ISSUED January 3, 1997

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

ARB 9

PROCEDURAL HISTORY

On August 10, 1996, MCImetro Transmission Services (MCImetro) filed a petition with the Public Utility Commission of Oregon (Commission) to arbitrate a contract for network interconnection with GTE Northwest, Inc., (GTE) pursuant to 47 U.S.C. §§ 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996 (Act). On October 7, 1996, GTE filed a response. An arbitration hearing was held on November 21 and 22, 1996, before Thomas G. Barkin, Arbitrator. The following appearances were entered:

For the petitioner, MCImetro:

Lisa F. Rackner, Attorney at Law

Portland, Oregon

Rogelio E. Peña, Attorney at Law

Denver, Colorado

Appearing pro hac vice

For the respondent, GTE:

Timothy J. O’Connell, Attorney at Law

Everett, Washington

John Williams, Attorney at Law

Washington, DC

Appearing pro hac vice

On December 9, 1996, the parties filed briefs and proposed contracts. On December 17, 1996, the parties also filed a joint matrix displaying the positions of the parties on the issues.

PRELIMINARY MATTERS

Arbitrator’s Authority

This proceeding is being conducted under 47 U.S.C. § 252(b). The standards for arbitration are set forth in 47 U.S.C. § 252(c):

In resolving by arbitration under subsection (b) any open issues and imposing conditions upon the parties to the agreement, a State commission shall--

(1) ensure that such resolution and conditions meet the requirements of section 251, including the regulations prescribed by the Commission pursuant to section 251;

(2) establish any rates for interconnection, services, or network elements according to subsection (d); and

(3) provide a schedule for implementation of the terms and conditions by the parties to the agreement.

FCC Pricing Rules

On August 8, 1996, the Federal Communications Commission (FCC) issued an order and rules on interconnection pursuant to 47 U.S.C. §§ 251 and 252. 47 C.F.R. § 51.100 et seq. On October 15, 1996, the United States Court of Appeals for the Eighth Circuit stayed the operation of the portions of those rules that relate to pricing and the "pick and choose" provisions. Iowa Utilities Board v. Federal Communications Commission et al., Case Nos. 96-3321 et seq. (8th Cir., October 15, 1996) (Order Granting Stay Pending Judicial Review). Among other matters, the Court found that the FCC's proxy rates would result in irreparable harm to incumbent LECs because they would suffer economic losses beyond those inherent in the transition from a monopolistic market to a competitive one. On November 12, 1996, the United States Supreme Court issued a decision declining to set aside the stay.

GTE argues that the Arbitrator may not rely on any aspect of the FCC pricing rules and that the pricing provisions may not be relied upon by anyone. I disagree. In this decision, I refer to discussions in the FCC order regarding pricing. At some other points, I adopt positions articulated by the FCC. I consider the FCC order to be a comprehensive analysis of issues related to interconnection. Where persuasive, the FCC order provides useful guidance for the resolution of the pricing issues in this proceeding. The FCC conclusions are not dispositive of the issues.

BASE CONTRACT

Base Contract

I adopt the MCImetro contract as the base contract for this decision.

MCImetro has proposed a comprehensive contract that will enable it to enter the local exchange market. GTE opposes adoption of a contract. GTE claims that the MCImetro contract includes a number of disputed issues that were not separately identified in this proceeding. It requests that the arbitrator resolve core, disputed issues and set a deadline for the parties to negotiate a final contract.

I do not adopt GTE's proposal. If anything, this proceeding has demonstrated the inability of the parties to resolve numerous issues related to MCImetro's entry into the local exchange market. I have little confidence that the parties will be able to finish a contract within any reasonable period of time. In fact, it is more likely that the parties will appear before the Commission at the deadline for a finished contract with another list of unresolved issues for the arbitrator and Commission to consider. This process does not further Congress’s directive that States act promptly to facilitate the development competitive markets in the local exchange industry.

GTE’s argument regarding unresolved issues not being separately identified is not persuasive. GTE placed its proposed contract into issue and was entitled to dispute any provision in MCImetro's proposed contract.

I have chosen the MCImetro contract because it is designed to facilitate entry into the local exchange market. GTE has little incentive to cede market share to its competitors. In fact, it has every incentive to slow the development of competition. As a result, I have chosen a contract that provides more specific timelines and leaves less room for continued, extended negotiations over each and every detail of the interconnection arrangements.

Agreements of the Parties

I accept the negotiated agreements of the parties as reasonable and consistent with the Act.

