I-ELECTRIC, KNOWLEDGE, KNOWLEDGEY,.
PLEASE RISE. HEAR YE, HEAR YE, HEAR YE. THE SUPREME COURT OF THE GREAT STATE OF FLORIDA IS NOW IN SESSION. ALL WHO HAVE CAUSE TO PLEA, DRAW NEAR, GIVE ATTENTION, AND YOU SHALL BE HEARD. GOD SAVE THESE UNITED STATES, THE GREAT STATE OF FLORIDA AND THIS HONORABLE COURT.
LADIES AND GENTLEMEN, THE FLORIDA SUPREME COURT. PLEASE BE SEATED.
GOOD MORNING, LADIES AND GENTLEMEN AND WELCOME TO THE FLORIDA SUPREME COURT. I WELCOME IN THE AUDIENCE, I DON'T KNOW WHERE THEY ARE. THE STUDENTS FROM THE UNIVERSITY OF FLORIDA LAW SCHOOL'S STATE CONSTITUTIONAL LAW CLASS ESCORTED BY FORMER JUSTICE BEN OVERTON. WELCOME AND I'M GOING TO CALL THE FIRST CASE ON THE CALENDAR THIS MORNING WHICH IS {CHARL}Y CRIST VERSUS LILA JABER, AND THE PARTIES MAY PROCEED.
MAY IT PLEASE THE COURT, I'M LYNN HEARN FROM THE SOLICITOR GENERAL'S OFFICE ON BEHALF OF THE APPELLANT. BEFORE THE COURT ARE REQUESTS BY FLORIDA'S THREE INCUMBENT TELEPHONE COMPANIES TO RAISE THE LOCAL TELEPHONE RATES IN FLORIDA BY APPROXIMATELY $350 MILLION PER YEAR.
COULD YOU KEEP YOUR VOICE UP? I'M HAVING A HARD TIME.
YES. THESE REQUESTS WERE FILED PURSUANT TO LEGISLATION THAT WAS PASSED IN 2003 THAT PERMITS INCREASES IF CERTAIN EVIDENCE CAN BE SHOWN.
THE DECISION IN 1995 TO OPEN UP THE LOCAL TELEPHONE MARKET TO COMPETITION. WITH THE BELIEF THAT COMPETITION WOULD BE GOOD FOR CONSUMERS, IT WOULD BRING IN MORE SUPPLIERS, IT WOULD EVENTUALLY DRIVE DOWN RATES. IT WOULD PROVIDE ADDITIONAL FEATURES AND BENEFITS AND SERVICES. SO IT TECHNICALLY LEGALLY MADE IT POSSIBLE FOR THERE TO BE COMPETITION STARTING IN 1995. UNFORTUNATELY THAT DIDN'T HAPPEN. COMPETITORS DIDN'T COME INTO THE FLORIDA LOCAL MARKET, AND SO --
WHAT WERE THE REASONS FOR THAT?
WELL, THAT'S --.
ISN'T ONE OF THE REASONS THE FACT THAT THE INCUMBENT CARRIERS HAD TO CHARGE RATES FOR LOCAL ACCESS THAT WERE BELOW COST AND NOBODY IS GOING TO COMPETE IN ORDER TO LOSE MONEY?
YES, THAT IS ONE OF THE REASONS. IT'S A PURE PROFITABILITY ANALYSIS BY A COMPETITOR TO LOOK AT THE REVENUES THAT THEY CAN BRING IN AND THE COSTS THAT THEY MUST PAY, AND SO I THINK ALL OF THE EVIDENCE IN THE RECORD IS THAT IT'S ONE OF THE WORDS WAS A COCKTAIL. IT'S A VARIETY OF FACTORS AND ONE OF THOSE IS THE REVENUE THAT THEY CAN BRING IN AND THE OTHER SIDE OF THAT IS THE COST.
DID YOU HAVE SORT OF A SUBSIDATION BY THE LOCAL COMPANIES AND THE OTHER RATES?
THE COMMISSION FOUND IN THIS PROCEEDING THAT BASIC LOCAL RATES WERE SUBSIDIZED BY OTHERS.
SO WITH THIS RULING BY THE PSC, ARE WE REDUCING THE SUBSIDIES, IS THAT WHAT'S GOING ON? WE ARE REDUCING THE SUBSIDIES AND INCREASING THE RATES FOR RESIDENTIAL PHONE CUSTOMERS?
THAT'S THE GENERAL CONCEPT OF IT.
AND WASN'T THAT CONTEMPLATED SPECIFICALLY BY SECTION 364.164 THAT THIS WOULD HAPPEN?
IT WAS FOR THE PURPOSE OF BRINGING ABOUT COMPETITION AND IMPROVING THE SERVICES THAT WERE PROVIDED.
WELL, THE ONLY WAY AS FAR AS THE WAY IT WOULD BRING ABOUT COMPETITION IS IF YOU RAISE THE {LOK} AT RATES TO MAKE IT MORE COMPETITIVE TO COME INTO FLORIDA. I GUESS THERE COULD BE OTHER WAYS, BUT SPECIFICALLY THIS DID, AND THIS DISCRETION IN THE PUBLIC SERVICE COMMISSION TO DETERMINE THIS, AND SO IT SEEMS TO ME AS FAR AS FOR THIS COURT AND MAYBE THAT WE HAVE TWO HURDLES. FIRST OF ALL WE HAVE A STATUTE THAT SPECIFICALLY CONTEMPLATES THIS AND THEN WE HAVE AN APPELLATE STANDARD REVIEW THAT GIVES GREAT DEFERNECE TO THE DECISIONS OF THE PUBLIC SERVICE COMMISSION SO WITH THOSE IN MIND, WHERE DID -- HOW DO WE OVERCOME THAT TO DECIDE THAT THE PUBLIC SERVICE COMMISSION ERRED EITHER AS A MATTER OF LAW OR FACT?
WELL, THE STATUTE IS DESIGNED TO BENEFIT CONSUMERS AND BRING ABOUT COMPETITION. IT'S NOT TO REBALANCE OR SIMPLY CHANGE THE ALLOCATION OF COSTS AND RATES BY THE PHONE COMPANY. THE PURPOSE OF THE STATUTE IS TO MACON ASSUMERS BETTER OFF, SO THE LEGISLATURE PROVIDED AS A REQUIREMENT IN ORDER TO IMPLEMENT THESE INCREASES THAT THERE MUST BE A SHOWING THAT IT WOULD BRING ABOUT COMPETITION SO THAT'S THE END. THE ULTIMATE PURPOSE.
BUT DOESN'T ALL OF THESE THINGS ARE COMPETITION MAY BE GOOD IN THE LONG RUN, BUT IF YOU ARE AN INDIVIDUAL CONSUMER IT IS ALWAYS BETTER TO HAVE YOUR RATES LOWER, SO I MEAN AND YOUR -- AS FAR AS THE ARGUMENT OF THE ATTORNEY GENERAL IT WOULD SEEM THAT THERE WOULD NEVER BE A WAY THAT IT COULD RAISE RATES, BECAUSE IN THE SHORT RUN THAT WOULD NEVER BE GOOD FOR THE CONSUMER, THE INDIVIDUAL RESIDENTIAL CONSUMER.
