ORDER NO. 96-119

ENTERED MAY 7 1996

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

CP 1, CP 14, CP 15

DISPOSITION: APPLICATIONS FOR RECONSIDERATION DENIED

On March 13, 1996, GTE Northwest Incorporated (GTE) and U S WEST Communications, Inc. (USWC) filed applications for reconsideration of the Commission’s order in these dockets (Order No. 96-021; the Order). On March 27, 1996, GTE filed a response to USWC’s application for reconsideration. Also on March 27, 1996, the following applicants and intervenors filed a joint reply to USWC’s and GTE’s applications: Electric Lightwave, Inc. (ELI), MCImetro Access Transmission Services, Inc. (MCImetro), MCI Telecommunications, Inc. (MCI), MFS Intelenet of Oregon, Inc. (MFS), Teleport Communications Group (TCG), and AT&T Communications of the Pacific Northwest (AT&T). On April 4, 1996, GTE filed a response to the joint reply.

In the Order, we adopted bill and keep as an interim solution for interconnection compensation between carriers of local exchange traffic in the competitive zones. That is, each carrier absorbs the cost of terminating traffic on its own network, regardless of which carriers originate the calls. We rejected USWC’s request for an interim universal service charge as part of interconnection compensation. We also ordered the local exchange carriers (LECs) to provide the alternative exchange carriers (AECs) with interim number portability, priced at total service long run incremental cost (TSLRIC).

The Order was entered on January 12, 1996. On February 8, 1996, the federal Telecommunications Act of 1996 (the Act) was signed into law. The Act treats a number of the same issues that we dealt with in the Order, and GTE bases some of its arguments for reconsideration on its reading of the Act.

GTE’s Application and Responses: GTE challenges the Order on three points: interconnection compensation, interim number portability, and switched access tariffs for the AECs. GTE also asks the Commission to stay enforcement of its bill and keep and interim number portability directives until the Commission acts on GTE’s application. GTE has made a compliance tariff filing, but requests that the Commission not act on that

filing until the Commission has acted on this application. GTE further asks that the AECs’ interim number portability tariffs become effective at the same time as the LECs’ tariffs.

1. Interconnection Compensation. According to GTE, the record does not contain substantial evidence to support the adoption of bill and keep. Moreover, GTE argues that the reasons for adopting bill and keep in the Order are inconsistent with the Act. GTE presents eight arguments against bill and keep.

1. Compelled termination of another carrier’s traffic is a taking and requires full compensation.

2. The Act requires originating carriers to cover the costs of terminating carriers. GTE relies on Sec. 252(d) of the Act to argue that carriers cannot be compelled to recover the cost of terminating another carrier’s calls from their own end use customers.

Although GTE acknowledges that the Act does not "preclude arrangements that afford the mutual recovery of costs through an offsetting of reciprocal obligations, including arrangements that waive mutual recovery (such as bill-and-keep arrangements)" (Sec. 252(d)(2)(B)(i)), it argues that bill and keep may not be used if it does not result in full compensation to all carriers.

3. Long run incremental termination and transport costs were set in UM 351 Phase I and must be applied to local/EAS interconnection. The Commission notes that transport and termination costs for local and EAS traffic are the same as for toll traffic (Order No. 96-021 at 19). GTE asks the Commission to take official notice that the long run incremental cost methodology it adopted in Phase I of UM 351 determines such costs on a minute of use basis and that the Commission has adopted specific cost levels for that functionality (Order Nos. 94-1056, 93-1118). GTE argues that under current Commission rulings, LECs and AECs will cover their terminating interconnection long run incremental costs if they receive compensation equal to or greater than the per minute of use costs adopted by the Commission.

4. Under the Act, full compensation includes contribution to joint and common costs. Sec. 254(k) of the Act provides that universal service should bear "no more than a reasonable share of the joint and common costs." GTE reasons that if universal service is to bear only a share of those costs, access, interconnection, and other services must also bear a share.