The parties reached agreements on a number of the issues in this proceeding. These agreements are adopted. Throughout the briefs and matrix, counsel represented that agreements had been reached. Unless specifically requested, I have not made a decision on the merits of an issue or on contract language necessary to implement an agreement. Furthermore, I am accepting representations of counsel that particular issues are resolved.

In many instances, I have adopted MCImetro proposed contract language on issues where GTE stated that issues were resolved. I adopted that language with the understanding that the parties may wish to make additional changes to reconcile the MCImetro proposed language with the terms of the stipulation.

Cost Recovery

The contract should include language that delineates MCImetro's obligation to compensate GTE for the economic costs of facilities MCImetro uses. The contract should include the following:

MCImetro must compensate GTE for MCImetro's proportionate share of the additional economic costs whenever MCImetro requests the use of facilities not currently in place, facilities with special technical standards, or when it requests services or facilities demonstrably superior in quality to the highest quality of these three items: (1) requirements of FCC rules; (2) requirements of Commission rules or orders; or (3) the level of quality GTE provides to itself or its affiliates. Disputes over the rate structure for cost recovery should be resolved according to the principles and methods set forth in 47 C.F.R. § 51.507, FCC Order ¶¶ 743-754, and Commission Orders Nos. 96-283 and 96-284.

Where GTE incurs additional costs to build or modify facilities for the benefit of MCImetro, and those costs are not included in existing rates, GTE is entitled to recover such additional costs. GTE has the burden of showing that any claimed additional costs are not already recovered through its existing rates. If GTE demonstrates that it is entitled to recover additional costs to provide facilities on behalf of MCImetro, it may propose to recover those costs through nonrecurring charges. GTE and MCImetro agree to spread recovery of large up-front charges over a reasonable period of time and to allocate such costs among all requesting carriers.

This approach will insure that GTE recovers its costs and that construction charges for new facilities that are not already included in rates will be recovered in a manner that will not discourage competition. These guidelines are consistent with that approved by the FCC in 47 C.F.R. §51.507(e). See also, Order No. 96-283 at 13-14, Order No. 96-325 at A-11; FCC Order at 682, 743-752.

This language should be incorporated into each section and appendix of the contract. Throughout this decision, there are references to requests for facilities placed on GTE by MCImetro. MCImetro's obligation to pay for facilities, including the cost of providing the facilities, is implied in each decision below.

Timelines

In this decision, I have adopted language that requires completion of a task by a specific date. Some of these requirements may be impractical. In some cases, the technology may not be available. In other cases, national organizations may not have set standards that are necessary for the completion of a particular task. My expectation is that the parties will apply their best efforts to comply with the timelines. Absent a showing of bad faith, failure to comply with a specific date shall not be construed as a breach or noncompliance with the contract.

Contract Implementation

MCImetro shall modify its proposed contract in conformance with this decision. The contract shall be completed and signed pursuant to the procedures set forth in the ordering paragraphs.

DECISION ON THE ISSUES

I. Costing Methods and Pricing

Issue 1--What is the proper methodology for determining the prices for GTE resold services?

Issue 1A--Are advertising expenses in their entirety an avoided cost?

Issue 1B--Are call completion costs (operator services) in their entirety an avoided cost?

Issue 1C--Are number service costs (directory assistance) in their entirety an avoided cost?

Issue 1D--Are general & administrative costs an avoided cost when GTE is wholesaling a local service?

Issue 1E--Are product management costs in their entirety an avoided cost?

Issue 1F--What percentage of testing and plant administration costs are an avoided cost?

Issue 1G--What percentage of sales expenses is an avoided cost?

Issue 1H--What percentage of uncollectable expenses is an avoided cost?

Issue 1I--Does the Act’s methodology for determining wholesale rates recognize any new costs that might be caused by the requirement to offer services for resale?

Issue 1J--Is a volume discount appropriate in a resale environment, and if so, what should the discount be?

MCImetro’s wholesale pricing discount model is adopted for calculating avoided costs. The following discounts for the sale of services at wholesale are adopted:

For all services other than specified below, 15.9 percent.

Volume discounted services, 7.95 percent.

These discount rates are interim, pending Commission determination of the appropriate discount rate. Order No. 96-283 at 14.