BUT WE'RE ALSO LOOKING AT -- WE NEED TO FOCUS ON THE ELEMENTS OF THE STATUTE AND THE ELEMENTS OF THE STATUTE ARE THAT IT WILL BRING ABOUT COMPETITION AND ONE OF THE KEY ARGUMENTS THAT WE MAKE IN THIS CASE IS THAT THERE ISN'T EVIDENCE THAT THESE RATE CHANGES WILL BRING ABOUT COMPETITION.
WASN'T THERE PLENTY OF TESTIMONY THAT IN OTHER JURISDICTIONS, IN FACT, THAT COMPETITION WAS SECURED BY ALLOWING SOME INCREASES IN THE RATES SO THAT IT WOULD MAKE IT APPEALING TO OTHER COMPETITORS TO COME IN AND, IN FACT, THEN WASN'T THERE TESTIMONY THAT EVENTUALLY THEN IN TERMS OF THE SOPHISTICATION OF SERVICES AND THE MULTIPLICITY OF SERVICES THAT THERE WILL BE THESE KINDS OF BENEFITS AND EVENTUALLY COMPETITION ALSO WILL DRIVE DOWN RATES, BUT THAT IT IS ALL SOMETHING THAT YOU HAVE TO GET STARTED, YOU KNOW, FIRST. LET ME ASK YOU A SEPARATE QUESTION ABOUT THE STATUTORY SCHEME TO SEE IF THERE IS AN ISSUE. DOES THE STATUTE OR THE SCHEME ALSO REQUIRE THAT ANY RATE ADJUSTMENT BE REVENUE NEUTRAL? THAT IS THAT WITHIN THE WHOLE SYSTEM OF RATES, LONG DISTANCE, LOCAL AND OTHERWISE, IS THERE A REQUIREMENT IN THE STATUTORY SCHEME THAT ANY APPROVED TO RATE ADJUSTMENTS BE REVENUE NEUTRAL?
THE REQUIREMENT IS THAT THE RATE ADJUSTMENTS BE REVENUE NEUTRAL TO THE INCUMBENT COMPANIES.
OKAY. ARE YOU RAISING ANY ISSUE THAT THE COMMISSION DID NOT HANDLE THIS IN A REVENUE NEUTRAL WAY?
NO.
SO THAT'S NOT AN ISSUE?
NO, IT'S NOT.
YOU ARE JUST SAYING THAT THE COMMISSION HAS NOT PROPERLY CONSIDERED WHETHER OR NOT THERE ARE BENEFITS THAT WILL JUSTIFY HAVING THESE RATES INCREASED ON A LOCAL LEVEL?
YES, BUT BEFORE YOU EVEN GET TO THE BENEFITS WE ARGUE THAT THERE ISN'T EVIDENCE THAT IT WILL BRING COMPETITION, AND TO ANSWER YOUR FIRST QUESTION, THERE IS NOT EVIDENCE IN THE RECORD THAT RATES CAN JUST -- RATE CHANGES SIMILAR TO THESE IN OTHER STATES BROUGHT ABOUT COMPETITION. IT'S NOT THERE. THERE IS NOT EVIDENCE OF THAT.
THERE WAS NO TESTIMONY BY ANYONE THAT SOMETHING LIKE THIS HAD HAPPENED OTHER PLACES AND THAT OTHER COMPANIES NOW THAT THEY SAW THAT THE RATES WERE A LITTLE HIGHER, THAT THEY WOULD COME INTO AN AREA THEN AND PROVIDE THE SERVICES BECAUSE THEN THEY COULD MAKE A PROFIT, AND THAT THAT WOULD ENCOURAGE -- THERE WAS NO TESTIMONY, EXPERT TESTIMONY OR OTHERWISE.
O. THERE WAS -- OH, THERE WAS SIGNIFICANT EXPERT TESTIMONY, YES, ABOUT THE ECONOMIC THEORY DESCRIBING THE RELATIONSHIP OF REVENUES AND COSTS.
BUT NO ACTUAL FACTUAL TESTIMONY THAT ANYTHING LIKE THIS HAD HAPPENED SOMEPLACE ELSE AND, THEREFORE, HAD BEEN PROVEN, YOU KNOW, TO WORK IN THE LONG RUN?
NO. THE TESTIMONY FROM OTHER STATES WAS FOCUSED UPON ANOTHER ELEMENT, ANOTHER ARGUMENT REGARDING THE REASONABLENESS AND AFFORDABILITY OF THE RATES AND SO THERE WAS SOME TESTIMONY, VERY CONCLUDES TESTIMONY THAT THEY WERE SIMILAR WITH -- FAMILIAR WITH SIMILAR RATE ADJUSTMENTS AND NOT MANY CONSUMERS HAD FALLEN OFF.
WELL, HOW ARE YOU GOING TO --
JUSTICE WELLS HAS A QUESTION.
MY QUESTION GOES TO THE SECOND PART OF WHAT JUSTICE PARIENTE ASKED YOU AND THAT IS THE RELATIVE ROLES HERE BETWEEN THE PSC AND THIS COURT, AND FROM WHAT I'VE HEARD YOU SAY, TALKING ABOUT SO FAR, IT APPEARS TO ME THAT THE PROBLEM THAT YOU HAVE IS WITH THE STATUTE AS OPPOSED TO WITH THE ADMINISTRATION BY THE PSC, SO IF YOU COULD DIRECT MY ATTENTION TO WHERE YOU SAY THAT THE PSC MADE AN ERROR ITS ROLE IN RESPECT TO THIS STATUTE?
RESPECTFULLY, WE DISAGREE. WE DON'T HAVE AN ISSUE WITH THE STATUTE. OUR ISSUE IS THAT THE FINDINGS OF THE PSC ARE NOT SUPPORTED BY COMPETENT SUBSTANTIAL EVIDENCE IN THIS RECORD.
AND NO FINDINGS THAT IT WOULD INCREASE COMPETITION?
YES.
YOU SAY THERE IS NO OTHER STATE WHERE IT HAS INCREASED COMPETITION OR THE LEAST THERE WASN'T EVIDENCE TO THAT EFFECT?
THAT'S CORRECT.
THIS WASN'T THE FIRST STATE TO DEVELOP THIS NEW SCHEME, RIGHT? THERE IS A LOT OF TESTIMONY TALKING ABOUT RATE ADJUSTMENTS FROM OTHER STATES WITHOUT A LOT OF SPECIFICS ABOUT THE RATE ADJUSTMENTS.
WE'RE NOT THE FIRST ONE.
WE'RE NOT THE FIRST ONE TO HAVE SOME RATE ASSESSMENT. IT IS NOT CLEAR FROM THE RECORD TO WHAT EXTENT OTHER STATES ACTIONS ARE SIMILAR TO OURS. THAT'S ONE THING THAT WE DON'T HAVE.
THE OTHER STATES ARE GOING TO THIS KIND OF LOCAL COMPETITION TRYING TO INCREASE COMPETITION FOR A LOCAL CARRIERS, AND WE'RE NOT THE FIRST ONE. AT ONE POINT THERE WAS A FIRST ONE, AND AND THE PUBLIC SERVICE COMMISSION OR UTILITY COMMISSION IN THAT FIRST CASE COULDN'T SHOW THAT OTHER STATES HAD ADOPTED THIS SCHEME AND IT HAD INCREASED COMPETITION. IT HAD TO SPECULATE TO A DEGREE AND BASE IT ON ECONOMICS. AND IF IT IS GOOD FOR THAT STATE WHY COULDN'T THIS PUBLIC SERVICE COMMISSION BASE IT ON ECONOMIC THEORY AND NOT ON WHAT HAS HAPPENED IN OTHER STATES?
