DATE:	October 6, 2005
TO:	Director, Division of the Commission Clerk & Administrative Services (Bayó)
FROM:	Division of Competitive Markets & Enforcement (Barrett, Lee) Office of the General Counsel (Teitzman, Scott)
RE:	Docket No. 041269-TP – Petition to establish generic docket to consider amendments to interconnection agreements resulting from changes in law, by BellSouth Telecommunications, Inc.
AGENDA:	10/18/05 – Regular Agenda – Final Agency Action – Interested Persons May Participate
COMMISSIONERS ASSIGNED:		Bradley, Edgar
PREHEARING OFFICER:		Edgar
CRITICAL DATES:		None
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\CMP\WP\041269.RCM.DOC

 

 Case Background

On August 21, 2003, the Federal Communications Commission (FCC) released its Triennial Review Order[1] (TRO), which contained revised unbundling rules and responded to the D.C. Circuit Court of Appeals’ remand decision in USTA I.[2] 

On March 2, 2004, the D.C. Circuit Court of Appeals released its decision in United States Telecom Ass’n v. FCC[3] (USTA II), which vacated and remanded certain provisions of the TRO.  In particular, the D.C. Circuit held that the FCC’s delegation of authority to state commissions to make impairment findings was unlawful, and further found that the national findings of impairment for mass market switching and high-capacity transport were improper. 

              The FCC released an Order and Notice[4] (Interim Order) on August 20, 2004, requiring ILECs to continue providing unbundled access to mass market local circuit switching, high capacity loops, and dedicated transport until the earlier of the effective date of final FCC unbundling rules or six months after publication of the Interim Order in the Federal Register.  On February 4, 2005, the FCC released an Order on Remand (TRRO), wherein the FCC’s final unbundling rules were adopted with an effective date of March 11, 2005.

 

In response to the decisions handed down in USTA II and the FCC’s Interim Order, BellSouth Telecommunications, Inc. (BellSouth) filed, on November 1, 2004, its Petition to establish a generic docket to consider amendments to interconnection agreements resulting from changes of law.  Specifically, BellSouth asked that we determine what changes are required in existing, approved interconnection agreements between BellSouth and competitive local exchange carriers (CLECs) in Florida as a result of USTA II and the Interim Order.

 

By Order No. PSC-05-0492-FOF-TP, issued May 5, 2005, the Commission found that the TRRO is specific, as is the revised FCC rule, that CLECs are prohibited from adding new local switching as a UNE, effective March 11, 2005.[5] (No-New-Adds Order)  On August 22, 2005, Supra Telecommunications and Information Systems, Inc. (Supra) filed its Emergency Motion to Require BellSouth to Effectuate Orders for Supra’s Embedded Customer Base.  Supra requests that the Commission issue a ruling declaring that BellSouth must continue to accept Section 251 UNE orders submitted to serve Supra’s embedded customer base until a new agreement is negotiated between the parties, or until the FCC-mandated transition period expires, whichever occurs first.  BellSouth filed its Response in Opposition to Supra’s Emergency Motion (Response) on August 29, 2005.

 

Essentially, Supra argues that the No-New-Adds Order does not clearly define how an ILEC should treat a requesting carrier’s UNE orders on behalf of customers that are not new customers, but that are already a part of a CLEC’s embedded customer base.  Staff notes that the identical issue has been concurrently addressed in staff’s recommendation in Docket No. 040156-TP, Petition for arbitration of amendment to interconnection agreements with certain competitive local exchange carriers and commercial mobile radio service providers in Florida by Verizon Florida Inc., filed on September 21, 2005.

 

 

 

 

 

 

 

 

 

 

Discussion of Issues

 

Issue 1:  Should the Commission grant Supra’s Emergency Motion to Require BellSouth to Effectuate Orders for Supra’s Embedded Customer Base?

 

Recommendation:  No.  Staff recommends that the Motion should be denied because while CLECs retain access to unbundled local circuit switching during the 12-month transition period for their embedded end-user customers, that access is limited to the arrangements existing on March 11, 2005.  Orders requiring a new UNE-P arrangement, such as a customer move to another location or an additional line, are not permitted pursuant to the FCC’s TRRO.  (TEITZMAN, SCOTT, LEE)[6]

 

Parties’ Arguments:

 

Supra’s Motion

 

