to enter into negotiated agreements with incumbent carriers is reflected by
these statistics.
e. Comments by Incumbents
ILECs were also asked to provide any comments, suggestions, information, reports, or
studies that the ILECs believe to be relevant to topics covered in this report, including intermodal
competition. Of the ten ILECs, only AT&T and Verizon filed comments. AT&T filed its
comments as confidential, and Verizon stated the following:
Verizon asserts competition is alive and well in Florida. Consumers have many
choices throughout the state, not only for basic telephone service, but also for all
their communications needs. Verizon has experienced a 40 percent drop in
residential access lines since 2001, while wireless subscription has increased by
83 percent and broadband line growth has exploded statewide. Analysts
anticipate another 25-30 percent reduction in the number of access lines by the
end of this year for ILECs such as Verizon.
65
As of 2007, the U.S. Department of Labor, Bureau of Labor Statistics found that
cellular phone expenditures actually surpassed spending on residential landline
phone services.
Conclusion: Wireless and VoIP services have become a significant portion of the voice
communications market. Historically, the Commission has not addressed barriers to entry that
may be impacting wireless and VoIP providers. However, these intermodal competitors are
providing competitive alternatives to both residential and business subscribers, as evidenced by
the fact that intermodal subscribership has increased while wireline subscribership has decreased.
In addition, CLECs investing in facilities in Florida are providing a range of service options, and
they do not appear to have faced insurmountable obstacles relating to interconnection issues.
While there was some positive growth in the number of CLECs offering service in Florida since
2007, the number of residential access lines served by CLECs has declined considerably, from
730,000 access lines in 2004 to fewer than 132,000 in 2008. While some CLECs have been able
to provide functionally equivalent service, intermodal competition and federal regulatory
decisions have made competing in this market more difficult.
3. The ability of customers to obtain equivalent services
Customers may obtain functionally equivalent services via wireline telephony, wireless
telephony, or VoIP. The primary focus of this report is the provision of wireline
telecommunications by ILECs and CLECs, the companies subject to Commission jurisdiction.
As of December 31, 2008, 139 CLECs were offering local telecommunications service in
Florida in some capacity, compared to 136 as of December 31, 2007. Appendix B lists the
responding CLECs that provide service in Florida and the methods by which each CLEC delivers
service. CLECs can offer service through resale of an ILEC’s or a CLEC’s wholesale services,
by using its own facilities, by leasing UNEs from an ILEC, or through a combination of
methods.
Based on the responses to the 2009 data requests, as of December 31, 2008, of the 278
exchanges in Florida, 12 exchanges have no CLECs offering service, compared to 1 exchange
without a CLEC offering service as of December 31, 2007.214 Table 5-1 lists selected exchanges,
the ILEC serving that exchange, the total number of CLEC lines in that exchange, and the total
number of CLECs offering service in that exchange for December 2007 and 2008. These
exchanges were arbitrarily selected to reflect a range based on the number of lines. The number
of CLECs offering services increased in 18 of the 23 exchanges represented, but CLEC access
lines decreased in 9 of the 18. The numbers show that CLECs are more likely to target areas
with large concentrations of customers.
214
The twelve exchanges without CLEC service are Alligator Point, Bristol, Carrabelle, East Point, Hosford, Keaton
Beach, Kingsley Lake, Molino, Raiford, The Beaches, Tyndall AFB, and Wewahitchka.
66
Table 5-1. CLEC Providers by Florida Exchange
Exchange
ILEC
Total Number CLEC Access
Lines
2007
Jasper
Callahan
Quincy
Baker
Crawfordville
Crestview
Leesburg
Ocala
Tallahassee
Myakka
Mulberry
Bartow
Zephyrhills
Lakeland
St. Petersburg
Tampa
Jay
Chipley
Gulf Breeze
Titusville
Gainesville
Orlando
Miami
Windstream
Windstream
TDS Telecom
Embarq
Embarq
Embarq
Embarq
Embarq
Embarq
Verizon
Verizon
Verizon
Verizon
Verizon
Verizon
Verizon
AT&T
AT&T
AT&T
AT&T
AT&T
AT&T
AT&T
2008
40
6
271
46
166
861
1,156
9,398
12,641
57
373
883
1,246
10,692
28,723
106,072
50
223
836
1,740
8,820
80,626
136,601
Source: Responses to 2009 FPSC data requests.
67
33
63
271
47
170
891
1,124
8,823
12,097
35
395
935
1,241
10,230
26,845
102,547
58
246
830
1,784
8,281
70,316
121,783
Number of CLECs
Offering Services
2007
2008
5
2
2
7
11
20
23
31
35
7
16
18
18
29
34
44
17
23
25
40
47
69
72
3
6
2
7
15
19
29
32
41
8
19
20
23
33
40
48
19
28
25
42
53
77
78
Customers must also be able to obtain functionally equivalent services at rates
comparable to that of the ILEC in order for meaningful CLEC competition to occur. Table 5-2
shows that customers appear to have access to services at a variety of rates as competitors have
developed pricing strategies to gain customers. Strategies may include overall discounts and
matching an ILEC’s price. Other CLECs have adopted a strategy of bundling basic local service
with discounted toll service or vertical features (call waiting, caller ID, etc.) to compete with
ILECs.
Table 5-2. Local Rates for Selected Florida CLECs and ILECs
Access Point
American
Fiber
CLEC Rates
Residential
Business
ILEC Rates
Residential
$6.30-$9.19
$17.09-$25.12
AT&T
$12.45-$13.58
$29.94-$36.07
$10.75
$29.25
AT&T
$12.45-$13.58
$29.94-$36.07
$12
$30
Verizon
$16.33
$33.44
$11.50
$25.25
Embarq
$15.40-$17.00
$23.45-$30.75
$11.75
$24.50-$29.50
AT&T
$12.45-$13.58
$29.94-$36.07
$12.50
$28.75
Verizon
$16.33
$33.44
$11.50
$25
Windstream
$9.49-$11.49
$23.75-$28.72
$11.30-$11.65
N/A
AT&T
$12.45-$13.58
$29.94-$36.07
$22.28
N/A
Verizon
$16.33
$33.44
Business
Knology
Orlando
Telephone
Cleartel
*Rates shown are for the lowest and highest rate groups for the most basic local service available.
The purpose is to compare CLEC rates in various ILEC footprints.
Source: Tariffs and price lists filed with the FPSC, as of May 2009.
The Commission asked the ILECs and CLECs for information on their bundled service
offerings, including whether they offered bundles, what percentage of customers were able to
purchase bundles, what percentage of customers actually purchased bundled services (take rate),
and if they offered prepaid service. Of the 139 CLECs and 10 ILECs that were offering local
telephone service, 66 CLECs and 7 ILECs reported offering bundled services.
Prepaid telephone service continues to be a pricing strategy offered by CLECs to
consumers with poor credit histories or to those previously disconnected due to repeated late
payment or nonpayment. This service typically gives customers local calling and 911 access in
exchange for a prepaid monthly fee, but typically the CLEC blocks long distance, 900 numbers,
68
and directory assistance calls. CLEC price lists indicate that prices for prepaid service range
from approximately $9.19 to $59.95 per month for residential customers, and from $21.93 to
$89.95 per month for business customers. Telephone companies providing only prepaid
telephone services account for 19 of the 139 CLECs providing local service in Florida and serve
approximately 11 percent of CLEC residential access lines.
Wireless and VoIP communications services are alternatives to wireline
telecommunications services that are growing in popularity. The appeal of these alternatives is
based on price as well as convenience and the availability of unique features.215 Although
obtaining detailed information regarding the penetration levels of these services in Florida is
difficult, as reported in Chapter IV, a growing number of Florida households have substituted
wireless service and VoIP service for wireline service. Florida’s population of college students
and seasonal residents may contribute to Florida’s continued decline in wireline subscribership
because they often fall into demographics with higher rates of wireless substitution.216, 217
Increasing popularity of wireless and VoIP service also contributes to the fact that total
residential access lines for Florida ILECs have steadily declined since 2001 despite an ongoing
increase in the number of Florida households.218 Many VoIP communications services require
the purchase of broadband access in order to provide service.
The FCC reports that the annual average percentage of Florida households with a
telephone increased in 2006 and 2007 after decreasing in 2004 and 2005. The annual average
household telephone penetration for Florida for 2008 was 93.0 percent, a decline of 0.6 percent
from 2007.219 Wireless-only households have grown to about 20 percent of total households
nationwide.220 The percentage of Florida households with wireless-only service was about 17
percent as of December 2007.221
Conclusion: Residential consumers in Florida are finding communication alternatives to
wireline services offered by ILECs. CLECs, VoIP providers, and wireless providers are
providing alternatives. By the end of 2008, CLECs provided 131,725 residential access lines.
Ninety-five percent of exchanges in Florida have at least 1 CLEC offering residential service but
215
FCC, Voice over Internet Protocol, March 28, 2008, <http://www.fcc.gov/voip/>, accessed on April 28, 2008.
Florida Department of Education, “The Fact Book, Report for the Florida Community College System,” 2008,
p. 2, <http://www.fldoe.org/arm/cctcmis/pubs/factbook/fb2008/fb2008.pdf>, accessed on April 21, 2009.
“Florida (FL): University and College Education System, Top Five Florida College and Universities by Student
Enrollment Size,” Educational Portal, <http://education-portal.com/articles/Florida_%28FL%29%3A_
University_and_College_Education_System.html>, accessed on April 15, 2009.
217
“Vulnerable and Hard-to-Reach Population Fact Sheet: Seasonal Residents,” Nova Southeastern University, et.
al, updated October 2006, <http://www.nova.edu/allhazards/forms/seasonal_res.pdf>, accessed on April 28, 2008.
218
FCC, “Local Telephone Competition: Status as of June 31, 2008,” September 2008, <http://hraunfoss.fcc.gov/
edocs_public/attachmatch/DOC-285509A1.pdf >, accessed on April 16, 2008.
219
FCC, “Telephone Subscribership in the U.S. (Data through November 2008),” June 2009, Table 2,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-291222A1.pdf>, accessed on June 19, 2009.
220
S.J. Blumberg, J.V. Luke, “Wireless Substitution: Early Release of Estimates From the National Health
Interview Survey, July-December 2008,” May 6, 2009, p. 1, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/
wireless200905.pdf>, accessed on May 13, 2009.
221
S.J. Blumberg, et al., “Wireless Substitution: State-level Estimates From the National Health Interview Survey,
January-December 2007” March 11, 2009, <http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200805.pdf>,
accessed on May 14, 2008.
216
69
12 exchanges have none. Customers using VoIP-based services in Florida account for an
additional 1.6 million residential access lines. Finally, wireless-only households in Florida
reached approximately 17 percent as of December 2007.222 Consequently, the Commission
concludes that Florida customers are able to obtain functionally equivalent services at
comparable rates, terms, and conditions.
4. The impact of price regulation on the maintenance of affordable and reliable
services
For calendar year 2008 section 364.051, F.S., provided that a price cap regulated ILEC
may adjust its basic local service revenues once in a 12-month period by an amount not to
exceed the change in inflation less 1 percent. In contrast, the price increase for any nonbasic
service category shall not exceed 6 percent within a 12-month period, until there is another
provider offering local telecommunications service in an exchange area. At that time, the prices
for any nonbasic service category may be increased in an amount not to exceed 20 percent within
a 12-month period.223 The following ILECs filed notices of rate changes for basic and nonbasic
exchange services (local message or measured rate service) between January 1, 2008, and
December 31, 2008, pursuant to Section 364.051, F.S.:
•
AT&T increased basic local rates by 1.6 percent effective July 11, 2008. Nonbasic
rates increased in the range of 0.001 percent to 7.6 percent among the revenue
categories.
•
Embarq increased basic local rates by 1.2 percent and nonbasic exchange rates by
14.43 percent effective March 11, 2008. Nonbasic rates increased in the range of
0.95 percent to 19.19 percent among revenue categories.
•
FairPoint increased basic local rates by 1.5 percent effective November 1, 2008.
•
ITS increased basic local rates by 1.8 percent effective May 1, 2008.
•
TDS Telecom increased nonbasic rates by 20 percent among the revenue categories.
•
Verizon increased basic local rates by 1.58 percent effective November 1, 2008.
Nonbasic rates increased in the range of 0.59 percent to 8.6 percent among revenue
categories.
•
Windstream increased basic local rates by 1.24 percent. Nonbasic rates increased in
the range of 1.9 percent to 5.8 percent among the revenue categories.
Conclusion: The FPSC believes these rate increases and price regulation, in general,
have had a negligible impact on the overall affordability of telephone service.
222
Ibid.
The 2009 Florida Legislature amended Section 364.051, F.S., which changed the terms of price regulation for
nonbasic services. However, the report text accurately reflects pricing conditions in effect for calendar year 2008.
223
70
5. Definition of basic local telecommunications services
The 2009 Florida Legislature modified the definition of basic local telecommunications
service and the new law became effective July 1, 2009. The new definition is as follows:
“Basic local telecommunication service” means voice-grade, single-line, flat-rate
residential local exchange service that provides dial tone, local usage necessary to
place unlimited calls within a local exchange area, dual tone multi-frequency
dialing, and access to the following: emergency services such as “911,” all locally
available interexchange companies, directory assistance, operator services, relay
services, and an alphabetical directory listing. For a local exchange company, the
term includes any extended area service routes, and extended calling service in
existence or ordered by the Commission on or before July 1, 1995.
The new definition eliminates multi-line residential and single-line business subscribers from the
definition.
According to Section 364.337(2), F.S., if a CLEC offers basic local telecommunications
service it must include access to operator services, “911” services at a level equivalent to that of
the ILEC serving that area, and relay services for the hearing impaired. CLECs must also
provide a flat-rate pricing option for basic local telecommunications. The statute states that
“mandatory measured service for basic local telecommunications services shall not be imposed.”
With regard to wireless and VoIP services, the FCC has required providers of these
services that interconnect to the public switched telecommunications network to provide E911
service. The FCC has an ongoing proceeding to consider additional regulatory requirements for
VoIP providers.224 While these services do provide the same or similar functionality to
traditional wireline service, they do not currently fall within the statutory definition of basic local
telecommunications service. Wireless or commercial mobile radio service providers are
expressly exempt from the statutory definition of a telecommunications company, and VoIP is
expressly excluded from the statutory definition of service.
Conclusion: No evidence suggests a need to recommend additions or deletions to the
definition of basic local service.
6. Other information and recommendations that may be in the public interest
Conclusion: There are no recommendations at this time.
224
FCC, WC Docket No. 04-36, IP-Enabled Services, released April 4, 2008.
71
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72
CHAPTER VI. STATE ACTIVITIES
A. ILEC REQUESTED RULEMAKING
In March 2008, five local exchange companies, Verizon, AT&T, Embarq, TDS Telecom,
and Windstream Florida (petitioners), filed a Joint Petition requesting that the Commission adopt
a new rule on competition and clarify, repeal, or amend 66 rules.225 The petitioners asserted that
with the increasing use of wireless, cable telephony, and VoIP, many of the rules were no longer
warranted. In response, the Commission reviewed all the rules in Chapters 25-4, 25-9, and 2514, Florida Administrative Code (F.A.C.). During the proceeding, the petitioners withdrew their
request for the new rule and the amendment or repeal of seven other rules. Due to the large
number of rules under consideration, staff filed three separate recommendations that were
addressed by the Commission on August 19, 2008, November 13, 2008, and January 6, 2009. In
addition, two staff workshops and one Commissioner workshop were held to review and discuss
the proposed rule changes.
With its decisions in these dockets, the Commission has exempted the price regulated
local exchange companies from 33 rules, repealed 16 rules, amended 20 rules, and taken no
action on 1 rule. Of the 20 rules that were amended, the companies either proposed amendments
or agreed to staff proposed amendments. The rule changes have decreased the reporting
requirements of the companies, eliminated rules which were duplicative of Florida Statutes,
limited the applicability of certain rules to residential customers, and allowed the companies to
consolidate reporting for installation service, repair service, and answer time. Also, several rule
changes were made to adopt the FCC’s standards where its standard was similar to Florida’s rule.
Overall, the changes have resulted in simplified and streamlined rules for regulating local
exchange companies. Five of the proposed rule amendments remain pending.
