before the public utilities commission of the state of ... · before the federal communications...
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BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Rulemaking on the Commission’s Own Motion )to Govern Open Access to Bottleneck ) R.93-04-003Services and Establish a Framework for )Network Architecture Development of )Dominant Carrier Networks ) )
)Investigation on the Commission’s Own )Motion into Open Access and Network ) I.93-04-002Architecture Development )of Dominant Carrier Networks ) )
)Order Instituting Rulemaking on the )Commission’s Own Motion Into Competition ) R.95-04-043for Local Exchange Service )__________________________________________)
)Order Instituting Investigation on the )Commission’s Own Motion Into Competition ) I.95-04-044for Local Exchange Service )__________________________________________)
REPLY COMMENTS OF PACIFIC BELL TELEPHONE COMPANY IN SUPPORT OFDRAFT APPLICATION FOR 271 APPROVAL
Pursuant to Administrative Law Judge Jacqueline Reed's instructions, Pacific Bell
Telephone Company hereby files its Draft Brief In Support Of Application By SBC Of Provision
Of In-Region, InterLATA Services In California.
JAMES B. YOUNGED KOLTONELSONYA CAUSBY
140 New Montgomery St., Rm. 1623San Francisco, California 94105Tel: (415) 542-0322Fax: (415) 974-1999E-mail: [email protected]
September 13, 2001 Attorneys for Pacific Bell Telephone Company
Before theFEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
CC Docket No. _________
DRAFT REPLY BRIEF IN SUPPORT OFAPPLICATION BY SBC FOR PROVISION OF IN-REGION,
INTERLATA SERVICES IN CALIFORNIA___________________________________
JAMES D. ELLISPAUL K. MANCINIMARTIN E. GRAMBOWKELLY M. MURRAYROBERT J. GRYZMALAJOHN S. DI BENEJOHN M. LAMBROS
175 E. HoustonSan Antonio, Texas 78205(210) 351-3410
Counsel for SBC Communications Inc.
JAMES B. YOUNGED KOLTOL. NELSONYA CAUSBYGARRETT L. WONG
140 New Montgomery StreetSan Francisco, California 94105(415) 545-9450
Counsel for Pacific BellTelephone Company
September 13, 2001
MICHAEL K. KELLOGGCOLIN S. STRETCH
KELLOGG, HUBER, HANSEN, TODD & EVANS, P.L.L.C.
1615 M Street, N.W., Suite 400Washington, D.C. 20036(202) 326-7900
Counsel for SBC Communications Inc.,Pacific Bell Telephone Company, andSouthwestern Bell CommunicationsServices, Inc.
In the Matter of
Application by SBC Communications Inc.,Pacific Bell Telephone Company, andSouthwestern Bell Communications Services,Inc. d/b/a Pacific Bell Long Distance forProvision of In-Region, InterLATA Services inCalifornia
TABLE OF CONTENTS
INTRODUCTION........................................................................................................................... 1
DISCUSSION ................................................................................................................................. 5
I. PACIFIC HAS FULLY SATISFIED THE COMPETITIVE CHECKLIST .......... 5
A. Pacific’s Performance Data Accurately Demonstrate ChecklistCompliance.................................................................................................. 6
B. Checklist Item 1: Interconnection .............................................................. 8
C. Checklist Item 2: Access to UNEs ........................................................... 14
1. UNE Combinations ....................................................................... 14
2. Pricing of UNEs ............................................................................ 17
3. Nondiscriminatory Access to OSS................................................ 32
D. Checklist Item 4: Unbundled Loops......................................................... 48
E. Checklist Item 5: Unbundled Local Transport ......................................... 56
F. Checklist Item 6: Unbundled Local Switching ........................................ 57
G. Checklist Item 7: Nondiscriminatory Access to 911/E911 and OS/DA .. 58
H. Checklist Item 10: Nondiscriminatory Access to Signaling and CallRelated Databases ..................................................................................... 61
I. Checklist Item 11: Local Number Portability .......................................... 62
J. Checklist Item 14: Resale......................................................................... 63
1. Performance .................................................................................. 63
2. Cross-Class Restrictions................................................................ 65
3. Advanced Services ........................................................................ 66
II. PACIFIC’S ENTRY INTO INTERLATA SERVICES IN CALIFORNIAWILL BENEFIT THE PUBLIC INTEREST........................................................ 71
CONCLUSION ............................................................................................................................. 77
INTRODUCTION
These reply comments mark the culmination of the longest, most comprehensive section
271 proceeding conducted by any state commission in the country. It began on March 31, 1998,
when Pacific Bell (“Pacific”) filed its first draft section 271 application with the Commission.
During the ensuing rounds of filings and collaborative work sessions, all interested parties had a
full and fair opportunity to present responsive evidence. Based on those submissions, the
Commission held on December 17, 1998, that Pacific had satisfied certain requirements, but that
additional work was needed with regard to certain specified Checklist Items.1
On July 15, 1999, Pacific submitted its Compliance Filing detailing Pacific’s resolution
of those outstanding items. After reviewing interested parties’ comments and Pacific’s
September 7, 1999 Reply to those comments, Assigned Commissioner Neeper, on February 14,
2000, instructed Pacific to update the record to take account of intervening developments and
other specific issues, which Pacific did on March 6, 2000. That request was followed by
additional requests to update the record, which Pacific did in August and September 2000. Each
time, interested parties were given a full opportunity to comment on Pacific’s evidence, and,
each time, Pacific responded to all their concerns in comprehensive reply filings.
At the request of the Commission, Pacific then filed a new draft FCC application on June
27, 2001. This filing incorporated the results of the extensive third-party test of Pacific’s OSS
completed earlier this year, and packaged Pacific’s 271 showing together in one comprehensive
filing that demonstrates Pacific’s compliance with each and every aspect of section 271.
1 Opinion, R.95-04-043, D.98-12-069 (Cal. Pub. Utils. Comm’n Dec. 17, 1998) (“FinalDecision”).
2
Once again, interested parties have been given a full opportunity to comment on Pacific’s
evidence. And, in response, several CLECs have candidly recognized that Pacific has taken all
the steps required to open the local market. Thus, for example, Mpower, a facilities-based CLEC
with close to three years’ experience in the California local market and more than 200
collocation arrangements in the state, “supports and endorses the request of Pacific Bell for . . .
approval of its Application.” Mpower at 1-2.
At the same time, other commenters – in particular, the long-distance incumbents that
have the most to gain by delaying Pacific’s entry into long distance – have used this opportunity
not to move the process forward, as Pacific has endeavored to do, but instead to raise already
resolved issues or to create new issues that are not based on any actual section 271 requirements.
These efforts should be rejected as a matter of proper procedure, because the commenters have
had a full opportunity to raise their concerns in the prior rounds of comment, and the issues were
resolved. These efforts to reopen settled issues should also be rejected because they risk
delaying the benefits of competition for California consumers.
Perhaps recognizing that Pacific has in fact taken all necessary steps to satisfy the
competitive checklist, the long-distance incumbents fall back on allegations regarding the
purported absence of local competition in California. These claims are demonstrably false. As
Pacific explained in its Draft Application, by virtually any measure, local competition in
California compares favorably with any other state at the time of section 271 relief. Moreover,
as the 271 process reaches the end-game – and as various CLECs recognize that the long-
distance incumbents will finally have an incentive to compete vigorously for local service
customers – the local competition numbers are spiking. In the last three months for which data
are available, CLECs won close to 300,000 lines, increasing their already impressive overall
3
count by an astonishing 13.7 percent. See Tebeau Reply Aff. ¶ 3 & Table 1. And, as for
AT&T’s and WorldCom’s single-minded focus on the UNE-platform, CLECs are ramping up
their use of that entry vehicle as well. In the few short months since Pacific’s Draft Application,
UNE-platform use has more than tripled to more than 66,000. See Tebeau Reply Aff. ¶ 4. These
numbers alone dispose of WorldCom’s assertion – offered without support of any kind – that
local competition in California “has been declining, not growing.” WorldCom at 6.
Likewise ignoring the indisputable evidence to the contrary, AT&T claims that
competition for residential customers in California is limited. AT&T at 6. But at the same time
as it makes these claims to this Commission, AT&T is telling the rest of the world something far
different. According to AT&T Broadband’s own vice president of communications, AT&T has
been able to capitalize on its “‘tremendous growth rate’” in local phone service in California to
“‘gain a significant piece of the market.’”2 Indeed, AT&T claims to be “racking up customers
and providing hefty local competition for Pac Bell,” and is “‘happy with the progress [it has]
made so far.’”3 Coupled with the substantial numbers of residential access lines served by
CLECs in the state – numbers that are increasing even more rapidly than CLEC business lines,
see Tebeau Reply Aff. ¶ 5 & Table 2 – this real-world evidence makes clear that AT&T’s claims
regarding its alleged inability to compete in the local market are simply false.
The impressive and growing level of competition in California also directly rebuts
AT&T’s and WorldCom’s claims that Pacific’s UNE prices are too high and inconsistent with
2 Erik Linden, Local Phone Service Battle Heats Up, Silicon Valley Business Ink, Aug. 31, 2001(quoting Andrew Johnson, Vice President of Communications for AT&T Broadband) (emphasisadded).
3 Id.
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the 1996 Act’s cost-based mandate. As discussed in more detail below, moreover, the specific
issues raised by AT&T and WorldCom have already been resolved by the Commission in the
OANAD proceeding. AT&T’s and WorldCom’s effort to rehash these arguments is nothing
more than a cynical, last-ditch effort further to delay the consumer benefits of Pacific’s long-
distance entry.
Nor is there any serious doubt that those benefits will be substantial. As Pacific
explained in its initial March 1998 filing (at 82-114), in its July 1999 Compliance Filing (at 89-
93), and again in its recently filed Draft Application (at 84-91), interLATA relief for Pacific will
bring lower prices and wider choice for long-distance services, as well as even faster local entry
by CLECs. The FCC has properly concluded “that BOC entry into the long distance market will
benefit consumers and competition if the relevant local exchange market is open to competition
consistent with the competitive checklist. As a general matter, [the FCC] believe[s] that
additional competition in telecommunications markets will enhance the public interest.”4 While
4 Memorandum Opinion and Order, Application by Bell Atlantic New York for AuthorizationUnder Section 271 of the Communications Act To Provide In-Region, InterLATA Service in theState of New York, 15 FCC Rcd 3953, 4164, ¶ 428 (1999) (“New York Order”); see alsoMemorandum Opinion and Order, Application of Ameritech Michigan Pursuant to Section 271of the Communications Act of 1934, as amended, To Provide In-Region, InterLATA Services InMichigan, 12 FCC Rcd 20543, 20741-42, ¶ 381 (1997) (“BOC entry into the long distancemarket will further Congress’ objectives of promoting competition and deregulation oftelecommunications markets.”). Even former detractors, such as MCI WorldCom’s Presidentand Chief Executive Officer and Sprint’s Chairman and Chief Executive Officer, haveacknowledged the competitive benefits of BOC entry into interLATA services. See The MCIWorldCom Sprint Merger; A Competition Review: Hearing Before the Senate Comm. on theJudiciary, 106th Cong. 65 (1999) (Statement of MCI WorldCom’s CEO Bernard Ebbers) (“theincreased capacity and the new players that are coming on board . . . will continue to drive downlong distance rates”); see also id. (Statement of Sprint CEO William T. Esrey) (“regional bell[][entry] into long distance” will lead to “long distance pricing . . . competition . . . around thecountry”).
5
the long-distance incumbents argue to the contrary, their claims are based on discredited
economic theories and mischaracterizations of the results of BOC entry in other states. In the
words of former FCC Chairman William Kennard, “[w]e need only review the state of
competition in New York and Texas to know the Act is working.”5
Delaying section 271 relief in California would deny consumers added choice and
competitive benefits in the interLATA market. And further delay would lead to no offsetting
benefits in the local market; on the contrary, further delay means only further consumer harm.
Pacific respectfully renews its request that the matter go to federal regulators with the strong and
unanimous endorsement of this Commission.
DISCUSSION
I. PACIFIC HAS FULLY SATISFIED THE COMPETITIVE CHECKLIST
The Final Decision found compliance with Checklist Items 3 (Poles, Ducts, Conduits,
and Rights-of-Way), 9 (Access to Telephone Numbers), 12 (Local Dialing Parity), and 13
(Reciprocal Compensation). Pacific’s Draft Application confirmed the vitality of those findings,
and no commenter challenged them in their recent filings. Equally undisputed is Pacific’s
compliance with Checklist Item 8 (White Pages Listings). With respect to the remaining
Checklist Items, the Final Decision set out a “solid blueprint” for compliance, which – as
Pacific’s Draft Application demonstrated in detail – Pacific has followed to the letter. As will
5 William E. Kennard, Chairman, FCC, Statement Before the Committee on the Judiciary of theUnited States House of Representatives on H.R. 1686 – the “Internet Freedom Act” and H.R.1685 – the “Internet Growth and Development Act” (July 18, 2000), athttp://www.house.gov/judiciary/kenn0718.htm.
6
now be explained, commenters’ various efforts to cast doubt on that showing have in most cases
already been resolved by the Commission, and are in all events without merit.
A. Pacific’s Performance Data Accurately Demonstrate Checklist Compliance.
Pacific’s Draft Application explained that its wholesale performance data have been
verified – pursuant to third-party audit, as well as individual data reconciliations – as accurate
and reliable. See Draft FCC Br. at 93-95; Johnson Aff. ¶¶ 50-65. AT&T disputes that
conclusion, but it does so largely on the basis of recycled claims that are no more persuasive now
than when first voiced.
First, AT&T reads this Commission’s review of OSS test data validation – particularly
with respect to sample sizes and the standard deviation used to calculate performance results – as
suggesting that the integrity of Pacific’s data is in question. See AT&T’s Kalb/Toomey Decl.
¶¶ 26, 28, 29. It does no such thing. With regard to sample sizes, the Commission recognized
that the February 2000 issue upon which AT&T focuses was attributable to one-time
programming changes that impacted Pacific’s ability to reproduce retail results. See Johnson
Reply Aff. ¶ 4. With respect to standard deviations, the Commission likewise recognized that
the issues raised were not systemic, and therefore did not call into question Pacific’s reported
performance on an ongoing basis. See id. AT&T offers nothing new to call these conclusions
into doubt.
AT&T also challenges the third-party audit of Pacific’s performance data, on the theory
that the auditor did not adequately audit Pacific’s retail data (against which much of its
wholesale data are measured). See AT&T’s Kalb/Toomey Decl. ¶¶ 34, 35. This criticism is
more than a little ironic. AT&T actively participated in all aspects of the
Pricewaterhouse/Coopers (“PwC”) audit. See Johnson Apr. 25, 2000 Aff. ¶ 77. It was a member
7
of the Audit Steering Committee, it proposed the design of the audit that was included in the
request for proposal, it participated in the selection of PwC to perform the audit, and it reviewed
and had the opportunity to comment on both the weekly status reports and the proposed final
audit report. Id. ¶¶ 77-78; see Johnson Reply Aff. ¶ 5. Yet never once during this process did
AT&T claim that the audit was inadequate, and it certainly never contended (as it does now) that
the audit was flawed because it did not more thoroughly examine the accuracy of Pacific’s retail
data. See Johnson Reply Aff. ¶ 5. AT&T’s complaint should be seen for what it is: an effort to
attack the audit process because it does not like the result.6
Finally, AT&T attempts to cast doubt on Pacific’s performance through misleading and
incomplete characterizations of data reconciliations. See AT&T’s Kalb/Toomey Decl. ¶ 47.
Indeed, AT&T fails to note that at least seven (and perhaps as many as 13) of the 23 trouble
tickets that it showed “in error” in its most recent reconciliation were in fact properly classified.
See Johnson Reply Aff. ¶¶ 6-7. These errors demonstrate the wisdom of the Commission’s
decision to put in place a forum for resolving disputes (such as this one) regarding the accuracy
of Pacific’s performance data, as well as the appropriateness of resolving such disputes in that
forum, rather than this one. Id. ¶ 7.7
6 AT&T also seeks to undermine the validity of the audit by claiming that the auditormisinterpreted the business rules for PM 9. There was no misinterpretation. See Johnson ReplyAff. ¶ 10. Indeed, AT&T fails to note that the interpretation that it believes is so strained as toundermine the entire audit has in fact been accepted by two independent auditors, while AT&T’sinterpretation has been validated by no one. See id. ¶¶ 10-11.
7 AT&T also fails to note that it may have intentionally corrupted Pacific’s performancemeasures by initiating trouble reports on UNE-P lines that were not in fact experiencing trouble.See Johnson Reply Aff. ¶ 9.
8
In short, Pacific’s data are accurate and verifiable, as demonstrated by the PwC audit and
the numerous data reconciliations conducted since. And, as discussed in Pacific’s Draft
Application, and elaborated below, those data reveal that Pacific is providing access to its
services and facilities that is fully sufficient to provide CLECs a meaningful opportunity to
compete.8
B. Checklist Item 1: Interconnection
Few commenters challenge Pacific’s compliance with Checklist Item 1. As explained
below and in the reply affidavits of William Deere, Gwen Johnson, and Curtis Hopfinger, those
challenges fail.
Interconnection. AT&T complains that Pacific arbitrarily “gates,” or limits to 12, the
number of DS1 interconnection trunks that may be installed in a single day, in a single market
area (Northern or Southern California). AT&T at 99-100; AT&T’s Walker/Fettig Decl. ¶¶ 9-18.
That is incorrect. Pacific’s policy in California is the same as that approved by the Texas
commission, the DOJ, and the FCC in the Texas 271 proceeding, which comports with the policy
in SWBT states. See Deere Reply Aff. ¶¶ 4-7; Memorandum Opinion and Order, Application by
SBC Communications Inc., et al. Pursuant to Section 271 of the Telecommunications Act of
1996 To Provide In-Region, InterLATA Services in Texas, 15 FCC Rcd 18354, 18383, ¶ 68
n.138, 18384, ¶ 69 n.141 (2000) (“Texas Order”) (noting increase from 8 to 12 DS1 trunks per
day). This reasonable policy ensures that all CLECs have an equal opportunity to interconnect
8 A few commenters challenge the performance incentives plan that Pacific has proposed andthat this Commission is now reviewing. See, e.g., AT&T at 115-25. These comments areduplicative of the Commission’s ongoing proceeding; Pacific therefore will not respond to themhere.
9
with Pacific’s network by having their trunks installed, thus ensuring equal use of the
engineering, design, and installation resources available to Pacific and CLECs. See Deere Reply
Aff. ¶ 4. Furthermore, based upon the approval by the Texas commission, the evaluation of the
DOJ, and the approval by the FCC, Pacific’s policy cannot be deemed discriminatory or
anticompetitive.
AT&T next contends that Pacific’s Accessible Letter CLECC01-072 causes improper
charges for transport by forcing CLECs to designate trunk termination at the Pacific switch
location rather than the facility termination location. See AT&T at 100; AT&T’s Walker/Fettig
Decl. ¶¶ 19-26. As an initial matter, AT&T has not met Pacific’s request for a demonstration
that such charges actually exist. Deere Reply Aff. ¶ 10. In addition, the problem to which
AT&T refers would likely be solved if AT&T would cease including certain codes, designed for
AT&T’s long-distance rather than local operations, that AT&T has chosen to place in the ASR.