Calculation of the Wholesale Resale Price

The parties offered a range of alternatives for the wholesale discount. GTE proposed an average discount rate of about seven percent, compared to MCImetro’s proposed discount rate of 15.9 percent. MCImetro's wholesale pricing discount model is based on the FCC's analysis for calculating the wholesale discount. The FCC identified certain account categories in the Uniform System of Accounts (USOA) that it considered presumptively avoidable and others that State commissions could find avoidable upon a proper showing by the competitor. MCImetro recommended that the avoided cost calculation include costs in the first category. MCImetro relied on publicly available data found in the Automated Report Management Information System (ARMIS) filed by GTE with the FCC. MCImetro included indirect costs in proportion to the ratio of total indirect costs to total direct avoidable expenses. GTE, on the other hand, conducted extensive studies of its operations analyzing all of its work centers to determine which activities or functions in each work center will be avoided in a wholesale environment.

I am adopting MCImetro’s analysis for several reasons. The first reason is that the analysis is consistent with the conclusion that reasonably avoidable costs should be included in the discount calculation. The Act requires the Commission to determine wholesale rates on the basis of retail rates charged to subscribers for the telecommunications services requested, excluding the portion attributable to any marketing, billing, collection, and other costs that will be avoided by the local exchange carrier. 47 U.S.C. § 252(d)(3). The FCC interprets avoided cost as those costs that an incumbent LEC would no longer incur if it were to cease retail operations and instead provide all of its services through resellers. The FCC stated:

We do not believe that Congress intended to allow incumbent LECs to sustain artificially high wholesale prices by declining to reduce their expenditures to the degree that certain costs are readily avoidable. We therefore interpret the 1996 Act as requiring states to make an objective assessment of what costs are reasonably avoidable when a LEC sells its services wholesale. We note that Colorado, Georgia,

Illinois, New York, and Ohio commissions have all interpreted the 1996 Act in this manner.

FCC Order ¶ 911.

The reasonably avoidable approach is the most reasonable manner for interpreting the statute. GTE contends that this interpretation is contrary to the plain meaning of the statute. GTE excludes only the costs that it believes will in fact be avoided. I conclude that the statutory term "will be avoided" may be read to anticipate the actions of a prudent competitor selling services at wholesale in a competitive market. To keep prices down, the competitor will cut its costs as deeply as possible to retain its customers. It is fair to say that Congress anticipated that the prudent wholesaler will avoid all costs reasonably avoidable. GTE cannot object to this interpretation of the statute without acknowledging its own liberties with the statutory term "avoided cost." GTE claims Congress must have meant "net avoided cost." GTE insists that an adjustment to avoided costs must be made to compensate GTE for the foregone contribution provided by complementary services, such as intraLATA toll. Of the two views, the FCC's reading of the law is more in keeping with the basic concepts underlying the statute.

The second reason is that MCImetro's evidence is more persuasive on the costs that are avoidable. I have reviewed the testimony submitted by the MCImetro witness and agree with his conclusions. Costs incurred for the retail operations should not be borne by carriers that purchase services wholesale. In addition, the avoidable cost calculation is based on Oregon data, and is, therefore, more relevant to the resale of services in this jurisdiction.

The MCImetro proposal is also preferable because it is consistent with the reasonable conclusions reached by the FCC regarding the avoidable costs in particular USOA accounts. FCC Order ¶ 928. The FCC concluded that 90 percent of marketing costs, including product management, sales, and advertising, are avoidable. Furthermore, the FCC determined that 90 percent of customer services costs will also be avoided in a wholesale environment. All operator services and directory assistance costs will be avoided, because MCImetro will provide these services itself. The FCC conclusions are conservative and should be sufficient to allow GTE to recover any new costs it must incur to provide wholesale services.

The third reason is that the GTE proposal is simply unacceptable. In this arbitration, the parties were directed to propose their last best offers. GTE chose to submit a wholesale resale rate calculation that included a factor that compensates GTE for opportunity costs. In theory, this factor is designed to compensate GTE for revenues from complimentary services such as intraLATA toll that it may lose because the customer has gone to a competitor. In effect, the model produces results that are anticompetitive and counterintuitive. The most obvious example is GTE's proposed wholesale rate for basic business service. As a result of the opportunity cost factor, GTE's wholesale rate is greater than the retail rate for the service. There is no basis in the Act for such a result.

Furthermore, as the MCImetro witness pointed, out there are several serious flaws with the GTE study, including unverifiable costs and allocations, failure to use Oregon-specific data, and adding back wholesaling costs. GTE's modified study is similarly flawed since it uses both inter- and intrastate numbers to calculate the discount and includes costs that MCImetro will separately incur to provide the retail service.