B. ILEC SERVICE QUALITY
ILECs are required by Commission rules to adhere to certain service quality standards
while providing basic local telecommunications service.226 The Commission evaluates the
service quality of the ILECs’ exchanges throughout the state on a yearly basis, but no more than
once in four years for exchanges served by the small ILECs.227 The service quality standards are
usually expressed as a percentage of compliance. For example, Rule 25-4.070, Customer
Trouble Reports, states that 95 percent of all out-of-service (OOS) conditions reported by the
individual subscriber shall be restored to service within 24 hours. In exchanges containing more
than 50,000 access lines, the OOS percentages are reported monthly; otherwise, the ILEC
aggregates the results and reports quarterly.
225
Docket 080159-TP, Joint petition to initiate rulemaking to adopt new rule in Chapter 25-24, F.A.C., amend and
repeal rules in Chapter 25-4, F.A.C., and amend rules in Chapter 25-9, F.A.C., by Verizon Florida LLC, BellSouth
Telecommunications, Inc. d/b/a AT&T Florida, Embarq Florida, Inc., Quincy Telephone Company d/b/a TDS
Telecom, and Windstream Florida, Inc.; and Docket No. 080641-TP, Initiation of rulemaking to amend and repeal
rules in Chapters 25-4 and 25-9, F.A.C., pertaining to telecommunications.
226
Chapter 25-4, F.A.C.
227
Small ILECs are Indiantown, Frontier, FairPoint, Smart City, TDS Telecom, Northeast Florida Telephone
Company, and Windstream.
73
Another standard found within the same rule involves troubles that are service-affecting.
Service-affecting troubles are of a lesser severity than an OOS condition, and they are typically
related to telephone service features such as voicemail, call forwarding, or noise on the line. In
service-affecting conditions, the ILECs are required to clear 95 percent of the troubles within 72
hours. The standard allows the ILECs to aggregate the results on a quarterly basis when the
exchange has fewer than 50,000 lines; otherwise, service-affecting troubles are reported monthly.
The ILEC service quality reports for Frontier and Embarq were published in 2008.228
Frontier is classified as a small ILEC, and its last evaluation occurred in 2001. Verizon and
AT&T Florida were also evaluated in 2008; however, the reports were not published in 2008 and
are not addressed in this report.
The Frontier 2008 service quality evaluation indicated that Frontier was not always
providing automatic rebates as required by Rule 25-4.070(3)(a), F.A.C. This issue was a repeat
finding from Frontier’s 2001 service quality evaluation. The problem was isolated to Frontier’s
billing system, and Frontier indicated that 752 customers were issued rebates for the period of
January 2001 through June 30, 2008, for a total of $5,415.66. The problem was resolved when
its customers were migrated to a new billing system.
Embarq’s service quality evaluation contained only minor discrepancies, and they have
been remedied. The 2 categories contributing to the majority of the discrepancies were serviceaffecting troubles that were not restored within 72 hours and service guarantee program (SGP)
installation rebates.
1. Service Guarantee Programs
ILECs are allowed to petition the Commission for approval of an SGP that relieves the
ILEC of the rule requirement addressed by each service standard in the SGP.229 However, in
exchange for relief from the rules, an SGP contains financial incentives for compliance with
certain service quality standards established by the SGP. The financial incentives may take the
form of a credit to an individual customer for service outages exceeding a certain level, or may
provide for the ILEC to make payments to a fund in the event it fails to achieve a certain
compliance percentage on a particular service standard established by the SGP. Currently three
ILECs (AT&T, Embarq, and Windstream) are operating under Commission-approved SGPs.
AT&T’s SGP provides automatic credits to residential customers for service outages
exceeding 24 hours and automatic credits for missing service installation commitment dates by
more than 3 days.230 For calendar year 2008:
228
The reports are posted on the Commission’s Web site and can be found at the following link:
http://www.psc.state.fl.us/utilities/telecomm/servicequality/index2.aspx.
229
Rule 25-4.085, F.A.C., Service Guarantee Program.
230
FPSC Order No. PSC-05-0440-PAA-TL, Docket No. 050095-TL, Petition for extension of modification of
existing Service Guarantee Program and for limited Waiver of Rules 25-4.070(3)(a) and 25-4.073(1)(d), F.A.C., by
BellSouth Telecommunications, Inc., issued April 25, 2005.
74
•
AT&T paid its customers $183,350 for missed installation commitments and
$1,540,840 for not repairing OOS trouble reports within 24 hours.
•
AT&T’s average answer time compliance was below requirements, resulting in
$4,000 being credited to its Lifeline Program.
Embarq’s SGP provides automatic credits to residential customers for service outages
exceeding 24 hours and automatic credits for missed installation commitment dates of greater
than 3 days.231 In 2008:
•
Embarq credited its customers $231,751 for missing the service installation
commitments and $355,545 for not restoring residential service outages within 24
hours.
•
Embarq paid $95,000 to its community fund for missing its monthly average answer
time standard.
Windstream’s SGP has similar service standards concerning service installations, repair
intervals, and answer times to those of AT&T and Embarq.232 In 2008, Windstream:
•
Provided $790 in credits to customers for failing to install service on the agreed upon
date.
•
Credited $5,500 to those customers experiencing OOS conditions.
•
Provided $35,000 to its Community Service Fund promoting Lifeline service.
2. Petition by Attorney General, Office of Public Counsel, and AARP
The Attorney General, the Office of Public Counsel (OPC), and AARP (the Petitioners)
filed a petition on May 15, 2008, requesting the FPSC to issue a show cause order against
Verizon for violation of Commission service quality rules.233 The Petitioners allege that Verizon
willfully violated the Commission’s service quality rule 262 times in 2007. The rule relates to
restoration of OOS and service-affecting trouble reports.234 The company is required by rule to
repair 95 percent of their service interruption complaints in each exchange within 24 hours and
231
FPSC Order No. PSC-05-0918-PAA-TL, Docket No. 050490-TL, Petition for approval of Service Guarantee
Program, with relief from requirements of Rules 25-4.066(2), 25-4.070(3)(a), 25-4.073(1)(a), and 25-4.110(6),
F.A.C., by Sprint-Florida, Incorporated, issued September 19, 2005.
232
Docket No. 050938-TP Joint application for approval of transfer of control of Alltel Florida, Inc., holder of
ILEC Certificate No. 10 and PATS Certificate No. 5942, from Alltel Corporation to Valor Communications Group,
and for waiver of carrier selection requirements of Rule 25-4.118, F.A.C., due to transfer of long distance customers
of Alltel Communications, Inc. to Alltel Corporate Holding Services, Inc.
233
Docket No. 080278-TL, Joint Petition for show cause proceedings against Verizon Florida LLC for apparent
violation of Rule 25-4.070, F.A.C., service availability, and impose fines, by the Office of the Attorney General,
Citizens of the State of Florida, and AARP.
234
Rule 25-4.070, F.A.C., Customer Trouble Reports.
75
95 percent of its service-affecting trouble reports in each exchange within 72 hours. The
Commission issued a show cause order on January 5, 2009, and an order establishing procedure
on February 23, 2009.235 A hearing is scheduled for October 29-30, 2009.
C. COMPETITIVE MARKET ACTIVITIES
1. Contested Adoption of Sprint AT&T Interconnection Agreement by Nextel
On June 8, 2007, Nextel filed its Notice of Adoption of existing interconnection
agreement between AT&T and Sprint, pursuant to AT&T/BellSouth Merger Commitments and
Section 252(i) of the Federal Telecommunications Act of 1996 (the 1996 Act). The Commission
found that the requested adoption was valid pursuant to Section 252(i) of the 1996 Act and 47
C.F.R. §51.809, effective June 8, 2007, the date on which Nextel filed its notice of adoption with
the Commission. Subsequently, the Commission clarified that the adoption included the threeyear extension amendment jointly filed on December 4, 2007, by AT&T and Sprint, which by its
express terms was effective March 20, 2007.
On March 18, 2009, AT&T filed a Complaint for Declaratory and Injunctive Relief in the
U.S. District Court for the Northern District of Florida regarding the Commission-ordered
effective date of June 8, 2007.
2. Frontier’s Notice of Election of Price Regulation
On November 17, 2008, Frontier,236 a small ILEC, filed its notice of election to be
subject to price regulation under Section 364.051, F.S., effective January 1, 2009. Frontier was
the last ILEC to elect price regulation. The election of price regulation exempts the company
from rate base rate of return regulation, and various statutes, but does not exempt the company
from quality of service requirements. The Commission issued an order acknowledging
Frontier’s election of price regulation to be effective January 1, 2009, and issued a
consummating order on March 31, 2009.237
3. Alternative E911 Services
Intrado Communications, Inc. (Intrado), a certificated CLEC that offers Public Safety
Answering Points as a competitive alternative to an ILEC’s E911 network, filed three petitions
for arbitration seeking to establish interconnection agreements with Embarq, AT&T, and
After administrative hearings for Intrado/Embarq and Intrado/AT&T, the
Verizon.238
235
FPSC Order No. PSC-09-0015-SC-TL (show cause order) and FPSC Order No. PSC-09-0107-PCO-TL (order
establishing procedure), Docket No. 080278-TL Joint petition for show cause proceedings against Verizon Florida
LLC for apparent violation of Rule 25-4.070, F.A.C., Customer Trouble Reports, and impose fines, by the Office of
the Attorney General, Citizens of the State of Florida, and AARP, issued February 23, 2009.
236
Frontier Communications of the South, LLC.
237
FPSC Order No. PSC-09-0136-PAA-TL and Order No. PSC-09-0195-CO-TL, Docket No. 080680-TL, Notice of
election of price regulation by Frontier Communications of the South, LLC, issued March 5, 2009 and March 31,
2009.
238
Docket No. 070699-TP, Petition by Intrado Communications, Inc. for arbitration of certain rates, terms, and
conditions for interconnection and related arrangements with Embarq Florida, Inc., pursuant to Section 252(b) of the
76
Commission determined that Intrado’s E911 service does not meet the definition of “telephone
exchange service” because the service will not provide the ability to both originate and terminate
calls.239 Embarq and AT&T were not required to provide interconnection pursuant to the
provisions set forth in Section 251(c) of the 1996 FTA; instead, the parties may negotiate
commercial agreements pursuant to Section 251(a). The Intrado/Verizon docket is scheduled for
an administrative hearing on September 16, 2009.
4. AT&T Request for Waiver of Rule 25-4.040(2), F.A.C.
On February 13, 2009, AT&T filed a petition for waiver of Rule 25-4.040(2), F.A.C.240
This rule requires that each subscriber served by a directory be furnished one copy of that
directory (both residential and business pages) for each access line. The Commission addressed
the petition on June 16, 2009, and granted AT&T a temporary two-year rule waiver. Under the
conditions of the order, AT&T will continue to provide business white page listings and yellow
pages, and residential white pages would be delivered only upon request of a customer. AT&T
would notify customers of this change by including a message in the “News You Can Use”
section of its customer bills for two months. In addition, AT&T will prominently place in three
locations in the business white page listings the options by which customers could acquire and
access residential listings. The options include the toll-free number to request a free copy of the
residential white pages listings in either a CD-ROM (in those markets where a CD-ROM is
available) or a printed copy. To further consumer awareness, the Commission will conduct
public outreach to inform consumers of the trial program and collect customer feedback. Upon
completion of the two-year trial period, the Commission will assess consumer feedback and
determine if the rule waiver should be continued or revoked.
5. Comcast / TDS Telecom Arbitration
Comcast241 filed a Petition for Arbitration with TDS Telecom pursuant to state and
federal law.242 While the Commission has dealt with many arbitration petitions in the past, this
Communications Act of 1934, as amended, and Section 364.162, F.S., and Docket No. 070736-TP, Petition by
Intrado Communications, Inc. for arbitration of certain rates, terms, and conditions for interconnection and related
arrangements with BellSouth Telecommunications, Inc. d/b/a AT&T Florida, pursuant to Section 252(b) of the
Communications Act of 1934, as amended, and Sections 120.80(13), 120.57(1), 364.15, 364.16, 364.161, and
364.162, F.S., and Rule 28-106.201, F.A.C., and Docket No. 080134-TP, Petition by Intrado Communications, Inc.
for arbitration to establish an interconnection agreement with Verizon Florida LLC, pursuant to Section 252(b) of
the Communications Act of 1934, as amended, and Section 364.162, F.S.
239
FPSC Order No. PSC-08-0799-FOF-TP, Docket No. 070699-TP, Petition by Intrado Communications, Inc. for
arbitration of certain rates, terms, and conditions for interconnection and related arrangements with Embarq Florida,
Inc., pursuant to Section 252(b) of the Communications Act of 1934, as amended, and Section 364.162, F.S., issued
March 16, 2009; and FPSC Order No. PSC-08-0798-FOF-TP, Docket No. 070736-TP, Petition by Intrado
Communications, Inc. for arbitration of certain rates, terms, and conditions for interconnection and related
arrangements with BellSouth Telecommunications, Inc. d/b/a AT&T Florida, pursuant to Section 252(b) of the
Communications Act of 1934, as amended, and Sections 120.80(13), 120.57(1), 364.15, 364.16, 364.161, and
364.162, F.S., and Rule 28-106.201, F.A.C., December 3, 2008.
240
Docket No. 090082-TL, Petition by BellSouth Telecommunications, Inc. d/b/a/ AT&T Florida d/b/a/ AT&T
Southeast for waiver of Rule 25-4.050(2), Florida Administrative Code.
241
Comcast Phone of Florida, L.L.C. d/b/a Comcast Digital Phone.
242
Docket No. 080731-TP, Petition by Comcast Phone of Florida, LLC d/b/a Comcast Digital Phone for arbitration
of an interconnection agreement with Quincy Telephone Company d/b/a TDS Telecom, pursuant to Section 252 of
77
case is unique in that it presents only one issue: Is TDS Telecom required to offer
interconnection to Comcast under Section 251 of the 1996 Act and/or Sections 364.16, 364.161,
and 364.162, F.S.? The Commission conducted an administrative hearing on July 13, 2009. A
final decision is pending.
6. Bright House Safety Complaint
On December 9, 2008, Bright House Networks Information Services (Florida) LLC, and
Bright House Networks, LLC (together, “Bright House”) filed a complaint with the FPSC
alleging that Verizon has violated Commission rules related to service installations and created
unsafe conditions for consumers. In its complaint, Bright House argued that Verizon has been
damaging Bright House installed equipment and wiring in the process of installing Verizon’s
facilities to customers. Specifically, Bright House asserted that coaxial drops were being left
ungrounded creating a safety concern should the drops become electrified.
Verizon contended that the coaxial cable facilities that are the subject of the complaint
are unregulated. Verizon argues that both its cable facilities and the Bright House cable that has
been disconnected are used to provide unregulated VoIP, broadband, and cable television
services. Verizon stated that the Commission lacked jurisdiction over the complaint and sought
to have the complaint dismissed.
Commission authority pursuant to Section 364.15, F.S., is limited to mandating “repairs
or improvements to, or changes in, any telecommunications facility” and “additions or
extensions to any telecommunications facility.” The Bright House complaint did not encompass
such services or facilities, and the Commission dismissed the complaint.243
7. Bright House and Comcast Retention Marketing Complaint
Bright House filed a complaint and request for emergency relief with the Commission on
November 16, 2007. Bright House alleged that Verizon was engaging in anticompetitive
behavior and was failing to facilitate the transfer of customers’ numbers to Bright House upon
request, contrary to Rule 25-4.082, F.A.C.244 Comcast filed a similar complaint and request for
emergency relief with the Commission on January 10, 2008.245
the Federal Communications Act of 1934, as amended, and Sections 120.57(1), 120.80(13), 364.012, 364.15,
364.16, 364.161, and 364.162, F.S., and Rule 28-106.201, F.A.C.
243
FPSC Order No. PSC-09-0342-FOF-TP, Docket No. 080701-TP, Emergency complaint and petition requesting
initiation of show cause proceedings against Verizon Florida, LLC for alleged violation of Rules 25-4.036 and 254.038, Florida Administrative Code, by Bright House Networks Information Services (Florida) LLC and Bright
House Networks, LLC., issued May 21, 2009.
244
Docket No. 070691-TP, Complaint and request for emergency relief against Verizon Florida, LLC for
anticompetitive behavior in violation of Sections 364.01(4), 364.3381, and 364.10, F.S., and for failure to facilitate
transfer of customers' numbers to Bright House Networks Information Services (Florida), LLC, and its affiliate,
Bright House Networks, LLC.