Id. ¶ 11. In any event, AT&T’s complaint is now moot. Pacific and AT&T have recently
discussed this issue, and Pacific rescinded its Accessible Letters CLECC01-072 and CLECC01-
127 on August 31, 2001, until the matter can be resolved by the T1M1.3 Working Group (a body
established to create network operability and interoperability standards in the United States) and
the Ordering and Billing Forum. See id. ¶¶ 13-14. The Commission thus need not, and should
not, consider the issue in this section 271 proceeding.
WorldCom complains that the average installation interval for provisioning
interconnection trunks in the Southern California region was somewhat longer for WorldCom
than for Pacific in March and May 2001, and that the same occurred in the Los Angeles region in
April. WorldCom App. 2, at 4-5 (PM 7). These instances, however, were caused by CLEC and
Pacific orders that had received a due date different from the standard interval that Measure 7
10
was intended to track, yet were mistakenly included in the Measure 7 results. Johnson Reply
Aff. ¶ 20. Pacific is making programming changes to its reporting processes to ensure that only
appropriate orders are counted in Measure 7, pursuant to the applicable business rules. Id.
In any case, comparison with a single CLEC does not give an accurate picture of
Pacific’s performance. WorldCom’s complaints concern only a handful of orders. See
WorldCom App. 2, Attach. A (PM 7). Pacific has provisioned aggregate CLEC trunks in parity
with itself in six of the past eight months in Southern California, and in nine of the last twelve
months in Los Angeles. See Johnson Reply Aff. Attach. F (PM 7, at 31, 41). Moreover, CLEC
trunks statewide have experienced no blockage on dedicated trunks during the past 12 months.
See id. Attach. F (PM 25, at 1-2). Similarly, blockage on common trunks has been minute, and
Pacific has easily met the performance standard in each of the past 12 months. See id. Attach. F
(PM 24, at 1).
WorldCom’s final complaint is that trunk repairs for one of its three companies (MFS)
were not timely performed in February and March 2001. WorldCom App. 2, at 5-6 (PM 20).
But this complaint involves insignificantly few orders, and thus cannot be statistically valid.
Johnson Reply Aff. ¶ 21. In addition, the length of the outages was small, and Pacific’s own
trunks experienced longer outage times than WorldCom’s MFS trunks during the same months.
Id. ¶ 21 & n.24 (PM 21). In any case, Pacific performed trunk repairs at parity with CLECs in
the aggregate in 11 of the past 12 months. See id. ¶ 22 (PM 20).
Plainly, the few isolated instances of which WorldCom (and only WorldCom) complains
in no way detract from Pacific’s otherwise excellent performance regarding interconnection
trunks as to all California CLECs.
11
Collocation. Virtually alone among commenters, Sprint complains that it has “struggled
to obtain access to Pacific’s network.” Sprint’s Broom Decl. ¶ 5. The numbers tell a different
story. As the reply affidavit of Curtis Hopfinger explains, Pacific has provided Sprint with
hundreds of physical and virtual collocation arrangements in California, representing tens of
thousands of square feet of central office space. See Hopfinger Reply Aff. ¶ 3. In light of this
wealth of commercial experience, the fact that Sprint cannot identify a single material problem
only confirms the adequacy of Pacific’s collocation processes and procedures.
Thus, for example, Sprint claims that Pacific should “pull” Sprint’s dark fiber facilities to
its collocation space from the manhole outside of a central office. Sprint’s Broom Decl. ¶¶ 5-6.
That contention lacks merit. The tariff and Advise Letter under which Sprint purchases
collocation clearly states that “‘[t]he collocator is responsible for placing its fiber optic cable
from the interconnection point into the central office cable vault.’” Hopfinger Reply Aff. ¶ 9
(quoting Advise Letter 20412B, § 16.2.15). Nor does Sprint identify any statutory or FCC
requirement that Pacific pull Sprint’s cable from the cable vault. Cf. 47 C.F.R. § 51.323(d)(1)
(requiring only that collocation interconnection points be “physically accessible”).
Sprint also complains that Pacific delayed its access to a list of Pacific-approved vendors
for pulling Sprint’s fiber from the manhole to the cable vault, and then required Sprint to submit
new applications for new work necessitated by Pacific’s delay. Sprint’s Broom Decl. ¶¶ 7-8.
Although it appears that there was some initial misunderstanding, Sprint concedes that it did
obtain the vendor list, which is also posted on Pacific’s web site. Id. ¶ 8; Hopfinger Reply Aff.
¶ 10.
Sprint next claims that Pacific deviates from its announced policy by requiring Sprint to
construct a new point of entry where the conduits running from the manhole into the central
12
office is full. Sprint’s Broom Decl. ¶ 9. As Sprint itself notes, however, where dual points of
entry are at capacity and thus not immediately available, Pacific’s policy is to “perform work as
necessary to make available [additional] separate points of entry for the collocator at the same
time that it makes such separate points of entry available for itself.” Id. (emphasis added); see
also Hopfinger Reply Aff. ¶ 11. And, even before Pacific adds an additional separate entry
point, Sprint has the option to order a separate point of entry via the custom work order process.
Id.
Sprint suggests that SBC’s collocation policies should be identical in each state where it
operates. Sprint’s Broom Decl. ¶ 11. But that illogical claim ignores the fact that each state is
unique: each has its own state commission making its own rulings, and its own group of CLECs
that may have different business plans and requirements. In any case, there is no legal
requirement that Pacific operate identically to other subsidiaries of its holding company, SBC.
Indeed, the FCC has established certain standards for collocation, and it permits each state
commission to set its own policies where the FCC has not acted. See Hopfinger Reply Aff. ¶ 8.
Sprint’s assertion is further without merit, given that it declined to adopt SBC’s multi-state
generic interconnection/resale agreement, available in 13 states, which contains uniform
collocation terms and conditions consistent with federal requirements. Id.
Sprint next contends that Pacific has improperly denied it “available” collocation space
that Pacific has reserved for its own use in three central offices. Sprint claims that Pacific should
give up its reserved space because significant additional space now under construction at those
offices will be ready by the time Pacific needs to use the space it has reserved. Sprint’s Broom
Decl. ¶ 12. FCC rules clearly provide, however, that “[a]n incumbent LEC may retain a limited
amount of floor space for its own specific future uses.” 47 C.F.R. § 51.323(f)(4). And Sprint’s
13
own collocation tariff states that Sprint “‘is not required to . . . relinquish building space
forecasted for Company use.’” Hopfinger Reply Aff. ¶ 4 (quoting tariff). That perfectly legal
space reservation policy makes eminent sense: It would be impracticable for an ILEC to serve
its customers effectively if validly reserved space had to be forfeited merely because a building
expansion (which may or may not be timely completed according to construction deadlines) is
underway, and Pacific’s investment in infrastructure to connect specific technologies might also
be stranded. See id. ¶¶ 5-6.
In any case, Pacific has largely accommodated Sprint’s three requests. Two central
office building expansions have been completed and Sprint is now collocated in each office. Id.
¶ 7. The third office has some available space, but Sprint declined Pacific’s offer to
accommodate it with space less than Sprint had originally requested. Pacific has informed
Sprint, however, that additional space will soon be available in the third office on a first-come,
first-served basis, as the building expansion is expected to be completed in the first quarter of
2002. Id. And, of course, Sprint also has the option of virtual collocation where space for
physical collocation is exhausted. Id.
Sprint next complains of seven rejected applications for collocation augment
applications. Sprint’s Broom Decl. ¶¶ 13-14. These seven requests were part of Sprint’s orders
for hundreds of collocation augments and new collocation jobs that Sprint submitted on the same
day. Hopfinger Reply Aff. ¶ 12. Pacific approved 91% of these numerous applications. Id. The
seven applications of which Sprint complains were rejected for their omission of material
information – the correct number of circuits and power relay rack information. Id. Pacific
completed three of these seven requests in April 2001, two are presently in progress, and Pacific
is waiting on the final two applications to be submitted with the correct information. Id.
14
Finally, Sprint contends that, when Pacific denies physical collocation for lack of space,
Pacific fails to provide the required floor plans and other information at the time of denial, but
rather provides them just before Sprint physically inspects the premises. Sprint’s Broom Decl.
¶¶ 15-20. But it makes no sense to provide floor plans when a CLEC has not even requested a
walk-through, much less indicated an intention to challenge the denial. Hopfinger Reply Aff.
¶ 14. Therefore, Pacific provides floor plans only to a CLEC that has properly requested a walk-
through of an exhausted collocation space. Id.; see also Final Decision, App. B at 10 (“Pacific’s
floor plans shall be provided to CLCs prior to any walkthrough”). While Pacific is in full
compliance with the Final Decision, Pacific will accommodate Sprint’s concerns on a going
forward basis by providing floor plans (subject to a non-disclosure agreement) at the time of a
denial of physical collocation space, effective October 1, 2001. Hopfinger Reply Aff. ¶ 14.
In sum, none of Sprint’s isolated, day-to-day complaints demonstrates any systemic
problem with Pacific’s provisioning of collocation. Id. ¶ 15. If anything, those complaints prove
only that Pacific works diligently with CLECs to resolve any outstanding issues.
C. Checklist Item 2: Access to UNEs
1. UNE Combinations
Pacific’s Draft Application demonstrated that Pacific performs combinations of UNEs
beyond what is required by the 1996 Act. See Draft FCC Br. at 23-25; Iowa Utils. Bd. v. FCC,
219 F.3d 744, 758-59 (8th Cir. 2000) (requiring ILECs to create new combinations of UNEs on
behalf of CLECs violates the plain language of the 1996 Act), cert. granted sub nom., Verizon
Communications Inc. v. FCC, 121 S. Ct. 877-79 (2001). Nevertheless, a few CLECs challenge
Pacific’s offerings of UNE combinations, focusing in particular on Pacific’s provision of the
enhanced extended loop (or, “EEL”). These claims fail.
15
XO complains that Pacific has refused to provide it with access to DS3 EELs. XO at 12-
14. But as Pacific has explained to XO, a basic postulate of the 1996 Act is that a requesting
carrier is not entitled to access a particular UNE arrangement unless and until it has an
interconnection agreement in place with terms that cover that arrangement. Hopfinger Reply
Aff. ¶ 16. XO’s existing interconnection agreement does not contain such terms. Id. Nor did
XO pursue relief – which is obviously available pursuant to 47 U.S.C. § 252(e) (arbitration) or
252(i) (opt-in) – prior to filing comments in this proceeding. Hopfinger Reply Aff. ¶ 16. In light
of XO’s own procedural failures, it should not – indeed, it may not – use the 271 proceeding to
perform an end-run around the procedures called for by the 1996 Act. In any event, Pacific has
advised XO of an agreement to which XO may opt-in, and which Pacific believes is responsive
to XO’s claimed needs. Id. ¶ 17.
Joined by WorldCom, XO also complains that Pacific’s ordering process for converting
special access to UNEs is inadequate, complaining in particular about Pacific’s prior two-order
process. XO at 14-16; WorldCom at 95-96. But these complaints are moot: Pacific has
implemented a process to allow CLECs to order conversions by submitting a single Local
Service Request (“LSR”). Hopfinger Reply Aff. ¶ 20. The specifics of this process – and
particularly its classification of the conversion as a “project” – ensure that the conversion is
seamless and that service to the end-user is not interrupted. See id. ¶¶ 20-21. In addition, as
Pacific has explained previously – and as neither XO nor WorldCom appears to have recognized
– Pacific’s processes are fully consistent with the requirements put in place by the FCC. See
Pacific’s Third Supp. Compliance Br. at 10-12, R.93-04-003, et al. (Cal. Pub. Utils. Comm’n
16
filed Sept. 29, 2000); Pacific’s Third Supp. Reply Br. at 21-24, R.93-04-003, et al. (Cal. Pub.
Utils. Comm’n filed Dec. 8, 2000).9
XO also alleges that the same conversion process that it appears to believe is inadequate
for EELs should be used not just for EEL conversions, but also for conversions to stand-alone
DS3 loops. XO at 18-19. But, as XO concedes, the FCC’s orders state specifically that the
conversion process it contemplates applies to loop-transport combinations, not to stand-alone
loops. See id. at 19; Hopfinger Reply Aff. ¶ 22. As with all unbundled loops, Pacific has
methods and procedures in place to ensure that it provisions DS3 loops in a timely manner, with
a minimum of trouble. See Hopfinger Reply Aff. ¶ 22; see also, e.g., Johnson Reply Aff. Attach.
F (Measure 1105002) (tracking percentage due dates missed of DS3 UNE loops).
XO next challenges Pacific’s position on CLECs’ right to commingle traffic over UNEs.
XO at 16-19. As the reply affidavit of Curt Hopfinger explains, however, that position is fully
consistent with the FCC’s requirement that a CLEC provide a significant amount of local service
through the special access arrangement that it seeks to convert to UNEs, as well as with its
restriction on connecting a loop-transport combination to tariffed services. Hopfinger Reply Aff.
¶¶ 23-24 & n.14. If XO is dissatisfied with these restrictions, it should seek to have them
changed in the FCC’s ongoing proceeding addressing this topic.
Finally, a few commenters raise claims regarding Pacific’s performance provisioning
special access. E.g., PacWest at 15. As the FCC has repeatedly held, however, “the provision of
special access services pursuant to a tariff” is irrelevant “for purposes of determining checklist
9 WorldCom also contends that Pacific refuses to convert special access circuits to EELs if thetransport is provided over a meet-point arrangement. WorldCom at 94-95. That is incorrect.See Hopfinger Reply Aff. ¶ 19 & n.8.
17
compliance.” Texas Order, 15 FCC Rcd at 18520, ¶ 335; see New York Order, 15 FCC Rcd at
4126-27, ¶ 340.10
2. Pricing of UNEs
This Commission set prices for unbundled network elements in a comprehensive
proceeding lasting more than three years and involving a record that would fill a warehouse. In
the course of that proceeding, parties took advantage of the extensive access to its cost studies
that Pacific provided, and they commented on those studies in excruciating detail in numerous
different comment cycles. And at the conclusion of that proceeding – on November 18, 1999 –
this Commission issued a 272-page decision comprehensively reviewing each of the parties’
many claims, and adopting rates that it concluded were fully compliant with the FCC’s TELRIC
methodology. See Interim Decision Setting Final Prices for Network Elements Offered by
Pacific Bell, D.99-11-050 (Cal. Pub. Utils. Comm’n Nov. 18, 1999).
For the next 18 months – a period of time that included at least three pleading cycles in
this Commission’s section 271 proceeding – commenters were virtually silent on the question of
10 As another state commission recently explained:
Special Access services and UNEs represent different choices for carriers, and involvedifferent pricing, terms and conditions. CLECs choose their own method of entry intothe telecommunications market. There are alternatives to Special Access. The fact that aCLEC chooses Special Access does not automatically make it appropriate to expand thescope of this proceeding to cover those services. . . . Special Access tariffs address theissue of what remedies exist if [the ILEC] fails to perform. If the tariffs are insufficient,or if [the ILEC] fails to perform pursuant to the tariff, the proper course of action is acomplaint against [the ILEC] or a request for an investigation in the appropriate forum.Thus, protections are in existence for CLECs who purchase Special Access service out of[the ILEC’s] tariff.
In re Petition of Indiana Bell Tel. Co., Inc. for a Three-Phase Process for Commission Review ofAmeritech Indiana’s Compliance with Section 271(c) of the Telecommunications Act of 1996,Cause No. 41657, at 5 (Ind. Util. Reg. Comm’n approved Aug. 8, 2001).
18
whether the Commission’s OANAD rates were consistent with the 1996 Act and the FCC’s
rules. Now, however, a few commenters – principally long-distance incumbents AT&T and
WorldCom – raise eleventh-hour objections to the Commission’s OANAD decision. Indeed, to
hear these commenters tell it, this Commission’s proceeding was so faulty – and the Commission
was so out-of-touch with both the facts and the law – that it adopted rates that are not even close
to being TELRIC compliant.
As an initial matter, however, it is important to recognize that AT&T and WorldCom
have made the exact same claims – usually using the exact same rhetoric – in virtually every
application for 271 relief by any BOC, in any state. In Verizon’s Massachusetts application, for
example, AT&T claimed that “broad scale competition for residential customers in
Massachusetts . . . is simply not possible . . . because the rates for unbundled network elements
are so high and not cost-based.”11 WorldCom too claimed that Verizon “ha[d] priced unbundled
network elements at non-cost-based rates so high that competitors cannot as a practical matter
use [UNEs], and in particular the [UNE-P], to provide broad-based service to residential
customers in the state.”12 Likewise, in New York and Texas, the story was largely the same,
with AT&T and WorldCom again claiming that catastrophe would result from approval of the
existing rates.13
11 AT&T at 2, CC Docket No. 00-176 (FCC filed Oct. 16, 2000).
12 WorldCom at 1, CC Docket No. 00-176 (FCC filed Oct. 16, 2000).
13 See AT&T at 12, 63, CC Docket No. 99-295 (FCC filed Oct. 19, 1999) (contending thatVerizon “d[id] not offer unbundled loops or unbundled switching at cost-based rates,” andtherefore did not provide “CLECs with appropriate incentives to enter the market and makeefficient investment decisions”); WorldCom at 2-3, CC Docket No. 99-295 (FCC filed Oct. 19,1999) (complaining that competition “for mass market residential and small business” woulddevelop only if Verizon’s “prices for [unbundled] elements are cost-based”); AT&T’s
19
Significantly, in each and every one of these cases, the FCC soundly rejected AT&T’s
and WorldCom’s claims, and approved the applications for interLATA relief.14
Like the boy who cried wolf, AT&T and WorldCom would presumably have this
Commission believe that this time is different, and that – this time – their claims really do mean
that the rates at issue are not cost-based. But they fail to provide a single persuasive reason to
believe that is so. Indeed, as discussed below and in the affidavits of Richard Scholl and Linda
Vandeloop, virtually every single claim that AT&T and WorldCom raise has already been
rejected by this Commission, in many cases repeatedly so. The fact of the matter is that this
Commission spent an enormous amount of time and resources ensuring that Pacific’s rates are
TELRIC compliant, and the resulting rates fall squarely within “the range that the reasonable
application of TELRIC principles would produce.” New York Order, 15 FCC Rcd at 4084,
Rhinehardt Decl. ¶ 55, CC Docket No. 00-65 (FCC filed Jan. 31, 2000) (claiming that SWBT’sUNE-P charges “subsidiz[e] SWBT’s monopoly position in local service”); WorldCom at 57,CC Docket No. 00-65 (FCC filed Jan. 31, 2000) (alleging that a certain SWBT charge “flatlydefies the Act and the FCC’s Order, and places CLECs at a competitive disadvantage withrespect to a highly popular service, raising an obstacle to competition for residential and smallbusiness customers”).
