BASIS, PURPOSE AND STATUTORY AUTHORITY.

The basis and purpose of these rules is to establish regulations regarding applications for specific forms of price regulation for local exchange telecommunications services. These rules also establish procedures and standards applicable to decisions regarding the appropriate level and type of relaxed regulation, such as flexible pricing, detariffing, and other such manner and method of regulation that are consistent with the General Assembly's expression of intent stated in 40-15-101, C.R.S., for services and products declared to be emerging competitive telecommunications services as defined in 40-15-301(2) and 40-15- 305(2) C.R.S. The rules also establish procedures and standards applicable to decisions regarding applications for deregulation of services or products in accordance with 40-15-305(1) C.R.S. Finally, the rules establish time schedules for the efficient disposition of applications filed in accordance with these rules.

These rules are issued pursuant to 40-2-108, 40-15-101, 40-15-203.5, 40-15-305 and 40-15-503, C.R.S. RULE 4 CCR723-38-1. APPLICABILITY.

These rules are applicable to all persons who are applying for a specific form of price regulation for a specific local exchange telecommunications service, and to all persons applying for relaxed regulation and deregulation for a specific emerging competitive telecommunications service. RULE 4 CCR 723-38-2. DEFINITIONS.

The meaning of terms used in these rules shall be consistent with their general usage in the telecommunications industry unless specifically defined by Colorado statute or this rule. In addition to the definitions in this section, the statutory definitions apply. In the event the general usage of terms in the telecommunications industry or the definitions in this rule conflict with the statutory definitions/the statutory definitions control. As used in these rules, unless the context indicates otherwise, the following definitions apply:

723-38-2.1 Advice letter.

Filing which is made with the Commission and which accompanies a tariff. 723-38-2.2 Applicant.

Any provider of local exchange or emerging competitive telecommunications services, or any person seeking to be authorized by the Commission to offer local exchange or emerging competitive telecommunications services, who files an application with the Commission pursuant to these rules. 723-38-2.3 Application.

A formal filing with the Commission, made by an applicant, which requests a specific form of price regulation, relaxed regulation and deregulation.

723-38-2.4 Band of rates or banded prices.

Range of rates or prices, which range is defined by a Commission- established price floor (the lower boundary) and a Commission- established price ceiling (the upper boundary) and within which a provider of local exchange or emerging competitive telecommunications service may set a specific price. 723-38-2.5 Certificate of public convenience and necessity or CPCN. Commission-granted authority to provide local exchange telecommunications services. The CPCN for telecommunications is generally granted on a statewide basis, subject to terms and conditions established by the Commission in its decision.

723-38-2.6 Commission.

The Public Utilities Commission of the state of Colorado. 723-38-2.7 Competitive Local Exchange Carrier (CLEC).

A telecommunications provider that has been granted a Certificate of Public Convenience and Necessity ("CPCN") to provide local exchange telecommunications service in the State of Colorado on or after February 8, 1996, pursuant to 4 CCR 723-25-4 and 40-15-503(2)(f), C.R.S. 723-38-2.8 Cost Support.

Data, information, methods, and analysis conducted in accordance with, and subject to, the Rules Prescribing Principles for Costing and Pricing of Regulated Services of Telecommunications Service Providers, 4 CCR 723-30, and the Cost Allocation Rules for Telecommunication Service and Telephone Utilities Providers, 4 CCR 723-27, unless the applicability of these rules is modified or waived by the Commission.

723-38-2.9 Deregulated Services.

Services and products deregulated by the General Assembly in 40-15-401,C.R.S. or the Commission in accordance with 40-15-305(1), C.R.S.

723-38-2.10 Detariffed or detariffing.

Local exchange and emerging competitive telecommunications services which the Commission has determined may appropriately be offered without filing a tariff setting forth the terms and conditions pursuant to which the service is generally offered; or, the process for obtaining commission approval of such a service offering; not synonymous with deregulation. 723-38-2.11 Emerging Competitive Telecommunications Services. Services and products regulated by the Commission in accordance with Title 40, Article 15, Part 3, C.R.S. 723-38-2.12 Incumbent Telecommunications Provider or Incumbent Local Exchange Carrier [ILEC] .

723-38-2.12.1 For purposes of this rule, the term incumbent local exchange carrier means, with respect to an area, the local exchange carrier that- (A) on the date of enactment of the Telecommunications Act of 1996, provided telephone exchange service in such area; and, (B)

(i) on such date of enactment, was deemed to be a member of the exchange carrier association pursuant to section 69.601(b) of the Federal Communications Commission's regulations (47 C.F.R. 69.601(b)); or, (ii) is a person or entity that, on or after such date of enactment, became a successor or assign of a member described in clause (i).

723-38-2.12.2 The Commission also may, by rule, provide for the treatment of a comparable local exchange carrier (or class or category thereof) as an incumbent local exchange carrier for purposes of this Rule 723-38, if- (A) such carrier occupies a position in the market for telephone exchange service within an area that is comparable to the position occupied by a carrier described in paragraph (1); (B) such carrier had substantially replaced an incumbent local exchange carrier described in paragraph (1); and, (C) such treatment is consistent with the public interest, convenience, and necessity and the purposes of this Rule.

723-38-2.13 Letter of Registration.

Commission granted authority to provide emerging competitive telecommunications services. The Letter of Registration is generally granted on a statewide basis, subject to terms and conditions established in the Commission decision.

723-38-2.14 Local exchange telecommunications services or service. Basic local exchange service and such other services identified in 40-15-201, C.R.S., or defined by the Commission pursuant to 40-15-502(2), C.R.S.; regulated advanced features, premium services, and switched access as defined in 40-15-301 (2) (a), (b), and (e), C.R.S.; or any of the above, singly or in combination.

723-38-2.15 Price List.