In its Motion, Supra claims that the TRRO does not permit BellSouth to refuse Section 251 UNE orders for the purpose of serving customers already in a CLEC’s embedded customer base.  Supra argues that the Commission should interpret the FCC’s TRRO according to its plain language and intent.  Supra claims that during this one-year transition, BellSouth must provision UNE-P at TELRIC rates plus one dollar for  Supra’s embedded customer base, and not merely for Supra’s existing lines.   Supra argues that this was not clarified in Commission Order No. PSC-05-0492-FOF-TP, issued May 5, 2005.   Supra cites to paragraph 199 of the TRRO in support of  preserving Section 251 UNEs for existing CLEC customers:

 

Finally, we adopt a transition plan that requires competitive LECs to submit orders to convert their UNE-P customers to alternative arrangements within twelve months of the effective date of this order.  This transition period shall apply only to the embedded customer base . . . During the twelve-month transition period . . . competitive LECs will continue to have access to UNE-P priced at TELRIC plus one dollar until the incumbent LEC successfully migrates those UNE-P customers to the competitive LEC’s switches or to alternative access migrations negotiated by the carriers.

 

TRRO ¶199.  Supra also cites paragraph 29 of the TRRO in support of distinguishing between embedded base and embedded lines:

 

. . . incumbent LECs must continue providing access to mass market unbundled       local circuit switching at a rate of TELRIC plus one dollar for the competitive             LEC to serve those customers until the incumbent LECs successfully convert         those customers to the new arrangements

 

TRRO ¶29.  Supra claims that numerous state commissions, while agreeing that the TRRO ended CLEC access to Section 251 UNEs for new customers, have nonetheless ordered ILECs to continue providing mass-market local circuit switching and UNE-P combinations to existing customers.  Supra cites to the North Carolina Utilities Commission and the Indiana Utility Regulatory Commission to support its argument that the twelve-month transition period is to allow a CLEC’s existing UNE-P customers to continue with their current type of service arrangement while the CLEC begins the necessary steps to convert these customers to an alternative service arrangement in a manner that will prevent service interruptions.

 

            In conclusion, Supra claims that BellSouth has denied Supra the ability to provide its embedded base customers with new UNE-P lines, and has denied Supra the ability to provide its embedded base customers with requested location changes.  Supra argues that these disruptions to its embedded base are unnecessary, and that BellSouth’s refusal to provision UNE-P is anti-competitive and is in violation of the TRRO.  Supra, therefore, respectfully requests immediate relief.

 

BellSouth’s Response 

 

In its Response, BellSouth argues that Supra’s Motion is contrary to, and inconsistent with, the text of the TRRO.  In short, BellSouth argues that when a CLEC orders a new UNE-P line to serve an existing customer, it is ordering new local switching, which is prohibited under the plain language of the FCC’s order and rules.  BellSouth cites to paragraph 227 of the TRRO to support its argument that the transition plan “does not permit competitive LECs to add new UNE-P arrangements using unbundled access to local circuit switching pursuant to section 251(c)(3).”  BellSouth also argues that FCC rules provide that “[r]equesting carriers may not obtain new local switching as an unbundled network element.”  C.F.R § 51.319(d)(2)(iii)  In further support of BellSouth’s argument, it cites to a Kentucky Injunction Order,[7] a Federal Court Opinion from Mississippi,[8] and an Order from Georgia.[9]  BellSouth argues that all three Orders stand for the notion that the language and intent of the TRRO equates to an unqualified elimination of new UNE-P orders as of March 11, 2005. 

 

            In addition, BellSouth points out that other state commission decisions are not binding on this Commission.  For example, the Georgia Commission decision to require BellSouth to process and provide new UNE-P arrangements was overturned by a federal court in Georgia.  Pursuant to that decision, BellSouth is rejecting all UNE-P orders in Georgia.  However, if the Commission is interested in other state commission decisions, then BellSouth argues that state commissions, such as the Tennessee and California Commissions, have ruled in favor of the ILECs.

 

            BellSouth also argues in its response that the purpose of the transition plan is to encourage the CLECs to move away from unlawful unbundling rules.  In short, BellSouth argues that allowing Supra to add new UNE-P arrangements is contrary to the FCC’s goal to transition CLECs off UNE-P platforms.  BellSouth supports its arguments by citing to paragraph 227 of the TRRO.  BellSouth argues that paragraph 227 illustrates the purpose of the transition period which is to “perform the tasks necessary to an orderly transition, which could include deploying competitive infrastructure, negotiating alternative access arrangements, and performing loop cut-overs or other conversions.”

 

            BellSouth argues that in light of its previously filed pleadings, Supra cannot legitimately argue that the Commission has not ruled on this issue.  BellSouth argues that the Commission, has already addressed this matter at its April 5, 2005, Agenda Conference, and rested the subsequent Order’s analysis on paragraph 233 of the TRRO.  BellSouth specifically points to the language regarding “no new adds.”[10]  In light of this Order, BellSouth argues that Supra cannot order new UNE-P lines for existing customers, nor can Supra order new UNE-P lines at different locations.

