******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. In the Matter of ) ) Puerto Rico Telephone Company ) ) CCB/CPD No. 99-36 Petition for Waiver of ) Section 61.41 or Section 54.303(a) ) of the Commission's Rules ) ORDER Adopted: February 10, 2000 Released: February 11, 2000 By the Chief, Competitive Pricing Division: 1. On December 10, 1999, Puerto Rico Telephone Company, Inc. (PRTC), pursuant to section 1.3 of the Commission's rules, filed a petition for waiver of section 61.41 of the Commission's rules, as well as any other provisions that would otherwise prevent PRTC from remaining subject to rate-of-return regulation and in the National Exchange Carrier Association (NECA) Common Line Pool (PRTC Petition). PRTC alternatively requests a limited waiver of section 54.303(a) of the Commission's rules in order to allow PRTC to continue to receive Long Term Support (LTS) for a transitional period, in the event that it is required to convert to price cap regulation. If PRTC is required to operate as a price cap carrier, it also requests an extension of the effective date for its initial price cap tariff to July 1, 2000. In this Order, we extend to July 1, 2000, the date by which PRTC may be required to file an initial price cap tariff, while the Commission continues to weigh the merits of its petition. 2. PRTC is the incumbent local exchange carrier (LEC) serving Puerto Rico. It serves more than 1.3 million access lines and provides local exchange, exchange access, intra-island services, and Internet access as a rate-of-return carrier. On February 12, 1999, the Commission approved an application to transfer control of PRTC to GTE Holdings (Puerto Rico) LLC, a wholly owned subsidiary of GTE International Telecommunications Incorporated, which is an affiliate of price cap carriers GTE Telephone Operating Companies (GTOC) and GTE System Telephone Companies (GSTC)(collectively "GTE"). The transfer was consummated on March 2, 1999. PRTC must now convert to price cap regulation as a result of its transfer of control to GTE, unless the Commission waives section 61.41(c)(2) of the Commission's rules. In the absence of a waiver, PRTC will also be required, upon its conversion to price cap regulation, to withdraw from the NECA Common Line pool, and will lose any Long Term Support it receives under section 54.303 of the Commission's rules. 3. PRTC maintains that a grant of its petition for waiver of section 61.41(c)(2) would serve the public interest in promoting competition and universal service, and would be consistent with prior Commission decisions. PRTC also maintains that the public interest would be served if the Commission granted its alternate request for waiver of section 54.303(a) in order to allow PRTC to receive LTS while subject to price cap regulation. Finally, PRTC argues that, if it is required to convert to price cap regulation, an extension of time to July 1, 2000 for filing its annual price cap tariff will help provide administrative ease and synchronization of PRTC's price cap filings with all other annual access tariff filings. 4. Several parties submitted responses to PRTC's Petition. Most commenters oppose an unconditional waiver of section 61.41(c)(2). Several commenters, however, stated that they would not be opposed to the Commission extending the deadline for PRTC to file its initial price cap tariff to July 1, 2000. Several parties further argue that a comprehensive investigation of PRTC's costs might be necessary before PRTC converts to price cap regulation. Some commenters also support a limited waiver of the Commission's rules in order to allow PRTC to gradually receive reduced amounts of Long Term Support after its conversion to price cap regulation. 5. PRTC's waiver requests raise complex issues regarding universal service support in Puerto Rico, local competition, and operation of the NECA Common Line Pool. The parties to this proceeding have also filed an abundance of cost data and supplemental information in support of their positions. In light of the time constraints caused by PRTC's impending conversion to price cap regulation, and the need for full review by the Commission of the arguments and cost data submitted, we will extend the deadline for PRTC's conversion to price cap regulation until July 1, 2000, without ruling on the merits of PRTC's petition. This will provide for administrative ease and synchronization of any PRTC price cap filings with all other annual access tariff filings, in the event that the Commission does not grant its waiver request. This will also avoid the potential disruption to NECA pool rates that might occur if PRTC were required to withdraw from the NECA pool in the middle of the tariff year. 6. Accordingly, IT IS ORDERED, pursuant to sections 4(i) and 201 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and 201, and sections 1.3, 0.91, and 0.291 of the Commission's rules, 47 C.F.R.  1.3, 0.91, and 0.291, that section 61.41(c)(2) of the Commission's rules, 47 C.F.R.  61.41(c)(2), SHALL BE WAIVED to the extent necessary to permit Puerto Rico Telephone Company, Inc. to file its initial price cap tariff and convert to price cap regulation no later than July 1, 2000. FEDERAL COMMUNICATIONS COMMISSION Jane E. Jackson Chief, Competitive Pricing Division Common Carrier Bureau