A filing with the Commission which contains all current rates of a provider of local exchange or emerging competitive telecommunications products and services.

723-38-2.16 Price regulation.

Commission-approved form of regulation of a provider's offering of any local exchange telecommunications service, which may contain, without limitation: regulation of the price and quality of services; price floors and price ceilings; flexibility in pricing between price floors " and price ceilings; modified tariff requirements; incentives for increased efficiency, productivity, and quality of service; or any combination of these, 723-38-2.17 Provider of local exchange telecommunications services or provider. Any person who holds a certificate of public convenience and necessity to provide local exchange telecommunications services.

723-38-2.18 Relaxed Regulation.

Flexible pricing, detariffing, and other such manner and methods of regulation as provided in 40-15- 302(1), C.R.S., that are consistent with the General Assembly's expression of intent stated in 40-15-101, C.R.S. for services and products declared to be emerging competitive telecommunications services as defined in 40-15-301(2) and 40-15-305(2), C.R.S.

723-38-2.19 Tariff.

A filing with the Commission which contains all rates, terms and conditions of a provider of local exchange or emerging competitive telecommunications services and products. The tariff of local exchange service providers shall also include a description of the service territory and local calling areas. 723-38-2.20 Transmittal letter.

Filing which is made with the Commission and which accompanies a notice of change to a price list. RULE 4 CCR 723-38-3. SPECIFIC FORMS OF PRICE REGULATION. On its own motion (by adjudication or by rulemaking) or in response to an application, the Commission may grant, for any local exchange telecommunications service and on a geographic basis, a specific form of price regulation.

723-38-3.1 Specific forms of price regulation.

The Commission may grant, singly or in combination, without limitation, any of the following: 723-38-3.1.1 Tariffed forms of price regulation.

723-38-3.1.1.1 Banded prices.

The Commission may set a band of rates within which an applicant will be allowed to price. When the Commission approves the use of a price band, the following procedures shall apply unless the Commission issues an order modifying them:

723-38-3.1.1.1.1 Price ceilings and price floors defining price band. Within 30 days of the date of a final Commission decision approving an application to offer a service within a band of rates, a provider shall file an advice letter setting a ceiling price and a floor price which defines the band of rates. Both the price floor and the price ceiling shall be determined in accordance with, and shall be subject to, the Rules Prescribing Principles for Costing and Pricing of Regulated Services of Telecommunications Service Providers, 4 CCR 723-30, and the Cost Allocation Rules for Telecommunication Service and Telephone Utilities Providers, 4 CCR 723-27, unless the applicability of those rules is waived by the Commission.

723-38-3.1.1.1.2 Initial price list.

The provider shall file, as part of the advice letter defining the price band, an initial price list that describes the terms and conditions of service and the rates to be charged for the service. If prices vary between, among, or within different customer classes, territories, or levels of service, the price list must reflect each such variance.

723-38-3.1.1.1.3 Changes to boundaries of band of rates. A provider wishing to change the price ceiling or the price floor, or both, of a band of rates shall file an advice letter. Both the amended price floor and the amended price ceiling shall be determined in accordance with, and shall be subject to, the Rules Prescribing Principles for Costing and Pricing of Regulated Services of Telecommunications Service Providers, 4 CCR 723-30, and the Cost Allocation Rules for Telecommunication Service and Telephone Utilities Providers, 4 CCR 723-27, unless the applicability of those rules is waived by the Commission. 723-38-3.1.1.1.4 Changes to prices within established band of rates. On or before 14 days prior to the desired effective date for a change to one or more prices contained in an established price band, a provider shall file with the Commission, by transmittal letter, a price list that describes each change proposed to the prices to be charged for the service. If prices vary between, among, or within different customer classes, territories, or levels of services, the price list must reflect each such variance. The Commission may set for hearing and, after hearing, may approve, modify, or deny any aspect of a change proposed to a price within a band of rates. If the Commission sets a proposed change in a price for hearing, the proposed change shall not go into effect on the proposed effective date without further order of the Commission. At the hearing, the provider shall bear the burden of proof with respect to each proposed change in the price (s) within a band of rates. If the Commission does not set the proposed change to the price (s) for hearing within 14 days of the filing of the transmittal letter, the new price shall go into effect by its terms. 723-38-3.1.1.2 dified tariff requirements.

The Commission may, in its sole discretion, permit the use of modified tariff requirements (for example, shortened notice period) for the offering of a specific service. 723-38-3.1.2 Tariffed forms of price regulation.

There are two steps to detariffing: first, the Commission must grant an application for a specific detariffed form of price regulation; second, the provider must submit specific information about the manner in which the provider intends to implement the specific detariffed form of price regulation. For the following types of detariffed forms of price regulation, except as otherwise provided by Commission decision and order, the following procedures. apply for submission of the specific information about implementation: 723-38-3.1.2.1 Confidential price floor.

The Commission may permit the use of a confidential price floor for a specific service. If permitted, the price floor shall be filed with the Commission under seal on or before 14 days before the proposed effective date for implementation of the price floor. The price floor is subject to Commission review to determine that the price floor (a) is consistent with the Rules Prescribing Principles for Costing and Pricing of Regulated Services of Telecommunications Service Providers, 4 CCR 723-30; (b) is not inappropriate; and (c) is consistent with the public interest. The Commission may set the proposed confidential price floor for hearing pursuant to such modified procedures as the Commission may deem appropriate and as are consistent with the Commission's practice and procedure designed to deal with confidential filings. At the conclusion of such modified procedure or hearing, the Commission may approve, modify, or reject the proposed confidential price floor. If the Commission sets a price floor for hearing, the proposed price floor shall not go into effect on the proposed effective date without further order of the Commission. At the hearing, the applicant shall bear the burden of proof with respect to the price floor. If the Commission does not set the price floor for hearing within 14 days of the filing of the price floor, the price floor shall go into effect by its terms. 723-38-3.1.2.2 Confidential contract.