THEY DIDN'T BASE IT ON ECONOMIC THEORY.
THERE WAS NO EVIDENCE OF ECONOMIC THEORY?
WHAT I AM SAYING IS THAT THE COMMISSION SAID IS THAT WE CAN'T GET EVIDENCE OF CERTAINTY THAT THERE WILL BE MARKET ENTRIES. THEY SAID WE THINK THERE IS GOING TO BE MARKET ENTRY. WE THINK THERE IS THEORETIC EVIDENCE. THEY DID SAY THAT THERE IS EVIDENCE FROM OTHER STATES BUT THEY ARE WRONG. THERE IS NOT EVIDENCE THAT SIMILAR PRICE ADD {JUNS}MENTS IN OTHER STATES HAS BROUGHT ABOUT COMPETITION.
BUT DID THE ECONOMISTS TESTIFY IN THIS CASE THAT COMPETITION, BASED ON ECONOMIC THEORY, THAT THESE ADJUSTMENTS WOULD BRING ABOUT COMPETITION FOR LOCAL CARRIERS?
ALL OTHER THINGS BEING EQUAL THAT THESE PRICE ADJUSTMENTS.
BUT GOING BACK TO THE STATUTE, BECAUSE USUALLY WHEN WE ARE REVIEWING PFC CASES WE HAVE A MORE GENERAL BRAND OF AUTHORITY BUT THE VERY PREMISE OF THE STATUTE OF 364.164 AND THEN SUBSECTION A IS THAT IN REACHING THE DECISION THEY'VE ACTUALLY TOLD THE COMMISSION THAT THEY SHALL CONSIDER WHETHER GRANTING THE PETITION WILL REMOVE CURRENT SUPPORT FOR BASIC LOCAL TELECOMMUNICATIONS SERVICES THAT PREVENT THE CREATION OF A MORE COMPETITIVE LOCAL EXCHANGE MARKET, SO IN THAT ONE IT SEEMS THAT THAT IS ALMOST EQUIVALENT TO A LEGISLATIVE FINDING THAT HAVING THE SUPPORT, WHICH IS ARTIFICIALLY LOW RATES HAS PREVENTED THE CREATION OF THE MORE ATTRACTIVE, COMPETITIVE LOCAL EXCHANGE MARKET. SO THAT'S WHAT I AM STILL -- NOT WHETHER I AM HUNG UP ON IT. BUT STILL DON'T KNOW THAT YOU ANSWERED IT ADEQUATELY. THAT THIS SEEMS TO ME NOT JUST AN ISSUE THAT THE PSC IS LOOKING AT A RATE INCREASE FOR SAY AN ELECTRIC UTILITY, BUT WHERE THERE IS A SPECIFIC FINDING IN THE STATUTE, SO COULD YOU AGAIN TELL ME WHY THAT STATUTE DOESN'T REALLY ALMOST HAMPERING THE PSC IN WHAT THEY ARE DOING OR DIRECT THEM THEY SHOULD BE DOING THIS.
IT DEFINITELY DOESN'T HAMSTRING THE COMMISSION, BECAUSE THE COMMISSION NEEDS TO FIND -- THEY NEED TO MAKE INDEPENDENT AND DID MAKE INDEPENDENT FINDINGS AS TO EACH OF THESE ELEMENTS OF THE STATUTE. NOW, SO THEY FOUND THAT THERE WAS SUPPORT, AND THAT REMOVING SUPPORT WOULD CREATE A MORE ATTRACTIVE MARKET AND THOSE FINDINGS ARE NOT BEING CHALLENGED HERE, BUT THE STATUTE GOES FURTHER. IT SAYS THAT IT HAS TO BENEFIT RESIDENTIAL CONSUMERS AND INDUCE ENHANCED MARKET ENTRY AND I WOULD ALSO DIRECT YOUR ATTENTION TO THE 2000 -- THERE WAS A STATUTE SIMILAR TO THIS THAT WAS PASSED IN 2002. IT WAS VETOED BY THE GOVERNOR. I MEAN A BILL PASSED. IT WAS VETOED BY THE GOVERNOR SO IT NEVER BECAME LAW. THAT STATUTE AND I WOULD URGE YOU TO LOOK AT IT AND COMPARE IT TO WHAT WE ARE LOOKING AT IN 2003. THAT DID HAVE FINDINGS THAT WOULD HAVE HAM STRUNG THE COMMISSION AND THAT'S EXACTLY WHY THE GOVERNOR VETOED IT. THE GOVERNOR SAID IT DOESN'T REQUIRE THE COMMISSION TO MAKE INDEPENDENT FINDINGS AS TO WHETHER THERE REALLY WILL BE COMPETITION.
BUT WASN'T THERE SOME TESTIMONY IN THIS RECORD FROM OTHER CARRIERS THAT INDICATED THAT THEY WOULD, BASED ON THIS KIND OF SCHEME ACTUALLY ENTER THE MARKET HERE IN FLORIDA, AND CAN'T THE COMMISSION USE THAT KIND OF EVIDENCE IN ORDER TO MAKE THE FINDING THAT THIS WOULD INCREASE COMPETITION?
YES, I THINK THAT'S EXACTLY THE KIND OF EVIDENCE THAT THE COMMISSION WOULD NEED TO FIND.
AND WASN'T THERE IN THIS RECORD?
WHAT THERE IS IN THE RECORD ON THAT IS EVIDENCE FROM TWO COMPETITORS. .
WE HAVE TESTIMONY FROM ONE FACILITIES BASED PROVIDER AND ANOTHER PROVIDER WHICH LEASES ACCESS FROM THE INCUMBENT, SO THE COMMISSION'S OWN REPORT ON COMPETITION SAYS THAT LEASING LINES OR UNIP IS THE WAY THAT COMPETITORS ENTER THE MARKET IN FLORIDA. IT IS NOT THROUGH FACILITIES.
JUSTICE LEWIS HAS A QUESTION.
I'LL LET YOU FINISH YOUR ANSWER.
AND THE REASON FOR THAT IS THAT THE INFRASTRUCTURE COSTS OF ENTERING THE MARKET TO PROVIDE FACILITIES-BASED COMPETITION ARE EXTRAORDINARY AND SO THE COMMISSION'S OWN REPORT AND THAT THE -- SO WE HAVE ONE UNIP COMPETITOR THAT TESTIFIED AT THE HEARING. THAT WAS AT&T. AFTER THE HEARING AND AFTER THE US TELECOM DECISION WHICH WAS THE BASIS OF OUR ARGUMENT BEFORE THE COMMISSION, AT&T ESSENTIALLY RECANTED ITS TESTIMONY. IT ANNOUNCED IN A VERY PUBLIC WAY THAT IT WAS NOT GOING TO COMPETE IN THE LOCAL MARKET.
WHAT ABOUT KNOLOGY?
KNOLOGY IS THE OTHER COMPETITOR WHO TESTIFIED. IT IS A FACILITIES BASED COMPETITOR. IT PROVIDES SERVICE IN ONE OR THE RECORD SHOWS THAT IT PROVIDES SERVICE IN ONE COUNTY IN FLORIDA. HAS 15,000 CUSTOMERS. THERE ARE 11 MILLION LINES IN FLORIDA. KNOLOGY REPRESENTS .001% OF THE TELEPHONE SUBSCRIBERS IN FLORIDA.
