Opinion ID: 1230017
Heading Depth: 1
Heading Rank: 4

Heading: the trial courts decision affirming the commission's grant of competitive status to dds is affirmed

Text: RCW 80.36.320(1) requires the Commission to consider various factors before classifying a company as competitive: In determining whether a company is competitive, factors the commission shall consider include but are not limited to: (a) The number and sizes of alternative providers of service; (b) The extent to which services are available from alternative providers in the relevant market; (c) The ability of alternative providers to make functionally equivalent or substitute services readily available at competitive rates, terms, and conditions; and (d) Other indicators of market power which may include market share, growth in market share, ease of entry, and the affiliation of providers of services. WITA, GTE, and Whidbey assert on two grounds that the Commission improperly granted DDS statewide competitive status. They contend that because DDS initially chose to limit the geographic scope of its relevant market, approval should be limited to that area selected. They further claim, even assuming arguendo that the Commission may grant competitive status for a region broader than that requested in an application, insufficient evidence was presented to support statewide registration. Neither claim is persuasive. It is true that RCW 80.36.320(1) envisions piecemeal approval of competitive status: The commission shall classify a telecommunications company providing service in a relevant market as a competitive telecommunications company if it finds, after notice and hearing, that the telecommunications company has demonstrated that the services it offers are subject to effective competition. (Italics ours.) In anticipation of the Commission's review of DDS's application for competitive status, DDS and the Commission staff each attempted to define relevant market. DDS identified east Puget Sound metropolitan area, including, but not limited to Seattle, Tacoma, Bellevue, and Everett as its relevant market. Administrative Record (DDS), at 39, 40 (amended classification petition §§ 4(a), (c)). A Commission staff economist identified the relevant market as the market for private line and special access service without any limitation on geographic area. Administrative Record (DDS), at 2325 (testimony of Thomas L. Wilson, Jr.). [14] In its approval of DDS's bid for competitive classification, the Commission identified the entire state of Washington as the relevant market. Administrative Record (DDS), at 10 (Fourth Supplemental Order). There are no restraints in the statute or regulations preventing the Commission from granting competitive status to a party for the relevant market as the Commission defines the relevant market. Therefore, if the Commission feels that a party has met the requirements of RCW 80.36.320(1) and WAC 480-120-022(7) for a relevant market as it defines the relevant market, it is free to so determine. WITA, GTE, and Whidbey also contend that DDS failed to provide information to the Commission about the number or size of alternative providers outside of the east Puget Sound metropolitan area or obtain information as to rates, terms, or conditions for substitute services in any areas outside of those served by GTE and U S West. These appellants are correct that the burden lies with the applicant to demonstrate it faces effective competition in the relevant market. RCW 80.36.320(1); WAC 480-120-022(7). However, contrary to their assertions, the evidence offered as to competitiveness pertained to the entire state. Carl Hunt, DDS's expert witness, testified: DDS is a non-dominant firm that will have minimal market share, no market power, and no captive customer base. It is a price taker in this market. As a price taker, DDS will simply respond to the market price like any firm in a workable competitive market. To impose full regulation on DDS would not be in the public interest. It would make DDS less competitive, and it would discourage entry by other potential competitive telecommunications providers. Administrative Record (DDS), at 2211 (direct testimony of Carl E. Hunt (Hunt)). Hunt noted: [N]ew entrants expect to be protected from unfair competition from the dominant carrier.... When a regulated market is first opened to entry, the previously regulated firm still will be dominant and, left to its own [devices], will be able to exert tremendous amounts of market power.... New entrants will ... have to accept whatever the market price is, which is ... one of the basic [tenets] of workable competitive markets. Thus, firms such as DDS that enter newly-opened markets are faced with effective competition. Under such a market, consumers have reasonably available alternatives, and DDS does not have a captive customer base. Administrative Record (DDS), at 2206-07 (Hunt). This analysis applies with equal force statewide since DDS is a new telecommunications provider in Washington and since dominant carriers (LEC's) operate throughout the state of Washington. In addition, Hunt explicitly noted that his analysis could be extended beyond the east Puget Sound area to include the entire state of Washington. Transcript of Proceedings (DDS) vol. 2, at 195 (Dec. 9, 1991). The staff economist, Thomas Wilson, Jr., also presented evidence which was germane statewide. He noted the LECs represent extremely viable competitors, with large amounts of facilities already in place, significant experience, and financial strength. Administrative Record (DDS), at 43 (amended classification petition § 5). Wilson commented with respect to DDS's market share: Conventional wisdom indicates it is zero, since it is a start-up company, and faces stiff competition from the LEC. Winning market share can be expected to be difficult for DDS. DDS can be regarded as ambitious if it thinks it can win 5% in the near future. Administrative Record, at 2329 (testimony of Thomas L. Wilson, Jr.). As does Hunt's analysis, Wilson's analysis pertains with equal vigor statewide and is not limited to the east Puget Sound area. In fact, Wilson expressly indicated that his analysis would be applicable to the entire state of Washington. Transcript of Proceedings (DDS) vol. 3, at 375-76 (Dec. 10, 1991). In addition to the testimony of these two specialists in the field, the Commission possesses, as part of its institutional knowledge, information regarding the number and sizes of alternative providers of service, the extent to which services are available from alternative providers in all markets, the ability of alternative providers to make functionally equivalent or substitute services readily available at competitive rates, the terms and conditions of alternative service, and other indicators of market power. Its decision to accord DDS competitive status reflects its judgment that DDS satisfied the inquiries posed by RCW 80.36.320(1) and WAC 480-120-022(7). Because substantial evidence supports its ruling, we affirm the trial court's decision affirming the Commission's ruling.