245
Docket No. 080036-TP, Complaint and request for emergency relief against Verizon Florida, L.L.C. for
anticompetitive behavior in violation of Sections 364.01(4), 364.3381, and 364.10, F.S., and for failure to facilitate
transfer of customers' numbers to Comcast Phone of Florida, L.L.C. d/b/a Comcast Digital Phone.
78
In these two cases, the issues are identical, and the alleged circumstances are
substantially similar. The Commission consolidated the two cases for administrative ease.
These companies also filed complaints regarding this issue with the FCC. While the cases were
set for hearing before the FPSC in August 2008, the FCC issued its order on June 23, 2008.246
In the FCC’s order, Verizon was ordered to cease its customer retention marketing activities
nationwide.247
Verizon sought to overturn the FCC’s order, and the case was argued before the D.C.
Circuit Court of Appeals on December 5, 2008. After reviewing the case, the D.C. Circuit Court
of Appeals denied Verizon’s petition for review of the FCC’s Order.248 The FPSC’s docket
regarding these complaints will remain open until time expires on Verizon’s opportunity for
further review of the FCC’s order.
8. Wholesale Performance Measurement Plans
Wholesale performance measurement plans provide a standard against which the
Commission can measure performance over time to detect and correct any degradation in the
quality of service ILECs provide to CLECs. The Commission adopted performance
measurements for AT&T (formerly BellSouth) in August 2001, for Embarq in January 2003, and
for Verizon in June 2003. Trending analysis is applied to monthly performance measurement
data provided by each ILEC.
For AT&T, the Commission adopted a Performance Assessment Plan to measure
AT&T’s wholesale performance. AT&T’s current Performance Assessment Plan consists of 49
performance measurements. Remedy payments may be applied to 35 of the measurements if
AT&T fails to meet the performance standards approved by the Commission. For the calendar
year 2008, AT&T paid approximately $3.7 million in remedies to CLECs and $2.2 million in
remedies to the State of Florida General Revenue fund.
Embarq’s current Performance Measurement Plan contains 36 performance measures to
ascertain if the ILEC is providing nondiscriminatory service to CLECs. Embarq furnishes
monthly performance reports to the Commission for review and assessment and prepares a
monthly root cause analysis report of measurements that have not met established standards for
three consecutive months. For the calendar year 2008, Embarq’s monthly compliance with
established standards has ranged from 89.6 percent to 96 percent.
Verizon’s current Performance Measurement Plan contains more than 40 measures.
Under this plan, Verizon furnishes monthly performance reports to the Commission for review
and assessment. For the calendar year 2008, Verizon’s monthly compliance with approved
standards ranged from 84.2 percent to 94.3 percent.
246
FCC 08-159, File No. EB-08-MD-002, Bright House Networks, LLC, et al., v. Verizon California, Inc., et al.,
Memorandum Opinion and Order, released June 23, 2008.
247
Ibid, ¶ 48.
248
Verizon California, Inc., et al. v. Federal Communications Commissioner, et al., Case No. 08-1234, United States
Court of Appeals for the District of Columbia Circuit, February 10, 2009, <http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DOC-288345A1.pdf>, accessed on June 8, 2009.
79
D. LIFELINE AND LINK-UP SERVICE FOR LOW-INCOME CONSUMERS
In its 2008 Annual Report on the Number of Customers Subscribing to Lifeline Service
and the Effectiveness of Procedures to Promote Participation, the FPSC reported:
•
Eligible customers enrolled in the Lifeline program in Florida grew 11.8 percent
during the October 2007 through June 2008 9-month review period.249
•
183,972 eligible customers were enrolled in the Lifeline program.
•
AT&T increased its Lifeline participation by 11,169 customers.
•
Embarq increased its Lifeline participation by 4,787 customers.
•
Verizon experienced a net loss of 1,198 Lifeline customers.
The primary reason for the increase in Lifeline participation is the automatic enrollment
process initiated by the FPSC and the Department of Children and Families (DCF). Between
April 1, 2007, and October 31, 2008, 268,797 Lifeline applications were filed through the
FPSC/DCF automatic enrollment process. In addition, enrollment of Lifeline customers by nonILEC eligible telecommunications carriers (ETCs) continues to have a positive impact. NonILEC ETCs enrolled 13,843 Lifeline customers, representing 7.5 percent of the total Lifeline
customer enrollment as of June 30, 2008.250
Other major developments in 2008 relating to Lifeline included the emergence of
TracFone d/b/a/ Safelink Wireless (TracFone) as a major Lifeline provider and an initial decision
by the FPSC to require application of Lifeline benefits to bundled packages.
1. TracFone Wireless
Following the Commission’s approval of TracFone’s petition for ETC designation,251
TracFone began serving Lifeline customers in Florida on September 8, 2008. It enrolled
approximately 226,000 new Lifeline customers in Florida from September 8, 2008, to December
31, 2008. Since Lifeline enrollment figures in the 2008 Lifeline Report ended June 30, 2008,
TracFone’s Lifeline customers are not included in the total number of Lifeline customers
mentioned above.
249
The 2008 Lifeline Report used a nine-month review period of September 8, 2008 to December 31, 2008, in order
to establish an earlier date for data collection. Future reports will use a twelve-month review period of July 1 to
June 30.
250
Non-ILEC Lifeline enrollment includes competitive ETC and non-ETC reseller enrollment.
251
FPSC Order No. PSC-08-0418-PAA-TP, Docket No. 070586-TP, Application for designation as an eligible
telecommunications carrier (ETC) by TracFone Wireless, Inc. for limited purpose of offering lifeline service to
qualified households, issued June 23, 2008.
80
2. Bundled Packages
A second new development impacting Florida’s Lifeline program is the application of the
Lifeline discount to bundled packages. A bundled service package combines basic local
exchange service with nonbasic or unregulated services. Such services may include call waiting,
call forwarding, voicemail, Internet access, and all other services that may be offered in a
bundled package in combination with basic service.
Currently, individual ETC policies within Florida vary among companies as to whether
the Lifeline discount applies to bundled service packages. Some ETCs provide Lifeline
consumers with the option to subscribe to any bundled package while others reject the
applications of Lifeline consumers subscribing to bundled services. Some ETCs offer Lifeline
benefits on limited plans for basic service only.
On June 23, 2008, the Commission clarified that pursuant to federal rules, 47 C.F.R.
§54.403(b), and consistent with Chapter 364, F.S., ETCs are required to apply the Lifeline
discount to the basic local service rate or the basic local service rate portion of any service
offering which combines both basic and nonbasic service.252 Verizon, Sprint Nextel, and Alltel
each filed a protest of the Commission’s order. A formal hearing was held on March 2, 2009. It
is anticipated that this matter will be brought before the FPSC for final resolution in the second
half of 2009.
E. TELECOMMUNICATIONS RELAY SERVICES
Chapter 427, F.S., requires that a telecommunication relay system be compliant with
regulations adopted by the FCC to implement Title IV of the Americans with Disabilities Act
(ADA). The FCC mandates the minimum requirements for services a state must provide,
certifies each state program, and periodically proposes changes in the stipulated services. One
such proposal is for states to fund the intrastate portion of the cost to provide video relay
service253 (VRS) and IP Relay.254
The relay costs for VRS and IP Relay are presently being paid through the federal
interstate Telecommunications Relay Service (TRS) fund. The FCC believes Title IV of the
252
FPSC Order No. PSC-08-0417-PAA-TP, Docket No. 080234-TP, Implementation of Florida Lifeline program
involving bundled service packages and placement of additional enrollment requirements on customers, issued June
23, 2008.
253
Video Relay Service is a form of Telecommunications Relay Service (TRS) that enables individuals with hearing
disabilities who use American Sign Language to communicate with voice telephone users through video equipment,
rather than through typed text. Video equipment links the VRS user with a TRS operator so that the VRS user and
the operator can see and communicate with each other in signed conversation. Because the conversation between the
VRS user and the operator flows much more quickly than with a text-based TRS call, VRS has become a popular
form of TRS.
254
IP Relay allows people who have difficulty hearing or speaking to communicate through an Internet connection
using a computer and the Internet, rather than a TTY and a telephone.
81
ADA255 and its legislative history make it clear that Congress intended that the states be
responsible for the cost recovery for intrastate relay services provided under their jurisdiction.256
In November 2007, the FCC stated that Section 225 of the 1996 Act provides that the
costs caused by interstate TRS shall be recovered from all subscribers for every interstate
service, and the costs caused by the provision of intrastate TRS shall be recovered from the
intrastate jurisdiction.257 In that Order, the FCC noted, “The issue of separation of costs relating
to the provision of IP Relay and VRS is pending pursuant to the Further Notice of Proposed
Rulemaking (FNPRM) in the 2004 TRS Report & Order.”
Historically, there were no means available to automatically determine the geographic
location of IP Relay and VRS calls; therefore, there was no way to determine if a particular IP
Relay or VRS call was interstate or intrastate. In June 2008, the FCC adopted a system for
assigning 10-digit telephone numbers linked to the North American Numbering Plan (NANPA)
for users of IP Relay and VRS, an initial step toward determining the jurisdictional nature of
such calls.258 The order requires that the telephone number assignments be “geographically
appropriate NANPA numbers.” The 10-digit numbering system for IP Relay and VRS had to be
implemented no later than December 31, 2008. Since the beginning and ending points of calls
will now be known, the cost burden of intrastate IP Relay and VRS calls could soon be assigned
to the states. The FPSC estimates the impact of assigning intrastate IP Relay and VRS costs to
the states at between $25 and $30 million for Florida.
The additional IP Relay and VRS costs could increase the annual budget for Florida TRS
to more than $39 million and likely exceed the current $0.25 surcharge cap per access line
allowed by statute. If the FCC determines that IP Relay and VRS intrastate costs must be
recovered by states, a legislative change may be necessary to either increase the present TRS cap
for local exchange company lines or have all carriers, including wireless and VoIP providers,
charge the surcharge as the federal TRS program does.
255
Title IV of the ADA requires that interstate and intrastate telecommunications relay services are available, to the
extent possible and in the most efficient manner, to hearing-impaired and speech-impaired individuals in the United
States.
256
FCC 04-137, CG Docket No. 03-123, Telecommunications Relay Services and Speech-to-Speech Services for
Individuals with Hearing and Speech Disabilities, Report and Order, Order on Reconsideration, and Further Notice
of Proposed Rule Making in, Released June 30, 2004.
257
FCC 07-186, CG Docket No. 03-123, In the Matter of Telecommunications Relay Services and Speech-toSpeech Services for Individuals with Hearing and Speech Disabilities, Report and Order and Declaratory Ruling,
released November 19, 2007.
258
FCC 08-151, CG Docket No.03-123, In the Matter of Telecommunications Relay Services and Speech-to-Speech
Services for Individuals with Hearing and Speech Disabilities, Report and Order and Further Notice of Proposed
Rulemaking, released June 24, 2008.
82
F. STATE LEGISLATION
1. CS/CS/SB 2626 Telecommunications Companies
Governor Crist signed CS/CS/SB 2626259 into law on June 24, 2009, amending Chapter
364, F.S. The bill reforms the existing regulatory framework for telecommunications and
designates DMS as the primary agency for the development of a statewide map of broadband
availability and a strategic plan for broadband deployment and use in the state.
a. Telecommunications Regulation
The new law primarily impacts the oversight of ILECs by the FPSC. The bill would
redefine basic service for the purposes of regulatory oversight to include only single-line, flat-rate
residential service without the addition of nonbasic or unregulated services, either priced
individually or as part of a combination of services (including unregulated services such as wireless
or video services) offered for one price. The revised definition reclassifies flat-rate, single-line
business services and residential services of more than one line, or combined with at least one
additional feature, as nonbasic service. Nonbasic services do not have the same degree of price
protection and service quality protection previously available for basic services. In addition, the bill
eliminates certain regulatory requirements of nonbasic services (any service other than basic,
interconnection services, or network access services). Significant changes to FPSC jurisdiction
include:
259
•
Single-line business customers and residential customers who subscribe to any nonbasic
or unregulated services are now considered nonbasic subscribers. Previously, the local
service component was classified as basic service, and rate increases in any 12-month
period were limited to the change in inflation less 1 percent. (Section 364.02(1)&(10)
and 364.051(3), F.S.)
•
Nonbasic subscribers are now subject to 10 percent rate increases in a 12-month period,
a reduction from the 20 percent increases previously allowed if competitors were
present. (Sections 364.02(1)&(10) and 364.051(5)(a), F.S.)
•
The FPSC no longer has authority to resolve service quality complaints of nonbasic
business or residential customers. (Sections 364.02(1)&(10) and 364.051(5)(b), F.S.)
•
The FPSC’s authority to compel repairs or improvements is now restricted to facilities
serving single-line residential customers subscribing to basic only services. (Section
364.15, F.S.)
•
The income eligibility criteria for Lifeline service is now increased to 150 percent of the
federal poverty guidelines from the existing 135 percent for ILECs AT&T, Embarq, and
Verizon. (Section 364.10(3)(a), F.S.)
Committee Substitute for Committee Substitute for Senate Bill 2626.
83
•
The FPSC authority over the terms of contracts between telecommunications companies
and their subscribers was repealed. (Sections 364.051(1)(c) and 364.19, F.S.)
•
The requirement that companies file tariffs containing rates, terms, and conditions of
service was eliminated.
Companies are allowed to publish this information
electronically or may continue to file schedules (tariffs) with the Commission. (Sections
364.04(1), 364.10(3)(a), and 364.051(5)(a), F.S.)
•
The requirement for a bill insert to annually inform customers of the prices of services to
which they subscribe was eliminated. Companies are still required to inform customers
of this information annually, but the method is not specified. (Section 364.3382, F.S.)
•
The price cap for operator services was removed. (Section 364.3376(3), F.S.)
•
Certificated carriers are allowed to merge or transfer ownership to other certificated
carriers without any state regulatory oversight. (Section 364.33, F.S.)
b. Broadband Deployment Administration
The bill creates a new section of the statute to acknowledge the importance of broadband
Internet service and authorizes the DMS to work collaboratively with Enterprise Florida, Inc.,
state agencies, local governments, private businesses, and community organizations to:
•
Conduct a needs assessment of broadband Internet service including wireless and
wireline Internet service providers, to create maps at the census tract level that will
show geographic gaps in coverage, identify download and upload transmission
speeds, and provide a baseline assessment of statewide broadband deployment in
terms of percentage of households with broadband availability.
•
Create a strategic plan defining goals and strategies for increasing the use of
broadband Internet service in the state.
•
Build and facilitate local technology planning teams or partnerships with members
representing cross-sections of the community.
•
Establish a grant program that will use funds to encourage the use of broadband
Internet service in rural, unserved, and underserved areas.
DMS is also authorized to:
•
Apply for and accept federal funds for these purposes, as well as accept donations and
gifts from individuals, foundations, and private organizations.
•
Enter into contracts that are necessary to carry out the goals of the section.
•
Establish any committee to administer or carry out the purposes of the section.
84
•
Adopt necessary rules, including the authority to establish definitions of terms
pertinent to the section.
2. Carrier-of-Last-Resort Obligation
Section 364.025, F.S., Universal Service, provides that: “Until January 1, 2009, each
local exchange telecommunications company shall be required to furnish basic local exchange
telecommunications service within a reasonable time period to any person requesting such
service within the company’s service territory.” This requirement is commonly referred to as the
carrier-of-last-resort (COLR) obligation. The 2008 Florida Legislature adjourned without
extending the expiration date, and the COLR obligation sunset on January 1, 2009. ILECs in the
state are no longer obligated by state law to serve any person requesting service. Federal law
requires carriers designated as ETCs to offer services that are supported by federal universal
service support mechanisms.260 However, designated ETCs are not required to be able to serve
all customers in their designated territory in order to secure ETC designation. Current FCC rules
require ETCs to file a report every 12 months indicating the number of requests for service that
the carrier was unable to fulfill. There are no established penalties for unfulfilled service
requests. To date, the FCC has yet to revoke an ETC designation for an unfulfilled service
request, and it is not known whether any state has done so.261
260
47 U.S.C. Section 214(e)(1)(A).
In addition to the expiration of the COLR obligation, the requirement to establish a permanent intrastate universal
service mechanism expired as of January 1, 2009.