AND DID KNOLOGY TESTIFY THAT THE REASON IT HASN'T EXPANDED SO FAR WAS THAT IT WOULD NOT BE COST EFFECTIVE FOR THEM TO ENTER INTO THAT MARKET BECAUSE THEY WOULD HAVE TO CHARGE BELOW COST RATES?
IT DID TESTIFY TO THAT, AND IT ALSO SAID, THOUGH, THAT IT DOESN'T OFFER RETAIL -- BASIC LOCAL SERVICES AS ONE OF ITS PRIMARY OFFERINGS SO IT DID SAY THAT. WHAT'S MISSING, THOUGH, IS ANYTHING LINKING KNOLOGY TO ANY OTHER COMPETITORS. SO THE QUESTION IS IS KNOLOGY, IF YOU ACCEPT THE TESTIMONY OF THE KNOLOGY WITNESS AS TRUE, IS KNOLOGY BY ITSELF COMPETENT, SUBSTANTIAL EVIDENCE THAT THERE WILL BE REDUCED MARKET ENTRY IN FLORIDA.
OKAY. WE'LL WAIT.
CAN I ASK ONE QUESTION? HOW DOES THE CASE FROM THE COURT IN D. C. FIT INTO ALL OF THIS? ARE YOU SAYING THAT UNDER THAT CASE THE PSC DIDN'T HAVE THE AUTHORITY TO DO THIS OR HOW DOES IT?
NO, WE'RE SAYING THAT THE U. S. TELE COM DECISION CHANGES THE STATE DRAMATICALLY REGARDING UNIP BASED STORE OR LEASED ACCESS AND THAT THE COMMISSION SHOULD HAVE, EVEN IF IT WAS CORRECT WHEN IT MADE ITS INITIAL DECISION THAT WHEN THAT DECISION, THE U.S. TELE COM DECISION CAME OUT, IT NEEDED TO COME BACK AND TAKE NEW EVIDENCE AND FIND OUT WHAT THE EFFECT WAS GOING TO BE, BECAUSE THE LEASE COMPETITORS, THE UNIP COMPETITORS ARE NO LONGER COMPETING. THE COST PART OF THE EQUATION IS NOW SO EXORBITANT THAT IT IS NOT PROFITABLE FOR THEM TO ENTER THE MARKET AND THAT'S WHAT IS HAPPENING.
WITH THIS -- DEALING WITH THIS REDUCTION IN THE RATES?
RIGHT.
YOUR REMAINING TIME FOR REBUTTAL. MR.^NELSON?
MAY IT PLEASE THE COURT, RICHARD MELSON ON BEHALF OF THE PUBLIC SERVICE COMMISSION.
JUSTICE BELL?
I'M GOING TO JUMP IN HERE. JUST A FOLLOW-UP ON THIS QUESTION IN FEBRUARY OF '05, THE FCC ISSUED NEW RULES AND IN RESPONSE TO THE D. C. OPINION, HOW DOES THAT IMPACT THE ARGUMENT ON ISSUE 2?
THOSE RULES BECOME EFFECTIVE TODAY, ALTHOUGH THEY HAVE BEEN CHALLENGED AT THIS POINT I THINK IN FOUR DIFFERENT CIRCUIT COURTS OF APPEAL. WHAT THEY DO IS IF UPHELD THOSE RULES WILL ULTIMATELY ELIMINATE WHAT WE CALL UNIP AS A METHOD OF COMPETITION BUT WHAT WE SEE IN FLORIDA IS IN THE BUSINESS MARKET WHERE THE RATES COMPETITORS HAVE TO COMPETE AGAINST ARE ABOVE COSTS, A MAJORITY OF LINES ARE NOT SERVED BY UNIP, THEY ARE SERVED BY IF HE -- IF YOU LOOK AT THE TOTAL LINES IN THE STATE, 54% OF THEM ARE SERVED BY THEIR OWN FACILITIES. IF YOU GO TO THE COMPETITION REPORT THAT MISS HEARN REFERRED TO YOU WILL SEE THAT THERE ARE AN INCREASING NUMBERS OF SWITCHES BEING EMPLOYED IN FLORIDA, MORE CARRIERS USING THEM. THEY HAVEN'T BEEN USED TO COMPETE IN THE RESIDENTIAL MARKET OR AT LEAST NOT THE PRIMARY METHOD BECAUSE LOCAL RESIDENTIAL RATES ARE BELOW COST AND IT IS NOT ECONOMIC TO COMPETE FOR THOSE EVEN IF YOU HAVE YOUR OWN FACILITIES.
WOULD YOU ADDRESS WHAT APPEARS TO BE THE TENSION WITHIN THE OVERALL STATUTORY SCHEME AND APPROACH, AND THAT IS ON ONE HAND YOU HAVE THE THRUST FOR IMPROVING OR INCREASING COMPETITION. ON THE OTHER HAND YOU HAVE VOICED THE PEOPLE'S CONCERN WITH REGARD TO THE INCREASING RATES AND PROVIDING SERVICE AT A REASONABLE AND VIABLE RATE. IS THE STATUTORY SCHEME UNFORGIVING AND IF NOT SHOULD THAT BE A FACTOR THAT WE WOULD LOOK TO WITH REGARD TO WHETHER THERE IS COMPETENT, SUBSTANTIAL EVIDENCE IN USING THEORY AS OPPOSED TO ACTUAL FACT IN GOING DOWN THE ROAD FIVE YEARS FROM NOW, IT WORKS ONE WAY OR THE OTHER OR DOES NOT BRING COMPETITION. THE STATUTE HAVE PROVISIONS TO READJUST TO CORRECT THAT OR DOES IT NOT AND SHOULD THAT PLAY INTO A CONSIDERATION OF WHAT TYPE OF EVIDENCE DOES ONE NEED TO APPROVE THIS APPROACH?
A LOT OF QUESTIONS THERE, YOUR HONOR. THERE IS NO PROVISION IN THE STATUTE AT THIS POINT FOR THE COMMISSION TO REEVALUATE THE BASIC REBALANCING. WE DO -- ARE REQUIRED BY STATUTE TO MAKE AN ANNUAL REPORT TO THE LEGISLATURE ON THE STATUS OF COMPETITION AND IT IS THOSE REPORTS THAT LED TO THIS TYPE OF LEGISLATION RECOGNIZING WE WEREN'T GETTING THE RESIDENTIAL COMPETITION, THE LEGISLATURE HELP FOR. IS THE STATUTE UNFOR GIVING? THE COMMISSION, BASED ON THE RECORD BEFORE IT, DETERMINED THAT BOTH PARTS OF THE STATUTE COULD BE SATISFIED THAT THERE WAS EVIDENCE, THAT THERE WOULD BE MORE COMPETITION AND IT WOULD BENEFIT RESIDENTIAL CONSUMERS. THEY ALSO FOUND THAT RATES WERE REASONABLE AND AFFORDABLE EVEN AFTER THE INCREASES, FOR EXAMPLE, FOR THE AVERAGE HOUSEHOLD I THINK THE EVIDENCE IS THAT THE LOCAL RATES ARE LESS THAN 4/10THS OF 1% OF HOUSEHOLD INCOME BEFORE THE INCREASE AND WILL REMAIN AT THAT LEVEL AFTER THE INCREASE. THERE IS EVIDENCE ABOUT RATES IN FLORIDA BEING LOWER THAN OTHER STATES. WILL CONTINUE TO BE THE FOURTH LOWEST IN THE NINE STATE SOUTHEAST REGION SO IN TERMS OF REASONABLEABILITY AND AFFORDABILITY I THINK THERE IS AMPLE EVIDENCE IN THE RECORD THAT BOTH PARTS OF THE STATUTE ARE BEING MET.