5. Measurement cost issues do not justify the adoption of bill and keep. GTE notes that in UM 351, it has proposed a minute of use charge similar to that for switched access. Its proposal does not require AECs to deploy measurement and billing equipment. In any event, GTE notes, the AECs are already measuring traffic, as judged by their proposal to combine toll and local/EAS traffic on the same trunks and then separate the traffic using the Percentage Local Usage factor. Therefore, GTE argues that AEC measurement costs are not an issue. GTE states that it has low-cost measurement systems in place; Commission concerns about measurement costs are irrelevant to GTE and cannot be used to justify bill and keep.

6. Traffic balance estimates do not justify the imposition of bill and keep. GTE argues that if traffic is in balance, a compensation scheme other than bill and keep will not impair the AECs’ competitive viability. If traffic is out of balance, the Act requires interconnection compensation that provides all carriers recovery of their costs. GTE advocates adoption of the switched access charges it proposed in UM 351 to compensate carriers for interconnection costs. GTE also argues that Order No. 96-021 ignores the fact that Oregon will have a multiprovider environment, so it is unlikely that traffic will be in balance in all permutations.

7. GTE’s proposal is reasonable whether traffic will be in balance or not.

8. The Commission should allow companies to negotiate interconnection arrangements other than bill and keep. The Act designates intercompany negotiation as the means of establishing interconnection arrangements. Sections 251(c), 252. The Act even gives carriers the right to enter into agreements that deviate from the Act’s standards. The Commission should amend its Order to allow negotiation.

2. Interim Number Portability. The Act directs LECs and AECs to make number portability available pursuant to intercompany negotiations (Sec. 251(b)(2) and directs the Federal Communications Commission (FCC) to implement regulations for shared recovery of number portability costs. GTE urges the Commission to amend the Order as follows:

Direct the applicants to provide interim number portability on the same basis as GTE;

Allow the LECs and AECs to negotiate number portability arrangements different from those in the order; and state that the compensation arrangement adopted by the FCC will apply in Oregon effective with the implementation of interim number portability, so interim number portability compensation is subject to true-up if the Commission’s compensation plan is found to be inconsistent with the plan adopted by the FCC in its rulemaking.

 

3. Switched Access Tariffs. GTE points out that interconnection is a bottleneck service, because it cannot be self-supplied. The Commission must therefore require the AECs to tariff their switched access service offerings, as a "reasonable condition" imposed on the AECs’ operating authority under the competitive zone law.

4. Other issues. In its response to USWC’s application, GTE raises concerns about the way interconnectors route their calls in support of its contention that the Commission should reconsider bill and keep. GTE also subscribes to USWC’s position on intercompany compensation arrangements, the pricing of interim number portability, and the designation of "essential services."

In its response to the Joint Reply, GTE argues that the Commission lacks independent authority under state law to order number portability. Customers have no property right in the numbers assigned to them that would permit them to transfer the numbers from one company to another. GTE contends that the Commission has no authority from the Oregon legislature to require one company to hand over its property to another. GTE Northwest v. Public Utility Commission, 321 Or. 458 (1995).

USWC’s Application: USWC does not oppose granting the applications, but challenges the terms and conditions imposed on USWC to enable the competitive providers to interconnect and compete. USWC urges the Commission to reconsider bill and keep, to allow an interim universal service charge until rates are rebalanced, to set interim number portability rates above TSLRIC, and to clarify that it has made no assessment of the term "essential function" in its discussion of number portability and the imputation studies presented in evidence.

1. Reconsider bill and keep. USWC asks the Commission to reconsider its bill and keep decision for the following reasons: First, bill and keep is based on the extended area service model and is an inappropriate interim arrangement between public utilities and competitive providers. Second, USWC cannot provide such services "for free" in view of its statutory obligation to furnish adequate and safe service at just and reasonable rates. USWC also argues that the Commission has no statutory authority to impose interconnection conditions on local exchange carriers.