As recognized by both parties, the discount rate adopted here should be interim.

Discount for Residential and Lifeline Services

GTE asserts that it will not sell at wholesale rates services that it claims are below cost. That includes lifeline services and residential service.

As discussed below, this position conflicts with the requirement of the Act that incumbent local exchange carriers (ILECs) offer for resale at wholesale rates any telecommunications service that the carrier sells at retail to subscribers who are not telecommunications carriers. Residential and lifeline services must be sold at wholesale. FCC Order ¶ 956.

GTE argues that this service is already sold below cost and that a further discount would be confiscatory. GTE points out that below-cost services receive contribution from other services, such as toll, access and vertical services, that are priced above cost. If GTE must sell the services at a discount, MCImetro would obtain avoided cost discounts for both above- and below-cost services. MCImetro would keep the contributions from the above-cost services that subsidize the below-cost services.

Even if GTE’s argument has merit, it does not overcome the statutory duty to offer telecommunications services to competitive local exchange carriers (CLECs) at the retail rate, less avoided costs. The law makes no provision allowing GTE to exempt from the resale requirement services that are allegedly sold below cost. The wholesale discount must be applied to GTE's retail rates.

GTE's claim of serious adverse effects cannot stay the implementation of the Act. If GTE believes that it has been disadvantaged by the wholesale resale duty because the retail rate is too low, the remedy is to request the Commission to raise the retail rate. The arbitrator’s authority is limited to implementation of the Act. This arbitrator cannot solve all the problems the Act creates. If there are other actions that need be taken to avoid undue consequences, GTE must raise those concerns in the appropriate forums.

Finally, to the extent that GTE's argument has merit, its claim of an unconstitutional taking cannot be addressed with any degree of rigor until the company has taken all reasonable actions to rebalance its rates. There are many steps in the full implementation of the Act that will affect GTE's ability to earn a reasonable return. New retail rates, access charge reform, and universal service charge implementation will all affect GTE's earnings. Until GTE pursues each of these steps, claims of unconstitutional takings are premature and speculative.

Volume and Term Discounted Services

GTE should offer volume and term discounted services at a wholesale rate of 7.95 percent. This is one-half the rate for fully-priced retail services. Notwithstanding GTE's assertions, there are avoided costs for services sold at volume and term discounts. While the discounts may be small and, in some cases may be zero, there remain marketing and other costs that GTE must incur to offer the volume and term discounted services. The issue is not whether there are avoided costs, but rather the amount of those costs. Until the avoided cost is calculated properly, I will set a reduced discount rate for services sold at a volume or term discount.

Issue 2--How should the cost of interconnection and unbundled network elements be calculated, and what prices should be established?

On an interim basis, pending determination of permanent rates by the Commission, the prices for unbundled elements in Order No. 96-283, Appendix C, are adopted. For the interim period, geographic deaveraging is not required. If, however, GTE requests pricing flexibility under Order No. 96-021, MCImetro may request the Commission to modify its prices to accommodate geographic deaveraging.

On November 1, 1996, the Commission issued Order No. 96-283 (Reopened UM 351, Phase II). In that order, the Commission modified the prices for unbundled elements that it had adopted in Order No. 96-188. The prices set forth in that order meet the requirement of the Act:

…(T)he just and reasonable rate for network elements …--

shall be—

based on the cost (determined without reference to a rate-of-return or other rate-based proceeding) of providing the interconnection or network element (whichever is applicable), and nondiscriminatory, and may include a reasonable profit.

47 U.S.C. § 252(d).

The single most important advantage to the UM 351, Phase II, prices is that the models, assumptions, and underlying cost data are readily available and have already been evaluated in a formal, open investigation. In reaching its conclusions, the Commission considered comments, testimony, briefs, and expert advice from all sides of the telecommunications industry. In contrast, GTE and MCImetro spent a considerable portion of the hearing demonstrating that each other’s models are not open to analysis and that each other’s assumptions are not readily available or documented. These complaints occur because the models have not been tested in an open, broadly noticed proceeding before a neutral third party who insisted on disclosure of the relevant factors in the studies and who had the time to verify the study conclusions.