AND THUS WOULD SUPPORT THE USE OF ECONOMIC THEORY AS OPPOSED TO ON THE GROUND IN FACT COMPETE {IF} ANALYSIS?
I DON'T THINK YOU HAVE TO MAKE THAT CHOICE BECAUSE I THINK THIS RECORD CONTAINS BOTH. IN RESPONSE TO THE QUESTION, I THINK, FROM JUSTICE ANSTEAD THERE IS EVIDENCE FROM OTHER STATES, NOT QUANTIFIED IN THE AMOUNT OF ADDITIONAL COMPETITION, BUT DR.^GORDON, WHO TESTIFIED AS AN ECONOMIST WAS ALSO CHAIRMAN AT ONE POINT OF THE MASSACHUSETTS COMMISSION AND THE MAINE COMMISSIONS, BOTH OF THOSE STATES UNDERWENT REBALANCING AND HE TESTIFIED THAT THERE WAS MORE COMPETITIVE ENTRY AND MORE COMPETITION AFTER REBALANCING THAN BEFORE. YOU'VE GOT KNOLOGY.
DID HE TESTIFY AS TO WHAT FORM THIS TOOK, I MEAN, HOW MANY ADDITIONAL COMPANIES ACTUALLY ENTERED THE MARKET OR ANYTHING LIKE THAT?
NO, MA'AM. IT WAS NOT QUANTIFIED IN THAT WAY.
I WANTED TO ASK SOMETHING SIMILAR TO WHAT JUSTICE BELL WAS ASKING. IT SEEMS TO ME THAT A MAJOR PREMISE OF THE COMMISSION WHEN IT ENTERED THIS ORDER WAS THAT THESE CLEC'S WOULD BE ABLE TO USE THE UNI TYPE SYSTEM TO ENTER THE MARKET FOR LOCAL COMPETITION AND I'M NOT TALKING ABOUT LONG DISTANCE. NOW, YOU WERE TALKING ABOUT THERE ARE A LOT OF FACILITIES BASED LONG DISTANCE CARRIERS BUT THERE ISN'T SEEM TO BE A LOT OF FACILITIES BASED LOCAL CARRIERS AND THERE AREN'T A LOT OF LOCAL CARRIERS PERIOD BUT IT SEEMS THE COMMISSION BASED ITS DETERMINATION ON THE FACT THAT NOW THEY ARE GOING TO BE ABLE TO USE THE UNI SYSTEM IN ORDER TO ENTER THE LOCAL COMPETITION. THAT SEEMS POTENTIALLY OUT THE WINDOW. WHY SHOULDN'T WE REMAND THIS CASE TO THE COMMISSION TO MORE CAREFULLY ANALYZE THE IMPACT OF THE D. C. CIRCUIT'S DECISION ON ITS ORDER?
A COUPLE OF RESPONSES, YOUR HONOR. FIRST, THE QUOTATION I GAVE YOU FROM LOCAL COMPETITION REPORT, ABOUT 54% OF LINES BEING SERVED BY FACILITIES BASED WAS CLEC LINES.
AND THAT'S FOR LOCAL COMPETITION.
YES, SIR, FOR LOCAL COMPETITION. IF YOU LOOK AT RESIDENTIAL, THE RESIDENTIAL MARKET HAD PRIMARILY BEEN ENTERED USING UNIP. THE BUSINESS MARKET HAD BEEN SUBSTANTIALLY ENTERED BY FACILITIES BASED LOCAL COMPETITION. THE FCC ORDER IN TAKING AWAY UNIP, THE FCC HAD TO MAKE A FINDING AND DID MAKE A FINDING THAT THAT WOULD NOT IMPAIR LOCAL COMPETITION. WE'RE HERE IN 2005, 15 MONTHS AFTER THIS LEGISLATION WAS PASSED. THINGS HAVE CHANGED LOT IN 15 MONTHS. IF YOU REMAND IT TO THE COMMISSION AND THE CASE COMES BACK UP, THEY WILL HAVE CHANGED A LOT BETWEEN THE TIME THE COMMISSION DECIDES AND THE CASE GETS BACK BEFORE YOU. THE LEGISLATURE GAVE THE COMMISSION 90 DAYS TO ACT ON THESE PETITIONS. WE READ THAT AS A LEGISLATIVE INTENT THAT WE GET ABOUT THE BUSINESS OF PROMOTING COMPETITION.
BUT I'M CONCERNED, ALSO, WITH AT&T WHO WAS GOING TO BE ONE OF THE COMPANIES ENTERING THE MARKET AND THEIR POST COMMISSION STATEMENT THAT THEY ARE NOT GOING TO DO THIS ANY MORE. AGAIN, WHETHER WE LOOK AT ECONOMIC THEORY OR WE LOOK ON THE GROUND, IT DOES SEEM THAT THOSE ARE TWO SUBSTANTIAL CHANGES IN THE LANDSCAPE. MAYBE OF AN EVER CHANGING SITUATION, BUT TWO SIGNIFICANT ONES FOR THE PSC TO CONSIDER. I MEAN, YOU KNOW, THIS WHOLE HEARING TOOK, I GUESS, WHAT, TWO DAYS TO CONDUCT, SO AS FAR AS ACTUALLY REMANDING IT FOR SOME FURTHER CONSIDERATION, IS THAT REALLY AN ONEROUS REQUIREMENT IF WE ARE -- WHAT WE ARE CONCERNED ABOUT ARE THE CONSUMERS AND WHETHER THEY ARE GOING TO BE HELPED IN THE LONG RUN BY WHAT IS BEING DONE AND YOU WOULD AGREE THAT WAS THE MOTIVATING FORCE FOR THE LEGISLATION, CORRECT?
THE MOTIVATING FORCE OF THE LEGISLATION IS THAT COMPETITION BRINGS A HOST OF BENEFITS TO CONSUMERS. REGARDLESS OF WHETHER UNIP IS AVAILABLE TOMORROW OR NOT, THERE WILL BE MORE COMPETITION WITH REBALANCING THAN WITHOUT, REGARDLESS OF THE CARRIERS COST OF COMING IN AND DOING BUSINESS. THE RATE IT HAS TO COMPETE AGAINST THE REVENUES IT CAN REALIZE IS AN ESSENTIAL PART OF THE EQUATION. IN A WAY THE DIMINISHMENT OF UNIP ALMOST MAKES REBALANCING MORE IMPORTANT BECAUSE IF YOU DON'T GET THE REVENUE SIDE OF THE EQUATION RIGHT YOU WILL NEVER SEE ANY COMPETITIVE ENTRY.