Finally, USWC contends that bill and keep prevents USWC from recovering its just and reasonable expenses. It is unlikely that traffic will be in balance, and the costs incurred in terminating traffic are not comparable for incumbents and new entrants. USWC asserts that it is being asked to provide service without fair compensation. This is confiscatory and an unconstitutional taking.

USWC also asks the Commission to clarify that bill and keep is not required if parties are able to negotiate other compensation arrangements as allowed by the Act. If the Commission retains mandatory bill and keep, USWC urges the Commission to shorten the 24-month time frame in the light of the Act. The Commission should clarify the conditions under which a shorter period would be ordered. According to USWC, the Commission must also reevaluate its requirements for industry work groups on compensation and local number portability. The work groups could jeopardize negotiations under the Act and result in a duplication of effort.

2. Interim Universal Service Charge. USWC asserts that the Commission decision to reject an interim universal service charge is not consistent with its concern about the impact of competition on the LECs and their customers who do not have access to competitive choice. Deferral of this issue to UM 731, the universal service docket, does not meet USWC’s concerns, because the primary subsidy that the interim universal service charge addresses is the subsidy that flows from business to residential services, not the subsidy associated with high cost issues.

3. Number Portability Rates. USWC argues that interim number portability rates should be set above TSLRIC. All interconnection services should be priced at a level that recovers the TSLRIC plus a reasonable contribution to the shared and common costs of the network. Pricing at TSLRIC allows competitors to shift the burden of the recovery of such costs to USWC retail customers and will not provide a reasonable rate of return for that service.

Further, USWC asks the Commission to clarify its finding that number portability is essential to the development of competition. Order at 78-79. USWC wishes to be certain that the Commission, in making that statement, is not making a finding that local number portability is in fact an "essential function" under ORS 759.050. USWC contends that there was not sufficient evidence presented in this docket to make an "essential function" finding with respect to number portability.

4. No Findings on "Essential Function" as It Relates to Imputation. Finally, USWC wishes the Commission to clarify that its discussion of essential functions as they relate to USWC witness Purkey’s imputation analysis is not a finding that certain elements are essential for purposes of analysis under ORS 759.050. The Order, at 58, reads:

Mr. Purkey’s analysis assumes that certain inputs to the imputation analysis are nonessential rather than essential functions. In Order No. 95-313, we held that all service elements should be treated as essential until such time as an LEC is able to demonstrate that viable alternatives exist in the relevant market.

 

USWC wishes the Commission to clarify that this passage does not constitute a finding of essentiality with respect to docket No. UM 351.

Joint reply of ELI, MCImetro, MCI, MFS, TCG, and AT&T to USWC and GTE Petitions for Reconsideration, Rehearing, Clarification, and Stay of Order No. 96-021: The Joint Reply argues that the Commission should deny USWC’s and GTE’s applications because they do not state sufficient grounds to warrant reconsideration, rehearing, clarification, or stay of Order No. 96-021. The Joint Reply argues that the Act does not prohibit the Commission from adopting and enforcing any portion of the Order. The Act permits state commissions to take any and all actions "not inconsistent" with the Act. Moving ahead with local exchange competition on a faster timetable than that in the Act or with more vigorous policies than the statutory minimums in the Act is not inconsistent with the Act.

1. Bill and keep. a) Commission authority to adopt interconnection arrangements. To counter GTE’s contention that the Order should be amended to permit negotiation, the Joint Reply argues that the Order does not forbid negotiation. Instead, it contemplates individual negotiations subject to certain parameters. The Order’s requirements are consistent with the concept of negotiations reflected in the Act.

b) Bill and keep is consistent with the Act. To counter USWC and GTE arguments that the Commission should reconsider its bill and keep decision, the Joint Reply cites Sec. 252(d)(2)(B)(i), which explicitly recognizes bill and keep as an acceptable form of compensation. See Footnote 1 above for the text of that section. Contrary to GTE’s position, the Joint Reply argues that the Act does not limit bill and keep to situations in which traffic is in balance and the costs incurred by interconnecting carriers are identical.