261
85
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86
CHAPTER VII. FEDERAL ACTIVITIES
A. BROADBAND
1. FCC Broadband Reporting
Section 706 of the 1996 Act directs the FCC to encourage the deployment of advanced
telecommunications capabilities to all Americans by using measures that “promote competition
in the local telecommunications market.” Furthermore, the section requires the FCC to conduct a
regular inquiry to determine “whether advanced telecommunications capability is being deployed
to all Americans in a reasonable and timely fashion.” The FCC released its Fifth Report on the
deployment of advanced telecommunications capabilities on June 12, 2008.262 The FCC
concluded in this report that advanced telecommunications capability is being deployed to all
Americans in a reasonable and timely fashion.
The FCC found it necessary to evaluate broadband deployment based on the migration of
customers and services to higher speed tiers. In light of the continuing evolution in technology
and consumer demand for advanced telecommunications capability, the FCC concluded that it
must modify its data collection efforts. In order to gather more detailed information at state and
national levels, the FCC is adding and collecting data on additional broadband speed tiers.
The FCC updated its High-Speed Services for Internet Access report to reflect data as of
December 31, 2007. The FCC’s analysis indicated that more than 99 percent of the country’s
population lives in ZIP Codes where a provider reports having at least 1 high-speed service
subscriber.263 Under the current analysis, one customer receiving broadband identifies the entire
ZIP Code as having broadband available. Critics of the FCC’s analysis have noted that almost
all ZIP Codes in the U.S. have access to at least one broadband satellite service provider.
The FCC concluded in March 2008 that it could better measure broadband deployment
by requiring submission of data on a smaller geographic level. The FCC adopted a Report and
Order to track broadband deployment at the census tract level to address the availability of
broadband on a more detailed geographic level. The FCC amended this requirement to include
reporting of the percentage of residential broadband customers in each census tract.264 The new
reporting requirements took effect on March 16, 2009.265
262
FCC 08-88, GN Docket No. 07-45, Inquiry Concerning the Deployment of Advanced Telecommunications
Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such
Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Fifth Report, released June 12, 2008.
263
FCC, “High-Speed Services for Internet Access: Status as of December 31, 2007,” January 16, 2009, p. 4,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287962A1.pdf>, accessed on March 12, 2009.
264
FCC 08-148, WC Docket No. 07-38, Development of Nationwide Broadband Data to Evaluate Reasonable and
Timely Deployment of Advanced Services to All Americans, Improvement of Wireless Broadband Subscribership
Data, and Development of Data on Interconnected Voice over Internet Protocol (VoIP) Subscribership, Order on
Reconsideration, released June 12, 2008.
265
FCC, DA 09-430, WC Docket No. 07-38, Development of Nationwide Broadband Data to Evaluate Reasonable
and Timely Deployment of Advanced Services to All Americans, Improvement of Wireless Broadband
Subscribership Data, and Development of Data on Interconnected Voice over Internet Protocol (VoIP)
87
The Consumers Union, Consumers Federation of America, and Free Press266 have asked
the FCC to reconsider its conclusion that advanced telecommunications capability is being
deployed to all Americans in a reasonable and timely fashion.267 The FCC sought comment on
the joint petition on September 8, 2008.268 While the comment cycle has concluded, the FCC
has taken no action to resolve the petition.
2. FCC Proceeding Regarding Internet Network Management
In October 2007, the Associated Press reported that it had conducted a test and
determined that Comcast was interfering with peer-to-peer traffic.269 Soon after, consumer
advocates filed a complaint and petition for declaratory ruling with the FCC against Comcast.270
They asserted that Comcast had violated the FCC’s Internet Policy Statement.271 The complaint
alleged that Comcast’s Internet network management practices resulted in degradation of certain
applications when its network became congested.272 The Associated Press’s tests indicated that
Comcast did degrade or block entirely certain types of peer-to-peer traffic.273 The Associated
Press found that the disruption occurred during nonpeak hours, regardless of network
congestion.274 This degradation was especially evident for those services that were in direct
competition with some of Comcast’s cable offerings, like video streams and VoIP. In August
2008, the FCC issued an order determining that Comcast had violated federal Internet policy and
that Comcast’s peer-to-peer management practices did not constitute “reasonable network
management.”275 The FCC found Comcast’s practices to be intrusive and discriminatory, and it
released an order requiring Comcast to:
•
Disclose its methodology for blocking and delaying applications.
Subscribership, Order, released February 23, 2009, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-09430A1.pdf>, accessed on April 28, 2009.
266
Free Press is a national, nonpartisan, nonprofit organization working to reform the media.
267
FCC,GN Docket No 07-45, Petition for Reconsideration by Consumers Union, Consumer Federation of America
and Free Press filed July 11,2008, <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_
document=6520033992>, accessed on April 28, 2009.
268
FCC Public Notice, DA 08-2035, GN Docket No. 07-45, Pleading Cycle Established for Comments on Petition
for Reconsideration of the Commission’s Fifth 706 Report, released September 3, 2008.
269
Peter Svensson, AP Technology Writer, “Comcast Blocks Some Internet Traffic,” San Francisco Chronicle,
October 19, 2007, <http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/10/19/financial/f061526D54.DTL&feed=
rss.business>, accessed on July 2, 2009.
270
Petition for Declaratory Ruling of Free Press, Public Knowledge, et al., before the FCC, WC Docket No. 07-52,
File No. EB-08-IH-1518, November 1, 2007.
271
FCC 05-151, CC Docket No. 02-33, Appropriate Framework for Broadband Access to the Internet over Wireline
Facilities, CS Docket No. 02-52, Appropriate Regulatory Treatment for Broadband Access to the Internet Over
Cable Facilities, et al, Policy Statement, released September 23, 2005.
272
Petition for Declaratory Ruling of Free Press, Public Knowledge, et al., before the FCC, WC Docket No. 07-52,
File No. EB-08-IH-1518, November 1, 2007.
273
Ibid. pp 7-11.
274
Peter Svensson, AP Technology Writer, “Comcast Blocks Some Internet Traffic,” San Francisco Chronicle,
October 19, 2007, <http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/10/19/financial/f061526D54.DTL&feed=
rss.business>, accessed on July 2, 2009.
275
FCC 08-183, WC Docket No. 07-52, Broadband Industry Practices Petition of Free Press et al,. for Declaratory
Ruling that Degrading an Internet Application Violates the FCC’s Internet Policy Statement and Does Not Meet an
Exception for “Reasonable Network Management,” Memorandum Opinion and Order, released August 20, 2008.
88
•
Design a plan to change its network management practices so that it no longer
discriminates between certain types of traffic.
•
Fully inform customers of its network management policies.
Comcast filed the required disclosures in September 2008,276 and completed the transition
to the new network management practices by year-end 2008.277
In January 2009, the FCC staff sought additional clarification of Comcast’s new network
management practices, especially related to VoIP phone calls.278 Comcast explained that during
periods of network congestion, VoIP calls that used the public Internet may sound “choppy” or
have a delay during the limited times when the High-Speed Internet service in a given area is
experiencing congestion. This would, in all likelihood, affect only a subscriber who has
temporarily triggered congestion management thresholds due to his or her own bandwidth
consumption. Comcast also explained that Comcast’s own VoIP offering does not ride over
Comcast’s high-speed Internet service and therefore is not affected by Comcast’s management of
that service. The FCC acknowledged receipt of the Comcast response and the matter appears to
be resolved.
3. American Recovery and Reinvestment Act (ARRA)
On February 17, 2009, President Obama signed the ARRA into law. As part of the
ARRA, Congress provided more than $7 billion for grants and loans to stimulate broadband
deployment and adoption. The $7 billion was divided between the NTIA279 and the RUS for
distribution. The $4.7 billion released to the NTIA was allocated in the following manner:
•
$4.35 billion to provide broadband access in unserved and underserved areas.
•
No less than $250 million to increase sustained broadband adoption.
•
No less than $200 million to upgrade technology and capacity and public computing
centers.
276
Ex Parte Letter from Kathryn A. Zachem, Comcast Corp., to Marlene H. Dortch, Secretary, FCC, WC Docket
No. 07-52, File No. EB-08-IH-1518, September 19, 2008),
<http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6520169715>, accessed on June
29, 2009.
277
Ex Parte Letter from Kathryn A. Zachem, Comcast Corp., to Marlene H. Dortch, Secretary, FCC, WC Docket
No. 07-52, File No. EB-08-IH-1518, January 5, 2009,
<http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6520192582>, accessed on June
29, 2009.
278
FCC Letter to Kathryn A. Zachem, Vice President, Regulatory Affairs, Comcast Corporation, WC Docket No.
07-52, Broadband Industry Practices Petition of Free Press et al., for Declaratory Ruling that Degrading an Internet
Application Violates the FCC’s Internet Policy Statement and Does Not Meet an Exception for “Reasonable
Network Management”, January 18, 2009, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC288047A1.pdf>, accessed on April 22, 2009.
279
The NTIA is an agency in the U.S. Department of Commerce that serves as the executive branch agency
principally responsible for advising the President on telecommunications and information policies.
89
•
Up to $350 million to fund the Broadband Data Improvement Act for development
and maintenance of a broadband inventory map.
•
There is also an additional $10 million provided to conduct audits and oversight of
grants and other funding.
Funding is subject to a 20 percent match, although a waiver can be granted if the NTIA
deems there is sufficient need. State and local governments, nonprofits, and any other entity,
including a broadband service or infrastructure provider, are eligible to apply for funding. States
may be consulted to help the NTIA identify unserved and underserved areas within the state and
to advise the NTIA regarding the allocation of grant funds within that state.
The RUS was given $2.5 million to provide direct loans and grants for distance learning
and telemedicine services in rural areas. Projects funded through the RUS must be used in areas
that are at least 75 percent rural and have the highest proportion of rural residents without
sufficient access to high speed broadband service in order to facilitate rural economic
development. Funding will be given to project applicants for broadband systems that will deliver
end users a choice of more than one provider, and be fully funded, completed, and commence
promptly.
The FCC has also been tasked with developing a national broadband plan within one year
of the enactment of the ARRA. The RUS, NTIA, and FCC are working collaboratively to
establish policy for future broadband deployment that will help all participants direct their efforts
in a productive manner. The FCC issued a Notice of Inquiry on April 8, 2009, seeking input
from consumers, industry, large and small businesses, nonprofits, the disability community,
governments at the federal, state, local and tribal levels, and all other interested parties. 280
B. UNIVERSAL SERVICE
Florida consumers pay significantly more into the federal Universal Service Fund (USF)
than the amount of support that is returned to eligible service providers in Florida.281 The
assessment factor used to collect revenue from telecommunications carriers has grown to
accommodate growth in the Universal Service Fund. These carriers can pass on these
assessments to their customers up to the amount that the carrier is charged. The FCC has
proposed an assessment factor of 12.9 percent for the third quarter of 2009. This would
represent the highest assessment factor implemented to date.282 For this reason, the FPSC
continues to actively monitor and participate in ongoing proceedings at the FCC and with the
Federal-State Joint Board on Universal Service (Joint Board). Table 7.1 shows Florida’s
estimated contribution and receipts for 2007.
280
FCC 09-31, GN Docket No. 09-51, A National Broadband Plan for Our Future, Notice of Inquiry, released April
8, 2009, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-31A1.pdf>, accessed on April 23, 2009.
281
FCC, “Universal Service Monitoring Report,” CC Docket No. 98-202, released December 31, 2008, Table 1.12,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287688A3.pdf>, accessed on April 1, 2009.
282
FCC Public Notice, DA 09-1322, CC Docket No. 96-45, Proposed Third Quarter 2009 Universal Service
Contribution Factor released June 12, 2009, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-091322A1.pdf>, accessed on June 17, 2009.
90
Table 7-1. 2007 Federal Universal Service Programs in Florida
(Annual Payments and Contributions in Thousands of Dollars)
Payments from
USF to Service
Providers
Estimated
Contributions283
Estimated Net
$82,308
$292,258
($209,950)
Low Income
20,912
56,094
(35,182)
Schools & Libraries
79,955
123,262
(43,307)
207
2,549
(2,342)
$183,382
$481,258
($297,876)
High-Cost
Rural Health Care
Total284
Source: FCC 2008 Universal Service Monitoring Report, Table 1.12.
1. High-Cost Support Reform
The FCC asked the Joint Board to review and recommend changes to the FCC’s rules
relating to the high-cost universal service support mechanisms for rural carriers.285 The Joint
Board issued its recommendation286 to the FCC on November 20, 2007, after seeking comment
through several public notices.287 In general, the Joint Board concluded that the FCC should:
•
Cap the total amount of high-cost support at the current level.
•
Eliminate the identical support rule, which provides support to competitors based on
the incumbent carrier’s costs.
•
Expand the list of supported services to include broadband and mobility services
through new high-cost programs.
283
Ibid. Program specific estimations are based on the percent of total contribution times the program disbursements
from Table 1.12.
284
The total contribution in this table includes approximately $7 million in administrative expenses for the Universal
Service Administrative Company.
285
FCC 04-125, CC Docket No. 96-45, Federal-State Joint Board on Universal Service, Order, released June 28,
2004.
286
FCC 07J-4, CC Docket No. 96-45, WC Docket No. 05-337, Recommended Decision, released November 20,
2007.
287
FCC 04J-2, CC Docket No. 96-45, Federal-State Joint Board on Universal Service, released August 16, 2004;
FCC 05J-1, CC Docket No. 96-45, Federal-State Joint Board on Universal Service, released August 17, 2005; FCC
06J-1, CC Docket No. 96-45, Federal-State Joint Board on Universal Service, released August 11, 2006; and FCC
07J-1, CC Docket No. 96-45, Federal-State Joint Board on Universal Service, released May 1, 2007.
91
•
Transition to fund only one provider for each service type (i.e., broadband, wireless,
and wireline) for a geographic area.
•
Consider requiring state matching support as a condition of receiving support beyond
some threshold amount for the broadband and mobility funds.
Under the current rules, rural carriers receive high-cost support based on their historic
costs. Non-rural carriers receive support based on forward looking costs. A competitive carrier
that has been designated as an ETC within a specific area can also receive high-cost support.288
The amount of support a competitive ETC receives is based on the per line equivalent support
amount the incumbent receives, and not on the competitive ETC’s own costs. High-cost support
for rural carriers represents approximately 68 percent of the high-cost fund, or about $3 billion
for 2008.289 The total federal USF for 2008 was about $7 billion.290
Prior to issuing a final order on the Joint Board Recommended Decision, the FCC
implemented an interim cap on support available to competitive ETCs that is currently in
place.291 In 2001, competitive ETCs received approximately $17 million in high-cost support.
By 2008, competitive ETCs received $1.3 billion in high-cost support.292 The FCC has indicated
that it sees the interim cap as the first step in a comprehensive reform process that will also
include intercarrier compensation (ICC).293
On November 5, 2008, the FCC sought comment through an Order and Further Notice of
Proposed Rulemaking (FNPRM).294 FCC Chairman Martin had intended this order to represent
a more comprehensive reform of both the high-cost programs and existing ICC mechanisms but
he was not able to form a consensus regarding these issues. The section of the Order addressing
USF reform only briefly addresses the Universal Service Joint Board’s Recommended Decision.
While there appeared to be some consensus based on the joint comments of the FCC
Commissioners, the FCC declined to implement any of the Joint Board’s recommendations. The
FCC sought comment on many of the Joint Board’s recommendations for a second time. The
FPSC’s latest comments in this proceeding take the following positions:
•
A carrier’s support should be based on its own costs, not on the cost or the support
received by the incumbent provider.
•
Place a permanent cap on the amount of high-cost support distributed to ETCs.
288
Competitive carriers can include wireline CLECs, wireless carriers, and cable providers.
Universal Service Administrative Company, “2008 Annual Report, Amended April 2009,” page 48, <http://
www.usac.org/_res/documents/about/pdf/usac-annual-report-2008.pdf>, accessed on April 22, 2009.
290
Ibid, p. 24.
291
FCC 08-122, CC Docket No. 96-45, WC Docket No. 05-337, Federal-State Joint Board on Universal Service,
High-Cost Universal Service Support, Order, released May 1, 2008.
292
FCC, “Universal Service Monitoring Report,” CC Docket No. 98-202, released December 31, 2008, Table 3.2,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287688A5.pdf >, accessed on April 2, 2009.
293
FCC, “Interim Cap Clears Path for Comprehensive Reform,” FCC News Release, released May 2, 2008,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-281921A1.pdf>, accessed on May 26, 2009.
294
FCC 08-262, WC Docket No. 05-337, High-Cost Universal Service Support, Order on Remand and Report and
Order and Further Notice of Proposed Rulemaking, released November 5, 2008.