The Commission may permit a provider to contract with a customer, subject to Commission approval, for the provision of a local exchange telecommunications service irrespective of tariff or price list requirements. If permitted, a notice of contract shall be filed with the Commission under seal prior to the expiration of 14 days from the date the contract is executed. The contract shall be subject to Commission review to determine whether (a) the rate negotiated is nondiscriminatory and the customer who is a party to the contract did not receive an inappropriate rate; (b) the contract terms are consistent with the public interest; and (c) the contract terms are consistent with applicable Commission rules. The Commission may set the contract for hearing and, after hearing, may approve or disapprove the contract. At the hearing, the applicant shall bear the burden of proof with respect to the contract. If the Commission does not set the contract for hearing, the contract is effective according to its terms. 723-38-3.1.3 Incentives for increased efficiency, productivity, and quality of service. The Commission may devise a specific form of price regulation which, in the Commission's judgment, and without limitation, enhances efficiency, productivity, or service quality, or any combination of these. 723-38-3.1.4 Other specific forms of price regulation.

The Commission may devise any specific form of price regulation which is, in the Commission's judgment, in the public interest and appropriate for the applicant's circumstances. 723-38-3.1.5 Price Ceilings.

Consistent with § 40-15-502(3)(b)(I), prices for residential basic local exchange service, including zone charges, if any, shall not rise above the levels in effect on May 24, 1995 for comparable services, except as otherwise provided for by law.

723-38-3.2 Default Forms Of Regulation.

723-38-3.2.1 Part 2 Service.

In the absence of a Commission-approved specific form of price regulation, an incumbent local exchange carrier shall be regulated pursuant to a traditional rate-of-return regulation methodology. 723-38-3.2.2 Part 3 Service.

In the absence of any specific. Commission-approved form of price regulation, a competitive local exchange carrier shall be regulated by the default form of price regulation detailed herein. 723-38-3.2.2.1 Applicability This default form of price regulation shall apply to all products offered by competitive local exchange carriers, with the exception of the rates, terms and conditions for 911 call delivery to a Basic Emergency Service Provider. Each local exchange carrier shall establish rates, terms and conditions governing 911 call delivery to a Basic Emergency Service Provider, as directed in Rule 4 CCR 723-29. 723-38-3.2.2.2 .Filing of Initial Tariffs.

In accordance with Commission rules, each CLEC shall file an initial tariff that contains the terms and conditions governing its services and products, as directed in 4 CCR 723-1-40.1. The tariff shall also contain the rates, terms, and conditions governing those services and products that are not subject to the specific form of price regulation established by this rule. For products and services subject to the default form of price regulation, changes to the initial tariff may be made upon 14 days notice to the Commission; additional notice to customers shall not be required unless ordered by the Commission. If the Commission does not suspend the effective date of the proposed tariff change, it shall become effective according to its terms.

723-38-3.2.2.3 .Price Lists.

In accordance with Commission rules, each CLEC shall file a price list that contains the current rates it charges for its services and products, as directed in 4 CCR 723-1-40.2. 723-38-3.2.2.3.1 .Price List Changes.

On or before 14 days prior to the desired effective date for a change in one or more prices contained in a price list, the CLEC shall file with the Commission, by transmittal letter, a price list that describes each proposed change. The CLEC may, but need not, provide notice to customers of any proposed price change.

723-38-3.2.2.3.2 Effective Date of Price Lists.

Unless the Commission suspends the effective date of a new price list, or a change in an existing price list, filed by a CLEG with the Commission, the new price list or changed price list shall become effective according to its terms.

723-38-3.2.2.4 Customer Specific Contracts.

A CLEC may negotiate and enter into customer-specific contracts, with terms and conditions tailored to the specific customer's needs. The CLEC shall file a notice of the contract with the Commission prior to the expiration of 14 days after the date the contract is executed. If the Commission does not set the contract for hearing, the contract is effective according to its terms. 723-38-3.2.2.5 .Promotional Offerings and Volume Discounts. A CLEC shall file promotional offerings and volume discounts in its price list. Such a filing shall be in the form of a transmittal letter, submitted to the Commission at least 14 days prior to the proposed effective date. The transmittal letter shall be numbered sequentially as set forth in Rule 723-1-40.2, and shall otherwise comply with Rule 723-1-40.2. The price list for promotional offerings and volume discounts shall contain the terms, conditions, and prices for such offerings. No supporting cost or other information need be filed unless specifically requested by the Commission. 723-38-3.2.2.6 Right to Investigate Tariffs and Prices. The Commission may suspend and investigate any tariff, tariff rate, price, or price list filed; and the Commission may set any customer-specific contract for hearing. Nothing in this Rule shall be deemed in any way to limit or to abridge any right of the Commission. 723-38-3.2.2.7 Burden of Proof.

In any proceeding before the Commission pursuant to Rule 3.2.2.6, the CLEC shall have both the burden of going forward and the burden of persuasion that any price, term or condition contained in a tariff, price list, or customer-specific contract is just, reasonable, and non-discriminatory. 723-38-3.2.2.8 Reporting Requirements.

To enable the Commission to track the progress of competition and to monitor the delivery of basic and advanced services to all areas of the state, it is in the public interest for CLECS to provide the Commission with information in annual reports and/or other special reports. 723-38-3.2.2.8.1 Annual Reports.

Annual reports, of both ILECs and CLECs, shall be filed in accordance with Rule 723-1-25, except that only one copy of the stockholder or certified public accountant report need be filed. 723-38-3.2.2.8.2 Further Reporting Requirements.