14 See Memorandum Opinion and Order, Application of Verizon New England Inc., et al., ForAuthorization to Provide In-Region, InterLATA Services in Massachusetts, CC Docket No. 01-9, FCC 01-130, ¶¶ 40-42, (rel. Apr. 16, 2001) (“Massachusetts Order”); New York Order, 15FCC Rcd at 4081-82, ¶ 238; Texas Order, 15 FCC Rcd at 18477, ¶ 241. The pattern appears tobe holding true in Pennsylvania as well, where Verizon’s application is now pending with theFCC. See AT&T at 4, CC Docket No. 01-138 (FCC filed July 11, 2001) (alleging Verizon’s“complete failure to establish cost-based UNE rates”); WorldCom at 18, CC Docket No. 01-138(FCC filed July 11, 2001) (contending that “inflated loop prices . . . are the principal reason thatWorldCom, and presumably other CLECs, are precluded from competing in residential localmarkets ubiquitously throughout the state through the leasing of UNEs”). Although the FCC hasnot yet ruled on Verizon’s application, the Department of Justice has submitted its evaluationand has not suggested that Verizon’s rates are in any way deficient. See DOJ Evaluation, CCDocket No. 01-138 (FCC filed July 26, 2001).
20
¶ 244. AT&T’s and WorldCom’s rhetoric to the contrary is as unpersuasive here as it has been
elsewhere.
Common Cost. AT&T’s and WorldCom’s primary argument is the claim that the
common cost factor adopted by the Commission is too high, and improperly allows Pacific to
recover in its UNE prices the common costs of its retail and unregulated services. AT&T at 21-
22; WorldCom at 17-20.15 As the Commission has ruled time and again, “this argument is
without merit.” D.99-11-050; see Scholl Reply Aff. ¶ 29. The costs used to create the
denominator for the CPUC-approved common cost factor are the forward-looking costs of
Pacific’s wholesale network. See, e.g., D.99-11-050, at 62-66; Order Modifying and Denying
Rehearing of Decision, 99-11-059, D.01-05-092, at 11 (Cal. Pub. Utils. Comm’n May 24, 2001);
Scholl Reply Aff. ¶¶ 29-32 & Figure A. AT&T’s and WorldCom’s persistence in pressing this
factually misguided contention – as their lead argument, no less – says much about the merits of
their remaining challenges.
Perhaps recognizing that this claim is factually incorrect, AT&T and WorldCom fall back
on the bare assertion that the common cost factor approved by the Commission is higher than the
common cost factor approved in other states. AT&T at 21-22; WorldCom at 19. But the truth is
that states have adopted a range of common cost factors, depending on – in AT&T’s words – the
“differences in approach” that they have adopted in applying TELRIC. AT&T at 17. Moreover,
even if the CPUC’s common cost factor were higher than most other jurisdictions, it would
15 That WorldCom challenges the OANAD-approved rates at all is curious in light of itssimultaneous admission that the Commission “set UNE prices based on the TELRIC standard” inthat proceeding, and its plea that the Commission use the “sound costing principles” applied inOANAD to other tariffed services. See WorldCom’s 709.2 Comments at 39.
21
remain legally irrelevant. This Commission’s long history of demanding increasing levels of
detail and accuracy in Pacific’s cost studies provided a baseline – absent in most other states –
for this Commission to require a level of precision in Pacific’s cost studies that is not present in
most other jurisdictions. See Scholl Reply Aff. ¶ 45. As the reply affidavit of Richard Scholl
explains, that history – and that precision – indicate that it is this Commission’s cost-study
process that “should be the standard upon which the others are graded.” Id.
Highlighting the absence of principle in their approach to UNE pricing, AT&T and
WorldCom also contend that the Commission should unilaterally impose a new common cost
factor of 8%. AT&T at 21 n.38; WorldCom at 49. But, even apart from the obvious procedural
problems with that suggestion, the basis for that proposal is a costing model – the Hatfield model
– that has been soundly and repeatedly rejected by the Commission. See Scholl Reply Aff. ¶ 47.
In the actual OANAD proceeding, moreover, AT&T and WorldCom proposed a common cost
factor of 13.8%, almost twice as high as their new proposal. See D.99-11-050, at 55. AT&T and
WorldCom resort to a methodology that the Commission has already rejected further undermines
their challenges to the Commission’s approved common cost factor.16
Activity-Based Costing. AT&T and WorldCom next take issue with the Commission’s
approval of “activity-based costing” for determining expenses and support investments. AT&T
16 AT&T’s and WorldCom’s proposals for loop and switching rates rely on the same discreditedmodel. They should be rejected for that reason, as well as for the additional reasons set out inthe reply affidavit of Richard Scholl. In addition, AT&T and WorldCom recycle their objectionto Pacific’s inclusion in its collocation pricing of the 19% markup for shared and common costsapproved by the Commission in D.99-11-050. As with so many of AT&T’s and WorldCom’sallegations, Pacific has fully addressed this issue previously, see Reply Br in Support ofSupplemental Compliance Filing at 42-43, R.93-04-003, et al. (Cal. Pub. Utils. Comm’n filedApr. 25, 2000), and the Commission itself has disposed of it, see D.99-11-050, n.70. See alsoScholl Reply Aff. ¶ 38.
22
at 25; WorldCom at 23. But the activity-based approach associates the costs of various
maintenance activities with the particular UNE being maintained. It is therefore consistent not
only with TELRIC, but also with the Commission’s own costing principle that “[a]ny function
necessary to produce a service must have an associated cost.” Interim Opinion Adopting Cost
Methodology Principles and List of Basic Network Functions for Which Cost Studies Are To Be
Performed, D.95-12-016 (Cal. Pub. Utils. Comm’n Dec. 6, 1995); Scholl Reply Aff. ¶ 12. By
contrast, the alternative approach advocated by WorldCom and AT&T – expense “loading
factors” – simply multiplies a pre-established factor by a given investment. That approach thus
ignores the indisputable fact that the maintenance activities associated with various switching
UNEs are unrelated to the prices of the various switch components used to provide the UNE.
See Scholl Reply Aff. ¶ 9-10. It is for precisely this reason that this Commission concluded that
Pacific’s activity-based approach was preferable to the AT&T/WorldCom approach. Id. ¶ 12.
Again recycling an argument that the Commission has already rejected, AT&T and
WorldCom allege that the activity-based costing approach improperly relies on embedded costs
and is for that reason inconsistent with TELRIC. AT&T at 24-26; WorldCom at 21-23. But this
Commission has already held, in response to this same argument from AT&T and WorldCom,
that Pacific’s cost studies – including its activity-based costs – are forward looking. See Interim
Opinion Adopting in Part and Ordering Modifications to Round I and II Cost Studies Submitted
by Pacific Bell and GTE California Inc. at 14-15, D.96-08-021 (Cal. Pub. Utils. Comm’n Aug. 2,
1996); Scholl Reply Aff. ¶ 17.
Switching. Joined in this respect by Z-Tel, AT&T and WorldCom take issue with
Pacific’s Commission-approved switching rate. The crux of this claim is that the CPUC-
approved rate is higher than the costs that other incumbent LECs allegedly incur in other states.
23
AT&T at 26-27; WorldCom at 26; see also Z-Tel at 5-8. But that allegation – even if it were
factually accurate, which, as discussed below, see infra pages 25-26, it is not – is beside the
point. As the FCC has repeatedly held, in the section 271 context, its job is not to compare costs
among states and seek out the lowest common denominator for each individual element. Rather,
the FCC simply ensures that the state commission adhered to “basic TELRIC principles,” and
that it did not make any “clear errors in factual findings on matters so substantial that the end
result falls outside the range that the reasonable application of TELRIC principles would
produce.” New York Order, 15 FCC Rcd at 4084, ¶ 244; see also, e.g., Kansas/Oklahoma Order
¶ 59.17
Nor is there any merit to AT&T’s and WorldCom’s opportunistic resort to the FCC’s
universal service cost model to attempt to demonstrate that Pacific’s switching costs are too high.
See AT&T at 41-42; WorldCom at 30. As the reply affidavit of Thomas Makarewicz explains,
the universal service model relies on nationwide average cost inputs, and is therefore a wholly
inappropriate vehicle for determining costs in any particular state. See Makarewicz Reply Aff.
¶ 8. That model also includes retail costs that – as the FCC and this Commission have
recognized – are appropriately excluded from a TELRIC analysis. Id. ¶ 9. For these reasons
(among others), the FCC “has never used the [universal service] cost model to determine rates
for a particular element, nor was it designed to perform such a task.” Massachusetts Order ¶ 32;
see Kansas/Oklahoma Order ¶ 84; New York Order, 15 FCC Rcd at 4085, ¶ 245; see also AT&T
17 Memorandum Opinion and Order, Joint Application by SBC Communications Inc., et al., forProvision of In-Region, InterLATA Services in Kansas and Oklahoma, CC Docket No. 00-217,FCC 01-29 (rel. Jan. 22, 2001) (“Kansas/Oklahoma Order”), appeal pending, SprintCommunications Co. v. FCC, No. 01-1076 et al. (D.C. Cir.).
24
Corp. v. FCC, 220 F.3d 607, 619-20 (D.C. Cir. 2000) (rejecting claim that FCC’s universal
service model undermined claim that Verizon’s New York switching rates were TELRIC-
compliant).18 AT&T’s and WorldCom’s efforts to import the FCC’s universal service model
into this proceeding are thus directly contrary to FCC precedent, and should be rejected.
Perhaps recognizing that their effort to cherry-pick desirable UNE rates from various
states is lawless and ultimately destined to fail, AT&T and WorldCom also attempt to identify
methodological or factual errors that would cast doubt on this Commission’s switching prices.
These claims fail. Thus, for example, AT&T and WorldCom claim that the Commission
improperly assumed that Pacific would purchase add-on switching capacity. AT&T at 27;
WorldCom at 29-30. In their view, the Commission was required to assume that every single
line in Pacific’s network would be served by a brand new switch. AT&T at 27-28; WorldCom at
29-30. Once again, however, the Commission has already resolved this contention, properly
concluding that Pacific’s “life-cycle” approach to switching costs is consistent with the FCC’s
and this Commission’s pricing rules. See Interim Decision Adopting Cost Methodology,
Evaluating the Hatfield Computer Model, and Deciding Other Issues Related to Cost Studies of
Pacific Bell’s System at 40, 46-52, D.98-02-106 (Cal. Pub. Utils. Comm’n Feb. 19, 1998); Scholl
Reply Aff. ¶¶ 51-54.
AT&T and WorldCom also challenge the Commission’s approval of a separate charge for
vertical features, complaining that some other states have not adopted such a charge. But the fact
18 The FCC has relied on the universal service model in the 271 context, but only where it hasfound a specific error in the application of TELRIC, Kansas/Oklahoma Order ¶¶ 80-86, or wherethe applicant seeks to import rates from another state, Massachusetts Order ¶¶ 22-27. There areno TELRIC errors here, and Pacific obviously does not seek to rely on rates adopted in any otherstate.
25
is that there are costs associated with Pacific’s wholesale provisioning of vertical features. See
Scholl Reply Aff. ¶¶ 73-74. The 1996 Act and the FCC’s rules require that those costs be
recovered. See 47 U.S.C. § 252(d); 47 C.F.R. §§ 51.503, 51.505. AT&T’s and WorldCom’s
claim thus amounts to the argument that, as a matter of law, those costs must be spread among all
purchasers of unbundled switching, instead of those that actually use the vertical features. That
theory is exactly contrary to the FCC’s statements regarding cost causation19 and should be
rejected out-of-hand.
AT&T and WorldCom also allege that Pacific’s switching rates are higher than the costs
that Ameritech has sought to recover in Michigan and Illinois. AT&T at 26; WorldCom at 28.
But the simple fact is that the switching costs in California do parallel the costs submitted in
Michigan and Illinois. In fact, the switching UNE unit investments in the CPUC-approved
TELRIC costs are comparable to those used in Michigan and Illinois. See Scholl Reply Aff. ¶¶
84, 89. The difference in the prices is a result of the simple fact that the rate structures adopted
in California are different from the structures adopted in those other states. That is to say, while
this Commission undertook the laborious task of identifying the expenses that are associated
with, say, switching UNEs as compared to other UNEs, those other jurisdictions relied on a less
precise methodology. The upshot is that Pacific’s switching UNE rate includes recovery for
numerous costs that this Commission properly associated with switching, but that other
jurisdictions have assigned elsewhere. See id. ¶ 85.
19 See, e.g., First Report and Order, Implementation of the Local Competition Provisions in theTelecommunications Act of 1996, 11 FCC Rcd 15499, 15847-48, ¶ 682 (1996) (“LocalCompetition Order”) (subsequent history omitted).
26
Loops. AT&T and WorldCom raise various claims regarding Pacific’s loop rates. As
with their claims regarding switching, however, these contentions are uniformly without merit.
AT&T and WorldCom first object to the Commission’s approval of a 38% fill factor,
contending that it is “below the range of inputs that the FCC has determined to be appropriate.”
AT&T’s/WorldCom’s Murray Decl. ¶ 116. In fact, however, the FCC approved Verizon’s
Massachusetts 271 application – including a loop rate derived by application of a 40% fill factor.
See Massachusetts Order ¶ 39. Moreover, this Commission itself recognized that the 38% fill
factor used in Pacific’s studies is fully five percentage points – i.e., 15% – higher than Pacific’s
existing fill factor at the time. D.96-08-021, at 30. Since that time, Pacific’s fill factor has
decreased. Scholl Reply Aff. ¶ 110. Thus, if anything, the 38% fill factor adopted by the
Commission was too high. And, in any event, as in Massachusetts, see Massachusetts Order
¶ 39, this Commission is currently reviewing Pacific’s loop rates. In light of this Commission’s
outstanding record in implementing the 1996 Act, it is at least as capable of resolving any
concerns regarding loop rates as is the Massachusetts Department of Transportation and Energy
(“DTE”).
AT&T and WorldCom also complain that Pacific’s rates assume an insufficient amount
of “structure sharing.” AT&T at 34-35; WorldCom at 32. But, once again, the authority that
they rely upon is the FCC’s (irrelevant) universal service rules. See AT&T’s/WorldCom’s
Murray Decl. ¶ 18. And, in any case, the Commission has resolved this issue previously. See
D.98-02-106, at 36; Scholl Reply Aff. ¶ 114.
AT&T and WorldCom further contend that Pacific’s loop rates do not properly assume
the use of next generation digital loop carrier (“NGDLC”). AT&T at 36; WorldCom at 24. But,
as this Commission has recognized, there are two types of NGDLC: Universal Digital Loop
27
Carrier (“UDLC”) – in which the digital loop facility terminates directly on a frame in the central
office – and Integrated Digital Loop Carrier (“IDLC”) – in which the digital loop facility
terminates directly into a digital switch. Because the 1996 Act as interpreted by the FCC
requires the incumbent LECs to provide CLECs with direct access to unbundled loops and ports
at the central office, only UDLC can be used to provide a UNE loop (or port). Scholl Reply Aff.
¶¶ 66-67; see also id. ¶ 116. Pacific’s TELRIC cost studies appropriately assume the use of
UDLC, because that is the type of NGDLC that can actually be used for unbundled access. Id.
¶ 67.
Again displaying its complete disregard for principle, AT&T argues that Pacific’s rate for
the high-frequency portion of the loop (“HFPL”) should be set at zero. AT&T at 37. In Texas,
however, “AT&T argues that a zero price for the HFPL UNE is both anti-competitive and
unjustified when viewed in light of the entire telecommunication marketplace.”20 AT&T had it
right in Texas. As this Commission correctly held, a positive price for the HFPL is fully
consistent with the FCC’s (and this Commission’s) rule that costs be allocated on a cost-
causative basis. See Scholl Reply Aff. ¶¶ 141-143.
Finally, WorldCom alleges that the CPUC erred in using “actual feeder routes.”
WorldCom at 33. In its view, the FCC’s TELRIC rules require the Commission to “‘assum[e]
away’ . . . existing facilities,” including “all existing, in-place local exchange carrier facilities.”
AT&T’s/WorldCom’s Murray Decl. ¶ 112. In fact, the FCC’s TELRIC rules do no such thing.
The FCC’s methodology requires the assumption of “efficient new technology that is compatible
20 Arbitration Award at 136, Petition of IP Communications Corp. to Establish Expedited Pub.Utils. Comm’n of Texas Oversight Concerning Line Sharing Issues, Docket No. 22168 (Tex.Pub. Utils. Comm’n July 13, 2001).
28
with the existing infrastructure.” Local Competition Order, 11 FCC Rcd at 15849, ¶ 685. The
Commission’s associated costing principle – that costs be based “on the existing or planned
location of switching and outside plant facilities . . . using the least-cost, most efficient
technology,” D.95-12-016 – is fully consistent with the FCC’s rule. See Scholl Reply Aff. ¶ 101.
DS3 Loops. XO and ORA allege that Pacific’s DS3 loop prices are too high and do not
comply with the FCC’s TELRIC methodology. See XO at 12; ORA ¶ IIIC. They are mistaken.
In the OANAD proceeding, the Commission set rates for DS1 and DS3 entrance facilities, as
well as for DS1 loops. See Scholl Reply Aff. ¶ 150. The DS1 and DS3 entrance facility rates
were based on the assumption of fiber ring technology. DS3 loops are provided using precisely
the same technology. Id. There is therefore no material cost difference in California between a
DS3 entrance facility UNE and a DS3 loop UNE, and their rates are accordingly the same. Id.
Nor is there any merit to XO’s claim that, because the Commission has not approved
deaveraged DS3 loop rates, Pacific’s rates are not consistent with the FCC’s rules. XO at 4.
Pacific’s DS3 loops are provided using multi-node fiber rings, which have no material
geographic cost differences between them. Scholl Reply Aff. ¶ 152. As to XO’s claim that this
approach is inconsistent with Southwestern Bell Telephone Company’s approach in Texas, see
XO at 5, the fact of the matter is that the majority of DS3 loops in Texas are point-to-point on a
“collapsed ring” basis. Scholl Reply Aff. ¶ 152. They therefore have geographic cost
differences that are not present in California. Id.; see also Vandeloop Reply Aff. ¶ 30.
Cost Changes. AT&T and WorldCom contend that the Commission’s OANAD decisions
should be thrown out because they purportedly rely on costs that are not current. AT&T at 31,
39; WorldCom at 25. In fact, however, this Commission’s approved rates were based, as
TELRIC requires, on the long-run forward-looking cost of Pacific’s UNEs. Absent a significant
29
shift in technology – either in the network technology used to provide the network element itself
or in the technology used in operating the network – those long-run forward-looking costs should
not be expected to change significantly. See Scholl Reply Aff. ¶ 81. As the reply affidavit of
Richard Scholl explains, there has been no such shift. See id. ¶¶ 81-82, 122-123.
AT&T and WorldCom point in particular to Pacific’s deployment of Project Pronto to
suggest that the Commission’s prices are out-of-date. See AT&T’s/WorldCom’s Murray Decl.
¶ 137. Once again, however, AT&T and WorldCom have their facts wrong. The Project Pronto
technology that Pacific is currently implementing is in fact the outside plant technology modeled
by Pacific in its TELRIC study for determining both recurring and non-recurring loop costs.
Scholl Reply Aff. ¶ 127. Moreover, the Commission-approved costs included specific
reductions to outside plant maintenance expenses to reflect future savings. See id.