In spite of the obvious advantages, GTE claims that the UM 351, Phase II, prices may not be used in this proceeding because the prices are based on USWC's costs, not GTE's costs. In Order No. 96-283, the Commission explained why the USWC prices for unbundled elements must be used for GTE:

… GTE has had over four years to prepare and submit properly documented studies that reflect company-specific costs. GTE has not prepared such studies, but has instead chosen to rely on cost information prepared by USWC. GTE's election is consistent with the approach that GTE itself recommended as a participant in the UM 351 Phase I cost study workshops. For GTE to now allege that it has been harmed by this process is disingenuous. GTE has always had, and still has, the option of submitting the information necessary to demonstrate that its costs differ from those adopted by the Commission here.

Order No. 96-283 at 9-10.

GTE's claim that it will be irreparably harmed by the use of USWC's costs can be given no weight given GTE's lack of diligence in submitting cost studies for Commission approval and its acquiescence to the approach the Commission followed in UM 351, Phase II.

Even if GTE's argument regarding USWC's costs were to be adopted, there is still no basis to adopt GTE's methodology. In this proceeding, GTE submitted a proposal that ignored the Commission's methodology for pricing unbundled elements. If the State commission pricing authority means anything under that Act, it must authorize State commissions to determine how prices shall be established. GTE cannot undercut that statutory grant by insisting that its own methodology be adopted, notwithstanding the Commission's carefully crafted policies. A State commission accepting such a claim would be abdicating its pricing authority to the regulated entity, a result clearly illegal under both state and federal laws.

Aside from GTE's disregard for Commission policies, there are other reasons to reject the company’s pricing for unbundled elements. GTE offers a concept called the market determined efficient component pricing rule (M-ECPR). GTE acknowledges that the FCC correctly rejected the initial version of this methodology, the ECPR. Under this approach, an incumbent LEC would set the price of an unbundled element equal to the incremental cost of the element, plus the opportunity cost of the resold element. The opportunity cost is the revenue that the incumbent loses when the new entrant sells the service to the customer instead of the incumbent. The opportunity cost is the incumbent’s net revenues from the lost sale, including profit and contribution to common costs. The lost revenue calculation is based on the existing retail price of the service sold. FCC Order ¶ 708. The FCC rejected ECPR because the retail prices used to calculate opportunity costs are based on revenues, not costs. As a result, "application of ECPR would result in input prices that would be either higher or lower than those which would be generated in a competitive market and would not lead to efficient retail pricing." FCC Order ¶ 709.

To overcome the FCC's objections, GTE offers the M-ECPR. The principle change in approach is to cap prices for each unbundled element at the price of its market alternative. Several problems with the GTE fix are immediately apparent. First, the basic concerns with ECPR still exist. The most basic is that GTE would set prices based on lost revenues, not costs. Second, there are no market alternatives for some building blocks. For example, GTE proposes to use "internal benchmarks" as a cap for certain kinds of loops. Internal benchmarks are not market determined prices. Third, GTE's cap merely limits the price of the monopoly network element. It does nothing to bring the price of the service down to the actual forward-looking cost of providing the service.

Finally, GTE insists that pricing of unbundled elements include an end-user charge to recover lost subsidies that were inherent in rate-of-return regulation. GTE claims that, without an end-user charge, facilities-based entry and M-ECPR pricing of unbundled network elements will produce stranded costs equal to the difference between GTE's net revenues under traditional regulation and what GTE will earn under M-ECPR. GTE claims that the provisions of 47 U.S.C. § 254 regarding universal service pricing authorize the end-user charges. Universal service charges are being addressed in separate FCC and Commission proceedings. There is no basis in the Act for including subsidies in the calculation of economically efficient prices.

GTE claims that failure to adopt its pricing proposal will result in a taking of GTE's property without just compensation in violation of the U.S. Constitution. This claim is not persuasive. The questions involving takings are numerous and complex. See FCC Order ¶¶ 733-740. Certainly the issues raised by the Telecommunications Act of 1996 are unprecedented. I see no reason to adopt GTE's assertion that its pricing proposal is the only choice that avoids a conflict with the Constitution.

MCImetro, also, objects to the use of the UM 351, Phase II, prices. MCImetro acknowledges that the Commission's pricing methodology is generally consistent with the FCC Order and that MCImetro has long supported the Commission's efforts. However, MCImetro now asserts that the UM 351, Phase II, costs were calculated using a "black box" model and that the same basic model is producing costs which are three times higher than the original cost estimates. MCImetro also notes that the UM 351, Phase II, prices are subject to revision and that the Commission Staff and USWC experts have no idea what type of numbers their stipulation will actually produce.