289
92
•
A reverse auction to determine support recipients should result in a single winner.
•
The FCC should limit the initial rounds of auctions to those wire centers that
currently receive the most high-cost support and in which there are already more than
three ETCs designated.
•
If the FCC were to determine that the definition of supported services should include
broadband and mobility services, that funding should only be used to deploy network
facilities in unserved areas.
•
Universal service funding should not be the source of recurring support for broadband
or mobility services.295
2. Universal Service Fund Oversight
On September 12, 2008, the FCC requested comments on ways to strengthen the
management, administration, and oversight of the USF.296 The primary goal in initiating the
notice was to ensure sufficient safeguards are in place for the USF to operate as Congress
intended. In recent years, the FCC has undertaken a series of steps to improve and strengthen
oversight, including recovery of any improperly disbursed funds.
While the FCC’s notice sought comment on all of the federal programs relating to USF,
the comments of the FPSC focused on the Lifeline program.297 The FPSC recommended the
FCC consider the following changes:
•
Include low-income beneficiary audits in each round of future USF audits.
•
Inform state commissions of ETC oversight audits so state and federal efforts are not
duplicated.
•
Acknowledge that states can enforce state and federal Lifeline requirements for
wireless ETCs, once a state has asserted jurisdiction for designating such carriers.
•
Acknowledge that wireless ETCs must file for annual certification with the state once
a state assumes jurisdiction regarding ETC designation of wireless carriers.
•
Confirm that state commissions may request that the Universal Service
Administrative Company suspend support disbursements for failure of an ETC to
comply with state and/or federal requirements.
295
FPSC Reply Comments to FCC Order and NPRM in CC Docket Nos. 96-45, 96-98, 99-200, 01-92 and WC
Docket Nos. 03-109, 04-36-05-337, and 06-122, filed December 2, 2008.
296
FCC 08-189, WC Docket No. 05-195, Comprehensive Review of the Universal Service Fund Management,
Administration, and Oversight, Notice of Inquiry, released September 12, 2008.
297
FPSC Reply Comments to FCC NOI in WC Docket No.05-195; filed December 18, 2008.
93
•
Determine that a Lifeline customer’s personal identifying information is confidential
before considering a national database to enforce federal rules that limit the Lifeline
credit to one per household.
3. Effects of Merger Conditions on Competitive ETCs
On November 4, 2008, the FCC approved two telecommunications mergers subject to
agreement by the companies on several key conditions. The first merger was between Verizon
Wireless and Alltel Corporation, and the second was the combination of the WiMAX network
holdings of Sprint Nextel and Clearwire Corporation (Clearwire). The mergers will have an
impact on the federal USF, specifically on the high-cost support. Both companies have agreed to
a five-year phase out of the high-cost support they currently receive. The total federal high-cost
support the companies would be reduced by 20 percent for the first year, and by an additional 20
percent per year for the subsequent 4 years. Competitive ETCs, like Alltel and Sprint Nextel,
can request high-cost support if such funding is justified by a cost analysis. If the FCC adopts a
different transition mechanism or a successor mechanism, then that rule would apply instead.
For 2008, the total high-cost fund was $4.4 billion. Competitive ETCs received
approximately $1.3 billion of this amount.298 Alltel received $414 million in 2008 and Sprint
Nextel received $63 million in 2008.299 Under the merger conditions, the reduction would
represent an 11 percent decrease in the total size of the high-cost fund and a 36 percent decrease
in the high-cost support that competitive ETCs receive.
If the further reform adopted by the FCC results in more significant reductions in highcost support, then these carriers could potentially receive more support under the five-year phase
down than under the new rules. Alternatively, if any reform results in more support being
available to carriers (such as from a fund specifically for wireless carriers), then the merged
companies could discontinue further phase downs and apply for support under the new rules.
C. LOCAL NUMBER PORTABILITY
Local number portability (LNP) allows end users the option to switch their
telecommunications service provider without having to change their telephone numbers, as long
as the location remains the same. In May 2009, the FCC reduced the porting interval timeframe
for simple wireline and simple intermodal port requests from four business days to one business
day.300 The four business day porting interval for simple wireline port requests was adopted
more than ten years ago. Since that time the telecommunications market has changed
dramatically, and technological advances have enabled number porting to be accomplished in a
298
FCC, “Universal Service Monitoring Report,” CC Docket No. 98-202, released December 31, 2008, Table 3.2,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287688A5.pdf >, accessed on April 2, 2009.
299
Universal Service Administrative Company, High Cost Data Disbursement Search Tool, Spin Codes: 143008900,
143006742, 143000910, and 143010148, <http://www.usac.org/hc/tools/disbursements/default.aspx>, accessed on
April 22, 2009.
300
FCC 09-41, CC Docket No. 95-116, Telephone Number Portability, and WC Docket No. 07-244, Local Number
Portability Porting Interval and Validation Requirements, Report And Order And Further Notice Of Proposed
Rulemaking, released May 13, 2009.
94
much shorter period, as evidenced by the voluntary two and one-half hour wireless provider
interval standard.
The North American Numbering Committee (NANC), a Federal Advisory Committee
established by the FCC, must address the implementation issues for the new porting interval
within 90 days of the effective date of the FCC Order. All providers subject to the FCC’s LNP
rules must comply with the 1-business day porting interval within 9 months from the date that
the NANC submits its report to the FCC, except small providers, which will be allowed 15
months from the date that the NANC submits its report to the FCC to comply.
D. FORBEARANCE
Section 10 of the 1996 Act allows a telecommunications carrier to petition the FCC to
refrain, or forbear, from applying any statutory provision or regulation if the FCC determines the
forbearance petition meets three criteria. To approve a forbearance petition, the FCC must find
that:
•
The regulation is not necessary to ensure that the carrier’s service charges, practices,
classification, or regulations are just, reasonable, and not unjustly or unreasonably
discriminatory.
•
Enforcement of the regulation is not necessary for consumer protection.
•
Forbearance is consistent with the public interest.
In determining whether forbearance is in the public interest, the FCC must consider
“whether forbearance from enforcing the provision or regulation will promote competitive
market conditions.”301 Possible outcomes include approval, denial, or approval in part and denial
in part.
Forbearance petitions are “deemed granted” by operation of law if the FCC fails to act
within one year from the date the petition is received.302 A petitioning party may also withdraw
its petition prior to FCC action or before the statutory deadline. State commissions are prohibited
from applying any provision of the 1996 Act for which the FCC has granted forbearance. In one
instance, forbearance was granted as a result of inaction by the FCC.303 In recent years, there has
been a significant increase in the number of forbearance petitions submitted to the FCC, with
varying degrees of success. In 2008, Congress considered legislation to eliminate the “deemed
granted” provision.304 While this legislation was not enacted, similar legislation has been
introduced this year.305 On June 29, 2009, the FCC issued an order adopting procedural rules
that affect carriers filing forbearance petitions. Specifically, the new rules place the legal burden
301
47 U.S.C. § 160(b).
The FCC may extend the 1 year statutory deadline by 90 days; 47 U.S.C. § 160 (c).
303
Verizon was granted forbearance by operation of law from regulation with respect to its broadband services on
March 19, 2006.
304
H.R. 3914 and S. 2469.
305
H.R. 400.
302
95
on the petitioner to prove that its petition meets the statutory criteria.306 The new rules also
require forbearance petitions to be “complete as filed,” limiting the flexibility petitioners’
previously enjoyed. Some recent decisions are summarized below.
1. Access Charges and VoIP
The FCC denied a petition filed by Feature Group IP, which asked the FCC to forbear
from applying access charges to “voice-embedded Internet communications.”307 The petition
sought a declaration from the FCC that such communications involve a net change in form and
content and are therefore qualitatively distinguishable from the use of Internet protocol
technology to provide Public Switched Telephone Network (PSTN)-equivalent services. The
FCC noted that Feature Group IP only seemed to be seeking forbearance if the agency deemed
that voice-embedded Internet communications are not exempt from access charges or that the
enhanced service provider exemption is not maintained. Feature Group IP was, in essence,
seeking a declaratory ruling as a preliminary matter. The FCC made clear that it makes no
decisions or findings in the order concerning the current compensation rules for these types of
communications, which are the subject of a pending rulemaking. Feature Group IP filed a
petition for reconsideration with the FCC on February 20, 2009. AT&T, Embarq, and Verizon
opposed Feature Group IP’s petition, and a final decision has not yet been rendered.
2. Accounting and Reporting Requirements
The FCC initiated rulemaking in September 2008 in response to a number of forbearance
petitions filed by ILECs, including Qwest and Verizon, seeking relief from Automated Reporting
Management Information System (ARMIS) service quality and infrastructure reports.308 This
proceeding follows the approval of a similar forbearance petition by AT&T in April 2008. The
rules from which the carriers were granted forbearance relief were created under rate-of-return
regulation to assign or allocate costs and revenues between interstate and intrastate operations
and between regulated and unregulated operations.
In granting conditional relief from ARMIS reporting requirements, the FCC found that
service quality information and customer satisfaction data may be useful to help customers make
informed decisions in a competitive market.309 As a result, the FCC sought comment on the
scope of information to be collected and the means by which information should be gathered.
The FCC emphasized that it does not preempt state accounting requirements adopted under state
306
FCC 09-56, WC Docket No. 07-267, Petition to Establish Procedural Requirements to Govern Proceedings for
Forbearance Under Section 10 of the Communications Act of 1934, as Amended, Report and Order, released June
29, 2009.
307
FCC 09-3, WC Docket No. 07-256, Feature Group IP Petition for Forbearance from Section 251(g) of the
Communications Act and Sections 51.701(b)(1) and 69.5(b) of the Commission’s Rules, Memorandum Opinion and
Order, released January 21, 2009.
308
ARMIS Reports 43-05, 43-06, 43-07, and 43-08.
309
FCC 08-203, WC Docket No. 08-190, Service Quality, Customer Satisfaction, Infrastructure and Operating Data
Gathering, and WC Docket No. 07-139, Petition of AT&T Inc. for Forbearance Under 47 U.S.C. § 160(c) from
Enforcement of Certain of the Commission’s ARMIS Reporting Requirements, Memorandum Opinion and Order
and Notice of Proposed Rulemaking, released September 6, 2008.
96
authority. Forbearance from additional ARMIS financial reports was granted in December 2008,
on condition that carriers continue to file certain pole attachment data publicly with the FCC.310
3. D.C. Circuit Review of Verizon Forbearance Ruling
On June 19, 2009, a three-judge panel of the D.C. Circuit Court of Appeals (Court)
issued its opinion that found that the FCC’s reasoning for denying Verizon’s forbearance petition
was inadequate.311 Verizon had requested forbearance from requirements to unbundle network
elements at cost based rates in six Metropolitan Statistical Areas outside of Florida.312 The FCC
unanimously denied Verizon’s petition in December 2007 finding that Verizon did not meet the
forbearance standard.313 In its decision, the Court ruled that the FCC unlawfully established a
“newly minted bright-line” retail market-share test in determining whether forbearance was
warranted. The test departed from FCC precedent by relying solely on actual, and not potential,
marketplace competition. Because the FCC’s departure was unexplained, the Court remanded
the decision back to the FCC.
E. VOICE OVER INTERNET PROTOCOL
In 2007, the FCC extended the TRS requirements to providers of VoIP services and
required interconnected VoIP providers to route 711-dialed calls to an appropriate TRS center.314
Persons dialing 711 from a telephone will automatically be connected to a TRS operator.
Previously, 711 calls dialed by consumers of VoIP services may not have provided call detail
information necessary to identify the caller’s location. Carriers had until April 2008 to
implement this requirement. As the implementation date approached, the FCC granted an
extension until March 31, 2009.315 The same extension of time was granted to traditional TRS
providers to fulfill their obligation to implement a system to automatically call an appropriate
PSAP when receiving an emergency 711-dialed call via an interconnected VoIP service. The
FCC took this action based on the significant technical challenges presented by this requirement.
On May 13, 2008, the FCC adopted an order expanding consumer protections for
customers of interconnected VoIP providers such as Vonage and Packet8. Interconnected VoIP
providers are those whose customers can place calls to and receive calls from the public
310
FCC 08-271, WC Docket No. 07-204, Petition of Qwest Corporation for Forbearance from Enforcement of the
Commission’s ARMIS and 492A Reporting Requirements Pursuant to 47 U.S.C. § 160(c), and WC Docket No. 07273, Petition of Verizon for Forbearance Under 47 U.S.C. § 160(c) From Enforcement of Certain of the
Commission’s Recordkeeping and Reporting Requirements, Memorandum Opinion and Order, released December
12, 2008.
311
Verizon Telephone Companies v. Federal Communications Commissioner, et al., Case No. 08-1012, United
States Court of Appeals for the District of Columbia Circuit, June 19, 2009, <http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DOC-291513A1.pdf>, accessed on June 24, 2009.
312
Those Metropolitan Statistical Areas are: Boston, MA, New York, NY, Philadelphia, PA, Pittsburgh, PA,
Providence, RI, and Virginia Beach, VA.
313
FCC 07-212, WC Docket No. 06-172, Petitions of the Verizon Telephone Companies for Forbearance Pursuant
to 47 U.S.C. § 160(c) in the Boston, New York, Philadelphia, Pittsburgh, Providence and Virginia Beach
Metropolitan Statistical Areas, Memorandum Opinion and Order, December 5, 2007,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-212A1.pdf >, accessed on June 24, 2009.
314
FCC 07-110, WC Docket No. 04-36, IP- Enabled Services, Report and Order, released June 15, 2007.
315
FCC DA 08-821, WC Docket No. 04-36, IP-Enabled Services, Order, released April 4, 2008.
97
telephone network, rather than solely over the Internet. Interconnected VoIP providers are now
required to notify customers before they discontinue, reduce, or impair service, as conventional
providers currently must do. Interconnected VoIP providers can no longer discontinue service
without notice, leaving customers unexpectedly without phone service or recourse.316 This
action was in response to the much publicized shutdown of SunRocket in 2008 that left several
thousand customers unexpectedly without service.
F. PROVISION OF SERVICES IN RESIDENTIAL MULTIPLE DWELLING UNITS
In May 2009, a three-judge panel of the D.C. Circuit Court of Appeals denied a cable
industry challenge to a 2007 FCC order relating to exclusive video contracts (Video Order).317
The Video Order specifically barred cable companies from entering into exclusive video
contracts with multi-dwelling unit (MDU) buildings and from enforcing existing exclusivity
clauses. The FCC expanded the definition of MDUs (apartment, cooperative, and condominium
buildings) to include gated communities, mobile home parks, garden apartments, and other
centrally managed real estate developments. The FCC found that competition (including
competition for triple play services) and broadband deployment are harmed by exclusive
contracts. While the FCC’s Video Order was accompanied by FNPRM addressing this issue, the
FCC has not issued an order addressing either exclusive marketing or bulk billing
arrangements.318
The FCC prohibited exclusive contracts for telecommunications providers in residential
MDUs or other real estate developments (Telecom Order) in a companion order released in
March 2008.319 The Telecom Order is designed to provide regulatory parity between
telecommunications and cable providers for residential customers.320 The FCC found that
exclusive contracts have impeded competition by blocking access to competitive provisioning of
triple play services.
316
FCC 09-40, WC Docket No. 04-36, IP-Enabled Services, Report and Order, released May 13, 2009, ¶2.
National Cable & Telecommunications Association, AT&T Inc, et al. v. Federal Communications Commissioner,
et al., Case No. 08-1016, United States Court of Appeals for the District of Columbia Circuit, May 26, 2009,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-290966A1.pdf>, accessed on June 4, 2009.
318
FCC 07-189, MB Docket No. 07-51, Exclusive Service Contracts for Provision of Video Services in Multiple
Dwelling Units and Other Real Estate Developments, Order and NPRM, November 13, 2007,
<http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-189A1.pdf>, accessed on June 4, 2009.
319
FCC 08-87, WT Docket No. 99-217, Promotion of Competitive Networks in Local Telecommunications
Markets, Report and Order, March 21, 2008, <http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-87A1.
pdf>, accessed on June 4, 2009.
320
In 2001, the FCC released an order that prohibited carriers from entering into exclusive telecommunications
contracts with owners of commercial multiple tenant environments.
317
98
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08
**Indicates that the company did not respond to the Commission’s data request.
^^Indicates that the company is in the process of canceling its certificate or has a
pending bankruptcy.
