(a) Application. The provisions of this section apply to an incumbent local exchange company (ILEC). This section does not apply to a deregulated company holding a certificate of operating authority or to an exempt carrier under PURA §52.154.
(b) Purpose. The purpose of this section is to establish procedures for pricing flexibility for services subject to competition and a process for commission review of pricing flexibility applications.
(c) Pricing flexibility.
  (1) Eligible services. An ILEC may request the types of pricing flexibility established by this subsection.
    (A) Banded rates. If an ILEC is granted the authority to charge banded rates, the minimum rates must yield revenues that are equal to or greater than 105% of the long run incremental cost of the service in the geographic market in which the service will be provided.
      (i) When an ILEC is granted the authority to charge banded rates, the ILEC must file a tariff showing the minimum and maximum rates and specifying its current rate. The current rate specified in the ILEC's tariff must be applied uniformly to all customers of the service in each exchange for which the commission has approved banded rates.
      (ii) If the ILEC desires to charge a rate different from its current rate, but between the minimum and maximum rates, it must file a revised tariff on or before the effective date of the rate change.
      (iii) The minimum and maximum rates may only be changed as provided for in the Public Utility Regulatory Act, Chapter 53, Subchapters C and D, or G.
    (B) Detariffing. If an ILEC is granted the authority to detariff a service, the ILEC must maintain at the commission a current price list for the service, and the commission must retain authority to regulate the quality, terms and conditions of the detariffed service, other than rates. The commission may determine the appropriate ratemaking treatment of any revenues from or costs of providing a detariffed service in a proceeding under the Public Utility Regulatory Act, Chapter 53, Subchapters C and D, or G.
    (C) Other types of pricing flexibility. If an ILEC is granted the authority to engage in a type of pricing flexibility that the commission finds to be in the public interest other than those specified in subparagraphs (A) - (B) of this paragraph, that pricing flexibility must be offered under such terms and conditions as the commission orders.
  (2) Other services. ILECs have the authority to enter into customer-specific contracts for those services specified in subsection (d) of this section. For those services, ILECs may apply for pricing flexibility for the services specified in paragraph (1) of this subsection, other than customer-specific contracts. For other services, ILECs may apply to the commission in accordance with this subsection to obtain any type of pricing flexibility specified in paragraph (1) of this subsection. Nothing in this subsection permits an ILEC to:
    (A) obtain pricing flexibility for basic local telecommunications service, including local measured service, or for any service that includes as a component a service not subject to significant competitive challenge; or
    (B) enter into customer-specific contracts or to obtain detariffing with respect to message telecommunications services, switched access services, or wide area telecommunications service.
  (3) Requirements for application. An application for pricing flexibility filed under this paragraph must:
    (A) include a statement of the ILEC's intention to use the procedures established in this subsection;
    (B) specify the type of pricing flexibility requested and, if the type of pricing flexibility requested is either banded rates or some other type of pricing flexibility in accordance with paragraph (1)(C) of this subsection that involves rate-setting;
      (i) state the proposed rates, and if the type of pricing flexibility is banded rates, state the maximum and minimum rates;
      (ii) include detailed documentation demonstrating that the minimum rates yield revenues that are equal to or greater than 105% of the long run incremental cost of the service in the geographic market in which the service will be provided;
      (iii) demonstrate that the rates are not unreasonably preferential, prejudicial or discriminatory;
      (iv) demonstrate that the rates are such that the service identified in accordance with to subparagraph (C) of this paragraph will not be subsidized directly or indirectly by regulated monopoly services; and
      (v) demonstrate that the rates are not predatory or anticompetitive;
    (C) identify the service for which the ILEC is requesting pricing flexibility, including each component of the service, and provide functional and technical descriptions of the service, including:
      (i) the functions that the service is intended to perform for the customer;
      (ii) the types of equipment used to provide the service (including, but not limited to, transmission facilities, switching facilities, customer equipment, software functions, and protocol);
      (iii) the network configurations used to provide the service; and
      (iv) schematics;
    (D) identify each service that is not subject to significant competitive challenge but that, at the time the ILEC files its application for pricing flexibility, the ILEC intends to provide as a tariffed adjunct to the service identified in subparagraph (C) of this paragraph and, for each such service, provide:
      (i) functional and technical descriptions; and
      (ii) citations to the tariff provisions under which each such service will be provided;
    (E) designate each exchange as to which the ILEC is seeking pricing flexibility;
    (F) include a map or maps of each exchange designated in accordance with subparagraph (E) of this paragraph that can be coordinated with the official commission boundary maps;
    (G) describe the products or services known to the ILEC that are currently available in each exchange designated in accordance with subparagraph (E) of this paragraph, and that are the same, equivalent, or substitutable for the service identified in accordance with subparagraph (C) of this paragraph, and identify the providers of those products or services;
    (H) with respect to the products or services described in accordance with subparagraph (G) of this paragraph, discuss:
      (i) the number and size of telecommunications utilities or other persons providing such products or services;
      (ii) the extent to which such products or services are available;
      (iii) the ability of customers to obtain such products or services at rates, terms, and conditions comparable to those that the ILEC will offer;
      (iv) the ability of telecommunications utilities or other persons to make such products or services readily available at rates, terms, and conditions comparable to those that the ILEC will offer; and
      (v) the existence of any significant barrier to the entry or exit of a provider of such products or services;
    (I) demonstrate that the level of competition with respect to all components of the ILEC's service identified in accordance with subparagraph (C) of this paragraph represents a significant competitive challenge within each exchange designated in accordance with subparagraph (E) of this paragraph that warrants the pricing flexibility specified in accordance with subparagraph (B) of this paragraph;
    (J) demonstrate that the service identified in accordance with subparagraph (C) of this paragraph is not basic local telecommunications service, including local measured service;
    (K) if the type of pricing flexibility requested in accordance with subparagraph (B) of this paragraph is customer-specific pricing or detariffing, demonstrate that the service identified in accordance with subparagraph (C) of this paragraph is not message telecommunications service, switched access service, or wide area telecommunications service;
    (L) to prevent the subsidization of the service identified in accordance with subparagraph (C) of this paragraph with revenues from regulated monopoly services, propose mechanisms to recover costs that may not be identified and recovered in a long run incremental cost study, including but not limited to costs associated with advertising, unsuccessful bids, and all items of plant used in the provision of the service;
    (M) identify and address the impact that approval of the application for pricing flexibility may have on universal service;
Cont'd...