The CLEC, as a requirement of this specific form of price regulation, shall file with the Commission periodic informational reports requested by the Commission. The CLEC and Commission staff may propose formats for such reports. The provider may file the periodic informational reports under seal if appropriate. Provided, however, interested persons have the right to challenge the CLEC'S designation of a periodic informational report, or any portion of it, as confidential and proprietary. In addition, the Commission on its own motion, may determine that a report, or portions of a report, are not confidential and proprietary.

723-38-3.2.2.9 Form of Financial Records.

CLECs shall use the system of accounts specified in Rule 723-1-25 (c). 723-38-3.2.2.10 .Location of Records A CLEC shall not be required to maintain its books of account and records in the State of Colorado. However, each CLEC shall produce its books of account and records in Colorado at a place and time designated by the Commission, upon request by the Commission. Alternatively, a CLEC shall compensate the Commission for the expenses, including, but not limited to, transportation and lodging, associated with Commission Staff's inspection of the CLEC's books and records outside the State of Colorado.

723-38-3.2.2.11 Cost Allocation Manual (CAM).

The CLEC shall be exempt from the requirement to file a Cost Allocation Manual. Each provider shall be required to follow the methods, standards, and guidelines of the Cost Allocation Rule to produce Colorado intrastate specific information for the Commission.

723-38-3.2.2.12 Price Ceilings.

Consistent with 40-15-502 (3) (b)(I), prices for residential basic local exchange service, including zone charges, if any, shall not rise above the levels in effect on May 24, 1995 for comparable services, except as otherwise provided for by law.

723-38-3.3 Price regulation and relaxed regulation.

With respect to a service which is a Part 3 of Title 40, Article 15, C.R.S., service, nothing in these rules shall limit the ability of the applicant to seek or to obtain both a specific form of price regulation and a specific form of relaxed regulation, as provided for in 4 CCR 723-25. 723-38-3.4 Providers Previously Granted Price or Relaxed Regulation. Any provider previously granted a specific form of price regulation or relaxed regulatory treatment by the Commission may elect to have the provisions of Rule 38.3.2.2 supersede the provisions of the provider's form of price regulation or relaxed regulatory treatment. The provider shall make that election by filing a notice with the Commission. That notice, signed by a duly authorized representative of the provider, shall be filed in the docket granting the provider the specific form of price regulation or relaxed regulatory treatment which is to be superseded by the provisions of Rule 38-3.2.2, and shall state that the provider is electing the default form of price regulation specified in Rule 38-3.2.2. RULE 4 CCR 723-38-4. APPLICATION FOR SPECIFIC FORMS OF PRICE REGULATION - CONTENTS OF APPLICATION; CRITERIA.

To obtain a specific form of price regulation, a provider of local exchange telecommunications services shall file an application with the Commission for approval of such specific form of price regulation. ,tb/>723-38-4.1 Contents of application.

The application shall contain, in the following order and specifically identified, the following information, either in the application or in appropriately identified, attached exhibits: 723-38-4.1.1 The name, address, and telephone number of the applicant and the name(s) under which the applicant provides or will provide each local exchange telecommunications service for which a specific form of price regulation is sought; 723-38-4.1.2 The service or services for which a specific form of price regulation is requested; 723-38-4.1.3 A description of the specific form of price regulation requested on a service-specific basis and on an operating area, or smaller geographic area, basis; 723-38-4.1.4 If other than as provided by statute or rule, a description (a) of the type of public notice which the applicant proposes to give in connection with the specific form of price regulation, if granted, and (b) of the timing of that public notice; 723-38-4.1.5 The operating area(s), or smaller geographic area(s), stated in metes and bounds, in which the service will be offered., under the requested specific form of price regulation; 723-38-4.1.6 A list of other known providers of the service or of similar or substitutable services and a description of any significant, functional differences between the applicant's service and other available services, if known;

723-38-4.1.7 The estimated market share held by the applicant for each service for which the requested specific form of price regulation is sought;

723-38-4.1.8 Any available cost and estimated demand data for each service for which the requested specific form of price regulation is sought;

723-38-4.1.9 A list of all currently effective tariff and price list pages for each service for which the requested specific form of price regulation is sought. The applicant must provide copies of the listed tariff and price list pages upon request by the Commission; 723-38-4.1.10 A description of all currently effective rate elements for. each service for which the requested specific form of price regulation is sought;

723-38-4.1.11 If the provision of the service for which the requested specific form of price regulation is sought involves the use of investments and expenses that are jointly or commonly used to provide services (a) not subject to the specific form of price regulation sought or (b) not subject to the jurisdiction of the Commission, identification of, in accordance with the Uniform Systems of Accounts or other Commission-approved methodology, the account numbers affected; and a brief description of the methods by which the jointly or commonly used assets, liabilities, revenues, and expenses are allocated between the relevant services;

723-38-4.1.12 If the Commission has not approved an accounting method to be used by the applicant in its offering of local exchange telecommunications services, a designation of the accounting method to be used to provide the service for which a specific form of price regulation is sought and a statement (not in the form of conclusory statements) explaining how the proposed accounting method meets the requirements of Rule 5 (Segregation of Assets);

723-38-4.1.13 If the Commission has approved an accounting method to be used by the applicant in its offering of local exchange telecommunications services, a statement (not in the form of conclusory statements) explaining how that accounting method meets the requirements of Rule 5 (Segregation of Assets);

723-38-4.1.14 A statement of the facts (not in the form of conclusory statements) relied upon by the applicant to show that a grant of the requested, specific form of price regulation to applicant is consistent with, and not contrary to, the statements of public policy contained in 40-15-101, 40-15-501, 40-15-502, and 40-15-503(2) (c), C.R.S.; 723-38-4.1.15 A statement that the applicant agrees (a) to answer all questions propounded by the Commission or any authorized member of its staff concerning the application; and (b) to permit the Commission or any authorized member of its staff to inspect the applicant's books and records as part of the investigation into the application; 723-38-4.1.16 A statement indicating, if the application is assigned for hearing, the town or city where the applicant prefers the hearing to be held and any alternative choices; 723-38-4.1.17 A statement that the applicant understands that the filing of the application does not, by itself, constitute authority to operate under the requested specific form of price regulation and that the applicant shall not implement any provisions of the requested specific form of price regulation unless and until a Commission decision granting the application is issued;