In any event, at AT&T’s and WorldCom’s suggestion, this Commission is already
reviewing loops and switching to determine whether adjustments are necessary. That is precisely
as it should be. In the Massachusetts Order, the FCC took great comfort in the fact that the
Massachusetts DTE had “undertaken a review of UNE rates . . . and [wa]s endeavoring to reset
UNE rates, consistent with [FCC] rules and the Act.” Massachusetts Order ¶ 30. That same
process in California ensures that, on a going-forward basis, Pacific’s UNE rates will continue to
be fully consistent with the FCC’s rules.21
21 WorldCom argues that the Commission’s decision to re-look switching and loops means thatWorldCom has made a prima facie case that loop costs have declined 20%. WorldCom at 31-32;see also AT&T’s/WorldCom’s Murray Decl. ¶¶ 94-95. In fact, this Commission’s re-lookdecision acknowledges only that the possibility of cost changes warrants further examination.See Scholl Reply Aff. ¶ 80.
30
Interim UNE Rates. AT&T and WorldCom also criticize the Commission for not having
set permanent rates for a limited set of UNEs. AT&T at 39-40; WorldCom at 37; see also XO at
3-4 (complaining about interim status of DS3 UNE loop rate).22 As the FCC has explained time
and again, reliance on interim rates is appropriate, provided that “the uncertainty surrounding the
interim rates has been minimized, and [the FCC has] confidence that the [state commission] will
set permanent rates that are in compliance with the Act and [its] rules.” Texas Order, 15 FCC
Rcd at 18395-96 ¶ 90. AT&T’s and WorldCom’s suggestion that this Commission is somehow
less able to set cost-based rates than the state commissions in other states should be rejected. See
also Vandeloop Reply Aff. ¶¶ 29-30 (explaining that Pacific’s DS3 loop rates have been
incorporated into approved interconnection agreements and are consistent with FCC principles).
“Margin” Analysis. Using unvalidated and misleading “margin analysis,” AT&T and
WorldCom claim that Pacific’s UNE prices are too high to permit them to turn a profit in the
local market in California. AT&T at 8, 19; WorldCom at 2, 10-15. As an initial matter,
however, AT&T and WorldCom each provide local service to hundreds of thousands of
California end-users. See Tebeau Aff. Attach. F. That simple, indisputable fact belies their
assertion that Pacific’s UNE prices are too high to permit them to enter the California market.
In any event, AT&T’s and WorldCom’s assertion is legally irrelevant. As the FCC has
explained repeatedly, AT&T’s and WorldCom’s “profitability argument” is not “part of the
22 Recognizing that the number of UNEs for which the Commission has not set prices isextremely limited, AT&T and WorldCom attempt to make up new UNEs to expand the list. SeeAT&T at 39-40 (discussing absence of permanent rates for “broadband” and “packetswitching”); WorldCom at 37 (same). As explained in Pacific’s June filing, however, there is nosuch thing as a “broadband” UNE, and there are no circumstances in which Pacific is required tounbundle packet switching in California. See Draft FCC Br. at 71.
31
section 271 evaluation of whether an applicant’s rates are TELRIC-based.” Massachusetts Order
¶ 41; see Kansas/Oklahoma Order ¶¶ 65, 92. Both AT&T and WorldCom grudgingly admit as
much, see AT&T at 20 n.32; WorldCom at 15-16 n.26, but they nevertheless contend that the
FCC’s holding in this respect is inconsistent with FCC precedent. But that claim too has been
rejected as based on a “misrepresentation of the [FCC’s] prior holding.” Massachusetts Order
¶ 42.
AT&T’s and WorldCom’s “margin analysis” also fails to come to grips with the well-
established fact that, to the extent that UNE rates impact CLEC incentives to enter the residential
market, that is largely a result of the continued regulation of retail rates.23 And the 1996 Act
provides an answer for that: CLECs are guaranteed a margin if they choose to compete with
Pacific by reselling its residential service. See 47 U.S.C. § 251(c)(4).
In addition to being legally irrelevant, moreover, AT&T’s and WorldCom’s claims are
simply wrong. As the reply affidavit of Dr. Dale Lehman explains, notwithstanding its name,
AT&T’s and WorldCom’s “margin analysis” fails to assume that entry will in fact take place at
the “margin.” See Lehman Reply Aff. ¶ 5. The reason for this failure is obvious: had AT&T and
WorldCom performed a realistic analysis, their own numbers would reveal positive margins for
all end-users, at all usage levels, and in all zones except zone three. See id. Moreover, for the
residential customers that CLECs are likely to target – customers that use at least three vertical
23 See, e.g., The Telecom Act Five Years Later: Is it Promoting Competition?, Hearing Beforethe Subcomm. on Antitrust, Business Rights, and Competition of the Senate Comm. on theJudiciary, 107th Cong., 1st Sess. (May 2, 2001) (testimony of Reed E. Hundt, Senior Advisor,McKinsey & Company, and former Chairman of the FCC) (“In terms of residential, voice,telephone service, . . . about 40 percent of all consumers are paying less than the cost to providea service. . . . And there’s no way that someone else is building an overlapping network to repeatthe experience of offering a below-cost service.”); see also Draft FCC Br. at 10.
32
services – AT&T and WorldCom have effectively understated the marginal revenue by more
than $9 per month. Id. AT&T and WorldCom make the same mistake – assuming that they will
compete on average, rather than at the margin – in calculating likely revenues from access
charges. Id. ¶¶ 5-6.24 The fact is that, when contemplating market entry, no right-minded CLEC
would make the extraordinary assumptions that AT&T and WorldCom make in order to reach
their self-serving, predetermined conclusion that Pacific’s prices are too high. AT&T’s and
WorldCom’s “margin analysis” is thus as factually implausible as it is legally irrelevant.25
3. Nondiscriminatory Access to OSS
In its Draft Application, Pacific demonstrated that it offers competing carriers
nondiscriminatory access to its operations support systems (“OSS”). See Draft FCC Br. at 33-
52; Huston/Lawson Joint Aff.; Henry Aff.; Smith Aff.; Flynn Aff.; Johnson Aff. Specifically,
24 It is also worth noting that the long-distance incumbents have trotted out the same discreditedtheories regarding intrastate access charges in virtually every single Southwestern Bell 271proceeding to date – each time without success. See, e.g., Direct Testimony of Wauneta B.Browne on Behalf of AT&T Communications of the Southwest, Inc., at 4, Application of theAttorney General of the State of Oklahoma, et al., To Explore Southwestern Bell TelephoneCompany’s Compliance with Section 271(c) of the Telecommunications Act of 1996, Cause No.PUD 970000560 (Okla. Corp. Comm’n filed Aug. 17, 2000); Direct Testimony of Robert P.Flappan on Behalf of AT&T Communications of the Southwest, Inc., at 3, Southwestern BellTelephone Company – Kansas’ Compliance with Section 271 of the FederalTelecommunications Act of 1996, Docket No. 97-SWBT-411-GIT (Kan. Corp. Comm’n filedJuly 19, 2000); Direct Testimony of R. Matthew Kohly on Behalf of AT&T Communications ofthe Southwest, Inc., at 4, Application of Southwestern Bell Telephone Company to ProvideNotice of Intent to File an Application for Authorization To Provide In-Region InterLATAServices Originating in Missouri Pursuant to Section 271 of the Telecommunications Act of1996, TO-99-227 (Mo. Pub. Serv. Comm’n filed Aug. 28, 2000).
25 As Pacific explained in its Draft Application, Pacific’s UNE-P rate compares favorably tostates that have been granted section 271 relief. See Draft FCC Br. at 30. A few commentersdispute that assessment, but, as the Reply Affidavit of Linda Vandeloop makes clear, thoseclaims rely on mistaken – or misleading, as the case may be – assumptions and analysis. SeeVandeloop Reply Aff. ¶¶ 14-19.
33
Pacific demonstrated that its OSS are processing commercial volumes of CLEC transactions,
with excellent performance results, and were subjected to 16 months of independent testing that
confirmed the reliability and robustness of Pacific’s OSS. Unable to refute this showing, the
CLECs’ comments primarily rehash earlier complaints about the OSS test. But that is beside the
point: the purpose of third-party testing is to “assess[] the commercial readiness of a BOC’s
OSS” where “data on commercial usage” are “absent.” New York Order, 15 FCC Rcd at 3993,
¶ 89 (emphasis added).26 As demonstrated below, Pacific’s OSS continue to process increasing
commercial volumes of orders in a nondiscriminatory manner. And, in any event, the CLECs’
repeated complaints about the OSS test are wrong: that test provides further evidence that
Pacific’s OSS satisfy the requirements of section 271.
Commercial Volumes. In its Draft Application, Pacific demonstrated that, between
February and April 2001, Pacific’s EDI/CORBA interfaces processed more than 2.6 million pre-
order transactions and that its EDI interface was used to create almost 700,000 service orders.
See Huston/Lawson Joint Aff. ¶¶ 12-21. From May through July 2001, Pacific’s pre-ordering
interfaces processed another 3.7 million pre-order transactions, and its EDI interface was used to
create nearly 700,000 more service orders. See Huston/Lawson Joint Reply Aff. ¶ 55. There is
thus no doubt that Pacific’s OSS are handling commercial volumes. Moreover, Pacific’s
performance has remained excellent even as order volumes have increased: from May through
26 Accord Memorandum Opinion and Order, Application of Verizon New York Inc., et al., forAuthorization to Provide In-Region, InterLATA Services in Connecticut, CC Docket No. 01-100, FCC 01-208, App. D, ¶ 32 (rel. July 20, 2001) (“Connecticut Order”); Kansas/OklahomaOrder ¶ 105; Texas Order, 15 FCC Rcd at 18399-400, ¶ 98; Memorandum Opinion and Order,Application of BellSouth Corp., et al., for Provision of In-Region, InterLATA Services inLouisiana, 13 FCC Rcd 20599, 20637-38, ¶ 56 (1998).
34
July 2001, Pacific met or exceeded the performance standard on at least 90% of its performance
measurements; in July 2001, Pacific met or exceeded the performance standard on 93% of those
measurements. See Johnson Reply Aff. ¶ 12 & Attach. E.27
Although the long-distance incumbents claim that Pacific’s OSS are not processing
commercial volumes of orders, their claims are misplaced. WorldCom contends, based on a
misreading of Pacific’s performance measurement data, that order volumes are less than one-
third as high as Pacific claims. See WorldCom at 51-52.28 WorldCom’s mistake is that it counts
only the number of firm order confirmations (“FOCs”) that Pacific’s OSS return; the appropriate
measure is all of the service orders that are processed by Pacific’s OSS, not merely the number
of LSRs for which a FOC is returned. See Huston/Lawson Joint Reply Aff. ¶¶ 51-52.
WorldCom is also incorrect in claiming that Pacific’s OSS are not processing commercial
volumes because WorldCom has not yet “enter[ed] on a mass market basis” in California.
27 WorldCom is the only commenter to claim that Pacific’s OSS are not scalable, taking issuewith the OSS capacity and stress tests. See WorldCom’s Lichtenberg Decl. at 9-13. However,WorldCom ignores that the OSS test included a review and validation of the capacity planningmethods and procedures that Pacific employs to ensure that its OSS can handle increasing CLECvolumes. See Huston/Lawson Joint Aff. ¶¶ 58, 64-68; Henry Aff. ¶¶ 15-17; Smith Aff. ¶¶ 15-17;TAM Report § 4.2.2. Further evidence that Pacific’s OSS are scalable is that Pacific hascontinued to provide excellent service to CLECs even as volumes have increased. SeeHuston/Lawson Joint Aff. ¶¶ 58, 64-68; Smith Aff. ¶¶ 15-17.
28 AT&T and WorldCom incorrectly claim that these volumes should not include transactionssubmitted by Pacific’s affiliates. See AT&T at 49; AT&T’s Willard Decl. ¶¶ 39 n.40, 43;WorldCom at 71; WorldCom’s Lichtenberg Decl. at 5. In fact, Pacific’s affiliates, such as ASI,submit LSRs using Pacific’s OSS, just as another CLEC would, and those LSRs are handled nodifferently from an AT&T-submitted LSR. See Huston/Lawson Joint Reply Aff. ¶¶ 50, 54. Noris WorldCom correct in claiming that Pacific’s order volume data are overstated because it isbased on service orders, rather than LSRs. See WorldCom’s Lichtenberg Decl. at 5-6. Countingservice orders provides a more accurate measure of the usage and capacity of Pacific’s OSS. SeeHuston/Lawson Joint Reply Aff. ¶¶ 50-51.
35
WorldCom at 71; WorldCom’s Lichtenberg Decl. at 3-5. As the FCC has repeatedly found,
commercial volumes of orders are those that demonstrate a BOC’s “performance towards
competing carriers in an actual commercial environment” and provide a “reliable . . . indicator of
checklist compliance.” Kansas/Oklahoma Order ¶ 36; see Connecticut Order App. D, ¶¶ 11, 32;
Huston/Lawson Joint Reply Aff. ¶ 52. The commercial usage data that Pacific presented in its
Draft Application are more than sufficient to demonstrate that its OSS satisfy the requirements of
section 271, even if those OSS will process more orders when other CLECs elect to enter the
California market.
Nor is there any basis to AT&T’s claim that Pacific’s OSS are not processing commercial
volumes with respect to particular product types. AT&T contends, along with WorldCom, that
Pacific has limited experience processing UNE-P orders, particularly when submitted over the
EDI interface. See AT&T at 48-49; AT&T’s Willard Decl. ¶¶ 39-40; WorldCom’s Lichtenberg
Decl. at 5-6, 8. This concern is misplaced. First, CLECs have used Pacific’s EDI interface to
create nearly 700,000 service orders over the past three months, demonstrating that this interface
is capable of handling commercial volumes of orders. See Huston/Lawson Joint Reply Aff. ¶ 55.
Second, Pacific has processed approximately 8,500 UNE-P orders submitted over EDI over the
past eight months, demonstrating that the EDI interface can handle commercial volumes of
UNE-P orders in particular. See id. ¶ 42. Third, because the provisioning of a UNE-P order is
the same regardless whether the CLEC uses EDI or LEX, Pacific’s extensive experience
provisioning UNE-P orders submitted over LEX – more than 60,000 such orders – provides
further commercial evidence that its OSS are operationally ready. See id. ¶ 42 n.13.29
29 AT&T contends that Pacific has limited commercial data for DS1 orders. See AT&T’sWillard Decl. ¶¶ 104-105. As Pacific explained in its Draft Application, in December 2000,
36
Third-Party Test. In addition to the evidence that Pacific’s OSS are handling commercial
volumes of orders, those systems were subjected to an extensive test by an independent third
party, supervised by this Commission. See Draft FCC Br. at 36-38; Huston/Lawson Joint Aff.
¶¶ 22-63. This test provides further evidence that Pacific’s OSS – which the third-party
reviewers found “are robust and reliable” – satisfy the requirements of section 271.30 To the
extent the third-party reviewers raised any issues with Pacific’s OSS, Pacific has addressed those
issues. See Huston/Lawson Joint Aff. ¶¶ 61-63. Indeed, the third-party reviewers recently
confirmed that Pacific appropriately responded to the 19 issues that this Commission’s staff
determined should be verified. See Huston/Lawson Joint Reply Aff. ¶¶ 20, 35, 40.
AT&T, WorldCom, and others, however, continue to rehash past criticisms of the OSS
test. For example, WorldCom again claims that CLECs were prevented from being heavily
involved in the test. See WorldCom’s Lichtenberg Decl. at 17-20. Yet, as Pacific has previously
shown, and as this Commission has concluded, CLECs had substantial involvement in every step
of the OSS test and, in fact, declined the invitation to participate directly in the carrier-to-carrier
testing. See Pacific Bell Telephone Company’s Reply Comments on the Final OSS Report at 4-5
(Cal. Pub. Utils. filed Mar. 9, 2001) (“OSS Test Reply Comments”); see also Huston/Lawson
Joint Reply Aff. ¶ 6. AT&T and WorldCom likewise repeat their claim that the test included
pursuant to the change management process, it retired CESAR; CLECs now can use EDI andLEX to submit orders for DS1 UNEs. See Huston/Lawson Joint Aff. ¶¶ 39, 172. Pacificprocesses approximately 1,000 UNE DS1 orders each month, which clearly constitutecommercial volumes. See Huston/Lawson Joint Reply Aff. ¶ 46.
30 GE Global eXchange Service, Final Report Presented to California Public UtilitiesCommission for Test Generation Services in Relation to Pacific Bell’s Operations SupportSystem § 2.2, at 13 (Dec. 12, 2000) (“TG Report”).
37
only a handful of UNE-P orders submitted over EDI. See AT&T at 48-49; AT&T’s Willard
Decl. ¶¶ 33-37; WorldCom at 53; WorldCom’s Lichtenberg Decl. at 24-28. Yet, as Pacific
previously explained, more than 3,700 UNE-P orders were submitted over EDI during the
Capacity Tests. See OSS Test Reply Comments at 8; Huston/Lawson Joint Reply Aff. ¶ 42.
And AT&T and WorldCom again mistakenly contend that the OSS test was not actually
“military-style” or sufficiently blind. See AT&T’s Willard Decl. ¶¶ 12-17; WorldCom at 54, 59;
WorldCom’s Lichtenberg Decl. at 21-22; Office of Ratepayer Advocates at 26-28;
Huston/Lawson Joint Reply Aff. ¶ 7.31
AT&T and WorldCom also criticize the recent report confirming that Pacific
appropriately responded to 19 of the issues raised during the third-party review. See, e.g.,
AT&T/WorldCom Joint Comments at 4-12. These claims are likewise misplaced. See
Huston/Lawson Joint Reply Aff. ¶¶ 20-40. For example, AT&T and WorldCom continue to
complain about the incidence of 804 and RC-11 error codes and take issue with the third-party
reviewers’ conclusion that no further action by Pacific was required. See, e.g.,
AT&T/WorldCom Joint Comments at 7-8; AT&T at 57-58; AT&T’s Willard Decl. ¶¶ 68-76;
WorldCom at 61-62. As Pacific has explained before, these error codes perform essential system
functions, ensuring that one problematic LSR does not cause a system backlog that affects
performance for all CLECs. See Huston/Lawson Joint Reply Aff. ¶¶ 24-28. Upon further
31 XO and AT&T also repeat earlier claims that there was insufficient testing of Pacific’s OSSability to process DS1 orders. XO at 32-35; AT&T at 54-55; AT&T’s Willard Decl. ¶¶ 101-103.As Pacific explained in its Draft Application, CLECs were fully involved in the discussions thatled to this Commission’s decision to reduce the original planned number of DS1 orders in thetest, even if they may not have agreed with that decision. See Huston/Lawson Joint Aff. ¶ 35;Huston/Lawson Joint Reply Aff. ¶ 45. And, as explained above, Pacific is processingcommercial volumes of DS1 orders.