MCImetro’s arguments seem directed at the fact that the model is producing higher prices than it had in the past. The Commission is setting prices for unbundled network elements based on the best information that it has before it. An end result favoring one side or the other should not influence the choice of the model.

MCImetro advocates the use of the Hatfield model for pricing network elements. MCImetro claims the model is completely open and has been studied, tested, critiqued, and improved over time. That may be, but the model has not be tested by the Commission and its adoption is certainly controversial in this proceeding. I do not adopt the Hatfield model.

One other additional topic is addressed in this section. MCImetro proposes rates that include geographic deaveraging. Geographic deaveraging is an appropriate mechanism for matching the cost to provide unbundled elements with the price for those elements. It is clear that the cost of providing unbundled loops varies with length and density. However, deaveraging unbundled elements before deaveraging retail rates places GTE at a competitive disadvantage. MCImetro should not be able to purchase loops in dense urban areas at a price that only reflects the cost of serving low-cost customers, while GTE is required to provide basic service at a rate that covers the cost of serving both high- and low-cost customers. Deaveraged prices are appropriate when all competitors can price retail services based on the underlying costs. See Order No. 96-283 at 14.

If GTE petitions the Commission for pricing flexibility under ORS 759.050(5) and Order No. 96-021, geographic deaveraging should be considered. If GTE submits such a request, MCImetro may reassert its claim that geographic deaveraging is necessary to insure fair competition.

Issue 3--What rates are appropriate for transport and termination of local traffic?

The rates for transport and termination shall be based on bill-and-keep. If, as a result of the industry work group efforts undertaken pursuant to Order No. 96-021, bill-and-keep is eliminated, the interim rates for termination and transport are set forth by the Commission in Order No. 96-283, Appendix C.

Issue 4--Should bill-and-keep be used as a reciprocal compensation arrangement for transport and termination of local traffic on a temporary or permanent basis?

Pursuant to Order Nos. 96-021, 96-129, and 96-160, bill-and-keep is adopted as the interim method of compensation for transport and termination. Reciprocal compensation issues are being resolved in industry workshops.

The Commission has already found that traffic exchanged between a competitive local exchange carrier (CLEC) and an ILEC is likely to be within a few percentage points of equilibrium. Order No. 96-021 at 55. This conclusion is consistent with the Act, which provides for the use of bill-and-keep as a just and reasonable means to recover the cost of terminating and transporting traffic between ILEC and CLEC networks. The FCC has determined that bill-and-keep may be employed if the amount of local traffic from one network to the other is roughly balanced with the amount of local telecommunications traffic flowing in the opposite direction, and is expected to remain so. 47 C.F.R. § 51.713(b). The FCC further provides that a State commission may presume rough balance, unless a party rebuts the presumption. Id. at (c).

GTE argues that it should not be required to use bill-and-keep on either a temporary or permanent basis. GTE proposes asymmetrical usage-based rates for transport and termination. The rates for termination should reflect the cost of each carrier’s network. However, the company has agreed to bill-and-keep that can be used initially under certain conditions and changed when traffic is more than 10 percent out of balance.

MCImetro agrees to bill-and-keep on an interim basis. However, for the long term, MCImetro proposes adoption of the current FCC position that bill-and-keep is appropriate for termination, but a symmetrical cost-based rate should apply for transport on a per-minutes-of-use basis. FCC Order ¶¶ 1111-1113. 47 C.F.R. § 51.703(e) and § 51.713. MCImetro recommends that a percent local usage factor should be used to measure usage.

Neither of the parties’ proposals resolve the problems that led the Commission to adopt bill-and-keep on an interim basis. Order No. 96-021 at 52-61. A principal concern addressed in that order was the technical inability to measure traffic transiting a carrier’s facilities. The Commission ordered bill-and-keep after concluding that there is little reason to assume that traffic is not in balance. The Commission also established an industry-wide work group to study the problem and propose solutions by January 1998.

As a result, I adopt bill-and-keep on an interim basis. A permanent solution should await the recommendations of the industry work group. GTE's proposal to apply bill-and-keep until traffic is 10 percent or more out of balance is not adopted. GTE did not explain how it intends to measure traffic. Neither is MCImetro's proposal is adopted. The rationale for its proposal to apply bill-and-keep to transport and not termination is based on little more than "a careful reading" of the FCC’s rules. This legalistic interpretation of the rule is inconsistent with the discussion in FCC Order ¶¶ 1111-1118.