723-38-4.1.18 A statement that, if the requested specific form of price regulation is granted, the applicant understands that the grant is conditioned upon: (a) filing of necessary advice letters and tariffs, transmittal letters and price lists, or adoption notices, as applicable; (b) compliance with statute and all applicable Commission rules; and (c) compliance with any and all conditions established by Commission order;

723-38-4.1.19 A statement that the applicant understands that, if contents of the application are found to be false or to contain material misrepresentations, any specific form of price regulation granted may be, upon Commission order, null and void; and 723-38-4.1.20 An affidavit signed by an officer, a partner, an owner, or an employee, as appropriate, who is authorized to act on behalf of the applicant, stating that the contents of the application are true, accurate, and correct.

723-38-4.2 Applicant's notice of application.

Within 14 days of filing an application for a specific form of price regulation, the applicant shall give notice of the application to all existing customers of the service for which a specific form of price regulation is sought. The applicant shall give notice in accordance with one of the methods of notice specified in 40-3- 104, C.R.S., unless the Commission approves a different means to notify existing customers. In addition, the applicant shall give notice by first class mail to all providers of local exchange telecommunications services who are identified in the list required by Rule 4.1.6 and who offer the service within the geographic area(s) in which the applicant proposes to offer service under the specific form of price regulation that is the subject of the application. The Commission will maintain, at its office, a current list of these providers with their mailing addresses. Not more than seven days after notice is given pursuant to this rule, the applicant shall provide the Commission with written verification of compliance with this rule. 723-38-4.3 a and Commission consideration.

etermining whether or not to grant an application, the Commission will, in the exercise of its sole discretion and judgment, and as appropriate, consider whether granting the requested, specific form of price regulation: (a) is suitable and appropriate under the circumstances; (b) is consistent with, and advances, the public policies contained in 40-15-101, 40-15-501, 40-15-502, and 40-15-503(2) (c),C.R.S.; (c) will have a beneficial effect on the availability of services to all consumers in the state at fair, just, reasonable, adequate, nondiscriminatory, and affordable rates; and (d) is not contrary to law or to Commission policy.

RULE 4 CCR 723-38-5. SEGREGATION OF ASSETS.

723-38-5.1 To define the regulated rate base and to implement alternatives to traditional rate-of-return regulation, it is necessary to segregate the assets, liabilities, revenues, and expenses associated with the service subject to a specific form of price regulation from the assets, liabilities, revenues, and expenses associated with all other regulated telecommunications services. As a result, and if deemed necessary, the Commission may require a provider which provides local exchange telecommunications service which is subject to a specific form of price regulation other than tradition rate-of-return regulation to file with the Commission an accounting plan that accomplishes this segregation of assets, liabilities, revenues, and expenses. If required, the accounting plan shall be filed within 30 days following a final Commission decision approving a specific form of price regulation.

723-38-5.2 In the event the Commission orders an applicant to file an accounting plan in accordance with Rule 5.1, the applicant shall not offer the service under the approved specific form of price regulation prior to Commission approval of an appropriate accounting plan to segregate assets, liabilities, revenues, and expenses of the service. In the event the Commission requires an accounting plan to segregate assets, liabilities, revenues, and expenses of the service, the applicant shall, to the extent necessary, modify its cost separation manual required by the Cost Allocation Rules for Telecommunication Service and Telephone Utilities Providers, 4 CCR 723-27, to conform to the accounting plan required by the Commission. 723-38-5.3 If required by the Commission to file an accounting plan, the applicant shall bear the burden of proving that the accounting plan submitted is sufficient to segregate assets, liabilities, revenues, and expenses to permit the Commission to define the regulated rate base and to implement the alternatives to traditional rate-of-return regulation. 723-38-5.4 Small local exchange carriers exempted from filing a cost segregation manual pursuant to Cost Allocation Rules for Telecommunication Service and Telephone Utilities Providers, 4 CCR 723-27, shall not be required to file plans or updates but shall be required to follow the cost segregation rules.

RULE 4 CCR 723-38-6. REVISION OF TERMS OF APPROVED FORM OF PRICE REGULATION. On its own motion, or upon the application of the provider which has been granted the specific form of price regulation affected, and after notice and opportunity to be heard, the Commission may revise a specific form of price regulation granted pursuant to these rules if the Commission finds that continued use of the approved specific form of price regulation is contrary to, or inconsistent with, statements of public policy in 40-15-101, 40-15-501, 40-15-502, and 40-15-503(2) (c), C.R.S. RULE 4 CCR 723-38-7. PROCESSING OF APPLICATIONS FOR SPECIFIC FORMS OF PRICE REGULATION.

723-38-7.1 The Comission will process applications in accordance with the Rules of Practice and Procedure found at 4 CCR 723-1.specific form of price regulation sought in an application shall not be in effect until the Commission issues an order approving it, with or without hearing. 723-38-7.2 The Commission shall deem all applications complete in accordance with the procedural requirements of 4 CCR 723-1, Rule 70.

723-38-7.3 Absent unusual or extraordinary circumstances, the Commission will reject an application that is incomplete (see 4 CCR 723-1, Rule 70 ) and will close the docket pertaining to that application. RULE 4 CCR 723-38-8. GENERAL RULES CONCERNING APPLICATIONS FOR SPECIFIC FORMS OF RELAXED REGULATION AND DEREGULATION.

723-38-8.1 Relaxed Regulation and Deregulation of Emerging Competitive Telecommunications Services.