38
review of these error codes, the third-party reviewers concluded that they are “a rare
occurrence,” that the total number of such error codes was overstated because a single
occurrence could cause multiple error codes, and that these error codes “occur[] for SBC
affiliated companies as well as non-affiliated companies.” Verification Report at 22;32 see
Huston/Lawson Joint Reply Aff. ¶ 28. Based on this thorough review, the third-party reviewers
rightly concluded that this issue did “not warrant further corrective action.” Verification Report
at 22.33
Pre-Ordering, Ordering, and Provisioning. Pacific demonstrated in its Draft Application
that it is providing CLECs with nondiscriminatory access to its pre-ordering, ordering, and
provisioning OSS. See Draft FCC Br. at 38-46. Performance data from May through July 2001
demonstrate that Pacific has continued to provide CLECs with nondiscriminatory access to these
aspects of its OSS. See Johnson Reply Aff. ¶¶ 24-26 & Attach. F. Although CLECs raise a
handful of complaints, none in any way undermines Pacific’s showing.
Pacific demonstrated that its DataGate, EDI, and CORBA pre-ordering interfaces can be
integrated with its EDI ordering interface. See Draft FCC Br. at 41. No CLEC disputes this.
AT&T, however, objects that CLECs cannot also integrate Pacific’s Verigate pre-ordering
interface with its LEX ordering interface, claiming that Pacific, by contrast, uses the integrated
32 Cap Gemini Ernst & Young, Pacific Bell OSS Test Recommendation Verification Report,Version 1.0 (June 22, 2001) (“Verification Report”).
33 AT&T and WorldCom similarly argue that the third-party reviewers should have performed afull reconciliation of all OSS test case data. See AT&T/WorldCom Joint Comments at 8-9;WorldCom at 60-61. The third-party reviewers, however, found that there was no need for sucha reconciliation because the reconciliation of actual performance data undertaken by Pacific andCLECs did not reveal any significant performance measurement discrepancies. See VerificationReport at 45; Huston/Lawson Joint Reply Aff. ¶¶ 31-33.
39
Starwriter system for retail orders. See AT&T at 51-52; AT&T’s Willard Decl. ¶¶ 190-192. The
FCC, however, has never required a BOC to demonstrate that all of the pre-ordering and
ordering interfaces that it provides to CLECs can be integrated; a BOC must show that CLECs
can achieve successful integration, which Pacific has shown. See, e.g., Massachusetts Order
¶ 52; Texas Order, 15 FCC Rcd at 18430-31, ¶ 155; New York Order, 15 FCC Rcd at 4020,
¶ 138. In addition, when Pacific made Starwriter available to CLECs, there was minimal CLEC
interest; when Starwriter was retired as a CLEC interface in April 2001, only one CLEC was
using it. See Huston/Lawson Joint Aff. ¶¶ 136 n.37, 147 n.40; Huston/Lawson Joint Reply Aff.
¶ 66. This lack of CLEC interest is likely attributable to the fact that Starwriter can accept only
single-line residential service orders; an integrated Verigate/LEX pre-ordering/ordering interface
would be functionally far superior to Starwriter, and BOCs are not required to provide CLECs
with access to OSS that are superior to what it provides its retail representatives. See
Huston/Lawson Joint Reply Aff. ¶ 66; Huston/Lawson Joint Aff. ¶ 136 n.37; see also, e.g., New
York Order, 15 FCC Rcd at 4051, ¶ 185.34
AT&T and WorldCom also contend that the third-party test does not demonstrate the
integratability of Pacific’s pre-ordering and ordering interfaces, because the Test Generator
obtained certain pre-ordering information from the Test Administrator. See AT&T at 51;
WorldCom’s Lichtenberg Decl. at 43-44. They are wrong. The Final Report of the Test
34 AT&T also complains about SBC’s policy limiting the number of Internet Protocol (“IP”)addresses for each CLEC. See AT&T’s Willard Decl. ¶¶ 161-177. In essence, AT&T wants topass off the responsibility for managing its network onto Pacific, by allowing AT&T to haveunlimited IP addresses that are capable of transmitting information to Pacific’s secure orderingsystem. This would require Pacific, rather than AT&T, to route AT&T’s data. SeeHuston/Lawson Joint Reply Aff. ¶¶ 58-64. As AT&T concedes, it could transmit its orders usingonly two IP addresses; Pacific’s proposal permits AT&T 12 such addresses. See id. ¶¶ 58, 65.
40
Generator clearly demonstrates that an integrated pre-ordering/ordering interface was developed
and used during the OSS test. See Huston/Lawson Joint Reply Aff. ¶ 70.
AT&T complains that orders for DS1 circuits as UNEs must be placed using an LSR,
while orders for DS1 circuits from Pacific’s special access tariff are placed using an Access
Service Request (“ASR”). See AT&T’s Willard Decl. ¶¶ 86-88, 98-100.35 Yet ordering UNE
DS1 circuits using an LSR is consistent with industry standards, as established by the OBF,
which also specifies that DS1 access circuits should be ordered using an ASR. See
Houston/Lawson Joint Reply Aff. ¶ 86. If AT&T does not agree with these guidelines, the
proper course is for AT&T to raise this issue in the OBF forum, not before this Commission.
See id.
WorldCom takes issue with the level of service it has received from personnel in
Pacific’s Local Service Centers, claiming that it “often” receives incomplete and contradictory
instructions on how to place orders and providing one specific instance in which it claims to have
received poor service. See WorldCom at 71-73. In fact, WorldCom has informed Pacific that
one reason for the errors it experiences is that WorldCom’s systems, which are “hard-coded” to
populate fields on its ASRs automatically, place erroneous information on the ASR, resulting in
rejection of the order. See Henry Reply Aff. ¶ 7. Pacific has implemented numerous
workarounds to accommodate the limitations of WorldCom’s systems. See id. In addition,
correction of one error on an ASR can cause information in other fields to be incorrect; it is the
35 AT&T’s various complaints with the regulations that the FCC has promulgated for the use ofUNE DS1 circuits have no place in this proceeding, which assesses whether Pacific has compliedwith the requirements of section 271, as implemented by the FCC. See AT&T’s Willard Decl.¶¶ 89-97.
41
CLECs’ responsibility to review the ASR to ensure that the corrections did not cause previously
correct fields to become invalid. See id. ¶ 5; see also id. ¶ 6.36
WorldCom also argues that Pacific does not return timely FOCs on interconnection trunk
orders sent by fax. See WorldCom at 90. In fact, Pacific’s performance in returning FOCs to
WorldCom – for both interconnection trunks and other products, and for both electronically and
manually submitted orders – has been excellent, with a 98 percent overall timely return rate. See
Johnson Reply Aff. ¶ 24 & Attach. F (PM 2); Henry Reply Aff. ¶ 9. And, from February
through June 2001, Pacific returned FOCs on manually submitted new and augment
interconnection trunk orders for all CLECs in an average of 4.3 and 3.6 days, which is well
within the respective seven- and four-day benchmarks. See Johnson Reply Aff. Attach. F (PM
2).37 Even for WorldCom specifically, Pacific met the benchmark for manually submitted new
interconnection trunk orders in each month from February through June 2001. See id. ¶ 19.
Only with respect to the extremely small number of interconnection trunk augment requests that
WorldCom submitted manually did Pacific fail to meet the benchmark in recent months; even
then, FOCs were returned on these few orders in intervals only slightly longer than the four-day
benchmark. See id.; see also Kansas/Oklahoma Order ¶ 36 (“data based on low volumes of
orders . . . is not as reliable . . . as performance based on larger numbers of observations”).
36 Pac-West’s contention (at 12) that the creation of wholesale service centers dedicated toserving CLEC customers is somehow “inherently discriminatory” is wholly inconsistent with the1996 Act and the FCC’s implementation of that Act. See, e.g., Texas Order, 15 FCC Rcd at18424-25, ¶¶ 144-146. Pacific established these centers for the benefit of the CLECs, andperformance measurements demonstrate that CLECs are receiving nondiscriminatory service.
37 In July 2001, the measurements for FOCs on interconnection trunks were consolidated intoPM 208301 and 208302, which do not distinguish between electronically and manuallysubmitted orders. Pacific met the benchmarks for both measures in that month. See JohnsonReply Aff. Attach. F.
42
WorldCom complains that Pacific’s flow-through rates are too low. See WorldCom at
58-59; WorldCom’s Lichtenberg Decl. at 7-8; WorldCom App. 2 at 6-8. However, as Pacific
explained in its Draft Application, the OSS test demonstrated that Pacific’s OSS are capable of
flowing through a very high percentage of orders – over 97 and 93 percent of orders flowed
through during the third-party tests. See Huston/Lawson Joint Aff. ¶ 57; see also Massachusetts
Order ¶ 78.38 In addition, Pacific demonstrated that flow through for important UNE and resale
order types is near or above 70 percent, respectively, notwithstanding the fact that the flow-
through measurement includes electronically submitted orders that, by design, require manual
handling and cannot flow through. See Johnson Aff. ¶¶ 87-88; see also Massachusetts Order ¶
78 (approving application where average UNE and resale flow-through rates were below 60
percent). Moreover, carriers achieve varying rates of flow-through, despite using the same OSS,
which the FCC has previously found demonstrates that the capabilities of Pacific’s OSS are
significantly better than the aggregate reported results might suggest. See Huston/Lawson Joint
Reply Aff. ¶¶ 92-96; see also, e.g., Massachusetts Order ¶ 78; New York Order, 15 FCC Rcd at
4038-39, ¶ 166.39
38 WorldCom contends that the third-party reviewers did not track flow through. See WorldComat 57-58; WorldCom’s Lichtenberg Decl. at 29-33. This is incorrect. Pursuant to the MasterTest Plan, Pacific provided the third-party reviewers with the raw data used to compute flow-through rates for the pseudo-CLECs. See Huston/Lawson Joint Reply Aff. ¶ 91.
39 In any event, the FCC has held that that “flow-through has significantly less value as anindicator of deficiencies of [a BOC’s] OSS” compared to its “overall ability to return timelyorder confirmation and rejection notices, accurately process manually handled orders, and scaleits systems.” New York Order, 15 FCC Rcd at 4035, ¶ 163; see also Massachusetts Order ¶ 77(flow-through rates are “not so much an end in themselves” or a “‘conclusive measure ofnondiscriminatory access to ordering functions’”) (quoting New York Order, 15 FCC Rcd at4034, ¶ 161). Pacific’s performance is strong with respect to each of these areas. See JohnsonReply Aff. Attach. F.
43
AT&T also repeats earlier claims that the OSS test revealed that Pacific made changes to
certain test orders after sending a service order confirmation (“SOC”); AT&T further asserts,
without any evidence, that Pacific might make such changes to actual CLEC orders. See AT&T
at 56-57; AT&T’s Willard Decl. ¶¶ 25-30; see also AT&T/WorldCom Joint Comments at 10-11.
AT&T’s claim is entirely misplaced – Pacific does not make changes to a CLEC’s account
without the CLEC authorizing such changes, nor did Pacific do so during the test. See
Huston/Lawson Joint Reply Aff. ¶ 39. Instead, if Pacific discovers a service-affecting error after
the SOC has been returned – for example, if a requested feature was not provided due to a
manual error – Pacific will notify the CLEC of the error. See Accessible Letter CLECC01-205
(June 15, 2001). Rather than requiring the CLEC to issue another LSR or ASR, Pacific will
obtain oral and written authorization from the CLEC and, only then, issue the service order
necessary to correct the error. See id. The third-party reviewers verified that this procedure is in
place, thus leading it to conclude that Pacific “has adequately addressed this recommendation.”
Verification Report at 54.40
WorldCom claims that CLECs cannot rely on the SOC to determine when to begin billing
an end user and contends that Pacific must provide billing completion notices, which would
inform CLECs of when Pacific’s billing systems are updated to reflect that an end user is now
served by the CLEC. See WorldCom at 73. As WorldCom concedes, Pacific has agreed to
provide these notices beginning in 2002. See id. In any event, an end user becomes
40 At the time of the OSS test, however, Pacific required only oral authorization before it wouldissue the necessary service order; this explains the third-party reviewers’ recommendation thatPacific obtain both oral and written authorization before issuing the necessary service order. SeeVerification Report at 12.
44
WorldCom’s customer once Pacific has completed the necessary provisioning. Therefore, the
date on the SOC provides WorldCom, and other CLECs, with the appropriate date to begin
billing the end user. See Huston/Lawson Joint Reply Aff. ¶ 101.
Maintenance and Repair. Pacific demonstrated in its Draft Application that CLECs are
able to use its maintenance and repair OSS to diagnose and process customer trouble complaints
with the same speed and accuracy as Pacific’s retail operations. See Draft FCC Br. at 46-47.
Pacific’s maintenance and repair performance has continued to be excellent. For example, in the
past three months, Pacific has provided parity or better service in resolving CLEC POTS outages
– including resale and UNE-P lines. See Johnson Reply Aff. Attach. F (PM 22). Pacific’s
maintenance and repair interfaces have likewise been available to CLECs 100 percent of the time
in all but one of the past 12 months. See id. (PM 42).41
As of June 16, 2001, Pacific enhanced its Toolbar Trouble Administration (“TBTA”)
interface to permit CLECs to open a trouble ticket electronically on the service due date, before
the service orders have posted to the maintenance and repair database, LMOS.42 This is the same
enhancement that SWBT made to its TBTA – at the insistence of AT&T and WorldCom –
during the course of its Texas 271 Application. See Texas Order, 15 FCC Rcd at 18458, ¶ 204 &
n.568. Now, however, AT&T claims this capability is “disturbing” because a CLEC can enter a
41 Pacific’s PBSM interface was available 99.81 percent of the time in May 2001. See JohnsonReply Aff. Attach. F (PM 42).
42 See Huston/Lawson Joint Reply Aff. ¶ 97. As Pacific explained in its Draft Application,PBSM also allows CLECs to open a trouble report electronically on the service due date. SeeHuston/Lawson Joint Aff. ¶ 193. Thus, there is no basis to WorldCom’s claim that “CLECscannot submit electronic trouble tickets to Pacific until their orders have posted to Pacific’sdownstream billing system.” WorldCom’s Lichtenberg Decl. at 35.
45
trouble report on another carrier’s line. AT&T’s Van de Water Decl. ¶ 77. Yet AT&T has long
known that this functionality was added to TBTA by permitting a CLEC to open a trouble report
on a line that is not in the CLEC’s user profile; AT&T should not be heard now to complain
about the effects of a system enhancement that it insisted must be implemented. See Texas
Order, 15 FCC Rcd at 18458, ¶ 204 n.568 (citing SWBT Accessible Letter, CLECSS00-018
(Feb. 18, 2000)).43 Moreover, it is CLECs’ responsibility to ensure they submit trouble reports
on their own lines. See Huston/Lawson Joint Reply Aff. ¶¶ 98-99.
AT&T and WorldCom also assert that there are errors in the UNE-P records in Pacific’s
LMOS database, which affect the access Pacific provides to its maintenance and repair OSS.
See AT&T at 65-69; AT&T’s Willard Decl. ¶¶ 129-154; AT&T’s Van de Water Decl. ¶¶ 74-78;
WorldCom’s Lichtenberg Decl. at 35-42.44 As Pacific explained in its Draft Application, LMOS
is a back-end system that is used in processing trouble reports on, among other things, UNE-P
lines. See Motta Aff. ¶ 44; Motta Reply Aff. ¶ 4. In response to the claims raised by AT&T,
Pacific engaged Ernst & Young to review the way in which records in its LMOS database are
updated. See Motta Reply Aff. ¶¶ 3, 5-8.45 Ernst & Young, conducting its review under the
43 For the same reason, WorldCom strains credulity with its claim to be confused by the messagereceived when taking advantage of this capability. See WorldCom’s Lichtenberg Decl. at 40.
44 As WorldCom admits, the concerns it raises about LMOS in California are wholly speculative.See WorldCom’s Lichtenberg Decl. at 40-42. The FCC has repeatedly held that such speculationis an insufficient basis to reject a BOC’s section 271 application. See, e.g., Kansas/OklahomaOrder ¶¶ 117, 151; New York Order, 15 FCC Rcd at 4044, ¶ 174 n.550, 4106-07, ¶ 295.
45 In recent months, Pacific has taken steps to enhance the reliability of the UNE-P informationin LMOS. See Motta Reply Aff. ¶ 8 & n.4. Pacific recently invited AT&T to perform areconciliation of recent maintenance and repair data to confirm the reliability of the UNE-P datain LMOS following these enhancements; AT&T declined. See Motta Reply Aff. ¶ 11.
46
same attestation standard that the FCC has previously found to provide persuasive evidence,
determined that Pacific’s OSS are designed so that service orders on UNE-P conversions
correctly update LMOS. See Motta Reply Aff. ¶ 9 & Attach. A; Kansas/Oklahoma Order
¶¶ 107-108.46
Indeed, Ernst and Young validated that, in August 2001, more than 99.2 percent of the
UNE-P lines billed in Pacific’s CABS billing system were correctly shown as working lines in
LMOS – meaning that CLECs could open electronic trouble reports on these lines – and that the
few records that were incorrectly in disconnected status in LMOS were updated at that time. See
Motta Reply Aff. ¶¶ 8-9 & Attach. A. In sum, this evidence demonstrates that the sequencing
problems that previously existed in SWBT’s LMOS database did not – and do not – affect
Pacific’s LMOS database. Id. ¶ 11.47
Billing. WorldCom is the only commenter to challenge Pacific’s performance in
providing timely and accurate bills to CLECs. See WorldCom at 62-63. In fact, Pacific’s
performance has been excellent. See Flynn Reply Aff. ¶ 4; Johnson Reply Aff. ¶¶ 27-32. Pacific
has met the standard for timeliness of usage data for resale lines in each of the past six months
46 Although AT&T asserts that records in LMOS are not updated within 24 to 48 hours, seeAT&T’s Willard Decl. ¶¶ 144, 149, 154, during the OSS test the Test Generator confirmed thataccounts were updated for trouble reporting purposes within 12 to 48 hours, see Motta ReplyAff. ¶ 10.
47 In any event, as demonstrated in SWBT’s recent filing before the FCC, the problems raisedwith respect to its LMOS database are a thing of the past. See Brief in Support of the JointApplication by Southwestern Bell for Provision of In-Region, InterLATA Services in Arkansasand Missouri, CC Docket No. 01-194 (FCC filed Aug. 20, 2001); Ernst & Young LLP, Report ofIndependent Accountants (Aug. 14, 2001) (included as Attachment A to the Affidavit of MichaelKelly, CC Docket No. 01-194 (FCC filed Aug. 20, 2001)); Joint Affidavit of Daniel J. Coleman,William R. Dysart, and David R. Smith, CC Docket No. 01-194 (FCC filed Aug. 20, 2001).
47
and for meet point billing in four of the past six months, including each of the past three months.
See Johnson Reply Aff. ¶ 28 & Attach. F (PM 28). For usage data for unbundled elements,
Pacific provided CLECs with better than parity service in each of the past two months, and was
out of parity by no more than 0.14 days during the four preceding months, which is clearly not a
competitively significant difference. See id.; see also Massachusetts Order ¶ 98. Pacific has
provided 100 percent of wholesale bills on time in each of the past six months. See Johnson
Reply Aff. Attach. F (PM 30). In the past three months, Pacific has consistently met the standard
for completeness of usage, recurring, and non-recurring charge data. See id. ¶¶ 29-30 & Attach.