           

            Next, BellSouth disputes Supra’s allegations of service disruptions and anti-competitive behavior.  First,  BellSouth argues that Supra’s claim that it cannot provide its customers with UNE-P lines and/or service location changes is meritless.  Specifically, BellSouth points to paragraph 199 of the TRRO wherein the FCC recognized that CLECs, such as Supra, can deploy their own switches to serve a customer base.  Second, BellSouth argues that Supra can enter into similar commercial agreements for UNE-P.[11]   Third, BellSouth argues that it does not participate in anti-competitive behavior and is in full compliance with the TRRO and relevant federal district court decisions.

 

            In conclusion, BellSouth notes that it is ready, willing and able to switch UNE-P customers to alternative arrangements.  BellSouth also notes that this can be done via an individual or batch hot cut process as noted in paragraphs 200 and 201 of the TRRO.

             

 

Staff Analysis:

 

In the TRRO, the FCC concluded that a twelve-month transition period applied to the embedded base of UNE-P customers and that CLECs may not obtain any new local switching (no-new-adds) as an unbundled network element, effective March 11, 2005.  TRRO ¶ 227.  In the No-New-Adds Order, the Commission found that the TRRO is specific, as is the revised FCC rule, that CLECs are prohibited from adding new local switching as a UNE, effective March 11, 2005.  No-New-Adds Order, p. 6.  Therefore, staff agrees with BellSouth that the Commission has already addressed this specific matter and recommends a consistent finding here.

 

            That said, staff agrees that the No-New-Adds Order did not explicitly address whether adding new lines, modifications, or rearrangements to serve the CLEC’s embedded customer base is permitted or prohibited after March 11, 2005.  While the Commission found that “further prolonging the availability of UNE-P and other de-listed UNEs could cause competitive carriers to further defer investment in their own facilities, a result that would be clearly contrary to the FCC’s intent, as well as the Court’s decision in USTA II,” the Order did not specify whether no-new-adds applies just to new customers or to the embedded customer base as well.  No-New-Adds Order, p. 7.

 

            Staff believes that several paragraphs in the TRRO, as well as the rules attached thereto provide guidance in addressing this dispute.  The TRRO specifically establishes a twelve-month transition period for the CLEC to migrate its embedded base of unbundled local circuit switching used to serve mass market customers to an alternative service arrangement.  TRRO ¶226.  Additionally, the TRRO states that the twelve-month transition period applies only to the CLEC embedded customer base and “. . . does not permit competitive LECs to add new UNE-P arrangements using unbundled access to local circuit switching . . .”.  TRRO ¶5, ¶227.  Staff also notes that footnote 625 in the TRRO states “[sic] transition period we adopt here thus applies to all unbundled local circuit switching arrangements used to serve customers at less than the DS1 capacity level as of the effective date of this Order.”  (emphasis added)  Referring to the rules attached to the TRRO, staff observes that they require ILECs to provide access to unbundled local circuit switching to serve a CLEC’s embedded base of end-user customers during the twelve-month transition period, while also prohibiting the addition of any new switching UNEs.  TRRO Appendix B, p. 148. 

 

            Based on the foregoing analysis, staff believes that the embedded customer base referred to in the TRRO means customers being served by unbundled local circuit switching on March 11, 2005.  Staff also believes that the TRRO prohibits CLECs from adding any new local switching UNE arrangements, not merely for new UNE customers as asserted by Supra.  For example, assume a CLEC customer receiving UNE-P service on March 11, 2005, requested an additional line in August.  The customer would be considered part of the CLEC’s embedded customer base because it was being served by UNE-P on March 11, 2005.  By definition then, staff posits that a new UNE-P line – an unbundled local circuit switching arrangement – ordered in August was not serving the CLEC’s embedded customer on March 11, 2005, and therefore is prohibited by the TRRO.

 

            In conclusion, staff recommends that the Motion should be denied because while CLECs retain access to unbundled local circuit switching during the 12-month transition period for their embedded end-user customers, that access is limited to the arrangements existing on March 11, 2005.  Orders requiring a new UNE-P arrangement, such as a customer move to another location or an additional line, are not permitted pursuant to the FCC’s TRRO.

 

 

 

 

 

 

 

 

 

 

Issue 2:  Should this docket be closed?

 

Recommendation:  No, this docket should remain open for an evidentiary hearing on this matter.  (TEITZMAN, SCOTT)

Staff Analysis:  This docket should remain open for an evidentiary hearing on this matter.