Issue 5--What method should be used to price interim number portability and what specific rates, if any, should be set for GTE?

I adopt the bill-and-keep cost recovery mechanism proposed by MCImetro.

The Act requires that the costs for interim number portability must be borne by all telecommunications carriers on a competitively neutral basis as determined by the FCC. 47 U.S.C. § 251(e)(2). See In re Telephone Number Portability, FCC Order 96-286 at ¶¶134-136. The FCC has indicated that bill-and-keep or a cost recovery mechanism that allocates costs through a surcharge on each carrier's number of ported telephone numbers relative to the total number of active telephone numbers in the local service area is acceptable. The FCC's bill-and-keep method, which is less expensive to implement, is adopted, pending the development of a permanent number portability solution.

GTE advocates that the Commission use the tariff provisions for interim number portability currently in effect in Oregon. These rates are based on incremental costs, a method that does not meet the FCC's criteria for competitively neutral rates. The FCC concluded that incremental cost-based charges would not meet its "competitive neutrality" criterion because a new facilities-based carrier would be placed at an appreciable, incremental cost disadvantage relative to another service provider, when competing for the same customer. The FCC stated:

…(A) cost-recovery mechanism that imposes the entire incremental cost of currently available number portability on a facilities-based new entrant would violate this criterion. This cost-recovery mechanism would impose an incremental cost on a facilities-based entrant that neither the incumbent, nor an entrant that merely resold the incumbent's service, would have to bear, because neither the incumbent nor the reseller would have to use currently available number portability measures in order for the prospective customer to keep his or her existing number.

FCC 96-286 ¶ 134.

Issue 6--What method should be used to price collocation?

The prices set forth in the Commission and FCC tariffs for virtual collocation are adopted. The prices set forth in GTE's FCC tariffs for physical collocation are adopted, on an interim basis. MCImetro may purchase network elements for interconnection at the prices set forth in Order No. 96-283, Appendix C.

On April 19, 1996, GTE filed tariffs for virtual collocation in compliance with Commission Order No. 96-079 (UT 119). There are no state physical collocation tariffs, although GTE has filed physical collocation tariffs with the FCC. The state and federal tariff rates should be adequate for MCImetro. The rates on file with the FCC may be adjusted through the FCC rulemaking proceeding. In the April 19, 1996, letter, GTE indicated it would comply with the FCC's order, when issued, and file a new physical collocation tariff.

I note that the rates for physical and virtual collocation are not the exclusive means by which MCImetro may interconnect with GTE. MCImetro may purchase unbundled elements for interconnection, at the prices set in Order No. 96-283, instead of using the Expanded Interconnection Service included in the collocation tariffs. Order No. 96-079 at 4.

Issue 7--What is the proper way to charge for access to poles, ducts, conduits, and rights-of-way?

Until the FCC adopts regulations governing the charges for access to poles, ducts, conduits, and rights-of-way, the Commission's administrative rules apply.

The Act provides that no later than two years after enactment, the FCC shall prescribe regulations to govern the charges for pole attachments used by telecommunications carriers to provide telecommunications services, when the parties fail to resolve a dispute over such charges. 47 U.S.C. § 224(e)(1). Until the FCC adopts regulations prescribing the charges for access to poles and conduits, the procedures and formula set forth in the Commission's administrative rules shall apply. OAR 860-022-0055 and -0060.

GTE proposes that the rate for attachments in the rules be imposed subject to a true-up once lawful rates are established. There is no reason for a true-up. The formula in the Commission's rules is lawful.

II. Services Available for Resale

Issue 8--What GTE services should be required to be made available for resale at wholesale rates?

Issue 9--Is GTE required to offer for resale at wholesale rates services to the disabled, including special features of that service such as free directory assistance service calls, if that service is provided by GTE?

Issue 10--What resale restrictions should be permitted, if any?

GTE shall make all retail telecommunications services available for resale with the following restrictions:

Residential service may not be resold to any other class of customers.

Services for the disabled or others mandated by law may not be resold to any ineligible customers.

Promotional offerings of 90 days or less need not be offered at a discount.

MCImetro may only resell grandfathered services to customers currently receiving the grandfathered service from GTE.

The requirement to provide retail services at wholesale rates applies to non-recurring charges, individual case basis charges, operator services, directory assistance services, promotional services, current and future Advanced Intelligent Network (AIN) services, wire and voice mail services, and enhanced, grandfathered, packaged, and private line services. Private line services may not be used for providing access services. Intentional violation of this restriction constitutes breach of this contract and shall terminate MCImetro's ability to purchase any additional private line services from GTE.

