PUC Soliciting Public Comment on Oregon’s Carrier of Last Resort Rules

The Oregon Public Utility Commission (PUC) wants to hear from you! The agency is hosting a series of workshops and public comment meetings this spring and summer. The series is part of a public process to investigate the continuing relevance of “carrier of last resort” or COLR obligations for Oregon’s regulated telecommunications utilities in light of increased competition, evolving technology, and policy drivers. CUB is deeply involved in this public process, advocating for the interests of residential customers. At the same time, customers who can contribute their own perspectives in public comments will bolster the advocacy work CUB is already doing. Background materials, contact information, and other details for the workshops and public meetings can be found on the PUC’s COLR webpage. The public process will conclude with a report to the Legislature, indicating any proposed administrative changes and recommendations for legislative action, at the end of the summer.

But hang on - what is COLR anyway? COLR means that a utility service provider must provide, upon request, reasonable and non-discriminatory service to all customers. In the case of regulated telecommunications utilities in Oregon, the PUC allocates service territories called “exchanges.”

Oregon’s largest regulated telecommunications utility, CenturyLink, authored a bill during the 2019 Oregon legislative session to eliminate COLR obligations for themselves and all regulated telecommunications utilities in Oregon. CUB opposed the CenturyLink legislation and worked with Representative Pam Marsh (Ashland) and other stakeholders to develop and pass an alternative, HB 3065. The CUB-backed legislation required the PUC to open the public process described above.

HB 3065 was careful to specify that any administrative changes made at the PUC to existing regulations or statutory proposals must first consider the experience of customers who cannot or do not participate in competitive voice/internet service markets. Examples of these customers include rural Oregonians with access to only one voice or internet access service provider, or elderly customers who lack either the digital literacy or financial means to abandon their traditional home telephone service.

The history of COLR as a regulatory construct in the United States is only a few decades old. After the invention of the telephone (think copper landline wired to the home) near the end of the 19th century, the delivery and regulation of that service remained largely unchanged until the 1980s and the breakup of “Ma Bell.” Until that point, AT&T served as the de facto telephone utility in the US. And until passage of the federal Telecommunications Act of 1996, telephone utilities that were created out of the Bell system break-up served as “incumbent providers” for both traditional telephone and, eventually, early “dial-up” internet access service.

The 1996 Telecommunications Act favored deregulation by allowing “competitive local exchange carriers” (CLECs) to compete with incumbent telephone utilities or “incumbent local exchange carriers (ILECs). Here in Oregon, CenturyLink (formerly known as Quest) is the ILEC for most of the Portland area and large sections of rural Oregon. Comcast is the primary CLEC that “competes” with CenturyLink. Ziply (formerly known as Frontier and GTE before that) is the ILEC in communities west of Portland, as well as large sections of Southern and Northeastern Oregon. Spectrum (also known as Charter) is the primary CLEC that competes with Ziply.

Outside of the two major ILECs, there are also dozens of small ILECs or RLECs (the “R” stands for rural). Many of these companies are more than 100 years old, serve no more than a couple thousand customers, and in some cases as few as only two or three hundred.

All Oregon ILECs/RLECs are COLRs because the PUC allocates service territories to them. These companies receive money from the Oregon Universal Service Fund (OUSF) to help pay for the differential cost of maintaining their networks across diverse (and often sparsely populated) territories and providing reasonable, non-discriminatory service to all customers.

CLECs, wireless telephone, and satellite providers offering broadband or voice services are not COLRs. They have no obligation to serve customers upon request. CLECs and most other non-ILEC providers do not pay into the OUSF. These dynamics often frustrate CLEC customers, particularly when they experience service quality issues. The PUC does not regulate CLECs directly, so CUB has less of a “hook” to intervene on customers’ behalf. But the PUC’s public process to investigate COLR, with its invitation of broad industry and public input, is a valuable and timely opportunity for CUB to advocate for policies in the interest of residential voice and internet customers generally.

This brings us back to the PUC’s public process to investigate the continuing relevance of ILEC COLR obligations.

The PUC’s COLR investigation is designed to be more casual, inclusive, and accessible to the public. The PUC has held three workshops to date. The most recent was on May 14 where CUB presented on the various technology and policy drivers affecting telecommunications companies and COLR. Two more workshops are scheduled for June 23 and July 30 with separate Public Comment Meetings scheduled for May 28 and June 9. Customers who wish to comment but cannot attend the (now virtual) meetings can do so by phone or email.

CUB’s presentation highlights the need for a nuanced view of ILECs’ COLR obligations. Consumer preferences have indeed changed as indicated by a steady decline in traditional landlines. Yet over 250,000 households still retain their traditional landline telephone in Oregon. Many of these customers do so because they cannot or choose not to participate in an otherwise competitive market for voice and internet access service. Many have inadequate wireless coverage at their home or in their community, or do not have access to high-speed internet (broadband) from either their ILEC or a CLEC. Others may have low digital literacy or lack access to internet-enabled digital equipment, like a “smart” phone or tablet.

CUB cautions that eliminating or relieving COLR obligations for certain companies in certain situations could have significant consequences for not only residential customers, but also statewide network integrity. To the extent the OUSF currently offsets the costs associated with COLR, this means provider networks carrying landline traffic, as well as wireless and broadband, stay well maintained. In the absence of COLR, these dynamics could shift, and ultimately harm residential customers.

CUB strongly encourages Oregon telecommunications customers to participate in the public process over the coming weeks, especially during the public comment meetings. You can also share your experience and concerns by taking the PUC’s “Telecommunications Survey”.

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