F (PMs 31-33). The same is true for billing accuracy. See id. ¶ 31 & Attach. F (PM 34). In
sum, there is no basis to WorldCom’s claims and no question that Pacific’s performance
provides CLECs “a meaningful opportunity to compete.” Connecticut Order App. D, ¶ 40; see
also Flynn Reply Aff. ¶¶ 5-18.
Change Management. Pacific demonstrated in its Draft Application that it currently
employs the SBC 13-state change management plan (“CMP”) in California, which is based on
the same CMP that the FCC has twice reviewed and approved. See Draft FCC Br. at 50-51. No
CLEC contends that this CMP does not satisfy the requirements of section 271.48
AT&T and WorldCom, however, claim that Pacific must provide test environments for
all of its interfaces, and for LEX in particular. See AT&T/WorldCom Joint Comments at 11;
WorldCom at 73-74.49 As the long-distance incumbents acknowledge, Pacific and the CLECs
48 AT&T, however, states that SWBT “appears” to have violated the CMP with respect to arecent accessible letter. AT&T’s Willard Decl. ¶¶ 115-119. As AT&T acknowledges, thissupposed problem “does not affect the Pacific territory.” Id. ¶ 119.
49 AT&T also claims that SWBT precludes CLECs from testing whether the OSS will rejectorders that are in violation of the business rules. See AT&T at 60-61; AT&T’s Willard Decl.
48
have agreed to provide a separate, “production” testing environment for LEX. See WorldCom at
74; Huston/Lawson Joint Reply Aff. ¶¶ 108-109; Verification Report at 57. Pacific already
provides “release” testing environments for all new releases, including for LEX, although
CLECs have expressed little interest thus far in using the environment. See Huston/Lawson
Joint Aff. ¶¶ 234, 242; Huston/Lawson Joint Reply Aff. ¶¶ 107-108.50
D. Checklist Item 4: Unbundled Loops
Hot cuts. Pacific’s Draft Application demonstrated that Pacific provides non-
discriminatory access to hot cut loops in accordance with the standards established by this
Commission. Specifically, Pacific demonstrated that it had exceeded the relevant standard – in
most cases, by substantial amounts – on every reportable coordinated cut sub-measure for each
of twelve months prior to filing. See Johnson Aff. ¶ 137 & Attach. A (PMs 990400 (completion
of all cuts within one hour of the scheduled end-time) & 990500 (same for stand-alone LNP)).
AT&T nonetheless claims that Pacific’s hot-cut offerings are deficient. Resorting to
unsubstantiated claims regarding the frame due time (“FDT”) conversion process, AT&T alleges
that it unfairly has been forced to rely on the more costly coordinated conversion process.
¶¶ 155-158. Not only does AT&T never allege that Pacific does this, it is also untrue: CLECsare permitted to test whether orders with errors will be rejected pursuant to the business rules.See Huston/Lawson Joint Reply Aff. ¶¶ 111-112. In addition, AT&T’s complaint that Pacific’stest environment is “static” is misplaced. See AT&T’s Willard Decl. ¶¶ 159-160. As the FCChas found, a test environment like Pacific’s satisfies the requirements of section 271. See TexasOrder, 15 FCC Rcd at 18421-22, ¶ 138; Huston/Lawson Joint Reply Aff. ¶ 113.
50 Although AT&T claims that Pacific’s training offerings are deficient, see AT&T at 59-60;AT&T’s Willard Decl. ¶¶ 57-64, the third-party reviewers who attended Pacific’s trainingclasses “found them adequate to perform the functions learned in class” and that they were “ableto train others based on their classroom experience and documents provided.” Pacific Bell OSSTest Final Report Questions – Version 2.3, at 238 (Reference Number 441).
49
AT&T’s Van de Water Decl. ¶¶ 25-27. But the FCC rejected this same argument in the Texas
271 proceedings, pointing out that SWBT (like Pacific) has no obligation to offer a non-
coordinated process at all. See Texas Order, 15 FCC Rcd at 18492, ¶ 271. Moreover, California
CLECs continue to select the FDT process for thousands of orders each month, a fact that by
itself demonstrates Pacific’s ability to perform reliable conversions at significant commercial
volumes. See Motta Reply Aff. ¶ 20. So long as Pacific can demonstrate that its TBCC
performance is adequate and that CLECs can freely choose between the FDT and TBCC
processes – and Pacific has made that showing – Pacific provides nondiscriminatory access to
hot cut loops. See Texas Order, 15 FCC Rcd at 18487, ¶ 261.
In addition, Pacific continues to devote considerable resources toward improving its FDT
performance, and Pacific’s record has improved substantially since it began collecting FDT-
specific data. See Motta Reply Aff. ¶ 18 & n.13. Pacific has also implemented a statewide
training program aimed at enhancing FDT proficiency, and Pacific now monitors FDT
performance on a daily basis. See id. ¶ 18.
Since 1998, Pacific has also performed a pre-installation check for dial tone and for
Automatic Number Identifier (“ANI”) on FDT orders. Id. ¶ 21. Because there are no industry
guidelines for when CLECs should build their translations, and because CLECs routinely fail to
perform the necessary switch translation in advance, Pacific expends a tremendous amount of
time and resources to validate that the CLECs are ready for conversions. Pacific continues to
work towards finding a pragmatic solution to this problem, conducting various trials in order to
determine the most effective time and manner for transmitting jeopardy notifications to CLECs.
See id. ¶¶ 21-23. But Pacific cannot do its job and the CLECs’ as well – the simple fact is that
50
the CLECs must take more responsibility for ensuring that their translations and wiring are
complete in time for the conversion.
AT&T also alleges that, in some cases, Pacific has willfully put CLEC customers out of
service. AT&T’s Van de Water Decl. ¶ 42 n.20. That claim is baseless. Unless a CLEC
specifically requests that Pacific stop work on an FDT order, Pacific currently is obligated to go
ahead with the scheduled conversion. Motta Reply Aff. ¶ 23. AT&T simply wants to blame
Pacific for work that CLECs have the responsibility to perform.
Nor is there any merit to AT&T’s complaint about receiving so-called “blind” FOCs.
AT&T’s Van de Water Decl. ¶ 53. In California, as in other states, AT&T and other CLECs
have pressed to receive FOCs in a minimal time frame. In order to meet that demand, Pacific has
committed to compressed intervals that are comparable to retail, and that – again, comparable to
retail – do not permit it to check to determine whether the required facilities are actually
available. Pacific’s processes are accordingly nondiscriminatory. In any event, the nature of the
hot cut process itself minimizes the risk of a lack of facilities. By definition, the hot cut involves
the conversion of an existing, active loop from Pacific to a CLEC.
Performance. WorldCom and XO challenge Pacific’s performance in provisioning UNE
loops, alleging that Pacific “is still experiencing performance failures, especially for the most
basic of UNE Loop, the 2-wire 8 db loop.” E.g., WorldCom App. 2, at 13. But WorldCom has
simply ignored the fact – explained in detail in Pacific’s Draft Application – that the benchmark
adopted by this Commission for loop with LNP is incompatible with the standards governing
LNP generally, which necessarily include a longer provisioning interval. See Johnson Aff. ¶¶
113-114; Johnson Reply Aff. ¶¶ 36-37. Moreover, as to the individual CLECs that at first blush
appear to have received longer average installation intervals for basic UNE loops that Pacific
51
provided itself, that is the result of the inadvertent inclusion of “project” orders in Pacific’s
wholesale data. Once those orders are excluded – as they properly should be under this
Commission’s rulings – it is clear that Pacific has in fact provided parity service to the CLECs in
question. See Johnson Reply Aff. ¶ 39.51
Pacific’s performance installing the UNE-Platform has been equally impressive.
Although Pacific experienced some very minor glitches with this product this year, its
provisioning performance has steadily improved as CLECs have ramped-up their use of this
vehicle, and it is now easily sufficient to provide CLECs a meaningful opportunity to compete.
See Johnson Reply Aff. ¶¶ 42-43.
Pacific’s maintenance and repair service has also been excellent. On a statewide level,
Pacific has bettered the parity standard for PM 21 (Average Time to Restore) for at least two of
the past three months for 8 db and 5 db UNE loops. Id. Attach. F (PMs 2195100, 2195200, and
2195300). For the UNE-Platform, a service which WorldCom describes as “extremely important
to . . . CLECs seeking to provide residential service to consumers in California,” WorldCom
App. 2, at 14, Pacific has met or exceeded the parity standard for PM 23 (% Repeat Reports)
during each of the past four months. Id. Attach. F; see also id. ¶ 58. The facts simply do not
support WorldCom’s claims.
51 It is important to note that WorldCom’s and XO’s focus on isolated, minor performancedisparities is largely beside the point. The FCC explicitly requires a CLEC to “indicate[] orotherwise submit[] evidence that [Pacific’s] performance has resulted in lost business.”Kansas/Oklahoma Order ¶ 189. WorldCom and XO wholly fail to make such a showing.Moreover, as the reply affidavit of Gwen Johnson makes clear, Pacific’s performance withrespect to UNE loops – viewed in the aggregate – is fully sufficient to provide CLECs ameaningful opportunity to compete. See Johnson Reply Aff. ¶¶ 37-45 & Attach. F.
52
XO’s allegations regarding Pacific’s DS1 loop provisioning and maintenance and repair
services fare no better. XO complains that Pacific frequently provides parity performance at any
aggregate level, but fails to meet the parity standard individually for XO. See XO at 26-30. Yet
the FCC has long recognized that isolated, anecdotal evidence from a single carrier cannot
undercut an empirical demonstration of nondiscriminatory performance. See, e.g., Texas Order ¶
50. Pacific’s comprehensive performance data demonstrate that Pacific provides
nondiscriminatory access to DS1 loops.
Indeed, this case shows the wisdom of the FCC’s decision to eschew reliance on isolated,
anecdotal evidence from a single carrier in the face of a comprehensive showing of
nondiscriminatory performance. Notwithstanding XO’s claims to the contrary, as the reply
affidavit of Richard Motta explains, Pacific’s performance in provisioning DS1 loops and related
services to XO has been outstanding. See Motta Reply Aff. ¶ 28. Moreover, Pacific has put in
place processes to continue – and even to improve upon – this performance. Id.
XO also alleges that Pacific routinely fails to repair DS1 loops within the committed time
period. XO at 4. The numbers tell a different story. As the reply affidavit of Gwen Johnson
explains, when measured by the CPUC-approved methodology for assessing parity – rather than
by XO’s contrived approach – Pacific’s maintenance performance for XO met parity for every
month from February through May 2001. See Johnson Reply Aff. ¶ 59 (discussing PM 20).
Equally unsubstantiated is XO’s allegation that Pacific closes trouble tickets prematurely so that
it appears as though it has completed maintenance work in a more timely fashion. XO at 10-11.
Indeed, notwithstanding weekly service calls to coordinate operations, XO has failed to provide
Pacific with even a single example of a prematurely closed trouble ticket. Motta Aff. ¶ 27.
53
In contrast to other CLECs’ efforts to fabricate systemic performance problems where
none exist, one CLEC appropriately applauds Pacific’s outstanding performance in processing
and provisioning high-capacity loops. As Mpower explains, “since July 2000, Pacific Bell has
delivered over 95% of all DS-0 loops on time and without trouble.” Mpower at 2. “Mpower has
provisioned over 90,000 DS-0 loops with Pacific Bell in the three years it has operated in Pacific
Bell’s territory.” Id. at 2. “As a consequence of Pacific Bell’s superior provisioning
performance, as compared with the other ILECs with whom Mpower does business, it is
Mpower’s experience that Pacific Bell has met its burden under the statute to provide a
competitive environment for CLECs under the Act.” Id. at 2.
xDSL-capable and Line-Shared Loops. Pacific’s Draft Application demonstrated that
Pacific’s performance in meeting California CLECs’ unprecedented demand for xDSL and line-
shared loops is outstanding, and well in excess of the FCC’s stated requirements. See Draft FCC
Br. at 55-65. Unable to take issue with that conclusion,52 commenters instead allege that
Pacific’s offerings themselves are non-compliant. These claims – which are generally predicated
on purported legal requirements that do not in fact exist – are false.
Thus, for example, AT&T alleges that Pacific has failed to satisfy its so-called
“obligation” to develop a single-order process for line-splitting. AT&T at 80-81. But AT&T’s
suggestion that the FCC has actually adopted this as a requirement is simply wrong. In fact, in
the Line Sharing Reconsideration Order, the FCC did nothing more than “encourage incumbent
LECs and competing carriers to use existing state collaboratives and change management
52 Only ORA takes issue with Pacific’s actual performance on this score; its claims are withoutmerit. See Johnson Reply Aff. ¶¶ 48-50.
54
processes to address . . . developing a single-order process for” line-splitting. Third Report and
Order on Reconsideration in CC Docket No. 98-147, Fourth Report and Order on
Reconsideration in CC Docket No. 96-98, Third Further Notice of Proposed Rulemaking in CC
Docket No. 98-147, Sixth Further Notice of Proposed Rulemaking in CC Docket No. 96-98,
Deployment of Wireline Services Offering Advanced Telecommunications Capability, 16 FCC
Rcd 2101, 2111-12, ¶ 21 (2001) (“Line Sharing Reconsideration Order”) (footnote omitted).
Pacific has done exactly that. See Chapman Aff. ¶ 99.53
Equally disingenuous is AT&T’s renewed suggestion that Pacific is obliged to allow
CLECs to line share over fiber in a digital loop carrier (“DLC”) environment. AT&T at 83.
Pacific allows CLECs to provide data service to Pacific voice customers served via DLC because
it both unbundles the HFPL and provides access to the high frequency portion of the copper
distribution facilities. The obligations set forth in the Line Sharing Reconsideration Order
extend no further. Indeed, as the FCC made clear in that Order, “the high frequency portion of
the loop network element . . . is only available on a copper loop facility.” Line Sharing
Reconsideration Order, 16 FCC Rcd at 2107, ¶ 10. This Commission has held the same. See
Final Arbitrator’s Report at 14-15, R.93-04-003, I.93-04-002 (Cal. Pub. Utils. Comm’n May 26,
2000), aff’d, Interim Opinion, D.00-09-074 (Cal. Pub. Utils. Comm’n Sept. 21, 2000). AT&T’s
assertion that Pacific has some obligation to provide line sharing over the fiber portion of fiber-
fed loops is therefore incoherent. See generally Chapman Reply Aff. ¶¶ 11-19.
53 XO’s allegation that Pacific has not allowed it to obtain loop conditioning at the CPUC-approved rates is difficult to fathom. XO at 20-22. Pacific sent XO the requested pricingamendment on August 24, 2001. Hopfinger Reply Aff. ¶ 18 n.7. And in any case, XO itself hasapparently decided it does not want those rates after all, as it has submitted a Rule 7 request toMFN into yet another set of loop conditioning rates. Id.
55
The fact that carriers cannot strictly “line share” once the signal moves from copper to
fiber facilities in no way eviscerates a CLECs’ ability to access the high frequency portion of a
loop served by DLC, which is all that the Line Sharing Reconsideration Order requires. A CLEC
can access the HFPL in one of two ways. First, to the extent that home run copper facilities are
available to that customer address, the CLEC can access the HFPL at the central office once
Pacific moves the end user to a home run copper loop. See Line Sharing Reconsideration Order,
16 FCC Rcd at 2109, ¶ 13 (“competitive LECs have the flexibility to engage in line sharing
using [digital subscriber line access multiplexer (“DSLAM”)] facilities that they have already
deployed in central offices”).
Alternatively, the CLEC can access the HFPL before the copper feeder enters the DLC
equipment – typically at the serving area interface or fiber distribution interface – splitting the
voice from the data component before the signals move onto fiber facilities. So long as the
CLEC locates a DSLAM at or near the remote terminal, it can utilize available dark fiber or fiber
feeder subloops to transmit the data signal through the central office and onto the packet
switched network. See Chapman Reply Aff. ¶ 13. The Line Sharing Reconsideration Order
simply made clear that CLECs can access “fiber feeder subloops for line sharing” or for any
other purpose. 16 FCC Rcd at 2107, ¶ 10; see also id. ¶ 12 (“We clarify that where a competitive
LEC has collocated a DSLAM at the remote terminal, an incumbent LEC must enable the
competitive LEC to transmit its data traffic from the remote terminal to the central office.”);
Chapman Reply Aff. Attach. C (letter from John Rogovin, Deputy General Counsel, FCC, to
Congressman W.J. Tauzin, explaining extent of existing line sharing obligations).
Nor can there be any tenable suggestion that Pacific is required to provide on an
unbundled basis the Broadband Service Offering that it offers as part of its Project Pronto
56
deployment. See, e.g., AT&T’s Finney Decl. at 15; ORA at 19-20. That service offering
includes packet-switching. The Line Sharing Reconsideration Order does not require, and
Pacific has no correlative obligation to provide, unbundled access to the packet switching
functionality. As the Commission explained in its Clarification Order,54 “the Line Sharing
Reconsideration Order in no way modified the criteria set forth in the Commission’s UNE
Remand Order regarding the unbundling of packet switching functionality.” Clarification Order
¶ 1. In the UNE Remand Order,55 the Commission made clear that an incumbent must unbundle
packet switching only in the limited circumstances when “a requesting carrier is unable to install
its DSLAM at the remote terminal or obtain spare copper loops.” 15 FCC Rcd at 3839, ¶ 313.
Thus, as Pacific has already explained in detail, so long as Pacific provides one or both of these
alternatives – and it does, as AT&T appears to concede56 – it need not offer packet switching.
See Pacific’s Reply Br. in Support of Third Supp. Compliance Filing at 14-21.
E. Checklist Item 5: Unbundled Local Transport
Z-Tel claims that Pacific improperly refuses to permit CLECs to use the shared transport
UNE to provide intraLATA toll service. Z-Tel at 8-12. Aside from there being no FCC or
federal statutory requirement that an incumbent permit UNEs to be used to provide an
54 Clarification Order, Deployment of Wireline Services Offering AdvancedTelecommunications Capability, CC Docket Nos. 98-147 & 96-98, DA 01-480 (FCC rel. Feb.23, 2001).
55 Third Report and Order and Fourth Further Notice of Proposed Rulemaking, Implementationof the Local Competition Provisions of the Telecommunications Act of 1996, 15 FCC Rcd 3696(1999) (“UNE Remand Order”).
56 AT&T at 84-85 (Pacific “permit[s] a CLEC to collocate a DSLAM at the remote terminal and. . . unbundle[s] access to sub-loops to allow the CLEC to access the copper wire portion of theloop”).
57
interexchange service,57 Z-Tel’s complaint is moot: This Commission has already addressed the
issue Z-Tel raises, and Pacific has committed in AT&T’s interconnection agreement to permit
the use of shared transport to route intraLATA toll traffic where AT&T purchases unbundled
switching and customized routing Option C. See Hopfinger Reply Aff. ¶ 25-26. That course is
also available to Z-Tel pursuant to 47 U.S.C. § 252(i).
