EXECUTIVE SUMMARY OF THE DIRECT TESTIMONY OF
JOHN HANGER
Filed August 9th, 2000, BPU Docket No. TO99120934
John Hanger is a former Commissioner of the Pennsylvania PUC and an expert on facilitating the transition within the public utility industry from a regulated to a competitive marketplace. Mr. Hanger’s testimony includes an introduction to successful deregulation strategies, his assertion that deregulation and ancillary issues like interconnection should be considered jointly, and an explanation of Pennsylvania’s experience in telecommunications deregulation.
I. INTRODUCTION
For nearly 10 years, Mr. Hanger has participated in virtually every Pennsylvania telephone case concerning alternative regulation and the introduction of competition in the local telephone market. His experience ranges from disputes about service, billing and meter reading to multi-billion dollar rate issues. Pennsylvania has taken an active role in the national trend towards encouraging competition through alternative regulation; in June 1993 Pennsylvania passed legislation permitting LECs to submit plans for alternative regulation. Mr. Hanger believes consumers are better protected by robust competition than price regulation. Competition better rewards and penalizes efficient and inefficient companies. If competition is genuine, it promotes innovation, investment and better service options. However, a policy of promoting competition will not, by itself, ensure universal access to telecommunications.
But the promotion of competition is the duty of legislatures and regulators, not the incumbent utilities. If price regulation ends before real competition has developed, consumers will be left at the mercy of a deregulated monopoly. Thus, Bell Atlantic-New Jersey’s (BA-NJ) petition is premature, since robust competition has not developed.
NEED FOR AN INTEGRATED APPROACH
In its pre-hearing order, the NJ Board of Public Utilities (BPU) determined that unbundled network elements (UNEs), operations support systems (OSS) and performance measures will not be addressed in this proceeding. Mr. Hanger testified that the BPU should not evaluate BA-NJ’s Application independently from the State’s Telecommunications Act of 1992 and the 1996 federal Telecommunications Act. Considerations that are necessary to fostering and maintaining competition include: (a) BA-NJ’s costs and pricing for its UNEs; (b) performance of OSS; and (c) interconnection with CLECs. Even if competition in NJ were presently established, failure to integrate these considerations into the current Plan for Alternative Regulation (PAR) would allow BA-NJ to forestall the growth of competition.
BA-NJ’s Application cannot be granted in full without concrete procedures and standards to safeguard consumers and competitors. Lack of coordination with separate telecommunications proceedings addressing issues of UNE pricing and OSS functionality will unduly enhance BA-NJ’s existing dominant position.
ACTIONS OF THE PENNSYLVANIA PUBLIC UTILITY COMMISSION
The Pennsylvania Public Utility Commission (PAPUC) integrated parallel proceedings that dealt with numerous issues of competition and interconnection, including both an initial generic determination and a later reexamination of Bell Atlantic-Pennsylvania’s (BA-PA) UNE costs. The reexamination established lower prices for UNEs and UNE combinations based upon reduced forward-looking economic costs. PAPUC’s Global Order also expedited the procedure for ascertaining UNE costs and implemented resale promotions to increase competition in rural local exchange markets. Moreover, wholesale and retail operations of BA-PA were required to be separated from each other