The Joint Reply argues against GTE’s claim that bill and keep violates the Act because it furnishes no contribution to joint and common costs. This argument is based on GTE’s assumption that the provisions of the Act regarding the pricing of basic universal service (Sec. 254) also apply to pricing of interconnection under Sec. 251. In fact, Section 252(d)(1)(A) expressly states that interconnection rates shall be based on cost without reference to rate-based proceedings.

Contrary to GTE’s claims, the Act nowhere states that companies must obtain cocarrier compensation from the carriers originating the traffic or that carriers cannot be required to obtain the compensation from their own customers. Rather, the Act expressly recognizes that there are forms of compensation arrangements which allow for the recovery of costs while waiving carriers’ mutual compensation, that is, bill and keep. Sec. 252(d)(2)(B)(i).

c) Bill and keep is not a taking. The Joint Reply opposes USWC’s and GTE’s argument that bill and keep is a taking of property without just compensation under either the United States or the Oregon constitution. It points out that the takings clause of the Fifth Amendment of the United States constitution and of art. I sec. 18 of the Oregon constitution are analyzed similarly. Under federal law, there are three types of takings: physical invasion, regulatory takings (which deprive an entity of all economically viable uses of private property), and public utility regulatory takings, which is what USWC and GTE argue has occurred here. The lead public utility regulatory takings case, Duquesne Light Co. v. Barasch, 488 US 299 (1989), prohibits confiscatory rates. However, the conclusion that rates are confiscatory is based on the utility’s investments as a whole, not on a service by service inquiry. Bill and keep is therefore not an unconstitutional taking.

d) USWC’s interim universal service charge is inconsistent with the Act. The Joint Reply asserts that with an interim universal service charge, the LECs would receive an interconnection payment far greater than AECs receive for terminating a LEC's calls. Such an unequal compensation mechanism is neither reciprocal nor mutual, as required by the Act. It also violates the Act by including an additional cost that bears no relationship to terminating calls, contrary to Section 252(d)(2)(ii).

2. Interim Number Portability. The Joint Reply argues that the Commission need not require AECs to offer interim number portability on a tariffed basis. It notes that the Act places a permanent number portability solution in the hands of the FCC but does not establish any restrictions on authority of this Commission to adopt specific requirements for interim number portability. In addition, the Commission need not clarify its Order by indicating that number portability in Oregon will be subject to FCC rules. The Order established a number portability workshop that will keep the Commission apprised of developments at the FCC. Order at 78.

The Joint Reply urges that the Commission should also reject USWC’s claim that it is entitled to charge an amount greater than TSLRIC for interim number portability.

3. State law does not bar the Commission from mandating bill and keep arrangements between LECs and AECs. The Joint Reply rejects the argument that the Commission lacks statutory authority to set LEC interconnection rates. It argues that ORS 759.050 permits the Commission to impose interconnection requirements on the AECs, but does not limit the Commission’s existing power to impose interconnection requirements upon USWC and other incumbent LECs. USWC ignores the fact that the Commission has always had and has exercised authority to require and approve LEC interconnection rates with providers that are not "telecommunications utilities," including switched access rates offered to interexchange carriers that have been classified as competitive nonutility providers for many years. See ORS 756.040.

DISCUSSION AND DISPOSITION.

1. Bill and Keep. Taking argument. GTE and USWC argue that compelled termination of another carrier’s traffic is a taking that requires full compensation. GTE argues that the originating carrier must fully compensate the terminating carrier for calls terminated on that carrier’s network. USWC argues that a bill and keep arrangement prevents it from recovering its just and reasonable expenses, because it is unlikely that traffic will be in balance and the costs incurred in terminating traffic are not comparable for incumbents and new entrants.