1-800-RECONEX, Inc. d/b/a USTEL
360networks (USA) inc.
A.R.C. Networks, Inc. d/b/a InfoHighway
AboveNet Communications, Inc.
Access Communications, LLC.
Access Integrated Networks, Inc.
**Access One, Inc.
Access Point, Inc.
AccuTel of Texas, Inc.
ACN Communication Services, Inc.
Advanced Telecom of South Florida, Inc.
Advantage Group of Florida Communications,
L.L.C.
Aero Communications, LLC
Affordable Phone Services, Inc. d/b/a High
Tech Communications
Airespring, Inc.
ALEC, Inc.
Alternative Phone, Inc.
^^Alticomm, Inc.
American Fiber Network, Inc.
American Fiber Systems, Inc.
American Telephone Company LLC
Americatel Corporation
ANEW Broadband, Inc. d/b/a INSTANTEL
PHONE SERVICE
Applied Technology Solutions, Inc.
Astro Tel, Inc.
AT&T Communications of the Southern States,
LLC d/b/a AT&T
ATC Outdoor DAS, LLC
Atlantic.Net Broadband, Inc.
ATN, Inc. d/b/a AMTEL NETWORK, INC.
Backbone Communications Inc.
Baldwin County Internet/DSSI Service, L.L.C.
Bandwidth.com CLEC, LLC
BCN Telecom, Inc.
Beauty Town, Inc. d/b/a Anns Communication
BeCruising Telcom
Bellerud Communications, LLC
BellSouth Long Distance, Inc. d/b/a AT&T
Long Distance Service
BellSouth Telecommunications, Inc. d/b/a
AT&T Florida d/b/a AT&T Southeast
Benchmark Communications, LLC d/b/a Com
One
BetterWorld Telecom LLC d/b/a BetterWorld
Telecom
Birch Telecom of the South, Inc. d/b/a Birch
Telecom and d/b/a Birch
Bright House Networks Information Services
(Florida), LLC
Broadband Communities of Florida, Inc.
Broadband Dynamics, LLC
BroadRiver Communication Corporation
Broadstar Communications, LLC
Broadstar, LLC d/b/a PrimeCast
Broadview Networks, Inc.
Broadwing Communications, LLC
Brydels Communications, LLC d/b/a AMIGOS
- Tu Compania de Telefonos
BT Communications Sales LLC
BTEL, Inc.
Budget PrePay, Inc. d/b/a Budget Phone
BudgeTel Systems, Inc.
BullsEye Telecom, Inc.
Business Telecom, Inc. d/b/a BTI
Callis Communications, Inc.
Campus Communications Group, Inc.
CBB Carrier Services, Inc.
Cbeyond Communications, LLC
Centennial Florida Switch Corp.
^^Ciera Network Systems, Inc.
City of Daytona Beach
City of Gainesville, a municipal corporation
d/b/a GRUCom
City of Lakeland
City of Ocala
99
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08
City of Quincy d/b/a netquincy d/b/a
netquincy.com d/b/a
www.netquincy.com
Cleartel Telecommunications, Inc. d/b/a Now
Communications, also d/b/a VeraNet
Solutions
Clective Telecom Florida, LLC
**Clertech.com, Inc.
CloseCall America, Inc
CM Tel (USA) LLC
Cogent Communications of Florida LHC, Inc.
Comcast Business Communications, LLC d/b/a
Comcast Long Distance
Comcast Phone of Florida, LLC d/b/a Comcast
Digital Phone
CommPartners, LLC
**Communication Lines, Inc.
**Communication Technology, Inc.
Communications Xchange, LLC
Comtech21, LLC
Comtel Telcom Assets LP d/b/a Excel
Telecommunications
Comtel Telcom Assets LP d/b/a VarTec
Solutions
Comtel Telcom Assets LP d/b/a VarTec
Telecom
Conextel, Inc.
Connect Paging, Inc. d/b/a Get A Phone d/b/a/
New Talk, Inc.
Cordia Communications Corp.
CoreTel Florida, Inc. d/b/a CoreTel
^^Cost Plus Communications, LLC
Covista, Inc.
Cox Florida Telcom, L.P. d/b/a Cox
Communications
Credicall USA Inc.
CTC Communications Corp. d/b/a One
Communications
Custom Network Solutions, Inc.
Cypress Communications Operating Company,
LLC
Dedicated Fiber Systems, Inc.
DeltaCom, Inc.
**DG-TEC, LLC
Dialtone Telecom, LLC
DIECA Communications, Inc. d/b/a Covad
Communications Company
Digital Express, Inc.
DPI-Teleconnect, L.L.C.
DRS Training & Control Systems, Inc.
DSCI Corporation
DSL Internet Corporation d/b/a DSLi
DSLnet Communications, LLC
DukeNet Communications, LLC
Eagle Communications, Inc. d/b/a Eagle Telco,
Inc.
Easy Telephone Services Company
**Economic Telecom, Inc.
^^Effectel Corp. d/b/a Porras and Company,
PA
Elantic Telecom, Inc.
ElectroNet Intermedia Consulting, Inc.
Embarq Communications, Inc.
ENA Services, LLC
Enhanced Communications Network, Inc. d/b/a
Asian American Association
^^Epicus Communications Group, Inc.
Ernest Communications, Inc.
EveryCall Communications, Inc.
eVox Communications, LLC
Excelacom Light, LLC
^^Excel Pager, Cellular, and Home Phone, Inc.
Express Phone Service, Inc.
ExteNet Systems, Inc.
Fast Phones, Inc. of Alabama
FiberLight, LLC
First Choice Technology, Inc.
First Communications, LLC
FL - CLEC LLC
FLATEL, Inc. d/b/a Florida Telephone
Company d/b/a Oscatel d/b/a Telephone
USA d/b/a Global Telecom
FlatPhone, Inc. d/b/a FlatPhone
100
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08
Florida Multi-Media Services, Inc. d/b/a
Florida Multi Media
Florida Phone Systems, Inc.
Florida Public Telecommunications
Association, Inc.
Florida Telephone Services, LLC
^^Fonix Telecom, Inc.
Fort Pierce Utilities Authority d/b/a GigaBand
Communications
FPL FiberNet, LLC
France Telecom Corporate Solutions L.L.C.
Frontier Communications of America, Inc.
Ganoco, Inc. d/b/a American Dial Tone
Georgia Public Web, Inc
Global Capacity Group, Inc.
Global Connection, Inc of America
Global Crossing Local Services, Inc.
Global Crossing Telemanagement, Inc.
Global NAPS, Inc.
Global Response Corporation
Globalcom Inc. d/b/a GCI Globalcom Inc.
Globaltron Communications Corporation
Grande Communications Networks, Inc.
Granite Telecommunications, LLC
Great America Networks, Inc.
**Great American Telephone, Inc.
GTC Communications, Inc.
Harbor Communications, LLC
Hayes E-Government Resources, Inc.
Home Town Telephone, LLC
Hotwire Communications, Ltd.
IDS Telcom Corp. d/b/a Cleartel
Communications
IDT America, Corp. d/b/a IDT
Image Access, Inc. d/b/a NewPhone, Inc.
Infotelecom, LLC
Intellicall Operator Services, Inc. d/b/a ILD
Interactive Services Network, Inc. d/b/a ISN
Telcom
InterGlobe Communications, Inc.
^^InterLink Global,Corp.
Inter-Tel NetSolutions, Inc. d/b/a Mitel
NetSolutions, Inc.
Intrado Communications Inc.
ITS Telecommunications Systems, Inc.
J C Telecommunication Co., LLC
Kenarl Inc. d/b/a Lake Wellington Professional
Centre
Kentucky Data Link, Inc.
KG Communications, LLC d/b/a KG
Communications
Kissimmee Utility Authority
KMC Data LLC d/b/a Hypercube Telecom,
LLC
Knology of Florida, Inc.
^^LecStar Telecom, Inc.
Level 3 Communications, LLC
Lightyear Network Solutions, LLC
Litestream Holdings, LLC
Looking Glass Networks, Inc.
LPGA International Communications, LLC
M Telecom, LLC
Madison River Communications, LLC
Marco Island Cable, Inc.
Maryland TeleCommunication Systems, Inc.
Matrix Telecom, Inc. d/b/a Matrix Business
Technologies
MCC Telephony of Florida, Inc.
McGraw Communications, Inc.
MCImetro Access Transmission Services LLC
d/b/a Verizon Access Transmission
Services
McLeodUSA Telecommunications Services,
Inc.
^^Meridian TeleSystems, Inc.
MET Communications, Inc.
Metropolitan Telecommunications of Florida,
Inc. d/b/a MetTel
Midwestern Telecommunications, Incorporated
Momentum Telecom, Inc.
MULTIPHONE LATIN AMERICA, INC.
Myatel Corporation
National Telecom & Broadband Services, LLC
101
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08
Navigator Telecommunications, LLC
NET TALK.COM, INC.
Network Operator Services, Inc.
^^Network PTS, Inc.
Network Telephone Corporation d/b/a Cavalier
Telephone d/b/a Cavalier Business
Communications
NetworkIP, L.L.C. d/b/a Elite Telecom
Neutral Tandem-Florida, LLC
New Edge Network, Inc. d/b/a New Edge
Networks
New Horizons Communications Corp.
NextG Networks of NY, Inc. d/b/a NextG
Networks East
Nexus Communications, Inc. d/b/a Nexus
Communications TSI, Inc.
nii Communications, Ltd.
Norlight Telecommunications, Inc.
Norlight, Inc. d/b/a Cinergy Communications
Norstar Telecommunications, LLC
North American Telecommunications
Corporation
North County Communications Corporation
NOS Communications, Inc. d/b/a International
Plus d/b/a O11 Communications d/b/a The
Internet Business Association d/b/a I
Vantage Network Solutions
Novus Communications, Inc.
NuVox Communications, Inc.
ONE SOURCE NETWORKS CLEC LLC
One Voice Communications, Inc.
^^OneStar Long Distance, Inc.
OneTone Telecom, Inc.
Optical Telecommunications, Inc. d/b/a
HControl Corporation d/b/a SH Services
LLC
Orlando Telephone Company, Inc.
Pac-West Telecomm, Inc.
PaeTec Communications, Inc.
**Payless Telephone Company, Inc.
Peerless Network of Florida, LLC
Pelzer Communications Corporation
Phone Club Corporation
Phone XP, L.L.C.
Pilgrim Telephone, Inc.
PNG Telecommunications, Inc. d/b/a
PowerNet Global Communications
d/b/a CrossConnect
^^Preferred Carrier Services, Inc. d/b/a
Telefonos Para Todos and d/b/a Phones
For All
Preferred Long Distance, Inc.
Primus Telecommunications, Inc.
PriStar Communications L.L.C.
ProfitLab, Inc.
Progress Telecom, LLC
Protection Plus of the Florida Keys, Inc. d/b/a
ENGAGE COMMUNICATIONS
QuantumShift Communications, Inc.
QuikVoIP, LLC
Qwest Communications Corporation
Reliant Communications, Inc.
ReTel Communications, Inc.
Rightlink USA, Inc.
Ring Connection, Inc.
RNK Inc. d/b/a RNK Communications Inc.
Sage Spectrum, LLC
Sage Telecom, Inc.
Sago Broadband, LLC
Sandhills Telecommunications Group, Inc.
d/b/a SanTel Communications
Saturn Telecommunication Services Inc. d/b/a
STS Telecom
SBC Long Distance, LLC d/b/a SBC Long
Distance d/b/a AT&T Long Distance
Servi Express Caracol d/b/a Telefonica Express
^^ServiSense.com, Inc.
Shands Teaching Hospital and Clinics, Inc.
SIP Interchange Corporation
SKYNET360, LLC
SkyWay Telecom, Inc.
Smart City Networks
Smart City Solutions, LLC d/b/a Smart City
Communications
102
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08
Smart Network Solutions Communications
Corp
SNC Communications, LLC
Solarity Communications, LLC
Southeastern Services, Inc.
Southern Light, LLC
Southern Telecom, Inc. d/b/a Southern
Telecom of America, Inc.
^^Southern Telcom Network, Inc.
Spectrotel, Inc.
Sprint Communications Company Limited
Partnership
StarVox Communications, Inc.
Sterling Telecom Inc.
STS Telecom, LLC
Sunesys, LLC
Sun-Tel USA, Inc.
Supra Telecommunications and Information
Systems, Inc.
Swiftel, LLC
Syniverse Technologies, Inc.
T3 Communications, LLC d/b/a Tier 3
Communications d/b/a Naples Telephone
and d/b/a Fort Myers Telephone
Talk America Inc. d/b/a Cavalier Telephone
d/b/a Cavalier Business Communications
**Talk For Less, Inc.
Tallahassee Community College
TCG South Florida
TelCove Operations, Inc. d/b/a Level 3
Communications
Tele Circuit Network Corporation
Telecom Management, Inc. d/b/a Pioneer
Telephone
Teledata Solutions, Inc. d/b/a TDSI, INC.
TeleDias Communications, Inc.
Telepak Networks, Inc.
Telovations Inc.
Telrite Corporation
Telscape Communications, Inc.
Tennessee Telephone Service, LLC d/b/a
Freedom Communications USA, LLC
^^Terra Telecommunications Corp.
The Boeing Company
The Hamilton Telephone Company d/b/a
Hamilton Telecommunications
The Other Phone Company, Inc. d/b/a Cavalier
Telephone d/b/a Cavalier Business
Communications
The Phone Company
The Ultimate Connection, L.C. d/b/a DayStar
Communications
Think 12 Corporation d/b/a Hello Depot
Time Warner Telecom of Florida, L.P.
^^Touch 1 Communications, Inc.
Touchtone Communications Inc. of Delaware
TQC Communications, Corp.
Trans National Communications International,
Inc.
Transparent Technology Services Corporation
d/b/a North Palm Beach Telephone
Company
^^Trinsic Communications, Inc.
Tristar Communications Corp.
U.S. Metropolitan Telecom, LLC d/b/a
Truwave Networks LLC
UCN, Inc.
Universal Telecom, Inc.
US LEC of Florida Inc. d/b/a PAETEC
Business Services
US Telesis, Inc.
Utility Board of the City of Key West d/b/a
Keys Energy Services
**Utility USA, Inc. d/b/a Vizon Telecom
VBNet, Incorporated
Verizon Avenue Corp. d/b/a Verizon Avenue
Verizon Florida LLC
Verizon Select Services Inc.
Vixxi Solutions, Inc.
VoDa Networks, Inc.
^^VoTTs Communications, LLC
Wholesale Carrier Services, Inc.
World-Link Solutions, Inc. d/b/a WL
Solutions, Inc.
103
APPENDIX A. LIST OF CERTIFICATED CLECS AS OF 12/31/08
WTI Communications, Inc.
XFone USA, Inc.
XO Communications Services, Inc.
**Ygnition Networks, Inc.
Yipes Enterprise Services, Inc. d/b/a Reliance
GlobalCOM Services, Inc.
YMax Communications Corp.
Zone Telecom, Inc.
104
APPENDIX B. CLECS PROVIDING SERVICE IN FLORIDA
CLEC
1-800-RECONEX, Inc. d/b/a USTEL
Access Communications, LLC.
Access Integrated Networks, Inc.
Access Point, Inc.
ACN Communication Services, Inc.
Advantage Group of Florida Communications, L.L.C.
Affordable Phone Services, Inc. d/b/a High Tech
Communications
Airespring, Inc.
Alternative Phone, Inc.
American Fiber Network, Inc.
American Telephone Company LLC
ANEW Broadband, Inc. d/b/a INSTANTEL PHONE
SERVICE
Astro Tel, Inc.
AT&T Communications of the Southern States, LLC
d/b/a AT&T
Bellerud Communications, LLC
BellSouth Telecommunications, Inc. d/b/a AT&T
Florida d/b/a AT&T Southeast
Benchmark Communications, LLC d/b/a Com One
BetterWorld Telecom LLC d/b/a BetterWorld Telecom
Birch Telecom of the South, Inc. d/b/a Birch Telecom
and d/b/a Birch
Broadstar Communications, LLC
Broadwing Communications, LLC
Budget PrePay, Inc. d/b/a Budget Phone
BullsEye Telecom, Inc.
Business Telecom, Inc. d/b/a BTI
Callis Communications, Inc.
Campus Communications Group, Inc.