WHAT INTERESTED ME IN LOOKING AT THE PETITIONS THAT WERE FILED, NORMALLY THE INDIVIDUALS, ECONOMIC THEORY, MONOPOLIES, WHATEVER, IT IS UNUSUAL TO CONSIDER THAT IT WOULD BE THE VERY CARRIERS THAT HAVE THE LOCAL MARKET THAT WOULD BE ACTUALLY SAYING, LISTEN, PLEASE DO THIS BECAUSE IT WILL BE GOOD FOR COMPETITION. IN OTHER WORDS, IT IS GOING TO BRING PEOPLE FROM THE OUTSIDE, AND I GUESS I HAVE A LITTLE BIT OF CNC -- CYNICISM THINKING THESE LOCAL CARRIERS ARE ACTING OUT OF THE GOOD OF THEIR HEART TO MAKE SURE THE COMPETITION COMES IN, SO HOW DO YOU ANSWER THAT? IN OTHER WORDS, IF BELLSOUTH AND VERIZON ARE SAYING DO THIS, SO WE CAN HAVE COMPETITION IN OUR LOCAL MARKET THAT WILL BE GOOD FOR US.
YOUR HONOR, IN 1995, THE LEGISLATURE STARTED DOWN THE PATH TOWARD LOCAL COMPETITION. AS CHART OF THAT, THE LOCAL COMPANIES GOT SOMETHING THEY WANTED WHICH WAS A SUBSTITUTION OF PRICE CAP REGULATION FOR TRADITIONAL RATE BASE OF RETURN REGULATION. THIS LEGISLATION SAYS IF YOU ALLOW COMPETITION TO COME IN, IF WE GET THE MARKET RIGHT, YOU LOCAL COMPANIES ARE GOING TO SEE SOME INITIAL REGULATORY BENEFITS DOWN THE ROAD. YOU ARE GOING TO BE ABLE TO COME IN AND PETITION TO BE TREATED MORE LIKE COMPETITORS IN TERMS OF QUALITY OF SERVICE TO BE TREATED MORE LIKE COMPETITORS IN TERMS OF PRICE REGULATION. I ASSUME THOSE COMPANIES BELIEVE THAT THEY CAN BE FORMIDABLE COMPETITORS AND THAT THEY WANT TO MOVE TO THE MARKET WHERE THEY CAN COMPETE ON AN EVEN KEEL WITH OTHERS.
AND WHAT IS THE --
AND BUT IN THE SHORT RUN AREN'T THEY THE ONES WHO REALLY WIN IN THIS SITUATION? THEY END UP WITH MORE REVENUE BY INCREASING THE RESIDENTIAL RATES?
NO, YOUR HONOR.
AT SOME POINT IN THE FUTURE WE GET OTHER PEOPLE INTO THE MARKET?
THEY END UP WITH NO ADDITIONAL REVENUE. THIS CHANGE IS REVENUE NEUTRAL. THE INCREASE IN LOCAL RATES IS DOLLAR FOR DOLLAR OFFSET BY REDUCTION IN ACCESS CHARGES SO THE LOCAL COMPANIES ARE NEUTRAL.
I THOUGHT THERE WAS SOMETHING IN THE RECORD HERE THAT SAID THAT THERE WOULD NOT BE A DOLLAR FOR DOLLAR -- THERE MAY NOT BE A DOLLAR FOR DOLLAR REDUCTION BASED ON THE INCREASE?
I THINK WHAT THE RECORD SAYS IS FOR A PARTICULAR CUSTOMER IT MAY NOT BE A DOLLAR FOR DOLLAR CHANGE, DEPENDING ON HOW MUCH LONG DISTANCE YOU USE AND BECAUSE SOME OF THE LONG DISTANCE RATE REDUCTIONS WILL GO TO BUSINESS CUSTOMERS THAT MAY NOT SEE A LOCAL RATE INCREASE BUT IF YOU LOOK AT THE TOTAL POT OF DOLLARS FOR THE LOCAL COMPANY THAT'S REVENUE NEUTRAL AND FOR THE LONG DISTANCE COMPANIES WHO HAVE TO FLOW THROUGH THEIR ACCESS COST REDUCTION IT IS ALSO REVENUE NEUTRAL.
THAT IS MANDATED BY THE LEGISLATIVE SCHEME. IS THAT NOT CORRECT?
YES, YOUR HONOR.
JUSTICE WELLS?
WELL, MY QUESTION WAS WHAT CAN BE DETERMINED FROM THE RECORD AS TO THE TIME PARAMETERS AS TO WHEN THIS COMPETITION SHOULD BE ABLE TO BE EVALUATED ON THE GROUND?
I'M NOT SURE THERE IS ANYTHING SPECIFIC IN THE RECORD, YOUR HONOR. THE RATE REBALANCING WILL TAKE PLACE IN THREE STEPS OVER TWO YEARS FOR A COUPLE OF THE COMPANIES AND IN FOUR STEPS OVER THREE YEARS FOR SPRINT. EVERY TIME THERE IS A REDUCTION THAT IS GOING TO SEND A SIGNAL TO THE MARKET. THERE MAY BE SOME ADDITIONAL ENTRY WHEN THE FIRST REDUCTION TAKES PLACE. IT MAY BE TWO YEARS DOWN THE ROAD BEFORE WE BEGIN TO SEE ENTRY. IN ANOTHER SECTION OF THE STATUTE, THE SECTION THAT WAS AMENDED AT THE SAME TIME, 364.051, THERE IS A CHECK BEFORE THE LOCAL COMPANIES CAN SAY THAT COMPETITION IS OUT THERE CONTROLLING OUR QUALITY OF SERVICE, THEY'VE GOT TO COME TO THE COMMISSION AND SHOW THAT COMPETITION HAS EXISTED SO I THINK THE LEGISLATURE ANTICIPATED THERE WOULD BE SOME SUBSEQUENT CHECKPOINTS.
DOES THE COMMISSION FEEL, AND I USE THE WORD HAM STRUNG BUT, YOU KNOW, THIS IS -- YOU ARE ACTING PURSUANT TO A PARTICULAR GRANT OF AUTHORITY IN A STATUTE. AM I CORRECT THAT THE STATUTE SEEMS TO PRESUME THAT IF THERE IS AN INCREASE IN THE LOCAL RATE THAT THAT WILL FOSTER COMPETITION? I MEAN, WERE YOU ACTING WITHIN THOSE LEGISLATIVE -- THAT LEGISLATIVE SCHEME OR HOW MUCH LEEWAY DID THE COMMISSION FEEL IT HAD TO SAY, LISTEN, ECONOMIC THEORY BUT IT DOESN'T MAKE SENSE TO US THAT, YOU KNOW, IF THERE IS NO ONE OUT THERE DYING TO COME IN AND IT IS NOT GOING TO BE GOOD FOR THE LITTLE GUY IN THE SHORT RUN, WE REALLY SHOULDN'T BE DOING THIS?
YOUR HONOR, I THINK THE STATUTE PROBABLY PRESUMED THAT THERE WAS A BENEFIT FROM COMPETITION AS THE LEGISLATURE DID IN 1995, BUT ULTIMATELY THEY CHARGED THE PSC WITH MAKING A RECORD-BASED PREDICTIVE JUDGMENT AS TO WHETHER REBALANCING WOULD, IN FACT, INDUCE ENTRY AND WHETHER IT WOULD BENEFIT RESIDENTIAL CONSUMERS. THE COMMISSION MIGHT HAVE BEEN ABLE TO READ THE STATUTE TO SAY THE BENEFIT IS AUTOMATICALLY PRESUMED WE DIDN'T READ IT THAT WAY. WE READ IT TO SAY THAT WE'VE GOT TO FIND BENEFIT AND THEN WE WENT THROUGH AND HEARD TESTIMONY BOTH IMPERICAL TESTIMONY AND THEORETICAL TESTIMONY AND CONCLUDED THAT THERE WOULD BE BENEFITS.