Under the takings clause of the Fifth Amendment of the United States constitution, government must pay a property owner when it takes private property for public use. The takings clause of the Oregon constitution, art. I sec. 18, is analyzed similarly to the Fifth Amendment. Stevens v. City of Cannon Beach, 317 Or 131, 135 n. 5 (1993), cert. den., 114 S.Ct. 1332 (1994). The United States Supreme Court has interpreted the takings clause to cover three types of takings: physical invasion, regulatory takings that deprive the property owner of all economically viable use of the property, and public utility regulatory takings (confiscatory rates).

1. Physical invasion: Permanent physical occupation by government or third party pursuant to government authorization is a categorical taking, compensable without regard to any fact specific inquiry. Loretto v. TelePrompter Manhattan CATV Co., 458 US 419, 432, 441 (1982) (statute requiring landlords to allow cable television installation in rental buildings was permanent physical invasion and thus a taking). If government regulation eliminates all economic value or use of the land, that also constitutes a categorical taking. Lucas v. South Carolina Coastal Council, 112 S.Ct. 2886, 2893 (1992).

2. Regulatory takings: Regulatory action effects a taking only if it deprives the property owner of all economically viable use of private property. There is no "set formula to determine where regulation ends and taking begins." McDonald, Sommer & Frates v. Yolo County, 477 US 340, 348 (1986) (quoting Goldblatt v. Hempstead, 369 US 590, 594 (1962)). A court must look into the circumstances of each case, balancing the nature of the government action, its economic impact, and its effect on investment backed expectations. Penn Central Transp. Co. v. City of New York, 438 US 104, 124 (1978).

3. Public utility regulatory takings (confiscatory rates): Utilities are not "limited to a charge for their property serving the public which is so unjust as to be confiscatory." Duquesne Light Co. v. Barasch, 488 US 299, 307 (1989). A court will look to the result of the ratemaking process, not the process itself, to determine if authorized rates rise to the level of a taking. "[W]hether a particular rate is ‘unjust’ or ‘unreasonable’ will depend to some extent on what is a fair rate of return given the risks under a particular rate setting system, and on the amount of capital upon which the investors are entitled to earn that return." Id. at 310. This inquiry, moreover, is based on the utility’s investments as a whole, not on a service by service basis. See, e.g., id. at 311-312 (refusal to allow recovery for investment in abandoned plant represented an insignificant drop in utility’s overall rate of return and thus was not a taking).

At issue here is whether the proposed bill and keep arrangement and the pricing of interim number portability at TSLRIC are takings. The third type of taking listed above is the applicable standard. Under Duquesne, there is no requirement that rates for each individual service include shared and common costs and a reasonable rate of return on investments. The Commission must evaluate the reasonableness of individual service rates in light of the company’s overall rate of return. (Duquesne at 310: "‘If the total effect of the rate order cannot be said to be unreasonable, judicial inquiry . . . is at an end.’") (quoting FPC. v. Hope Natural Gas Co, 320 U.S. 591, 602 (1944)). Rates are confiscatory under state or federal law only if a utility’s rates as a whole are set at a level that denies the company the opportunity to earn a reasonable rate of return. Therefore, bill and keep and the proposed TSLRIC price for interim number portability are not takings under the federal constitution.

USWC argues that Oregon applies a higher level of scrutiny to utility takings claims. That is not the case. The Oregon Supreme Court has stated that "business invests with knowledge of such governmental power to make laws for its conduct, and the balancing of regulatory goals against their economic consequences is the daily stuff of politics rather than of litigation for ‘just compensation.’" Suess Builders v. City of Beaverton, 294 Or 254, 259 (1982). Bill and keep and the proposed price for interim number portability are not takings under the Oregon constitution.