F. Checklist Item 6: Unbundled Local Switching
WorldCom claims that Pacific’s customized routing offering is flawed because Pacific is
as yet unable to route traffic over WorldCom’s Feature Group D trunks to WorldCom’s OS/DA
platform, which WorldCom requested in 1997. WorldCom at 106-18. Because that issue is
currently in arbitration, see Deere Reply Aff. ¶ 19, it should be decided in that forum, rather than
in this proceeding. Cf. AT&T, 220 F.3d at 630 (affirming FCC’s view that section 271
proceedings are not “forums for the mandatory resolution of . . . issues already pending” in other
dockets) (internal quotation marks omitted).
In any case, WorldCom’s own witness recently testified that WorldCom and Nortel still
have not yet discovered a solution to make routing over such trunks technically feasible for OS
traffic routed via Nortel switches. See Deere Reply Aff. ¶ 20 (“‘We have been working on
coming up with a proposed solution from Nortel although we don’t have one at this point in
time.’”) (quoting WorldCom’s witness). And, although WorldCom’s witness stated that it had
57 To the contrary, the UNE Remand Order expressly concluded that unbundling of sharedtransport was justified only in order to promote competition in the “local market” – not theinterexchange or long-distance market. UNE Remand Order, 15 FCC Rcd at 3865, ¶ 379.Moreover, the FCC defined the shared transport UNE by reference to unbundled switching, id. at3862, ¶ 369, which it similarly defined as “local circuit switching” – not interexchange or longdistance switching. Id. at 3863, ¶ 272.
58
presented Pacific a solution for DA traffic via Nortel switches earlier this year, he admitted that
it would require a change to each Pacific Nortel switch used to route such traffic. Id. ¶¶ 20-21.
Pacific and WorldCom are setting up a field trial to test the ordering, provisioning, and billing
functions of WorldCom’s requested routing scheme, which Pacific is willing to do at a
reasonable cost. Id. ¶ 21. Yet WorldCom expects Pacific to absorb the entire cost of this work,
claiming that such costs may only be recovered via the standard nonrecurring charge for
provisioning switching. See WorldCom at 115-16. But making special translations to the switch
and establishment of entirely new operating and billing system modifications are beyond the
intended scope of those nonrecurring charges. Thus, WorldCom should bear the reasonable cost
of performing such specialized work. See Deere Reply Aff. ¶¶ 23-28.
G. Checklist Item 7: Nondiscriminatory Access to 911/E911 and OS/DA.
911. Both Z-Tel and WorldCom insinuate that Pacific should be exclusively responsible
for maintaining and updating all the 911 records for their customers free of charge. Nothing
under the Act or the FCC’s rules supports such an expansive view of Pacific’s responsibilities.
For instance, Z-Tel claims that it should not be charged for having Pacific perform any
record updates in the E911 database for its customers. Z-Tel at 12-13. Pacific has given Z-Tel
and other CLECs the option of performing their own error correction at no charge or having
Pacific Bell perform this function at the tariffed rate. Deere Reply Aff. ¶¶ 31-33. Z-Tel opted to
have Pacific perform these updates for a fee. Id. ¶ 33. Z-Tel’s claim that its chosen arrangement
is discriminatory is implausible.
Z-Tel also has not put forth evidence for its claims that most record updates occur due to
a preexisting error in Pacific’s database. Z-Tel at 12-13. Indeed, the only testing performed by
Z-Tel (in coordination with Pacific) showed that each of the ten errors from a sample collection
59
of records were due to incorrect address entries by Z-Tel personnel. Deere Reply Aff. ¶ 35. In
addition, Z-Tel’s complaint about Pacific’s practice of sending misroutes directly to Z-Tel is
misguided. Z-Tel at 13. Pacific has no obligation, under either federal or state law, to
investigate and clear misroutes for competing carriers. As explained in the affidavit of William
Deere, Pacific has provided Z-Tel the tools to investigate misroutes free of charge, but Z-Tel has
refused to avail itself of this option. Deere Reply Aff. ¶¶ 41-43.
For its part, WorldCom appears to believe that Pacific should be held responsible for
updating all of WorldCom’s customers’ 911 information, even when WorldCom provides
incomplete customer information. Specifically, WorldCom claims that, for all customer
migrations, it should be able to input only telephone information without having also to input
address information. See WorldCom at 120-22. But Pacific requires this address information
simply to ensure that the submitted customer information is correct and up-to-date. Deere Reply
Aff. ¶ 47. Moreover, as WorldCom itself acknowledges, Pacific plans to implement a system by
October 2001 that will update the E911 database using existing customer information. See
WorldCom at 123; Deere Reply Aff. ¶ 46. This new system should further reassure this
Commission of Pacific’s commitment to nondiscriminatory access to its E911 services.
AT&T claims that Pacific previously caused the omission of the addresses of certain
AT&T customers served through the UNE-Platform from the E911 database. AT&T’s Van de
Water Decl. ¶¶ 57-68. At the same time, AT&T concedes that Pacific has since fixed this
problem and that it is no longer experiencing incomplete 911 entries. Id. ¶¶ 57, 65-66. AT&T
further insists that Pacific be required to provide an explanation of the problem, but Pacific has
done precisely that. Deere Reply Aff. ¶¶ 48-62. As Pacific has explained, AT&T’s backlog of
errors accumulated because AT&T incorrectly indicated in its CLEC profile field that it would
60
handle its own error correction. See id. ¶¶ 50-51. As soon as Pacific noticed that AT&T’s
profile field was incorrect, it fixed the backlog of errors and began performing daily error
corrections. Id. ¶ 49.
OS/DA. WorldCom alleges that Pacific does not comply with its obligation to provide
customized routing, and claims that, as a result, Pacific should be required to provide OS/DA at
UNE prices. WorldCom at 120; WorldCom’s Lehmkuhl Decl. at 13. But Pacific’s provision of
customized routing as part of the local switching element satisfies Checklist Item 6. See Rogers
Reply Aff. ¶ 6 (explaining that CLECs using Pacific’s resale services or unbundled local
switching can route their customers’ OS/DA calls to their own platform, or to the platform of a
third party, in the same manner Pacific routes its own calls). Therefore, Pacific does not have to
provide OS/DA as a UNE. See Texas Order, 15 FCC Rcd at 18527, ¶ 348 (“the Commission has
removed directory assistance and operator services from the list of required unbundled network
elements”); UNE Remand Order, 15 FCC Rcd at 3891-92, ¶¶ 441-442 (holding that where
incumbent carriers provide customized routing or a compatible signaling protocol, they need not
provide access to OS/DA as UNEs).
WorldCom also claims that Pacific’s DA prices for long distance carriers are less
expensive than those charged to CLECs. WorldCom’s Lehmkuhl Decl. at 4. Pacific’s DA prices
for long distance carriers are lower than the market-based prices offered to CLECs simply
because the federal access charge is under federal price caps. Rogers Reply Aff. ¶ 9. WorldCom
is wrong, however, in stating that Pacific charges CLECs more for local calls than it charges
retail customers under its tariff. WorldCom’s Lehmkuhl Decl. at 4. To the contrary, Pacific
61
offers CLECs a wholesale market-based price for DA that is much lower than what it offers at
retail. Rogers Reply Aff. ¶¶ 9-10.58
H. Checklist Item 10: Nondiscriminatory Access to Signaling and Call RelatedDatabases.
Again rehashing an argument that has been fully addressed previously, WorldCom
contends that Pacific should be required to provide access to its CNAM and LIDB database on a
bulk basis, rather than a per query basis. WorldCom at 124-130. But WorldCom does not
dispute that Pacific is only legally obligated to provide CLECs the same kind of access to its
CNAM and LIDB databases that it provides itself. And WorldCom concedes that Pacific
operators may only use these databases on a per query basis. Id. at 126. Thus, regardless of
WorldCom’s claims regarding the capacity of Pacific operators to manipulate data, Pacific has
satisfied its legal obligation in this respect. See Deere Reply Aff. ¶¶ 75-82. Moreover, Pacific
has offered WorldCom the ability to administer its data through direct, unbundled electronic
interfaces that would give it the same data administering capabilities as Pacific. Id. ¶ 75.
WorldCom’s additional argument – that Pacific should be required to provide WorldCom
with “batch” or “bulk” access to these databases, so long as it technically feasible to do so – does
not hold water. See id. ¶¶ 65-73. As the FCC has repeatedly held, Pacific’s obligation is to
provide “nondiscriminatory” access to these databases, not – as WorldCom appears to believe –
the most technologically advanced or most direct access. See Local Competition Order, 11 FCC
Rcd 15742, ¶ 485 (“We, therefore, emphasize that access to call-related databases must be
58 PacWest and XO raise additional complaints with respect to this Checklist Item; these claimsare insubstantial. See Deere Reply Aff. ¶¶ 63-64; Rogers Reply Aff. ¶¶ 13-14; Hopfinger ReplyAff. ¶ 30.
62
provided through interconnection at the STP and that we do not require direct access to call-
related databases.”); see also Texas Order, 15 FCC Rcd at 18523, ¶ 341 (finding that SWBT was
not obliged to provide all technically feasible methods of routing, but only the kind of routing
SWBT itself uses).
I. Checklist Item 11: Local Number Portability
Cox/CCTA allege that Pacific’s LNP process flows hinder CLECs’ ability to perform
cut-overs when the CLEC’s customer cancels or fails to show-up for an installation appointment.
Cox/CCTA at 4. Without specific examples to assist Pacific in precisely determining the nature
of the allegation, however, Pacific can only note that its process flows are fully consistent with
industry standards. See Mondon LNP Reply Aff. ¶ 5. Those standards require that the CLEC
create an activation request before porting. Id. ¶ 6. If the CLEC must postpone the due date –
for any reason, including a customer’s cancellation – it is up to the CLEC to inform Pacific in a
timely manner that it requires a new due date. Id. Where the CLEC fails to do so, the customer
may lose dial tone, but Pacific can hardly be faulted for that failure.
Failing to grasp this point, AT&T suggests that, in this situation, a high number of its
customers experience a loss in dial tone, and it seeks to blame this problem on Pacific. AT&T at
95. In fact, Pacific’s performance in limiting service outages is outstanding: from May through
July 2001, only a tiny fraction – far fewer than the 1% benchmark – of AT&T’s LNP orders
experienced trouble. See Mondon LNP Reply Aff. ¶ 17. And in any case, Pacific’s process
flows are fully consistent with industry standards, which require timely notification from a
CLEC; if AT&T cannot hold up its end of the bargain, it should review its own internal
processes, or press its case to have the standards changed. See Mondon LNP Reply Aff. ¶¶ 10-
13.
63
Notwithstanding the fact that Pacific’s processes fully satisfy industry standards, Pacific
is working with AT&T to develop a mechanized enhancement that would avert those few
instances where customers lose dial tone due to last minute cancellations and reschedules. But
AT&T’s bare assertion – offered with no explanation or support – that its preferred enhancement
is “relatively simple and could be completed in 3 to 6 months,” AT&T’s DeYoung/Grant/
Protherone Decl. ¶ 43, is simply wrong. Moreover, it is important to emphasize that – contrary
to AT&T’s apparent suggestion – Pacific’s willingness to explore this enhancement in no way
undermines the adequacy of its showing under Checklist Item 11. Pacific satisfies Checklist
Item 11 today. See Mondon LNP Reply Aff. ¶ 3. Its willingness to work with CLECs to make
its already-compliant systems more receptive to their needs speaks only to Pacific’s commitment
to ensure open local markets in California.
J. Checklist Item 14: Resale
1. Performance.
WorldCom generally complains about the quality of Pacific’s resale products and about
the timeliness of provisioning. But rather than look to Pacific’s overall performance record,
WorldCom focuses on isolated instances where the parity standard was not achieved. So, for
example, WorldCom asserts that resale services are not provisioned on time based on
performance misses in Measure 7 (Average Completed Interval) for “no field work orders” for
Resale PBX, Resale Business POTS and Resale Centrex. See WorldCom App. 2, at 17. But the
miss for Resale PBX occurred in only one month – April 2001 – in one region – Bay – and
involved only a handful of orders. See Johnson Reply Aff. ¶ 62. Regarding the submeasure
associated with Resale Business POTS, the difference in time between Pacific’s provisioning
these services for CLECs and its provision of similar services for its own retail customers is
64
competitively insignificant. Id. None of these misses reflects a significant issue with the
timeliness of provisioning resale services.
WorldCom also complains about the quality of the resale services that it obtains from
Pacific, citing failures to meet parity for Measure 15 (Provisioning Troubles) for MCImetro in
February and April. WorldCom App. 2, at 18. While it is true that Pacific failed to satisfy the
parity standard for this measure for resale services in these months, the small number of orders
for MCImetro (for both of these submeasures) meant that Pacific’s performance would have had
to have been perfect in order to have met the parity standard. See Johnson Reply Aff. ¶ 63 &
n.72. Indeed, contrary to WorldCom’s allegations that Pacific provides “inferior [resale]
facilities,” WorldCom App. 2, at 19, Pacific’s provisioning quality for these services has been
close to perfect. For example, Pacific has provided parity service for resale (as assessed in
Measure 15) to CLECs in the aggregate in every month in 2001. See Johnson Reply Aff. ¶ 63.
WorldCom points out that Pacific failed to satisfy the parity standard in February and
April 2001 for resale business services under Measure 16 for CLECs in the aggregate. But as
Gwen Johnson explained in her opening affidavit, Pacific has taken steps to correct certain
isolated performance lapses. See Johnson Aff. ¶¶ 154-155. For CLECs in the aggregate,
Measure 16 performance results for May, June and July 2001 reflect the superior provisioning
quality provided for resale business services. Out of 42 submeasures, Pacific achieved parity in
39 of them, for an overall success rate of 93 percent. For resale business POTS, resale ISDN and
resale PBX, parity was achieved in every instance during this three-month period. Johnson
Reply Aff. ¶ 65.
Finally, WorldCom is simply wrong when it suggests that repeat trouble report rates are a
problem for the resale business POTS services that Pacific provides to MCImetro. See
65
WorldCom App. 2, at 18. Pacific’s repeat trouble report for WorldCom has been solid: contrary
to WorldCom’s mistaken analysis, during the months of January through July 2001, Pacific
missed only two out of 21 opportunities for WorldCom for resale POTS service performance for
Measure 23 (percent repeat trouble reports). See Johnson Reply Aff. ¶ 66. Since March,
moreover, Pacific has met parity for these services for WorldCom every month. Id.
2. Cross-Class Restrictions.
Both WorldCom and ASCENT complain that Pacific imposes an unreasonable restriction
on the resale of its services by insisting that services provided for resale be provided to end users
rather than resold to other carriers. See WorldCom at 131; ASCENT at 17. The CPUC currently
is addressing this specific issue in the MCI/Pacific Arbitration, Application A.01-01-010. In its
Final Arbitrator’s Report, the ALJ concluded that, while Pacific may not restrict the ability of a
carrier to resell services that it has purchased from Pacific at a wholesale discount, that carrier
may not attempt to evade cross-class limitations by reselling residential services to another
carrier that offers such services to business customers:
Section 251(c)(4)(B) is clear that a state commission may prohibit a reseller that obtainsat wholesale rates a telecommunications service that is available at retail only to aparticular category of subscribers from offering such service to a different category ofsubscribers. This Commission has made it clear that certain types of arbitrage will not betolerated, e.g., that residential access lines are not to be resold to business services (D.96-03-020 at 27). MCIm will be responsible for maintaining those restrictions for theservices it resells to other carriers. MCIm also has the obligation to insure that thecarriers or other non-end-user entities it sells to at wholesale are carriers certificated bythis Commission to provide local service.
Final Arbitrator’s Report at 27; see also Local Competition Order, 11 FCC Rcd at 15975, ¶ 962.
Pacific will, of course, comply with any final CPUC order that resolves this issue. But, for
present purposes – i.e., for purposes of section 271 – Pacific clearly has a current, concrete and
specific legal obligation to offer those telecommunications services that it provides at retail at a
66
wholesale discount to other carriers in compliance with the requirements of sections 251
and 252.
3. Advanced Services.
Pacific’s Draft Brief explained that in order to comply with the D.C. Circuit’s decision in
Association of Communications Enterprises v. FCC, 235 F.3d 662 (D.C. Cir. 2001) (“ASCENT
I”), Pacific’s advanced services affiliate, ASI, has entered into an interconnection agreement
pursuant to which DSL.net (and other CLECs that chose to opt-in to that agreement) can resell
ASI’s retail telecommunications services. Draft FCC Br. at 55-83; Habeeb Aff.59 A number of
commenters dispute the adequacy of the DSL.net agreement,60 but, in doing so, they fail to
appreciate not only the limited scope of ASI’s retail service offerings, but also the FCC
precedent that squarely establishes that the showing contained in the Draft Application is fully
sufficient to meet checklist requirements.
“The category of services subject to the provisions of section 251(c)(4) is determined . . .
by whether those services are telecommunication services that an incumbent LEC provides (1) at
retail and (2) to subscribers who are not telecommunications carriers.”61 In California today,
59 ASCENT I held that an incumbent LEC’s decision to offer telecommunications servicesthrough a wholly owned affiliate does not eliminate the obligation to comply with therequirements of section 251(c). 235 F.3d at 666-67. Under the terms of ASCENT I, ASI’s newobligations are not limited to resale under section 251(c)(4). Therefore, as explained in the DraftApplication, to the extent appropriate and applicable, ASI also provides for interconnection,unbundled network elements, and collocation pursuant to the requirements of section 251(c).
60 See ASCENT at 4-11; AT&T at 70-80; XO at 35-38; ORA at 13-20.
61 Second Report and Order, Deployment of Wireline Services Offering AdvancedTelecommunications Capability, 14 FCC Rcd 19237, 19242, ¶ 9 (1999) (“Second AdvancedServices Order”), aff’d, Association of Communications Enters. v. FCC, 253 F.3d 29 (D.C. Cir.2001) (“ASCENT II”).
67
ASI offers three forms of DSL-related services that fall into this category – grandfathered
residential DSL transport services, intrastate DSL transport service provided under ASI’s DSL
intrastate tariff, and customer service arrangements (“CSAs”) with business end users. And as
the reply affidavit of John Habeeb explains, Pacific makes available each of these categories of
service to CLECs at the wholesale discount required by section 251(c)(4). See Habeeb Reply
Aff. ¶¶ 3, 7.
A few commenters appear to suggest that, under the terms of the ASCENT I decision,
ASI is required to offer for resale not just its retail telecommunications services, but its
wholesale services as well. See, e.g., ASCENT at 8. That is untrue. The FCC’s rules clearly
state “advanced telecommunications services sold to [ISPs] as an input component to the [ISPs’]
retail Internet service offering shall not be considered to be telecommunications services offered
on a retail basis that incumbent LECs must make available for resale at wholesale rates.” 47
C.F.R. § 51.605(c). Thus, as AT&T explains, “DSL service . . . sold directly to ISPs” is
“generally outside the purview of Section 251(c)(4).” AT&T at 79.
AT&T nonetheless objects to the fact that, in an effort to remove any confusion
surrounding the wholesale nature of its DSL transport service, ASI has taken the limited step of
eliminating the so-called “split billing” option for ISPs. AT&T appears to contend that this step
negatively impacts ISPs, and should therefore count against Pacific’s checklist compliance.
