(a) Application. This section applies to incumbent local exchange companies (ILECs), as defined in the Public Utility Regulatory Act (PURA) §51.002(3), which have not elected to be regulated pursuant to PURA Chapters 58 or 59.
(b) Purpose. The purpose of this section is to establish the substantive and procedural requirements for an ILEC to introduce new services and/or to exercise pricing and packaging flexibility, including customer promotional offerings, and for complaints regarding service offerings introduced by informational notice offerings.
(c) New services. The term "new services" has the meaning assigned in §26.5 of this title (relating to Definitions) and shall include services for which no rate was in effect on September 1, 1999. An ILEC may file an informational notice to introduce a new service. An ILEC filing an informational notice pursuant to this subsection shall file the appropriate information in accordance with subsection (g)(2) of this section.
  (1) Pricing standards.
    (A) An ILEC shall price each new service at or above the service's long run incremental cost (LRIC).
    (B) The price of a new service may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.
    (C) A price that is set at or above the service's LRIC is presumed not to be predatory.
  (2) LRIC studies. An ILEC may establish a service's LRIC by submitting a LRIC study, as specified in subsection (g)(2)(D)(ix) of this section, that conforms to the requirements of §26.214 of this title (relating to Long Run Incremental Cost (LRIC) Methodology for Services Provided by Certain Incumbent Local Exchange Companies (ILECs)).
  (3) LRIC adoption. An ILEC serving fewer than one million access lines in Texas may establish a service's LRIC by adopting the commission-approved cost studies of a larger company for the same service.
  (4) Rate adoption. In lieu of filing a LRIC study or adopting the LRIC studies of a larger company, an ILEC with less than one million access lines may adopt a rate that is identical to or higher than a larger company's tariffed rate for the same service.
  (5) Packaging of new services. If an ILEC offers a new service as a component of a package, the ILEC shall also offer the new service as a separately tariffed service.
(d) Pricing and packaging flexibility. An ILEC may file an informational notice to exercise pricing and packaging flexibility by filing the appropriate information in accordance with subsection (g)(2) of this section.
  (1) General requirements.
    (A) Pricing flexibility includes:
      (i) customer specific contracts;
      (ii) packaging of services;
      (iii) volume, term, and discount pricing;
      (iv) zone density pricing, with a zone defined as an exchange; and
      (v) other promotional pricing.
    (B) A discount or other form of pricing flexibility may not be preferential, prejudicial, discriminatory, predatory, or anticompetitive.
    (C) An ILEC may exercise pricing flexibility, including the packaging or joint marketing of any regulated service with any other regulated or unregulated service or any service of an affiliate.
  (2) Pricing standards.
    (A) An ILEC shall price each regulated service offered separately or as part of a package at either the service's tariffed rate or at a rate not lower than the service's LRIC.
    (B) An ILEC shall price each service at or above the service's LRIC.
    (C) A price that is set at or above the service's LRIC is presumed not to be predatory.
    (D) The price of a package that combines regulated products or services with unregulated products or services shall recover the cost to the ILEC of acquiring and providing the unregulated products or services. In this section, unregulated products or services are products or services provided by an entity that is unaffiliated with the ILEC.
    (E) The price of a package that combines regulated products or services with the products or services of an affiliate shall recover the cost to the ILEC of acquiring and providing its affiliate's products or services, which shall be greater than or equal to the cost to the affiliate of acquiring and/or providing the products or services. The cost to an ILEC of acquiring or providing the affiliate's products or services shall be valued in a manner consistent with Federal Communications Commission (FCC) requirements, to the extent such requirements are applicable to the ILEC, and with subparagraph (F) of this paragraph. A group of products or services that are jointly marketed by an ILEC in conjunction with one or more of its affiliates shall be priced in a manner consistent with FCC requirements, to the extent such requirements are applicable to the ILEC, and with subparagraph (F) of this paragraph.
    (F) Consistent with PURA §52.051(1)(C), an ILEC shall not use revenues from regulated monopoly services to subsidize services subject to competition.
  (3) LRIC studies. An ILEC may establish a service's LRIC by submitting a LRIC study, as specified in subsection (g)(2)(D)(ix) of this section, that conforms to the requirements of §26.214 of this title.
  (4) LRIC adoption. An ILEC serving fewer than one million access lines in Texas may establish a service's LRIC by adopting the commission-approved cost studies of a larger company for the same services.
  (5) Rate adoption. In lieu of filing a LRIC study or adopting the LRIC studies of a larger company, an ILEC with less than one million access lines may adopt a rate that is identical to or higher than a larger company's tariffed rate for the same service.
(e) Customer promotional offerings. An ILEC may file an informational notice to offer customer promotional offerings by filing the appropriate information in accordance with subsection (g)(2) of this section.
  (1) An ILEC may offer a promotion for a regulated service for not more than 90 days in any 12-month period.
  (2) Customer promotional offerings may consist of:
    (A) a waiver of installation charges or service order charges, or both, for not more than 90 days in a 12-month period; or
    (B) a temporary discount of not more than 25% from the tariffed rate for not more than 60 days in a 12-month period.
  (3) Although ILECs are not required to file LRIC studies with informational notices regarding these customer promotional offerings, the offerings are subject to the standards for pricing flexibility in subsection (d) of this section, in the event of a complaint.
(f) Requirements for customer specific contracts. An ILEC may enter into customer-specific contracts for certain services as provided in §26.211 of this title (relating to Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges). For all services not addressed in §26.211 of this title, an ILEC must offer customer-specific contracts pursuant to this section.
(g) Procedures related to the filing of informational notices and associated tariffs. The provisions of this subsection apply to ILECs choosing to introduce new services and exercise pricing and packaging flexibility including customer promotional offerings through informational notice filings.
  (1) Notice requirements.
    (A) An ILEC shall provide the informational notice in compliance with this section to the commission, to the Office of Public Utility Counsel (OPC), and to any person who holds a certificate of operating authority in the ILEC's certificated area or areas, or who has an effective interconnection agreement with the ILEC.
    (B) Unless an interconnection agreement contract specifies otherwise, an incumbent local exchange carrier shall continue to provide to affected resellers of retail services the same notice of rate changes or withdrawal of detariffed services that it was required to provide prior to detariffing.
  (2) Filing requirements.
    (A) Filing of informational notice and confidential information. At the time the informational notice is filed in Central Records, a copy of the informational notice, including confidential information, shall be delivered to OPC. In addition to the record copy, an additional copy of any confidential information shall be filed in Central Records for use by the commission staff.
      (i) The commission shall assign each informational notice a unique control number and shall stamp the tariff sheets "received."
      (ii) The commission staff shall file any notice of deficiencies (including deficiencies in LRIC studies submitted) for incomplete filings not in compliance with this section or pleading alleging that the service offering is inappropriately filed as an informational notice filing within three working days after the date of the filing of the informational notice.
Cont'd...