Cbeyond Communications, LLC
City of Daytona Beach
Cleartel Telecommunications, Inc. d/b/a Now
Communications, also d/b/a VeraNet Solutions
CloseCall America, Inc
Comtech21, LLC
105
Resale
X
X
Local
Platform
X
X
X
SwitchBased
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
APPENDIX B. CLECS PROVIDING SERVICE IN FLORIDA
CLEC
Comtel Telcom Assets LP d/b/a Excel
Telecommunications
Connect Paging, Inc. d/b/a Get A Phone d/b/a/ New
Talk, Inc.
Covista, Inc.
Custom Network Solutions, Inc.
Cypress Communications Operating Company, LLC
DeltaCom, Inc.
Dialtone Telecom, LLC
DPI-Teleconnect, L.L.C.
DSL Internet Corporation d/b/a DSLi
Easy Telephone Services Company
Embarq Communications, Inc.
Ernest Communications, Inc.
EveryCall Communications, Inc.
Express Phone Service, Inc.
First Communications, LLC
FLATEL, Inc. d/b/a Florida Telephone Company d/b/a
Oscatel d/b/a Telephone USA d/b/a Global Telecom
Florida Multi-Media Services, Inc. d/b/a Florida Multi
Media
Florida Phone Systems, Inc.
France Telecom Corporate Solutions L.L.C.
Ganoco, Inc. d/b/a American Dial Tone
Global Connection, Inc of America
Global Crossing Local Services, Inc.
Global Crossing Telemanagement, Inc.
Global Response Corporation
Granite Telecommunications, LLC
Harbor Communications, LLC
Home Town Telephone, LLC
Hotwire Communications, Ltd.
IDS Telcom Corp. d/b/a Cleartel Communications
Image Access, Inc. d/b/a NewPhone, Inc.
Interactive Services Network, Inc. d/b/a ISN Telcom
InterGlobe Communications, Inc.
106
Resale
Local
Platform
SwitchBased
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
APPENDIX B. CLECS PROVIDING SERVICE IN FLORIDA
CLEC
Inter-Tel NetSolutions, Inc. d/b/a Mitel NetSolutions,
Inc.
Knology of Florida, Inc.
Level 3 Communications, LLC
Lightyear Network Solutions, LLC
Matrix Telecom, Inc. d/b/a Matrix Business
Technologies
MCImetro Access Transmission Services LLC d/b/a
Verizon Access Transmission Services
MET Communications, Inc.
Metropolitan Telecommunications of Florida, Inc. d/b/a
MetTel
Momentum Telecom, Inc.
Navigator Telecommunications, LLC
Network Telephone Corporation d/b/a Cavalier
Telephone d/b/a Cavalier Business Communications
Nexus Communications, Inc. d/b/a Nexus
Communications TSI, Inc.
Nii Communications, Ltd.
Norlight, Inc. d/b/a Cinergy Communications
North American Telecommunications Corporation
NOS Communications, Inc. d/b/a International Plus d/b/a
O11 Communications d/b/a The Internet Business
Association d/b/a I Vantage Network Solutions
NuVox Communications, Inc.
One Voice Communications, Inc.
OneTone Telecom, Inc.
Orlando Telephone Company, Inc.
PaeTec Communications, Inc.
Phone Club Corporation
Phone XP, L.L.C.
PNG Telecommunications, Inc. d/b/a PowerNet Global
Communications d/b/a CrossConnect
QuantumShift Communications, Inc.
Qwest Communications Corporation
ReTel Communications, Inc.
Ring Connection, Inc.
RNK Inc. d/b/a RNK Communications Inc.
107
Resale
Local
Platform
SwitchBased
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
APPENDIX B. CLECS PROVIDING SERVICE IN FLORIDA
CLEC
Sandhills Telecommunications Group, Inc. d/b/a SanTel
Communications
Saturn Telecommunication Services Inc. d/b/a STS
Telecom
Servi Express Caracol d/b/a Telefonica Express
Smart City Solutions, LLC d/b/a Smart City
Communications
Southeastern Services, Inc.
Spectrotel, Inc.
Sun-Tel USA, Inc.
Supra Telecommunications and Information Systems,
Inc.
Swiftel, LLC
T3 Communications, LLC d/b/a Tier 3 Communications
d/b/a Naples Telephone and d/b/a Fort Myers Telephone
Talk America Inc. d/b/a Cavalier Telephone d/b/a
Cavalier Business Communications
Tele Circuit Network Corporation
TeleDias Communications, Inc.
Tennessee Telephone Service, LLC d/b/a Freedom
Communications USA, LLC
The Other Phone Company, Inc. d/b/a Cavalier
Telephone d/b/a Cavalier Business Communications
The Ultimate Connection, L.C. d/b/a DayStar
Communications
Think 12 Corporation d/b/a Hello Depot
Time Warner Telecom of Florida, L.P.
Trans National Communications International, Inc.
Tristar Communications Corp.
U.S. Metropolitan Telecom, LLC d/b/a Truwave
Networks LLC
Universal Telecom, Inc.
US LEC of Florida Inc. d/b/a PAETEC Business
Services
Wholesale Carrier Services, Inc.
WTI Communications, Inc.
XO Communications Services, Inc.
Zone Telecom, Inc.
Total # of Companies = 119
108
Resale
Local
Platform
SwitchBased
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
86
X
X
35
48
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Alachua
Alford
Alligator Point
Altha
Apalachicola
Apopka
Arcadia
Archer
Astor
Avon Park
Baker
Baldwin
Bartow
Belleglade
Belleview
Beverly Hills
Blountstown
Boca Grande
Boca Raton
Bonifay
Bonita Springs
Bowling Green
Boynton Beach
Bradenton
Branford
Bristol
Bronson
Brooker
Brooksville
Bunnell
Bushnell
Callahan
Cantonment
Cape Coral
Cape Haze
Carrabelle
Cedar Key
Celebration
Century
Chattahoochee
Cherry Lake
Chiefland
CLEC Residential
Providers
Dec-07
Dec-08
4
4
5
4
0
0
0
0
0
0
10
11
11
9
10
12
3
1
11
9
3
3
9
5
6
7
22
22
11
11
7
5
2
2
1
30
34
1
9
8
8
9
3
2
30
29
9
11
4
3
0
0
17
20
1
1
20
21
13
16
12
9
1
3
13
16
7
6
1
3
0
0
3
4
1
1
8
10
2
2
6
4
13
18
109
CLEC Business
Providers
Dec-07
Dec-08
2
2
4
7
1
0
0
0
1
1
17
20
11
12
6
7
5
6
13
13
4
4
8
8
12
14
14
19
10
16
8
9
0
0
3
43
33
3
7
7
15
21
5
7
29
32
18
25
1
2
0
0
6
6
0
0
18
20
11
14
8
9
1
3
12
12
13
18
9
9
0
0
4
6
5
8
2
4
0
0
3
3
11
12
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Chipley
Citra
Clearwater
Clermont
Clewiston
Cocoa
Cocoa Beach
Coral Springs
Cottondale
Crawfordville
Crescent City
Crestview
Cross City
Crystal River
Dade City
Daytona Beach
DeBary
Deerfield Beach
DeFuniak Springs
Deland
DeLeon Springs
Delray Beach
Destin
Dowling Park
Dunnellon
East Orange
East Point
Eau Gallie
Englewood
Eustis
Everglades
Fernadina Beach
Flagler Beach
Florahome
Florida Sheriffs’ Boys Ranch
Forest
Freeport
Frostproof
Ft. Lauderdale
Ft. Meade
Ft. Myers
Ft. Myers Beach
CLEC Residential
Providers
Dec-07
Dec-08
15
18
2
1
17
13
8
9
8
8
26
30
16
17
31
30
8
7
4
5
3
3
11
7
7
8
5
6
10
8
30
33
18
17
25
27
7
25
17
10
9
31
31
7
7
8
1
1
23
21
10
0
0
11
24
24
3
4
12
11
0
0
25
25
10
12
2
2
3
1
5
4
3
6
5
16
42
3
4
30
17
2
5
6
110
CLEC Business
Providers
Dec-07
Dec-08
10
12
1
1
28
31
15
18
9
9
26
28
17
20
26
34
3
4
7
10
1
1
10
13
5
8
11
16
9
13
30
37
16
18
29
35
7
23
22
7
7
35
32
14
11
10
0
0
13
12
11
0
0
15
23
26
13
20
9
11
4
2
16
17
10
11
1
1
0
1
5
8
4
10
9
25
45
1
6
26
18
5
8
10
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Ft. Pierce
Ft. Walton Beach
Ft. White
Gainesville
Geneva
Glendale
Graceville
Grand Ridge
Green Cove Springs
Greensboro
Greenville
Greenwood
Gretna
Groveland
Gulf Breeze
Haines City
Hastings
Havana
Hawthorne
High Springs
Hilliard
Hobe Sound
Holley-Navarre
Hollywood
Homestead
Homosassa
Hosford
Howey-in-the-Hills
Hudson
Immokalee
Indian Lake
Indiantown
Interlachen
Inverness
Jacksonville
Jacksonville Beach
Jasper
Jay
Jennings
Jensen Beach
Julington
Jupiter
CLEC Residential
Providers
Dec-07
Dec-08
26
47
15
4
1
10
33
35
6
5
2
2
14
17
8
6
18
20
1
1
6
6
6
4
1
1
6
7
15
13
12
10
3
4
17
18
15
16
2
2
2
2
15
16
13
15
35
39
31
36
7
6
0
0
2
1
8
6
7
6
0
0
1
1
1
1
11
6
38
23
22
42
2
1
12
12
1
1
17
16
2
1
25
26
111
CLEC Business
Providers
Dec-07
Dec-08
24
47
14
12
1
18
24
29
6
8
1
0
9
11
4
4
12
15
0
0
4
4
2
3
0
0
8
11
15
17
14
21
3
3
8
8
5
6
2
2
1
1
18
16
12
11
36
42
27
29
10
10
0
0
2
3
14
18
12
13
3
3
2
2
3
2
8
11
36
22
16
42
3
2
6
7
0
1
20
21
2
1
26
32
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Keaton Beach
Kenansville
Keys
Keystone Heights
Kingsley Lake
Kissimmee
La Belle
Lady Lake
Lake Buena Vista
Lake Butler
Lake City
Lake Placid
Lake Wales
Lakeland
Laurel Hill
Lawtey
Lee
Leesburg
Lehigh Acres
Live Oak
Luraville
Lynn Haven
Macclenny
Madison
Malone
Marco Island
Marianna
Maxville
Mayo
McIntosh
Melbourne
Melrose
Miami
Micanopy
Middleburg
Milton
Molino
Monticello
Montverde
Moore Haven
Mount Dora
Mulberry
CLEC Residential
Providers
Dec-07
Dec-08
0
0
1
0
25
25
12
15
0
0
16
12
8
8
8
8
1
26
2
11
21
2
7
13
8
7
13
5
0
5
6
16
5
9
12
3
11
1
3
1
2
18
16
2
0
10
8
4
5
3
2
11
10
9
11
2
2
3
4
33
33
1
2
49
41
4
6
21
18
24
15
0
0
9
10
2
1
5
7
10
11
6
8
6
112
CLEC Business
Providers
Dec-07
Dec-08
0
0
4
3
28
36
8
11
1
0
20
25
10
13
9
15
1
18
2
17
21
2
10
24
12
12
19
3
0
6
3
15
3
18
12
3
14
6
3
0
0
11
12
3
2
12
9
1
2
13
10
12
11
6
5
1
2
2
1
27
26
1
1
50
50
5
3
19
14
14
12
0
0
9
7
3
1
7
7
15
14
13
8
1
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Munson
Myakka
Naples
New Port Richey
New Smyrna Beach
Newberry
North Cape Coral
North Dade
North Ft Myers
North Naples
North Port
Oak Hill
Ocala
Ocklawaha
Okeechobee
Old Town
Orange City
Orange Park
Orange Springs
Orlando
Oviedo
Pace
Pahokee
Palatka
Palm Coast
Palmetto
Panacea
Panama City
Panama City Beach
Paxton
Pensacola
Perrine
Perry
Pierson
Pine Island
Plant City
Polk City
Pomona Park
Pompano Beach
Ponce de Leon
Ponte Vedra Beach
Port Charlotte
CLEC Residential
Providers
Dec-07
Dec-08
4
3
3
12
14
4
8
14
17
6
19
6
7
37
35
3
9
7
6
20
6
6
7
15
19
4
2
12
10
10
14
1
9
6
26
35
2
47
42
18
22
19
13
17
20
19
16
19
15
7
4
2
3
29
26
1
19
39
1
25
31
1
28
14
1
2
10
10
3
19
9
12
5
0
9
2
38
11
7
33
15
5
9
2
113
CLEC Business
Providers
Dec-07
Dec-08
0
5
4
23
19
15
18
6
22
16
7
16
16
35
30
13
14
22
13
20
10
6
7
20
14
4
4
12
12
7
6
0
13
18
22
23
0
51
45
27
23
12
11
14
11
16
15
21
20
18
15
2
2
25
22
0
18
30
0
31
27
1
30
12
1
7
7
20
5
21
15
18
9
1
4
12
35
4
3
40
13
4
14
1
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Port St Joe
Port St. Lucie
Punta Gorda
Quincy
Raiford
Reedy Creek
Reynolds Hill
Salt Springs
San Antonio
Sanderson
Sanford
Sanibel-Captiva Island
Santa Rosa Beach
Sarasota
Seagrove Beach
Sebastian
Sebring
Shalimar
Silver Springs Shores
Sneads
Sopchoppy
Spring Lake Hills
St. Augustine
St. Cloud
St. Johns
St. Marks
St. Petersburg
Starke
Stuart
Sunny Hills
Tallahassee
Tampa
Tarpon Springs
Tavares
The Beaches
Titusville
Trenton
Trilacoochee
Tyndall AFB
Umatilla
Valparaiso
Venice
CLEC Residential
Providers
Dec-07
Dec-08
1
9
31
32
5
2
2
2
1
0
3
2
5
6
2
2
4
2
0
0
34
34
0
2
4
15
16
4
4
25
23
11
10
4
5
8
8
0
7
5
3
3
5
3
8
10
11
22
24
3
2
10
14
14
12
15
26
24
8
11
20
23
19
22
4
5
10
4
0
0
25
25
16
18
6
5
0
0
9
8
7
4
9
6
114
CLEC Business
Providers
Dec-07
Dec-08
1
18
28
33
12
17
0
0
0
0
16
15
1
0
3
4
6
8
0
0
28
33
7
10
8
29
21
6
6
22
19
18
13
12
10
9
6
10
4
5
3
2
5
7
5
16
14
21
19
1
2
13
24
8
8
30
29
33
5
4
19
23
31
34
18
21
12
12
0
0
25
22
10
10
4
7
0
0
5
5
12
13
17
21
APPENDIX C. NUMBER OF CLEC PROVIDERS IN EACH
EXCHANGE
Exchange
Vernon
Vero Beach
Waldo
Walnut Hill
Wauchula
Weekiwachee Springs
Weirsdale
Welaka
Wellborn
West Kissimmee
West Palm Beach
Westville
Wewahitchka
White Springs
Wildwood
Williston
Windermere
Winter Garden
Winter Haven
Winter Park
Yankeetown
Youngstown-Fountain
Yulee
Zephyr Hills
Zolfo Springs
CLEC Residential
Providers
Dec-07
Dec-08
12
11
30
31
1
1
0
0
9
8
22
18
6
5
11
12
2
2
13
4
44
0
4
1
0
8
3
11
9
5
11
13
6
16
15
17
12
4
19
47
7
7
10
11
12
14
6
7
5
6
115
CLEC Business
Providers
Dec-07
Dec-08
4
6
26
30
1
1
0
0
9
10
19
21
3
5
5
6
0
0
16
4
40
0
3
1
0
13
2
11
8
13
9
22
9
23
19
26
17
18
20
44
6
7
6
7
7
9
12
18
4
3
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116
APPENDIX D. CERTIFICATED FLORIDA COMPANIES PROVIDING
VoIP SERVICE PER FPSC DATA REQUEST RESPONSES
Company Name
Access Point, Inc.
Advantage Group of Florida Communications, L.L.C.
ANEW Broadband, Inc. d/b/a INSTANTEL PHONE SERVICE
Astro Tel, Inc.
BetterWorld Telecom LLC d/b/a BetterWorld Telecom
Broadstar, LLC d/b/a PrimeCast
Broadwing Communications, LLC
BullsEye Telecom, Inc.
