MTC seeks to remove usage and billing charges from the tariff because customers, according to MTC, are unable to predict their monthly charges and are therefore less likely to purchase ISDN service. Thus, removal of usage based charges should increase sales of ISDN and help recover foregone revenue. The proposed amendment to the service establishment charge tariff includes new language waiving the service establishment charge for customers agreeing to subscribe to the service for a minimum period of three years. Staff has reviewed the petition and recommends that the Commission deny the request. Staff is concerned that eliminating a source of revenue such as a usage charge may exacerbate the problem of cost recovery.
Staff recognizes that a usage based charge discourages customers from purchasing ISDN services.
However, because the petition does not include demand forecasts supporting claims of ISDN sale increases, staff is unable to assess the impact the proposed changes will likely have on the Company's prospects of recovering the cost of providing ISDN service. In addition, staff believes the proposed amendments waiving service establishment charges for customers subscribing to ISDN services for a three year period may adversely impact the development of competition. Staff avers that arrangements such as the one proposed by the Company have the effect of removing certain customers from the market before competitors have the opportunity to provide service. Staff admits that, in the near term, competitive markets are not likely to develop in small independent telephone company service areas. Nevertheless, Staff is concerned arrangements similar to that proposed by the Company will have a precedential effect in other service areas.