LECs cannot terminate traffic for free in view of their statutory obligation to furnish adequate and safe service at just and reasonable rates. Contrary to USWC’s contention, bill and keep does not constitute "free use" of a LEC's facilities. It is an in-kind exchange whereby each carrier absorbs the cost of terminating traffic on its own system. If traffic flows are significantly out of balance, some carriers may bear more than their share of termination costs. Those carriers will not necessarily be the LECs. In any event, we have found that traffic flows will likely be in balance. See Order at 55.

The Commission’s authority to order interconnection. USWC and GTE assert that under state law, the Commission lacks authority to order LECs to interconnect with AECs. As the Joint Reply points out, we have authority to require and approve LEC interconnection rates with providers that are not classified as telecommunications utilities, including switched access rates offered to interexchange carriers. See ORS 756.040. Furthermore, ORS 759.050 gives the Commission authority to specify the terms of interconnection between telecommunications utilities and competitive providers of local exchange service. As GTE points out, with the passage of the Act this argument becomes moot in any case.

The Act's pricing standards. GTE argues that the Act permits bill and keep only where costs are approximately equivalent and urges the Commission to rehear testimony on the parties' costs. Where costs are not equivalent, GTE maintains that originating carriers must cover the costs they impose on carriers who terminate their calls. GTE bases its argument on Section 252(d)(2)(A) of the Act, which is quoted above at Footnote 1, and on a reading of other sections together with the pricing standards. However, the plain language of the Act militates against GTE's position. Sec. 252(d)(2)(B) states:

This paragraph shall not be construed -- (i) to preclude arrangements that afford the mutual recovery of costs through the offsetting of reciprocal obligations, including arrangements that waive mutual recovery (such as bill-and-keep arrangements.)

 

We find that Subsection (B)(i) means that bill and keep is permissible without the constraints GTE reads into it. We also find that bill and keep is meant to coexist with the standards articulated in Subsection (A), as an acceptable alternative.

This determination means that we need not address GTE's arguments about using the UM 351 Phase I costs to price interconnection. Nor need we address GTE's argument that interconnection compensation must include a contribution to joint and common costs.

Justification for the Commission's bill and keep decision. GTE argues that there is insufficient evidence in the record to justify the Commission's adoption of bill and keep. Specifically, GTE cites measurement costs and traffic balance estimates as failing to justify the Commission's decision. We disagree. The Commission's discussion of and decision on interconnection compensation runs from page 27 to page 60 of the Order. We fully considered arguments relating to measurement costs and traffic balance. Furthermore, although GTE claims that its measurement costs are less than those of USWC, there is insufficient evidence in the record to substantiate that claim.

We adopted bill and keep as the interim method of intercompany compensation for exchange of local traffic between the applicants and the LECs because we are convinced that bill and keep has fewer shortcomings than other compensation proposals put forward in these dockets. As we stressed in the Order, bill and keep is a transitional mechanism chosen because, among other things, it is simple to administer, avoids costs associated with cash based compensation methods, and will allow competition to progress as the interconnection compensation work group develops its recommendations. We stressed that bill and keep is appropriate for the early stages of competition because it will not affect traffic flows or influence a carrier's choice of customers.

Furthermore, bill and keep is an interim measure that we believe will allow competition to begin while we conclude other dockets (UM 731 on universal service;

UM 773 on costing; UM 351 on unbundling and pricing) that will have a major impact on interconnection rates.

May parties negotiate arrangements other than bill and keep? USWC and GTE both pose this possibility. For the interim period for which bill and keep was foreseen, the parties to these dockets may not negotiate alternative interconnection compensation arrangements with each other. The parties have already had an opportunity to negotiate a solution in these dockets. In fact, the parties agreed to mediate the dispute but could not produce a satisfactory compensation mechanism. Based on this record, there is no reason for us to believe that the parties could now successfully negotiate a compensation mechanism. Moreover, such negotiations could be used to delay competition entry. We are also not persuaded by USWC’s argument that the industry work group will impede negotiations under the Act.