Callis Communications, Inc.
Cbeyond Communications, LLC
City of Quincy d/b/a netquincy d/b/a netquincy.com d/b/a
www.netquincy.com
CommPartners, LLC
Communications Xchange, LLC
Comtech21, LLC
Comtel Telecom Assets LP d/b/a Excel Telecommunications
Comtel Telecom Assets LP d/b/a VarTec Solutions
Comtel Telecom Assets LP d/b/a VarTec Telecom
Cost Plus Communications, LLC
Cox Florida Telcom, L.P. d/b/a Cox Communications
Cypress Communications Operating Company, LLC
DIECA Communications, Inc. d/b/a Covad Communications
Company
DSL Internet Corporation d/b/a DSLi
Embarq Communications, Inc.
ENA Services, LLC
FLATEL, Inc. d/b/a Florida Telephone Company d/b/a Oscatel d/b/a
Telephone USA d/b/a Global Telecom
Florida Multi-Media Services, Inc. d/b/a Florida Multi Media
Florida Telephone Services, LLC
Global Crossing Local Services, Inc.
Harbor Communications, LLC
Hotwire Communications, Ltd.
Interactive Services Network, Inc. d/b/a ISN Telcom
Inter-Tel NetSolutions, Inc. d/b/a Mitel NetSolutions Inc.
Knology of Florida, Inc.
Lightyear Network Solutions, LLC
Litestream Holdings, LLC
MCC Telephony of Florida, Inc.
National Telecom & Broadband Services, LLC
North American Telecommunications Corporation
NuVox Communications, Inc.
117
Company also provides local wireline
services as displayed in Appendix B
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
APPENDIX D. CERTIFICATED FLORIDA COMPANIES PROVIDING
VoIP SERVICE PER FPSC DATA REQUEST RESPONSES
Company Name
Optical Telecommunications, Inc. d/b/a Hcontrol Corporation d/b/a
SH Services LLC
Orlando Telephone Company, Inc.
PaeTec Communications, Inc.
Phone XP, L.L.C.
Qwest Communications Corporation
RNK Inc. d/b/a RNK Communications Inc.
Saturn Telecommunication Services Inc. d/b/a STS Telecom
Southeastern Services, Inc.
T3 Communications, LLC d/b/a Tier 3 Communications d/b/a Naples
Telephone and d/b/a Fort Myers Telephone
Tele Circuit Network Corporation
Telovations Inc.
Time Warner Telecom of Florida, L.P.
Trans National Communications International, Inc.
US LEC of Florida Inc., d/b/a PAETEC Business Services
U.S. Metropolitan Telecom, LLC d/b/a Truwave Networks LLC
Verizon Access Transmission Services
XO Communications Services, Inc.
Zone Telecom, Inc.
118
Company also provides local wireline
services as displayed in Appendix B
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
APPENDIX E. SUMMARY OF COMPLAINTS FILED BY CLECS
Complaint or
Docket
Number
CLEC
Bright House
Networks,
Comcast
ILEC
Verizon
Date
Opened
11/16/07
DSLI
Bellsouth
12/03/07
0760408T
Astrotel
Verizon
03/27/08
0773172T
Flatel, Inc.
Verizon
07/15/08
0786992T
Astrotel
Verizon
08/13/08
0791471T
Complaint against
Verizon for
improperly fulfilling
a conversion request,
resulting in loss of
service.
08/27/08
Astrotel
Verizon
08/13/08
0791590T
08/15/08
Astrotel
Verizon
08/14/08
0791794T
Complaint against
Verizon for not
fulfilling orders in a
timely fashion.
Complaint against
Verizon for not
fulfilling orders in a
timely fashion.
Astrotel
Verizon
08/15/08
0791850T
Complaint against
Verizon for not
fulfilling orders in a
timely fashion.
08/22/08
070691-TP
080036-TP
Description
Complaint against
Verizon for alleged
failure to facilitate
transfer of customer
numbers.
Complaint involving
the inability to send
entire faxes or faxes
being only partially
received.
Complaint regarding
Verizon
disconnecting local
service too soon
when their
customers switch
providers.
Complaint that
Verizon was
enabling certain
types of calls that
resulted in a fee to
Flatel.
119
Date
Closed
Pending
01/15/08
Resolution
Order PSC-080344-PCO-TP
modifies the
procedures for
this process.
Bellsouth and
DSLI resolved
the faxing issue.
04/17/08
Verizon stated
that the
disconnect was
human error,
and agreed to
correct it.
10/13/08
Flatel could not
provide proof
that they were
being charged
or that it had
submitted any
payments to
Verizon.
Verizon
discovered the
errors that
created the
service
disruption and
remedied the
issue.
Verizon
fulfilled the
order.
08/15/08
Verizon
fulfilled the
order and
contacted the
customer to
assure operable
service.
Verizon
fulfilled the
order.
APPENDIX E. SUMMARY OF COMPLAINTS FILED BY CLECS
Complaint or
Docket
Number
CLEC
Astrotel
ILEC
Verizon
Date
Opened
09/08/08
Phone Club Corp
Bellsouth
12/03/08
0811634T
Astrotel
Verizon
12/08/08
0812297T
Bright House
Networks
Verizon
12/09/08
Astrotel
Verizon
Astrotel
0795435T
Description
Complaint against
Verizon for not
fulfilling orders in a
timely fashion.
Date
Closed
12/09/08
Complaint against
Bellsouth for
inappropriate
charges to PCC.
Complaint against
Verizon for not
adding all features to
customer’s service.
Pending
080701-TP
Complaint against
Verizon for alleged
violations of
electrical codes.
Pending
12/12/08
0813377T
12/12/08
Verizon
12/16/08
0813838T
Complaint against
Verizon for errors
resulting in
temporary loss of
service.
Complaint against
Verizon for
improperly billing an
Astrotel customer.
Astrotel
Verizon
12/16/08
0813881T
Complaint against
Verizon for not
fulfilling orders in a
timely fashion.
12/19/08
Astrotel
Verizon
12/16/08
0813882T
Complaint against
Verizon for not
fulfilling orders in a
timely fashion and
causing line outages.
12/19/08
120
12/19/08
12/23/08
Resolution
Verizon
discovered a
system error
that they are
attempting to
resolve.
Waiting on
response from
the PSC.
Astrotel
cancelled its
order, and
Verizon had to
manually
correct some
invalid address
information.
Verizon is
doing an
internal review;
the PSC has the
option to
reinspect or
close the
docket.
Verizon
repaired
problem with
service.
Verizon phoned
customer and
apologized, and
corrected billing
error.
Verizon
discovered a
system error
that they are
attempting to
resolve.
Verizon is
working to
resolve system
errors that
create delays
and outages.
APPENDIX E. SUMMARY OF COMPLAINTS FILED BY CLECS
CLEC
Astrotel
ILEC
Verizon
Date
Opened
12/16/08
Complaint or
Docket
Number
0813884T
Description
Complaint against
Verizon for not
fulfilling orders in a
timely manner.
121
Date
Closed
11/18/08
Resolution
Verizon is
working to
resolve system
errors.
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122
APPENDIX F. FLORIDA LIFELINE ELIGIBILITY CRITERIA
Eligibility for participation in the Lifeline and Link-Up programs is determined by
subscriber enrollment in any one of the following qualifying programs:
Program-Based Criteria
ƒ
Temporary Cash Assistance (TCA)
ƒ
National School Lunch’s Free Lunch Program
ƒ
Temporary Assistance to Needy Families (TANF)
ƒ
Food Stamps
ƒ
Medicaid
ƒ
Low-Income Home Energy Assistance Program (LIHEAP)
ƒ
Supplemental Security Income (SSI)
ƒ
Federal Public Housing Assistance (Section 8)
ƒ
Bureau of Indian Affairs programs:
-Tribal TANF
-Head Start Subsidy
-National School Lunch Program
Income-Based Criteria
ƒ
150 percent of the Federal Poverty Guidelines.321
321
The 2009 Legislature passed Legislation that increased the income-based Lifeline eligibility threshold in Florida from 135
percent of the Federal Poverty Guidelines to 150 percent, effective July 1, 2009. The Florida income-based criterion applies only
to AT&T, Embarq, and Verizon; the other Florida ILECs do not currently enroll Lifeline applicants on the basis of income.
Alltel and Sprint Nextel (wireless carriers) were designated as ETCs in Florida by the FCC and are subject to the income-based
criterion established by federal regulation. TracFone has voluntarily provided Lifeline benefits to subscribers in Florida based on
the 135 percent Federal Poverty Guideline income test.
123
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124
GLOSSARY OF TERMS
3G
4G
911/E911
Access Line
Broadband
BPL
Circuit
CLEC
Coaxial Cable
Commercial Agreement
DOCSIS
Third-generation technology. Used in the context of mobile
telephone standards. 3G networks are wide area cellular telephone
networks that evolved to incorporate high-speed Internet access
and video telephony.
Fourth-generation technology. 4G is the stage of broadband
mobile communications that will supersede 3G. End-to-end IP
and high-quality streaming video will likely be among 4G's
distinguishing features.
Basic 911/Enhanced 911. Basic 911 systems forward all
emergency 911 calls to the appropriate public safety answering
point. E911 systems are able to automatically forward the caller’s
location (ALI) and call back number (ANI) to the appropriate
PSAP.
The circuit or channel between the demarcation point at the
customer’s premises and the serving end or class 5 central office.
A term describing evolving digital technologies offering
consumers integrated access to voice, high-speed data services,
video on demand services, and interactive information delivery
services.
Broadband over Power Lines.
The use of power line
communications technology to provide broadband Internet access
through a computer plugged into any electrical outlet in your
home.
A fully operational two-way communications path.
Competitive Local Exchange Company. Any company certificated
by the Florida Public Service Commission to provide local
exchange telecommunications service in Florida on or after July 1,
1995.
A high-capacity cable widely used in voice, video, and data
applications. Coaxial cable includes one physical channel that
carries the signal surrounded (after a layer of insulation) by
another concentric physical channel, both running along the same
axis. The outer channel serves as a ground and a shield against
external interference.
A contractual arrangement between an ILEC and CLEC to
purchase network components or other services not required
pursuant to state or federal law.
Data Over Cable Service Interface Specification. DOCSIS
defines the communications and operation support interface
requirements for a data over cable system.
125
GLOSSARY OF TERMS
DSL
ETC
Exchange
FiOS
ILEC
Intermodal
Internet Protocol (IP)
IXC
Local Loop
Local Platform
LTE
PSTN
Digital Subscriber Line. A family of technologies (including
variations such as asynchronous DSL, high bit-rate DSL, very
high bit-rate DSL, etc.) that provide high-speed Internet access.
DSL is typically provided by traditional wireline
telecommunications companies via a copper loop to the
customer’s premises. DSL is the principal competition of cable
modems.
Eligible Telecommunications Carrier. An ETC designated under
Section 214(e), F.S., is eligible to receive specific federal
universal service support.
An ILEC’s central office or group of central offices, together with
the subscribers’ stations and lines connected thereto, forming a
local system which furnishes means of telephonic communication
without toll charges between subscribers within a specified area,
usually a single city, town, or village.
FiOS is Verizon’s suite of voice, video, and broadband services
provisioned over fiber optic cable directly to the customer’s
premises. FiOS can currently provide Internet access with
maximum download speed of 50 Mbps and upload speed of 20
Mbps.
Incumbent Local Exchange Company. Any company certificated
by the FPSC to provide local exchange telecommunications
service in Florida on or before June 30, 1995.
The use of more than one type of technology or carrier to transport
telecommunications services from origination to termination.
When referring to local competition, intermodal refers to
nonwireline voice communications such as wireless or VoIP.
The term refers to all the standards that keep the Internet
functioning. IP describes software that tracks the Internet address
of nodes, routes outgoing messages, and recognizes incoming
messages.
Intrastate Interexchange Company. Any entity that provides
intrastate interexchange telecommunications services.
See Access Line.
The commercial replacement for UNE-P. The local platform
provides an end-to-end circuit. See UNE-P.
Long Term Evolution. LTE is a technology standard for the future
provision of 4G wireless services.
Public Switched Telephone Network. The PSTN is the network
that provides switching and transmission facilities to the general
public.
126
GLOSSARY OF TERMS
Resale
The 1996 Act requires ILECs to offer to its competing
telecommunications carriers, at wholesale rates, any
telecommunications service that the ILEC provides to its
customers at retail rates, so that the competing carriers can resell
the services.
Smartphone
A mobile phone offering advanced capabilities, often including
wireless data capability. The BlackBerry Storm and the iPhone
are considered smartphones.
Switch
A mechanical, electrical, or electronic device that opens or closes
circuits, completes or breaks an electrical path, or selects paths or
circuits.
Switched Access
Local exchange telecommunications company-provided exchange
access services that offer switched interconnections between local
telephone subscribers and long distance or other companies. Long
distance companies use switched access for origination and
termination of user-dialed calls.
Tariff
A statement by a regulated telecommunications company that sets
out the services offered by that company. A tariff provides the
rates, terms, and conditions under which regulated services are
provided and also states the general obligations of the company
and customers. Tariffs are subject to review by regulatory
agencies and must be adhered to by the common carrier to ensure
nondiscrimination between customers. In Florida, CLECs are not
required to file tariffs, but they must file price lists if they offer
basic local telecommunications service.
Telecommunications Act The federal Telecommunications Act of 1996 established a
of 1996 (the 1996 Act)
national framework to enable CLECs to enter the local
telecommunications marketplace.
TRO
Triennial Review Order. The FCC released the TRO on August
21, 2003; the Order became effective on October 2, 2003. In this
Order, the FCC determined that ILECs do not have to unbundle
certain broadband elements, including FTTH loops in greenfield
situations, broadband capabilities of FTTH loops in overbuild
situations, the packet-switched capabilities of hybrid loops, and
packet switching.
TRRO
Triennial Review Remand Order. The FCC released the TRRO in
February 2005. In this Order, the FCC eliminated unbundled local
switching as a UNE, effective March 11, 2005, with a transition
period extending until March 11, 2006. This decision effectively
eliminated the combination of local elements known as UNE-P.
In its place, the ILECs continue to provide the same service but at
higher market-based rates, a service referred to as local platform.
127
GLOSSARY OF TERMS
TRS
UNE
UNE-P
U-verse
Universal Service
VRS
VoIP
Wi-Fi
WiMAX
Telecommunications Relay System. TRS enables a person with a
hearing or speech disability to access the nation’s telephone
system to communicate with voice telephone users through a relay
provider and a communications assistant.
Unbundled Network Element. The Telecommunications Act of
1996 requires that the ILECs unbundle certain network elements
and make them available to CLECs. UNEs are defined as physical
and functional elements of the network, for example, Network
Interface Devices, local loops and subloops, operations support
services, etc.
Unbundled Network Element–Platform.
An unbundled
combination that provided an end-to-end circuit. The TRRO
eliminated the UNE-P effective March 11, 2005, with a transition
period extending until March 11, 2006. Now available through a
commercial agreement, UNE-P is known as the local platform.
See Local Platform.
U-verse is AT&T’s brand name for a group of services provided
via Internet Protocol (IP), including television service, Internet
access, and voice telephone service. Similar to Verizon’s FiOS
service, AT&T’s U-verse is deployed using fiber optic cable.
This term describes the financial support mechanisms that
constitute the national universal service fund. This fund provides
compensation to telephone companies or other communications
entities for providing access to telecommunications services at
reasonable and affordable rates throughout the country, including
public institutions and rural, insular, high-cost areas.
Video Relay Service. Video Relay Service is a form of
Telecommunications Relay Service that enables individuals with
hearing disabilities who use American Sign Language to
communicate with voice telephone users through video equipment,
rather than through typed text.
Voice over Internet Protocol. The technology used to transmit
voice conversations over a data network using Internet Protocol.
Wi-Fi is a standard originally licensed by the Wi-Fi Alliance to
describe the underlying technology of wireless local area networks
(WLAN) based on the specific methods and techniques of wireless
local area network operation.
Worldwide Interoperability for Microwave Access. Defined by the
WiMAX Forum, formed in April 2001, to promote protocol
conformance and interoperability. The Forum describes WiMAX
as a standards-based technology enabling the delivery of last mile
wireless broadband access as an alternative to cable and DSL.
128
GLOSSARY OF TERMS
Wireline
A term used to describe the technology used by a company to
provide telecommunications services. Wireline is synonymous
with “landline” or land-based technology.
129
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