Contribution of Telecommunications Services to the D.C. Courts, B-286182, January 11, 2001

B-286182 Jan 11, 2001 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights A price cap plan is an alternative form of regulation that uses market-based incentives together with price caps. The Commission is a quasi-judicial body that has the authority to approve rates and settlement agreements that are reasonable. Whether the plan is in the public interest. Will maintain the quality and availability of telecommunications services. Accounts for changes in technology and the structure of the telecommunications industry that are occurring. Will ensure that the rates charged by [Verizon] will be just. That "Ratepayers will thus benefit from access to new technology sooner and at a lower cost than under rate-of-return regulation." /4/ The Commission further found that "the plan will encourage [Verizon] to invest in new facilities. View Decision Matter of: Contribution of Telecommunications Services to the D.C. Courts File: B-286182 Date: January 11, 2001 DIGEST DECISION The District of Columbia Courts requested an advance decision on whether they can lawfully accept and use a contribution of telecommunications services and equipment made available to them as part of a settlement agreement in a rate case between the Office of the People's Counsel of the District of Columbia (OPC) and Bell Atlantic, Washington, D.C., Inc. (BA-DC) (now Verizon Communications). /1/ Pursuant to the settlement agreement, Verizon has agreed to provide services and equipment equivalent to $1.53 million to the District of Columbia Courts for the purpose of developing advanced telecommunications services that promote and facilitate access to the legal system within the District of Columbia Court System. We conclude that the District of Columbia Courts may accept and use the services and equipment directed to them by Verizon pursuant to its settlement agreement with OPC. BACKGROUND On November 12, 1996, the Public Service Commission of the District of Columbia (Commission) approved a settlement agreement between OPC /2/ and Verizon regarding Verizon's application for a price cap plan to replace rate-of-return based incentive regulations. A price cap plan is an alternative form of regulation that uses market-based incentives together with price caps. It reflects a move away from rate-of-return based regulations traditionally used to regulate monopolies. The Commission is a quasi-judicial body that has the authority to approve rates and settlement agreements that are reasonable, just, and nondiscriminatory. D.C. Code Sec. 43-501. The Commission may approve a plan for alternative regulation, such as the plan that Verizon had proposed, if the Commission determines that the plan meets criteria specified in section 3(j) of the Telecommunications Competition Act of 1996. D.C. Code Sec. 43-1452(j). Before approving such a plan, the Commission must consider, for example, whether the plan is in the public interest, will maintain the quality and availability of telecommunications services, and accounts for changes in technology and the structure of the telecommunications industry that are occurring. The Commission found generally that the price cap plan represents a less burdensome form of regulation and that "market-based incentives, together with the limits on rate increases and Commission oversight, will ensure that the rates charged by [Verizon] will be just, reasonable and nondiscriminatory. . . ." /3/ The Commission also determined that price cap regulation creates stronger, market-based incentives for Verizon to deploy technology quickly and efficiently, and that "Ratepayers will thus benefit from access to new technology sooner and at a lower cost than under rate-of-return regulation." /4/ The Commission further found that "the plan will encourage [Verizon] to invest in new facilities, offer innovative services and increase usage of the telephone networks." /5/ "The plan will thus promote universal service in the District and help ensure that all District residents have access to the information superhighway as we move into the 21st Century." /6/ As part of the 1996 settlement agreement, OPC and Verizon agreed to establish an "infrastructure fund," consisting primarily of contributions from Verizon, to finance advanced telecommunications projects in District of Columbia schools, libraries, and community centers. /7/ This element of the agreement was important in the Commission's finding that the proposed price cap plan satisfied the section 3(j) criteria. The Commission found, particularly, that the expected improved access of District of Columbia ratepayers to advanced telecommunications services financed by Verizon's contribution to the infrastructure fund was pivotal in satisfying at least two section 3(j) criteria--that the proposed regulatory plan account for changes in technology (section 3(j)(4)), and that the plan maintain the quality and availability of telecommunications services (section 3(j)(6)).