CAN YOU DISCUSS THE LIFELINE PROGRAM? IT SEEMS THAT PART OF THE COMMISSION'S JUSTIFICATION FOR THE FACT THAT IT WOULDN'T AFFECT -- GREATLY AFFECT RESIDENTIAL CUSTOMERS WERE THAT THOSE AT THE LOWEST END OF THE INCOME SPECTRUM WOULD HAVE ACCESS TO THE LIFE LINE PROGRAM AND I THINK THE TELEPHONE COMPANIES EVEN AGREED TO EXTEND THE PROGRAM TO THOSE UNDER 135% OF THE POVERTY LEVEL. HOW DO CONSUMERS FIND OUT ABOUT THE LIFELINE PROGRAM?
CONSUMERS FIND OUT ABOUT THE LIFELINE PROGRAM A VARIETY OF WAYS. IF A CONSUMER IS ALSO ELIGIBLE FROM SOME OTHER SORT OF ASSISTANCE PROGRAM, THEY WILL FIND OUT IN THAT. I THINK THE COMMISSION HAS RECENTLY STARTED HOLDING TOWN HALL TYPE MEETINGS, MAKING OURSELVES AVAILABLE TO CIVIC GROUPS, TO SENIOR CENTERS, THE OFFICE OF PUBLIC COUNSEL HAS GOT A ROLE IN DOING THAT. THE COMMISSION SINCE THIS CASE HAS HAD ANOTHER PROCEEDING REGARDING LIFELINE WHERE WE ADDRESSED SOME OF THOSE TYPES OF QUESTIONS, BUT YOU ARE CORRECT, YOUR HONOR. THE COMMISSION DIDN'T SAY THAT LIFELINE WAS A BENEFIT TO BE WEIGHED IN THE BALANCE BECAUSE IT IS NOT LISTED IN SECTION 164 OR SOMETHING WE CONSIDER BUT WHEN YOU GET TO THE QUESTION OF IS THE RESULT REASONABLE AND AFFORDABLE WE DID TAKE INTO ACCOUNT THE LIFELINE ASSISTANCE WHICH SAYS IF YOU ARE AT OR BELOW 125% OF THE POVERTY LEVEL AND THE LOCAL COMPANY IS COMMITTED TO RAISE THAT TO 135% THEN SEVERAL THINGS HAPPEN. FIRST YOU QUALIFY FOR A $13.50 CREDIT AGAINST YOUR LOCAL PHONE BILL. SECOND, YOU ARE PROTECTED FROM ANY OF THESE RATE INCREASES AT LEAST UNTIL ACCESS CHARGE PARITY IS REACHED AND TO THE EXTENT YOU ARE A LIFELONG LINE CUSTOMER MAKING LONG DISTANCE CALLS YOU WILL RECEIVE THE BENEFIT OF ANY LONG DISTANCE RATE INCREASES SO IN TERMS OF PROTECTING THE MOST VULNERABLE FLORIDA CITIZENS THE LEGISLATURE TOOK A VERY AFFIRMATIVE STEP TO DO THAT.
COULD YOU RESPOND TO THE EXTENSIVE CITING IN THE BRIEFS IN OPPOSITION TO THESE INCREASES, VARIOUS STATEMENTS MADE BY MEMBERS OF THE LEGISLATURE IN BOTH THE SENATE AND THE HOUSE IN FLOOR DEBATE WITH ABOUT THIS WHERE THERE WERE ASSURANCES THAT IF I THOUGHT AFTER WE PASSED THIS LEGISLATION THAT THE LOCAL PHONE RATES FOR MY {ELD} -- ELDERLY PARENTS WERE GOING TO GO UP, I WOULD NEVER VOTE FOR THIS PROPOSITION AND THEN THE SPONSORS OF THE LEGISLATION REASSURING THEM, WELL, I CAN ASSURE YOU THAT THAT COULD NEVER HAPPEN UNDER THIS LEGISLATION AND, OF COURSE, THEY CITED THAT AS THE UNDERLINE -- UNDERLYING RATIONAL -- RATIONALE OF THE LEGISLATION. HOW DO YOU RESPOND TO MANY OF THOSE LEGISLATORS ACTUALLY BEING IN THE AUDIENCE TODAY WHERE THEY RECEIVED THOSE ASSURANCES BEFORE THEY SIGNED OFF ON THIS LEGISLATION AND INDEED WE WAKE UP TODAY AND NOW THEIR ELDERLY PARENTS ARE SEEING INCREASES IN THEIR LOCAL TELEPHONE BILLS?
I THINK IF YOU READ THE LEGISLATIVE HISTORY AS A WHOLE, YOU DON'T GET AS UNIFORM OR READ THE FLORIDA DEBATES AS A WHOLE YOU DON'T GET AS UNIFORM A PICTURE AS HAS BEEN PAINTED IN THE BRIEFS. SOME OF THE STATEMENTS WERE VERY CAREFUL THAT THIS LEGISLATION, ENACTMENT OF THIS LEGISLATION WON'T AFFECT RATES. BEFORE THAT HAPPENS THE COMMISSION HAS TO ACT. THERE WAS ALSO DEBATE ON THE OTHER SIDE SAYING REGARDLESS OF THE ASSURANCES WE ARE HEARING IF YOU READ THE LANGUAGE OF THE STATUTE, IT CONTEMPLATES REBALANCING. IT CONTEMPLATES THAT ANY INCREASES WILL BE SHARED ONLY BY RESIDENTIAL AND SINGLE LINE BUSINESS, BUT THE OFFSETTING LONG DISTANCE RATE REDUCTIONS CAN BE SPREAD AMONGST A BIGGER GROUP THAT INCLUDES ALL BUSINESS CUSTOMERS.
IN OTHER WORDS THE CLEAR LANGUAGE OF THE STATUTE WAS TO REMOVE SUPPORT FOR A LOCAL RESIDENTIAL RATE, SO WHATEVER MIGHT HAVE HAPPENED WITH ISOLATED COMMENT BY A LEGISLATOR, WE HAVE TO -- IF WE ARE BOUND BY THE CLEAR LANGUAGE OF WHAT IS IN THE STATUTE?
THAT'S CORRECT, YOUR HONOR.
BUT IT STILL GOES BACK TO I GUESS THE QUESTION IN THE LONG RUN IS THAT MAYBE YOU RESPONDED JUST TO JUSTICE LEWIS' QUESTION ON IT IS IF TWO YEARS GO BY AND THERE IS NO INCREASED COMPETITION AND YOU HAVE AND THESE CARRIERS ACTUALLY END UP MAKING MORE MONEY HOW DOES THAT -- WHAT IS THE REVIEW MECHANISM?
YOUR HONOR, THERE IS NO REVIEW MECHANISM AT THIS POINT. WHAT WE'VE SEEN SINCE THE COMMISSION'S DECISION IS BILLS INTRODUCED BOTH IN THE 2004 SESSION AND IN THE 2005 SESSION TO ADDRESS THE ISSUE. SO FAR NOTHING HAS PASSED.