723-38-8.1 The Commission, upon its own motion, or upon application by any person using, providing, or planning to provide telecommunications service, within Colorado, shall regulate pursuant to Part 3 of Article 15, Title 40, C.R.S., any emerging competitive telecommunications service provided by any person otherwise subject to its jurisdiction, in whole or in part, and shall grant one or more specific forms of relaxed regulation for services upon a finding that the specific form of relaxed regulation is consistent with the General Assembly's expression of intent stated in 40-15-101, C.R.S. 723-38-8.1 The Commission, upon its own motion, or upon applications by any person using, providing, or planning to provide telecommunications service, within Colorado, shall deregulate any emerging competitive telecommunications service, upon a finding that there is effective competition for the service, and that deregulation will promote the public interest, and the provision of adequate, reliable service at just and reasonable rates as stated in 40-15-301(1) C.R.S.

723-38-8.2 Notice.

Upon the filing of an application for a specific form of relaxed regulation or for deregulation, the applicant must provide notice of the application within 15 day to all existing customers in accordance with one of the methods of notice in 40-3-104, C.R.S., unless the Commission approves a different means to notify existing customers. The applicant also must provide notice by first class mail to all providers of telecommunications services who are regulated by the Commission under Title 40, Article 15, Part 2 or Part 3, C.R.S. The Commission will maintain a current list of these providers with their mailing addresses at the Commission's office.

723-38-8.3 - Non-Action by the Commission.

Effect of Failure to Comply With Procedural Requirements. No application or request filed with the Commission shall be deemed granted by non-action of the Commission or by the Commission's failure to comply with any procedural requirement in these Rules except as specifically required by statute and except non-action pursuant to Rule 9.3.2(c)

RULE 4 CCR 723-38-9. RULES RELATING TO APPLICATIONS FOR SPECIFIC FORMS OF RELAXED REGULATION.

723-38-9.1 Application Information for Specific Forms of Relaxed Regulation. 723-38-9.1.1 Any application for a specific form of relaxed regulation of an emerging competitive telecommunications service must include the following information: (a) The name, address, and telephone number of the applicant; (b) A specific description of the service for which relaxed regulation is sought and the specific form of relaxed regulation requested;

(c) The geographic. areas in which the service is, or will be, offered; (d) A list of other known providers of similar or substitutable services, and any significant, functional differences between the applicant's service and other available services, if known;

(e) The estimated market share of the applicant;

(f) Any available cost and estimated demand data;

(g) A list and copies of all presently effective tariff pages for the service; (h) A description of all presently effective rate elements for the service; (i) If the provision of the service involves the use of investments and expenses that are jointly or commonly used to ' provide Part 2 services or not subject to relaxed regulation under Title 40, Article 15, Part 3, then identify the Uniform System of Accounts account numbers affected, and briefly describe the methods by which the jointly or commonly used assets, liabilities, revenues, and expenses are allocated between the relevant services and products, and (j) Specific information demonstrating that the specific form of relaxed regulation will be consistent with the General Assembly's expression of intent stated in 40-15-101, C.R.S. 723-38-9.1.2 At the time the application is filed, the applicant shall file its direct testimony and copies of exhibits to be offered at the hearing. If an exhibit is too large or cumbersome to prefile, the location of the exhibit shall be disclosed where parties may inspect it, and the applicant shall file a title of each exhibit and a summary of the information contained in the exhibit. The applicant shall indicate any information. which is claimed to be confidential and shall set forth the grounds for the claim of confidentiality. The applicant may file a motion for the protection of information which it claims to be confidential. 723-38-9.2 Processing Applications for Specific Forms of Relaxed Regulation. 723-38-9.2.1 Upon the filing of an application for a specific form of relaxed regulation or upon Commission motion, the applicant shall immediately issue notice to the public as required by Rule 8.2, of this Rule 38. If the Commission institutes a proceeding for relaxed regulation upon its own motion, it shall issue notice to the public in accordance with 40-6- 108(2), C.R.S.

723-38-9.2.2 With the inclusion of the information required by Rule 9.2.1, the Commission will process an application for a specific form of relaxed regulation as set forth in Rule 70 of the Commission's Rules of Practice and Procedure, 4 CCR 723-1. When the Commission issues its "Notice of Filing" pursut to Rule 70ant to Rule 70, such notice shall contain provisions for the handling of any confidential information. In addition, Rule 77 of the Commission's Rules of Practice and Procedure shall govern all discovery with regard to the application.

723-38-9.3 Specific Forms of Relaxed Regulation.

723-38-9.3 Alternatives to Rate-of-Return Regulation. The ' Commission may use alternatives to traditional rate-base or rate-of-return regulation and may adopt any surrogate process it deems appropriate under the circumstances to protect the public and promote competition with respect to an emerging competitive telecommunications service, which may include, but is not limited to, the alternatives listed in this rule. 723-38-9.3.2 Flexible Pricing Bands.

(a) The Commission may set a band of rates in which the applicant will be allowed to price without further Commission approval.

(b) Within 14 days of receiving approval to offer a service within a band of rates, the applicant shall provide the Commission with a price list that clearly describes the rates to be charged for the service. The price list shall also be sent to affected customers at least 14 days prior to those prices taking effect. If prices vary across different customer classes, territories, or levels of services, the price list must reflect each of these distinctions. (c) When an applicant requests that the Commission modify an existing band of rates, the applicant shall supply, in its application to modify the existing band of rates, the Commission with available cost and marketing data used to conclude that the existing band is no longer appropriate. The Commission shall have 14 days to approve or deny the application or set a hearing date for comments on the requested change. " If the Commission takes no action within the 14-day period, the application to modify the existing band shall be deemed approved.

723-38-9.3.3 Trial Offerings.