May the interim period for bill and keep be shortened? USWC asks whether the 24-month period for bill and keep may be shortened and, if so, under what conditions. The only condition under which the period would be shortened is if the industry interconnection compensation work group completes its task in a period shorter than 24 months and generates a compensation proposal that the Commission approves.

2. Interim Number Portability. GTE states that the Act requires both LECs and AECs to make number portability available pursuant to intercompany negotiations. GTE urges the Commission to amend its Order to provide that the applicants must also provide interim number portability, that companies may negotiate number portability arrangements different from those specified in the Order, and that the interim number portability arrangement is subject to revision and the compensation subject to true up if inconsistent with regulations that the FCC will promulgate.

We agree that under the Act, the AECs must provide number portability as well as the LECs. That requirement under the Act exists independently of the Order, and there is no reason to amend the Order to make it reflect the Act. If the FCC regulations on interim number portability compensation prove to be inconsistent with the Commission's Order, we can amend the Order at that time. In the meantime, the LECs must still operate under the Order and offer number portability at TSLRIC.

USWC and GTE object to pricing interim number portability at TSLRIC. This is a reiteration of the takings argument that these parties made with respect to bill and keep. For the reasons detailed above, that argument fails with respect to interim number portability as well.

Although it admits that the Act makes this argument moot, GTE argues that the Commission has no authority to mandate number portability. GTE cites GTE Northwest v. Public Utility Commission, 321 Or 458 (1995), in general for the proposition that the Commission has no authority from the legislature to require one company to hand over its property to another. This case is not on point. It deals with physical collocation of another carrier's equipment in a LEC's central office. Absent a statute to the contrary, the Supreme Court held, such physical collocation is a physical invasion of a LEC's territory and is an uncompensated taking.

Ordering interim number portability is neither a physical invasion nor a regulatory taking that deprives the property owner of all economically viable use of private property. It would thus be subject to the public utility regulatory takings analysis. See discussion of takings above, at pp. 8-10. Under the Duquesne analysis, we note that the LECs receive compensation for number portability. The compensation is set at TSLRIC, but once more, the determination that a taking has occurred is not based on a service by service analysis but on the utility's overall return on investment.

3. Switched Access Tariffs. GTE urges us to require the AECs to tariff their switched access service offerings as a reasonable condition under the competitive zone law. Nothing mandates the imposition of this requirement, and we decline to impose it on the AECs.

4. Interim Universal Service Charge. USWC argues that the Commission should reconsider its decision to reject an interim universal service charge as part of the interconnection charge. USWC points out that UM 731, the universal service docket, will address only subsidies from low cost to high cost customers, not the subsidy from business to residential customers. We deny USWC's request for the same reasons we denied it in the Order at 58-59.

5. "Essential Function" determination. USWC and GTE ask the Commission to clarify that local number portability is not an "essential function" as defined in ORS 759.050(2) for imputation purposes. In the Order, at 58, we noted the holding of Order No. 95-313, that all service elements should be treated as essential functions until a LEC can demonstrate that viable alternatives exist in the relevant market. Arguments relating to this issue are being considered in UM 351, but our holding has not changed. All service elements, including number portability, should be considered essential functions until a LEC demonstrates otherwise.

6. Other issues. GTE expresses concerns about how interconnectors route their calls. The Order instructs the parties to negotiate on physical interconnection issues. See Order at 69.

CONCLUSION

Applicants GTE and USWC have not shown that there is new evidence essential to the decision, a change in law or agency policy since the order was issued on a matter essential to the decision, an error of law or fact in the order essential to the decision, or other good cause for further examination of a matter essential to the decision. OAR

860-14-095(3). Their applications for reconsideration should be denied.

ORDER

IT IS ORDERED that the applications of GTE Northwest, Inc. and U S WEST Communications, Inc., for reconsideration of Order No. 96-021 are denied.

Made, entered, and effective ________________________. 

A party may appeal this order to a court pursuant to ORS 756.580