AT&T at 77; see also ASCENT at 12. Coming from AT&T, this allegation is particularly
outrageous. This is the same AT&T that is, along with the other cable incumbents, among the
nation’s leading providers of broadband Internet access,62 and that has fought tooth-and-nail to
62 See, e.g., McKinsey & Co., Broadband 2001 Report (Apr. 2, 2001).
68
keep from providing ISPs with any access to the telecommunications component of its
broadband service.63 In light of AT&T’s efforts to prevent ISPs from having any access at all to
its dominant systems, its complaints regarding the manner in which Pacific does provide access
ring hollow.64
A few commenters also appear to suggest that Pacific is obliged to offer at a wholesale
discount the information services that its Internet affiliate, Pacific Bell Information Services
(“PBI”), provides at retail. E.g., ASCENT at 8-9; AT&T at 73. That suggestion is without
merit. The FCC has consistently found that “Internet access services are appropriately classed as
information, rather than telecommunications, services.” Report to Congress, Federal-State Joint
Board on Universal Service, 13 FCC Rcd 11501, 11536, ¶ 73 (1998) (“Report to Congress”); see
also, e.g., Second Advanced Services Order, 14 FCC Rcd at 19244, ¶ 14. Nor is it of any
significance that PBI purchases wholesale DSL transport from ASI. As AT&T explains, the
relevant question is whether Pacific, ASI, and PBI – when “viewed . . . together as one entity” –
provide a retail telecommunications service. AT&T at 74. And as the FCC has explained, even
where the telecommunications provider and the information service provider are the “same
entity,” the subscriber to the information service is receiving only an information service. Report
63 See, e.g., Comments of AT&T Corp., In the Matter of Inquiry Concerning High-Speed Accessto Internet Over Cable and Other Facilities, GN Docket No. 00-185 (FCC filed Dec. 1, 2000).
64 Likewise inapposite are CISPA’s claims regarding the quality of service ASI provides to itsISP customers. ISPs are not telecommunications carriers, so the services they receive from ASIare not governed by section 251 or section 271. See, e.g., AT&T at 79 (“DSL service . . . solddirectly to ISPs” is “generally outside the purview of Section 251(c)(4)”). Moreover, the 1996Act expressly forecloses any expansion of the section 271 “competitive checklist” beyond theitems listed in the statute. See 47 U.S.C. § 271(d)(4). CISPA’s claims – which in all eventsPacific is endeavoring to address – are simply beyond the scope of this proceeding. See HabeebReply Aff. ¶¶ 16-17.
69
to Congress, 13 FCC Rcd at 11534, ¶ 69 n.138. PBI’s high-speed DSL Internet access service is,
therefore, an information service, not a retail telecommunications service, and it is accordingly
not subject to resale at a wholesale discount under section 251(c)(4). See Connecticut Order ¶ 42
n.93 (rejecting argument that “Verizon should make its bundled offerings that include
deregulated CPE and internet access available for resale. The resale obligation clearly extends
only to telecommunications services offered at retail”) (emphasis added).
While the telecommunications component included in PBI’s information service offering
is not a retail offering, it is nonetheless important to note that it is subject to the FCC’s Computer
III requirements. See Memorandum Opinion and Order, and Notice of Proposed Rulemaking,
Deployment of Wireline Services Offering Advanced Telecommunications Capability, 13 FCC
Rcd 24011, 24031, ¶ 37 (1998) (“We note that BOCs offering information services to end users
of their advanced service offerings, such as xDSL, are under a continuing obligation to offer
competing ISPs nondiscriminatory access to the telecommunications services utilized by the
BOC information services.”). Thus, commenters’ suggestions that Pacific is somehow capable
of adversely impacting competition in the broadband Internet services market are simply wrong.
Moreover, those commenters ignore the fact that AT&T and the other cable incumbents control
the vast majority of that market, and – particularly in light of their unwillingness to permit any
unaffiliated ISPs to access their facilities – accordingly pose the real threat to competition. See
generally Chapman Reply Aff. ¶¶ 3-10 & Attach. B (discussing competition in the broadband
market).
Finally, AT&T and XO take issue with the precise terms that ASI has negotiated with
DSL.net. AT&T at 75-76; XO at 36 n.82. As the reply affidavit of John Habeeb notes, however,
AT&T has not sought to negotiate different terms with ASI. Habeeb Reply Aff. ¶ 9. As noted
70
above, see supra Part I.C.1, the 1996 Act sets out specific procedures pursuant to which
requesting carriers can negotiate and, if necessary, arbitrate interconnection agreement terms and
conditions. This Commission should reject AT&T’s and XO’s efforts to use the section 271
process to perform an end-run around those procedures.
In any event, the suggestion that the terms of the DSL.net agreement are inconsistent with
the 1996 Act is simply wrong. See Habeeb Reply Aff. ¶¶ 10-13. Thus, for example, AT&T
complains that ASI will not resell service over facilities that do not exist. AT&T at 76. But the
law is clear that Pacific’s resale obligation extends only so far as its existing facilities, and no
further. See, e.g., Local Competition Order, 11 FCC Rcd at 15934, ¶ 872 (“The 1996 Act does
not require an incumbent LEC to make a wholesale offering of any service that the incumbent
LEC does not offer to retail customers.”); see also, e.g., New York Order, 15 FCC Rcd at 4149-
51, ¶¶ 394-397 (rejecting various allegations that Bell Atlantic violated Checklist Item 14
because it refused to provide services for resale that “it does not offer . . . at retail to subscribers
who are not telecommunications carriers”). Likewise, AT&T’s challenges (at 76) to ASI’s
commitment to offer CSAs for resale to “similarly situated” customers founders on the FCC’s
approval of that precise phrasing. See Habeeb Reply Aff. ¶ 10; Second Louisiana Order, 13 FCC
Rcd at 20780, ¶ 313.65 Finally, AT&T’s complaint that ASI’s OSS are insufficient rests on a
misstatement of the applicable standard. Contrary to AT&T’s apparent suggestion, ASI is under
no obligation to establish that it handles CLEC orders in exactly the same fashion as it handles
orders for itself. Rather, ASI must enable CLECs to perform the requisite activities “in
65 AT&T’s also alleges that the termination liability provisions of the DSL.net agreement areunlawful, without pausing to note that the precise provisions have been approved by thisCommission. See Habeeb Reply Aff. ¶ 11.
71
substantially the same time and manner” as itself. E.g., Kansas/Oklahoma Order ¶ 104. It does
precisely that. See Habeeb Aff. ¶¶ 6-12.66
II. PACIFIC’S ENTRY INTO INTERLATA SERVICES IN CALIFORNIA WILLBENEFIT THE PUBLIC INTEREST.
Pacific’s Draft Brief demonstrated that Pacific’s entry into in-region, interLATA services
would serve as a catalyst for competition in long distance and local markets. Texas and New
York provide empirical proof of that fact: following Bell company entry in those states, the
incumbent IXCs responded with discounts on long distance at the same time as they finally
ramped-up their efforts to compete in the local market. See Draft FCC Br. at 84. A few
commenters dispute these facts. They do so, however, with misleading characterizations of
Southwestern Bell’s recent pricing actions in Texas, as well as flat misrepresentations of a recent
Texas PUC report on the state of competition there.
No one disputes that Southwestern Bell entered the long distance market in Texas with a
splash. With lower prices than the long-distance incumbents that have historically dominated the
market, SBC quickly signed up tens of thousands of customers – particularly residential and
small business customers that have been historically underserved by the incumbents.67 By the
end of 2000, SBC had 1.7 million long-distance lines in Texas, representing 1.4 million
66 ASCENT’s contention that ASI must engage in a third-party test to make this showing isbaseless. ASCENT at 10-11. ASI’s CPSOS interface is handling far more commercial volumesthan can expected to be generated by CLECs seeking to resell ASI’s retail telecommunicationsofferings. Moreover, the FCC has approved two section 271 applications (for Massachusetts andConnecticut) since the mandate issued in ASCENT I, and in neither case did it conclude that theseparate data affiliate at issue had to test its OSS to show compliance with the Act.
67 See Bruce Meyerson, SBC, Sprint Top Earnings Forecasts, Associated Press, July 20, 2000.
72
customers.68 In response, the incumbents responded with discounts and packages that are
unavailable in other states.69
To be sure, after a few months of actual market experience – the first long-distance
experience the company had ever had – Southwestern Bell adjusted some of its rates, and
discontinued some plans. It is important to emphasize, however, that the changed rates for new
customers were still well below AT&T’s basic rates, so consumers were still much better off.
See Carrisalez Reply Aff. ¶ 25. Moreover, in stark contrast with AT&T’s practice of unilaterally
raising rates to existing customers,70 Southwestern Bell grandfathered all existing customers on
the changed rate plans – i.e., their rates were not increased. As former Texas PUC Chairman Pat
Wood recently testified to Congress, the upshot of Southwestern Bell’s long distance entry in
Texas is that rates have gone “from 12 cents on average a minute . . . down to 8 cents a
minute.”71 The suggestion that consumers are somehow worse off is preposterous.
Equally absurd is AT&T’s characterization of the Texas Commission’s Report on Scope
of Competition in Telecommunications Markets of Texas (Jan. 2001) (“Texas Commission
68 See Vince Vittore, SBC Long-Distance Progresses, Telephony, Jan. 29, 2001.
69 See, e.g., AT&T Offers Reduced Rates to Mexican Border Cities, PR Newswire, Oct. 26,2000; WorldCom Website, MCI WorldCom Local Phone Service: Texas (visited June 11, 2001),at http://www.mciworld.com/for_your_home/products_services/local/tx/oca200.shtml.
70 See, e.g., AT&T to Raise Some Rates by as Much as 11 Percent, N.Y. Times, June 2, 2001, atC4 (reporting that AT&T had announced increase in long-distance rates paid by 28 millioncustomers by as much as 11 percent); Ben Charny, AT&T Splits Bill, Adds Charge, CnetNews.Com, Aug. 24, 2001 (“About 1 million AT&T customers can expect a couple of newthings in the mail: two separate bills instead of the usual one and an extra charge of $9.95 amonth.”); see also WorldCom Price Hikes Criticized as Unethical, S.F. Chron., Sept. 19, 2000.
71 The Telecom Act Five Years Later – Is It Promoting Competition?: Hearing Before theSubcomm. on Antitrust, Business Rights, and Competition of the Senate Comm. on theJudiciary, 107th Cong. (2001) (test. of Pat Wood, Chairman, Texas Pub. Utils. Comm’n).
73
Report”). Relying in equal parts on selective quotations and pure fabrication, AT&T claims that
the Texas Commission Report indicates that long-distance entry in Texas is leading to
“remonopolization of the local phone market.” See AT&T at 7. The truth is far different.
The thrust of the Texas report is that “cross-subsidies that have traditionally kept
residential rates artificially low now contribute to the lack of competition for residential
customers. The same cross-subsidies have provided cream-skimming opportunities in large
metro and business markets.” Texas Commission Report at x. Rather than blaming
Southwestern Bell – as AT&T would have this Commission believe – the Texas Commission in
fact recognized that the primary reason that competition looks less viable for certain rural and
residential customers than in the business and urban markets, is “rooted in underlying market
conditions and in the historical regulatory pricing system for local telephone service.” Id. at 85.
The continuation of Texas’s long-standing public policy to provide universal service and to
maintain low rates for basic residential local service “means that some segments of the market
may not receive rates that reflect the true cost of the service. . . . Most residential and rural
customers receive basic local services at rates well below their true cost (with the remainder of
the cost subsidized by Texas and federal universal service payments and over-priced vertical or
nonbasic services).” Id. at xi. And as AT&T and WorldCom have previously explained to this
Commission, the same factors are at work in California.72
At the same time, the Texas Commission Report also recognizes that local competition is
thriving in certain markets: “The Large Metropolitan areas and the Suburban counties, which
72 See AT&T/MCI OANAD Reply Br. at 61 (July 31, 1998) (“[T]he retail price structure bearslittle if any resemblance to the kind of forward-looking economic costs that the Commission hasadopted as the basis for pricing [UNEs].”).
74
combined comprise almost 60 percent of Texas’ population, have heavy concentrations of
CLECs. Data show that the Dallas and Houston metro areas have about twenty or more CLECs
serving customers, while San Antonio and Austin have ten or more CLECs serving customers.
Many rural areas that allow for customer choice have a choice of two, three, or more CLECs, in
addition to an ILEC.” Id. at 78. And the market for “business customers in the Large Metro
areas of Texas appears to be competitive. Facilities-based competition has provided increased
capacity for CLECs to compete with ILECs over the long term.” Id. at 83.
Moreover, the Texas Commission Report provides a direct rebuttal to those commenters
who claim that Pacific is somehow to blame for recent difficulties experienced by many CLECs.
See, e.g., Sprint at 2-3. As the report notes, “[I]nvestor sentiment turned sharply negative
towards the telecommunications sector when CLECs were unable to convince investors that
prevailing and projected profits were large enough to justify the prevailing level of investment
and high share prices.” Texas Commission Report at 56. AT&T, itself, was not immune from
these forces, and the Texas Commission Report recognizes that these economic developments
have required AT&T to withdraw from its “ambitious but unprofitable business plan,” id. at 58.
Thus, try as some commenters might to blame incumbent LECs for CLECs’ financial
difficulties, the truth is that the problems experienced by many CLECs are either of their own
making or linked to particular vulnerabilities in the recent softening of the economy.73 Since
73 It is worth noting that commenters’ claims regarding the demise of CLECs are in somerespects overstated. Thus, for example, Covad’s CEO recently stated that its Chapter 11 filing“has no effect on the operations, customers, nationwide network or employees of our operatingsubsidiaries which provide DSL services.” See Covad Files Reorganization Plan withBankruptcy Court (Aug. 28, 2001), athttp://www.clec.com/newsprint.asp?ContentID=2147448221.
75
March 2000, the NASDAQ index has fallen more than 50 percent; CLEC shares have fallen
more than 75 percent; and data CLEC shares have fallen more than 90 percent. Most CLECs
adopted business models that depended entirely on their ability to raise capital for their continued
viability.74 Without easy access to such capital, many CLECs have faced hard times. But that is
hardly Pacific’s fault. Rather, it is simply the result of the fact that their business models failed
to show any likelihood of profits in the foreseeable future. To their credit, most CLECs have
recognized that fact, and refused to follow AT&T’s example of holding incumbent LECs
responsible for their financial difficulties. As NorthPoint’s CEO, Elizabeth Fetter, put it, “We
were highly incented by Wall Street to spend money like drunken sailors,” leaving CLECs ill-
prepared for a financial downturn.75
The FCC has long recognized that the benefits of new entry in long distance
presumptively outweigh any risk of harm.76 As the foregoing analysis demonstrates, that
74 See, e.g., Supplemental Reply Declaration of Dr. William E. Taylor ¶ 25, Application byVerizon New England Inc., et al., for Authorization To Provide In-Region, InterLATA Servicesin Massachusetts, CC Docket No. 01-9 (FCC filed Feb. 28, 2001).
75 Scott Woolley, Highway to Hell, Forbes, Feb. 19, 2001, at 98. As the CEO and a founder ofthe data CLEC Jato Communications, Brian Gast, has noted, “in hindsight, (there were) a lot ofnaïve assumptions that capital would always be there to fund the business plan.” Kris Hudson,Jato’s Fall Reflects Industry Problems, Denver Post, Dec. 30, 2000, at C-01. As a spokesman forone CLEC, Vitts Networks, has explained, companies tried for “success by growth, instead ofgrowing by success. Some of these guys overbuilt and got way out ahead of their funding.”Peter J. Howe, DSL Start-Ups Begin To Fold Before Turning a Profit, While Bells Sit Pretty,Boston Globe, Dec. 17, 2000, at F1. Covad’s Chairman, Chuck McMinn, observed, “There hasbeen a dramatic shift in focus that has occurred in our industry, turning us from growth toprofitability as the metric.” Jessica Johnson, DSL Forecast: Foggy, But Clear Road Beckons(Jan. 4, 2001), at http://www.clec.com. HarvardNet’s President, Mark Washburn, likewiseannounced that “[t]he markets have gone from a position of, ‘What will you do for me nextyear?’ to ‘What will you do for me this quarter?’” Peter J. Howe, DSL Providers Fail WithoutDeep Pockets, The Deseret News, Dec. 20, 2000, at C-03.
76 See Report and Order, Inquiry into Policies To Be Followed in the Authorization of Common
76
presumption stands unrebutted. Uniform historical experience shows that Pacific’s entry into the
long-distance market will trigger lower prices from the long-distance incumbents, as well as
increased incentives for competition in the local market.77
Carrier Facilities To Provide Telecommunications Service Off the Island of Puerto Rico, 2 FCCRcd 6600, 6604, ¶ 30 (1987) (“plac[ing] a burden on any entity opposing entry by a new carrierinto interstate, interexchange markets to demonstrate by clear and convincing evidence that[additional] competition would not benefit the public”); Report and Third Supplemental Noticeof Inquiry and Proposed Rulemaking, MTS and WATS Market Structure, 81 F.C.C.2d 177, 201-02, ¶ 103 (1980) (Commission will “refrain from requiring new entrants to demonstratebeneficial effects of competition in the absence of a showing that competition will producedetrimental effects”).
77 The 1996 Act gives this Commission a consultative role with the FCC regarding Pacific’ssection 271 application only with respect to the competitive checklist. See 47 U.S.C.§ 271(d)(2)(B). The Act does not require the FCC to consult with state commissions regardingthe public interest, and the FCC has not done so in practice. See, e.g., AT&T’s 709.2 Commentsat 10. This Commission thus need not review commenters’ various “public interest” allegations.In addition, because reviewing section 272 compliance is also beyond the consultative roleafforded state commissions under the Act, this Commission need not resolve the questions raisedby the commenters that challenge 272 compliance. See 47 U.S.C. § 271(d)(2)(B). In any case,Pacific maintains the identical structural separation and nondiscrimination safeguards inCalifornia as does SWBT in states which have received section271 relief. See Henrichs ReplyAff. ¶ 7. Moreover, the section 272-related allegations are insubstantial, as explained inaffidavits filed with this brief. See Henrichs Reply Aff.; Yohe Reply Aff.
77
CONCLUSION
The vast record compiled in this proceeding establishes beyond dispute that Pacific has
satisfied the requirements of the competitive checklist. The Commission should endorse
Pacific’s application to provide interLATA service in California.
Respectfully submitted,
_______________________JAMES D. ELLISPAUL K. MANCINIMARTIN E. GRAMBOWKELLY M. MURRAYROBERT J. GRYZMALAJOHN S. DI BENEJOHN M. LAMBROS
175 E. HoustonSan Antonio, Texas 78205(210) 351-3410
Counsel for SBC Communications Inc.
JAMES B. YOUNGED KOLTOL. NELSONYA CAUSBYGARRETT L. WONG
140 New Montgomery StreetSan Francisco, California 94105(415) 545-9450
Counsel for Pacific BellTelephone Company
September 13, 2001
MICHAEL K. KELLOGGCOLIN S. STRETCH
KELLOGG, HUBER, HANSEN, TODD & EVANS, P.L.L.C.
1615 M Street, N.W., Suite 400Washington, D.C. 20036(202) 326-7900
Counsel for SBC Communications Inc.,Pacific Bell Telephone Company, andSouthwestern Bell CommunicationsServices, Inc.