IN OTHER WORDS SO THERE ISN'T -- SO IF COMPETITION, DOES NOT OCCUR TWO YEARS, THREE YEARS.
THEN THERE IS NO AUTOMATIC SELF CORRECTING PROVISION IN THE EXISTING STATUTE, BUT YOU'VE GOT THE LEGISLATURE THAT MADE THE POLICY DECISION, WE'RE GOING TO HAVE COMPETITION, REBALANCING MAY BE THE WAY TO JUMP START THAT. THE LEGISLATURE CAN STEP BACK IN AND CHANGE THAT POLICY IF THEY SEE THAT THINGS HAVE GONE AWRY.
IS THERE A MECHANISM BY WHICH THE PUBLIC COUNSEL COULD FILE A PETITION BEFORE THE COMMISSION OR SOMEBODY ELSE FILE A PETITION BEFORE THE COMMISSION TO CORRECT IT?
THERE IS NO SPECIFIC STATUTORY PROVISION, AND I'D HATE TO TELL YOU WHAT I MIGHT ADVISE THE COMMISSION IF WE GOT A PETITION. I TRY NOT TO RULE ON THINGS UNTIL WE HAVE TO.
THE SAME THING THEN IF YOU SAID IT IS REQUIRED, THAT IT BE REVENUE NEUTRAL, BUT IF IT ENDS UP THAT BECAUSE OF THE INCREASE OF THE RATE FOR THE RESIDENTIAL CUSTOMER AND THAT THERE IS -- THE ACCESS -- THAT IT IS NOT WHAT IS THE REMEDY THERE?
WELL, THE -- EACH YEAR WHEN THE COMPANIES COME IN AND FILE THEIR ACCESS REDUCTION, THEIR LOCAL INCREASE, THE COMMISSION HAS TO LOOK AT THAT AND DETERMINE ON A YEAR BY YEAR BASIS THAT IT IS REMEDY NEUTRAL.
SO THERE IS AN ABILITY FOR CORRECTION?
YES, YOUR HONOR.
WITH OUR HELP YOU HAVE USED UP YOUR TIME. REBUTTAL? THAT'S CALLED 90 SECONDS.
MAY IT PLEASE THE COURT, CHARLIE CRIST, ATTORNEY GENERAL OF FLORIDA. FIRST GO TO THE STATUTE, THAT'S WHAT YOU ADDRESSED, YOUR HONOR. THE STATUTE REQUIRES THAT THIS BENEFIT RESIDENTIAL CONSUMERS. WHAT THE PSC HAS GRANTED DOES EXACTLY THE OPPOSITE. IT DETRIMENTS RESIDENTIAL CONSUMERS.
DOESN'T IT ALSO SEEM TO REQUIRE THAT WE TAKE OUT THESE LIMITS THAT HAVE ARTIFICIALLY REDUCED THE COST OF LOCAL SERVICE OR THE RATES BELOW THE COST SO THAT THE COMPANIES ARE LOSING MONEY ON LOCAL SERVICE, ISN'T SUBSECTION 1 ESSENTIALLY SAY THAT HAS TO BE REMOVED?
IT MAY ADDRESS THAT TO A POINT, BUT I KNOW FOR CERTAIN THAT IT SAYS THAT IT MUST BENEFIT RESIDENTIAL CONSUMERS. IT PLACES 88% OF THE 343 MILLION DOLLAR INCREASE ON THE BACKS OF RESIDENTIAL CONSUMERS.
BUT, AGAIN, AND I APPRECIATE THAT, BUT IT DOES LOOK LIKE THE LEGISLATURE MADE A DETERMINATION SPECIFICALLY THAT THE WAY THAT THEY WERE GOING TO NOW WORK TO ENHANCE MARKET COMPETITION WAS TO REMOVE THE CURRENT SUPPORT. WHAT ELSE COULD THAT MEAN, OTHER THAN RAISE RATES THAT WERE ARTIFICIALLY LOW? I MEAN, I JUST -- HOW ELSE WAS THAT GOING TO -- HOW ELSE WAS THE COMMISSION OR THE CARRIERS GOING TO ADDRESS IT?
WELL, I THINK IT'S IMPORTANT TO NOTE, YOUR HONOR, THAT THEY MAINTAIN THIS SECTION 364.164 THAT IT WOULD BE BENEFICIAL TO RESIDENTIAL CONSUMERS, BUT I THINK IT'S ALSO IMPORTANT TO NOTE THAT THE LAW UNDER SECTION 364.01 WHERE IT SAID THAT ANY RATE RESTRUCTURING HAS TO BE REASONABLE AND AFFORDABLE. THERE WERE STATEMENTS MADE BY HUNDREDS OF CITIZENS FOR THE STATE OF FLORIDA TO THE COMMISSION THAT THEY CHOSE TO IGNORE THAT, IN FACT, IT WOULD NOT BE REASONABLE.
WAS IT FINALLY PRESENTED THAT DESPITE THE INCREASES IN THE LOCAL RATES THAT THE RATES WOULD REMAIN THE FOURTH LOWEST IN THE REGION?
I THINK THERE WAS TESTIMONY TO THAT EFFECT.
AND ISN'T THAT COMPETENT, SUBSTANTIAL EVIDENCE THAT THE RATES WOULD REMAIN AFFORDABLE?
I DON'T THINK SO. I THINK WHAT A COMPETENT AND SUBSTANTIAL EVIDENCE IS THE IMPACT IT WOULD HAVE ON THE HUNDREDS OF FLORIDIANS WHO PUT THEIR STATEMENTS BEFORE THE COMMISSION THAT THE COMMISSION DID NOT TAKE INTO ACCOUNT THAT IT WOULD NOT BE REASONABLE AND AFFORDABLE AND THAT, IN FACT, THEY WOULDN'T HAVE THE OPPORTUNITY TO BUY FOOD AND MEDICINE IF THEY WANTED TO MAINTAIN THEIR LOCAL SERVICE. THAT'S WHAT THE PUBLIC SERVICE {DMITION} IS SUPPOSED TO PROTECT. THEY ARE SUPPOSED TO FIGHT FOR THE PUBLIC. WHAT THEY DID IS DID NOT FIGHT THE PUBLIC.
AREN'T YOU SUGGESTING THAT THE LEGISLATURE HAS REALLY BEEN PRESENTED A CATCH-22 TO THE COMMISSION THAT ON THE ONE HAND WE WANT YOU BY REMOVING THESE SUBSIDIES TO INCREASE COMPETITION AND ON THE LOCAL MARKETS, BUT AT THE SAME TIME WE DON'T WANT YOU TO ALLOW ANY INCREASE IN THE RATES OF THE LOCAL LEVEL, AND THAT'S AN IMPOSSIBLE TASK, IS IT NOT?
IT'S CHALLENGING BUT THAT'S WHY WE ARE HERE.
THANK YOU. WITH THAT I'M GLAD YOU PUT IT RIGHT BACK ON OUR BACKS. WE'LL TAKE IT UNDER ADVISEMENT AND THANKS BOTH OF -- ALL OF YOU FOR YOUR ASSISTANCE IN A CONTINUING AREA OF CHALLENGE. I'M SURE FOR ALL THREE BRANCHES OF GOVERNMENT. THANK YOU VERY MUCH.
THANK YOU, YOUR HONOR.