(a) The Commission may authorize the applicant to offer the service on a limited basis for a period of six months, unless extended further by the Commission. The applicant will be required to provide all customers with written notice of the trial-nature and duration of the offering. The Commission may limit the trial in terms of the investment level, prices, the territory in which the service may be offered, or the number of customers which can be served during the trial period.

(b) During the trial period, the applicant may be required to maintain segregated books and accounts in a manner prescribed by the Commission, and to file the data with the Commission at the end of the trial period.

723-38-9.3 Shortened Notice Periods. Revised tariffs for emerging competitive telecommunications services that reflect only decreases in rates shall require a minimum of five days' notice to the Commission. Tariffs for emerging competitive telecommunications services which reflect increased rates shall require a minimum of 14 days' notice to the Commission and affected customers. Unless the Commission sets a hearing date for the tariff and suspends its proposed effective date, the tariff will become effective according to its terms.

723-38-9.3 Detariffing of Services. The Commission may detariff any emerging competitive telecommunications service. Detariffing shall mean that providers of the competitive service shall provide the Commission with a price list,- including the terms and conditions of the provision of the competitive service. Except as otherwise provided by Commission decision or order, the price list shall not be subject to Commission review except in establishing that the prices do not result in improper cross-subsidization as described in 40-15-106, C.R.S.

723-38-9.3.6 Waiver of Tariff Requirements for Competitive Firm. The Commission may also waive tariff requirements for any applicant who offers only emerging competitive telecommunications services.

723-38-9.3.7 Segregation of Assets.

723-38-9.3.7.1 Where a provider provides Part 2 services and/or Part 3 services which are not subject to relaxed regulation, the Commission may require the provider to file with the Commission an accounting plan that segregates assets, liabilities, revenues, and expenses for the services at issue from the assets, liabilities, revenues, and expenses associated with all other regulated services in order to define the regulated rate base and to implement the alternatives to rate-of-return regulation. The accounting plan shall be filed within 30. days after a final Commission decision has been issued concerning the services at issue. 723-38-9.3.7.2 If an industry-wide service or market has been authorized a specific form of relaxed regulation by the Commission, the Commission may require all providers that provide Part 2 services and/or Part 3 services which are not subject to relaxed regulation and the services at issue, to submit to the Commission, an accounting plan that segregates the assets, liabilities, revenues, and expenses associated with providing the services at issue. The accounting plan shall be filed within 30 days from the effective date of the final Commission decision granting the relaxed regulation of the services at issue. The Commission may establish a proceeding to adopt an appropriate method to segregate the assets, liabilities, revenues, and expenses associated with providing the services at issue. If no party to the proceeding requests a hearing, the Commission may approve a plan for the segregation of assets, liabilities, revenues, and expenses without hearing under 40-6-109(5), C.R.S.

723-38-9.3.7.3 In the event the Commission orders that an accounting plan be filed in accordance with Rule 9.3.7.1 or 9.3.7.2, no provider shall offer the services at issue prior to Commission approval of an appropriate accounting plan to segregate assets, liabilities, revenues, and expenses of the services. In the event the Commission requires an accounting plan to segregate assets, liabilities, revenues, and expenses of the services under Rules 9.3.7.1 or 9.3.7.2, the provider shall also modify its cost separation manual required by 40-15-108, C.R.S. and Cost-Allocation Rules for Telecommunications Service Providers and Telephone Utilities, 4 CCR 723-27. Small LECs exempted from filing a cost- segregation manual shall not be required to file plans or updates but shall be required to follow the cost-segregation rules.

723-38-9.3.8 Additional Procedures.

The Commission may adopt other procedures it deems appropriate in furtherance of relaxing regulation of services subject to its jurisdiction, consistent with the expression of intent pursuant to 40-15-101. C.R.S.

723-38-9.3.9 Revision of Terms of Relaxed Regulation.

The Commission may, upon its own motion or upon the motion of any person, revise a form of relaxed regulation for a service if continued use of the form of relaxed regulation is no longer consistent with the General Assembly's expression of intent in 40-15-101, C.R.S. 723-38-9.3.9.1 Revision of Terms of Relaxed Regulation. A provider that has previously implemented relaxed regulation, granted under these rules, may elect to modify the terms of that relaxed regulation. In that event, the provider may choose between the relaxed regulation ordered by the Commission or the default price regulation for Part 3 local exchanges services as detailed in 4 CCR 723-38-3. The provider may elect to have those rule provisions supersede the provisions of the Commission order granting the provider's form of relaxed regulation. The provider shall make that election by filing a notice with the Commission. That notice, signed by a duly authorized representative of the provider, shall be filed in the docket granting the provider the relaxed regulation, shall identify the previous Commission order granting the relaxed regulation which is to be superseded by the provisions of 4 CCR 723-38-3.2.2, and shall state that the provider is electing the form of price regulation specified in 4 CCR 723-38-3.2.2.

RULE 4 CCR 723-38-10.RULES RELATING TO DEREGULATION.

723-38-10.1 Application Information for Deregulation.

723-38-10.1.1 Any application for deregulation of an emerging competitive telecommunications service in accordance 40-15-305(1), C.R.S. must include, the following information: 723-38-10.1.1.1 The name, address, and telephone number of the applicant; 723-38-10.1.1.2 A specific description of the service for which deregulation is sought; 723-38-10.1.1.3 The geographic areas in which the service is, or will be, offered; 723-38-10.1.1.4 A list of other known providers of similar or substitutable services, and any significant, functional differences between the applicant's service and other available services, if known;

723-38-10.1.1.5 The estimated market share of the applicant; 723-38-10.1.1.6 Any available cost and estimated demand data; 723-38-10.1.1.7 A list and copies of all presently effective tariff pages for the service; 723-38-10.1.1.8 A description of all presently effective rate elements for the service; 723-38-10.1.1.9 If the provision of the . service involves the use of investments and expenses that are jointly or commonly used to provide Part 2 and/or Part 3 services, then identify the account affected under an accounting plan designed to segregate assets, liabilities, revenues, and expenses as required in Rule 10.3 of these rules, and briefly describe the methods by which the jointly or commonly used assets, liabilities, revenues, and expenses are allocated between the relevant services and products, and 723-38-10.1.1.10 Specific ' information demonstrating that the service is subject to effective competition in the relevant market for such service, that such deregulation will promote the public interest, and the provision of adequate and reliable service at just and reasonable rates.

