Implementation of provider number
portability for facility based competition relative to small ILEC's
is one of the troublesome implementation areas alluded to in the
Four Small LEC Position Paper of Cause 39983. This task force
has focused primarily on moving ahead with number portability
implementation for the major urban areas as fast as possible.
The task force has not, however, given adequate consideration
to the "real world" small ILEC implementation problems,
economic impact upon the small ILEC areas nor the impact as measured
by the rates paid by small ILEC subscribers. The benefits have
been assumed and the implementation and economic impacts have
been "shelved" to a future date. The task force appears
to have taken a "one-size-fits-all" approach attempting
to force a large urban company solution upon the distinctly different
operating environment and characteristics of a small ILEC. In
effect, the task force appears to have taken the view that since
large companies have their number portability agenda and solution,
small ILEC considerations should not delay or compromise the given
solution. Since the small ILECs represent less than five percent
of the Indiana access lines, such an approach is probably practical
and reasonable as long as there is no negative economic impact
on the small ILEC or its customers.
The Illinois Experience and Indiana Small ILECs
To date, the Indiana task force has
focused its efforts on the Illinois task force experience. It
is extremely important for the Commission to understand the significance
of three facts:
1. No small ILEC was involved, even
in the meetings on number portability, in Illinois. As a result,
no small ILEC billing system vendors were involved. While switch
manufacturers may create solutions for number portability, other
small ILEC critical system considerations (such as operational
support systems) have not been analyzed. In Illinois, small company
considerations were, at best, swept under the carpet.
2. Illinois is not a flat-rate local
service state like Indiana. Illinois permits local measured services,
a rate design that is more compatible to the recovery of per-message
or per-minute costs arising from the processing of a call to a
ported customer. Thus, in Indiana, there is no simple way to
pass on or integrate local service prices for minute or message
sensitive costs affecting large volumes of traffic.
3. The cost of deployment and operation
of number portability including administrative and bill process
changes is unknown. The Illinois experience has not shed any
light on the actual cost of number portability for the Indiana
task force. The cost estimate included in this report is, at
best, little more than a guesstimate of the initial cost for some
of the participants. There is no estimate of the recurring costs
which some believe will be much larger than the initial costs.
There are certainly no cost estimates readily available for small
ILECs and there is no information to suggest why such costs would
not be proportionally more significant than with the large companies.
The lack of specific cost information regarding the deployment
and operation of number portability in either a large company
or a small ILEC exchange renders conclusions regarding the cost/benefits
or economic impacts of number portability incomplete and premature.
Federal Orders and Law
With regard to the specific economic
impact issues, the FCC's recent orders are not enlightening.
However, the FCC acknowledges that areas may be of concern to
small companies, and that Congress provided for suspensions and
modifications for small companies. Specifically, the FCC has
relied on TA96, Section 252 (f) (1) and (2) to solve the small
company implementation problems and in its July 2, 1996 Order
on Telephone Number Portability (CC docket No. 95-116, RM 8535,
paragraph 83) states:
83. "We note that the 1996
Act exempts rural telephone companies from the "duty to negotiate...the
particular terms and conditions of agreements to fulfill the [interconnection]
duties" created by the 1996 Act, including the provision
of number portability, and that carriers satisfying the statutory
criteria contained in section 251 (f) may be exempt from the obligations
to provide number portability as set forth herein. In addition,
section 251 (f) (2) permits a LEC with fewer than two percent
of the country's total installed subscriber lines to petition
a state commission for suspension or modification of the requirements
of section 251. In our recent notice of proposed rulemaking implementing
sections 251 and 252 of the Communications Act, we address the
applications of this statutory exemption, and we believe that
specific application of such provisions is best addressed in that
proceeding. We intend to establish regulations to implement these
provisions by early August 1996, consistent with the requirements
of section 251 (d)."
Thus, as long as this Commission
grants 251 (f) (2) suspensions relative to 251 (b) (2) Number
Portability to small Indiana ILECs, the adverse economic impact
of number portability for five percent of the, primarily rural,
access lines of Indiana can be avoided in a manner fully consistent
with what Congress intended.
Indiana Task Force Small ILEC Exchange Selection
The initial task force selection
of exchanges for number portability in the Indiana MSA's included,
as we expected, blanket requests that included all small ILEC
exchanges. While the requests associated with the small ILEC
exchanges were later removed, if facility-based competition for
even one or two business subscribers comes to such exchanges,
the bona fide requests can certainly be anticipated.
A Problem Exists
Unfortunately, the current nonselection
of small ILEC exchanges and the 251 (f) (2) suspension relative
to 251 (b) (2) does not alleviate the impact for small Indiana
ILECs and their subscribers. Any small ILEC exchange with EAS
to a selected number ported exchange will be impacted. An EAS
call from a small ILEC exchange to a number ported exchange will
require processing in the LRN systems to be delivered to the appropriate
service provider in the number ported exchange. For the 100 top
MSA's this situation will involve fourteen small ILECs in Indiana.
Either the small ILEC will need to install SS7 and number portability
into each switch and perform the dip, contract with a vendor to
perform the dip or rely on a carrier within the number ported
region to perform the dip and appropriate routing. At this time,
the latter alternative appears to be the most practical for small
ILECs. As noted, this task force has not produced any solid costs
for "dips", let alone switch modifications relative
to small companies.
Since the number ported exchange
and its service providers are totally the beneficiaries of such
EAS routing, the small ILECs in the task force believe all costs
to keep small ILEC EAS calling viable should be born by the number
ported exchange service providers. A Commission order in this
Cause is warranted on this issue on a timely basis. In the absence
of a Commission order on this issue, small ILECs with EAS to selected
number ported exchanges may very well incur costs with no rational
cost recovery or rational rate design policy to use. Only an
order on this issue will resolve this situation.
The Bigger Issue
Finally, the small ILECs in this
task force would be remiss if this report did not clearly point
out the massive administrative problems the number portability
will require of the small ILEC if they are ever required to implement
such number portability.
Where a small ILEC experiences a
facility based provider building into a few business customers
or the three block business area of a village such providers likely
will not duplicate the plant in the rural areas. Yet, the small
ILEC can fully expect to receive a number portability bona fide
request for the exchange. In this scenario, the small ILEC may
be faced with incurring company wide facility, switching, dip
and routing costs for the presumed benefit of the limited CLEC
customers. Who is the beneficiary in such a situation? But the
inequity doesn't stop there. We reference for the Commission
the "Process Flow" diagrams distributed at the December
10, 1996 task force meeting: 1) service provision, 2) cancellation
of service order, 3) disconnect, 4) repair, and 5) conflict resolution.
Literally every subscriber administrative function must go through
LRN translation. Existing phone numbers become extinct for subscriber
administration transactions. Yet, none of these administrative
system effects have been addressed in a small LEC context nor
has there been any meaningful discussion regarding the costs of
such undertakings. Just think of the complexity of processing
a repair order in an exchange with resale competition and number
ported facility based competition. Just a mere glance at these
flow charts should convince anyone that the massive administrative
burden would require additional personnel, administration, training
and EDP cost. Economic burden on the small ILEC and adverse economic
impact on subscribers are very obvious results. This is why Congress
included Section 251 (f) (2) in TA96.
The Commission, through this task
force and TA96, has sufficient record before it to determine that
number portability should not be applicable in small ILEC areas
for decades. An order of such at this time would clear the table
on this issue and eliminate the need to expend countless hours
and money to respond to any such request for number portability.
Prepared by: D. Glancy and M. Proctor