723-38-10.1.2 At the time the application is filed, the applicant shall file its direct testimony and copies of exhibits to be offered at the hearing. If an exhibit is too large or cumbersome to prefile, the location of the exhibit shall be disclosed where parties may inspect it, and the applicant shall file a title of each exhibit and a summary of the information contained in the exhibit. Any information which is claimed to be confidential shall set forth the grounds for the claim of confidentiality, including information in Rule 10.1.1 above. 723-38-10.2 Processing Applications for Deregulation 723-38-10.2.1 Upon the filing of an application for deregulation, the applicant shall issue notice of the application to the public as required by Rule 8.2, of these rules. If the Commission institutes a proceeding for relaxed regulation upon its own motion, it shall issue notice to the public in accordance with.40-6-108(2), C.R.S.

723-38-10.2.2 The Commission shall issue a procedural order within 20 days from the date the application is filed concerning the processing of the application, including protective provisions for the handling of any alleged confidential information. 723-38-10.2.3 Should an application be filed which the Commission determines is not complete, the Commission shall notify the applicant within 10 days from the date the application is filed of the need for additional information. The applicant may then supplement the application so that it is complete. Once complete, the application will then be processed as of the date the application is completed.

723-38-10.2.4 The schedule for processing an application for deregulation shall be as follows: 723-38-10.2.4.1 Within 85 days from the date the Commission issues its procedural order, Staff of the Commission and intervenors shall file their direct testimony and copies of exhibits to be offered at the hearing. If an exhibit is too large or cumbersome to prefile, the location of the exhibit shall be disclosed where parties may inspect it, and the applicant shall file a title of each exhibit and a summary of the information contained in the exhibit. Parties shall indicate any information which is claimed to be confidential and shall give the grounds for the claim of confidentiality. 723-38-10.2.4.2 All discovery requests shall be completed within 90 days after the issuance of the procedural order. Response time for discovery requests shall be 20 days.

723-38-10.2.4.3 The. hearing shall be set and begin within 110 days of the date of the procedural order and may only be continued for a period of 15 days upon a showing of good cause.

723-38-10.2.4.4 Simultaneous ó closing statements and briefs may be filed within 10 days after completion of the hearing.

723-38-10.2.4.5 A decision will be issued within 180 days from the date the application is filed unless the proceeding cannot be completed within 180 days; then the Commission may defer the decision for an additional 90 days as permitted by 40- 15-305(1) (c), C.R.S.

723-38-10.3 Accounting Plan to Segregate Assets 723-38-10.3.1 Where a provider of telecommunications services furnishes regulated services and provides or proposes to offer deregulated services, the provider shall file with the Commission an accounting plan that segregates assets, liabilities, revenues and expenses associated with providing regulated services from assets, liabilities, revenues, and expenses associated with providing deregulated services. The accounting plan shall be filed with the Commission within 30 days after a final decision has been issued by the Commission granting deregulation of services at issue.

723-38-10.3.2 If an industry-wide service, product, or market is deregulated by the Commission under 40-15-305-(1), C.R.S., all providers that provide regulated services and the deregulated services at issue shall submit to the Commission an accounting plan to segregate the assets, liabilities, revenues, and expenses associated with providing the deregulated services at issue. The accounting plans shall be filed with the Commission within 30 days from the effective date of the final order granting deregulation of the services at issue. The Commission may establish a proceeding to adopt an appropriate method to segregate the assets, liabilities, revenues, and expenses associated with providing the deregulated services at issue. If no party to the proceeding requests a hearing, the Commission may approve the plans for the segregation of assets, liabilities, revenues, and expenses without hearing under 40-6-109(5), C.R.S. 723-38-10.3.3 No provider shall offer deregulated services prior to Commission approval of an appropriate accounting plan to segregate assets, liabilities, revenues, and expenses of the services as required by Rule 10.3.1 or 10.3.2. The provider shall also modify its cost separation manual required by 40-15-108, C.R.S. and by the rules Prescribing Cost- Allocation Methods for Segregation of Investments and Expenses of Telecommunications Providers, 4 CCR 723-27, when the Commission deregulates services under 40-15- 305(1), C.R.S. Small LECs exempted from filing a cost-segregation manual shall not be required to file plans or updates but shall be required to follow the cost-segregation rules. RULE 4 CCR 723-38-11. ADDITIONAL PROCEDURES.

The Commission may adopt such other procedures as it deems appropriate for services subject to its jurisdiction, consistent with the expression of public policy contained in 40-15-101, 40-15-501, 40-15-502, and 40-15-503(2) (c), C.R.S.

RULE 4 CCR 723-38-12. COMBINED APPLICATIONS.

An applicant may file a combined application to obtain a specific form of price regulation, relaxed regulation or deregulation under these rules; to obtain a CPCN to provide local exchange telecommunications services, a letter of registration to provide emerging competitive telecommunications services, to transfer a CPCN, or any combination of these under 4 CCR 723-25. In a combined application, the applicant shall comply with the application process and provide all information required for each separate component of the combined application.

RULE 4 CCR 723-38-13. WAIVER OR VARIANCE.

The Commission may permit a waiver or variance from these rules, if not contrary to law, for good cause shown if it finds that compliance is impossible, impracticable, or unresonable.