The Act provides that the ILEC must offer any telecommunications service for resale at wholesale rates that the carrier provides at retail to subscribers who are not telecommunications carriers. The ILEC may not prohibit, or impose unreasonable or discriminatory conditions or limitations on resale. However, a State commission may, consistent with the FCC's regulations, prohibit a competitor from purchasing wholesale services available only to one category of customers and reselling the services to another category of customers. 47 U.S.C. § 251(c)(4).

GTE’s position with respect to resale of services falls into three categories:

Services that GTE will offer for resale, at a discount. In addition to other services not raised as an arbitrable dispute by MCImetro, GTE will offer grandfathered services and optional calling plans (subject to the condition that resale is to be limited to those customers who are eligible to subscribe to the service from GTE), and existing AIN services.

Services that GTE will not offer for resale. These include services that GTE already sells below cost, inside wire maintenance, voice mail, public and semi-public pay telephone lines, promotions, future AIN services, and services that CLECs might want to sell cross-class.

Services that GTE will offer for resale, but not at a further discount. These include future contracts, operator services (OS), directory assistance (DA), non-recurring charges, and services that are already offered at wholesale rates.

With limited exception, the Act makes no provision for GTE's proposed prohibitions and limitations. All retail telecommunications services that that are sold to subscribers who are not telecommunications carriers must be sold on a wholesale basis. There can be no prohibition on the resale of these services, except that a State commission may prohibit resale of a service only available to a particular class of retail customers to another class of customers. 47 U.S.C. § 251(4). Further, GTE may not impose unreasonable or discriminatory conditions or limitations on the resale of these services. The FCC has determined that any further limitation or condition is presumptively unreasonable. 47 C.F.R. § 51.613 (b). It did find reasonable a restriction for short term promotions of no more than 90 days. Id. (a)(2).

GTE proposes a number of prohibitions and limitations on the resale of eligible services. Resale of allegedly below cost services is discussed in more detail above and pay telephone lines are discussed in the next group of issues. GTE asks for a restriction against the resale of services to interexchange carriers and other retail telecommunications providers. I do not adopt this proposal because it is not a cross-class restriction. I agree with GTE that inside wire maintenance is not a telecommunications service under the Act and does not have to be resold. Voice mail is a telecommunications service, even though it has been deregulated. There is no basis for GTE to withhold future technological advancements in AIN services from the resale obligation. Pricing issues related to trigger access to AIN services should be addressed on an individual case basis (ICB).

GTE claims also that it should not be required to wholesale those services that it offers to subscribers at promotional discounts. It asserts that, if resale of promotions is not prohibited, GTE will not be able to distinguish its offerings from those of its competitors. The FCC proposed that promotional discounts of 90 days or less do not have to be offered at resale. FCC Order ¶ 950. 47 C.F.R. § 51.613(2). I believe this provision allows GTE to distinguish its services, but prohibits GTE from offering perpetually discounted, nonstandard promotions.

GTE also seeks to limit the resale of private line services, because access services (which are functionally indistinguishable) are sold to interexchange carriers at wholesale. I conclude that private line is a retail service and must be made available for resale. However, because private line and access lines are indistinguishable, there is a possibility that a competitor could provide access services with a private line service. This could result in improper avoidance of access charges. As a result, the contract should require that private line services may not be used for access service. If MCImetro intentionally violates this restriction, GTE may refuse to offer at wholesale any further private line services.

GTE must offer separately for resale, at the discount rate, those operator services and directory assistance services (OS/DA) that it sells to subscribers at retail. I have adopted an averaged wholesale discount. Cost studies are insufficiently detailed to justify evaluating discounts on a service-by-service basis.

Non-recurring charges must be offered at a discount. The Act requires resale of services. There is no provision for imposing limitations based on the type of charge. In addition, there is insufficient information in the record to conclude that there are no avoided costs associated with nonrecurring charges.

Issue 11--How soon after this agreement takes effect should GTE provide MCImetro with a list of GTE's telecommunications services?

I adopt MCImetro's proposal that the list should be provided within 10 days of the effective date of the contract.

GTE's proposal to provide the list within a "reasonable amount of time after the effective date" of the contract is vague and could lead to delays. To avoid missing the 10-day requirement, GTE should begin developing its list prior to the effective date of the contract.

Issue 12--What is a reasonable period for advance notification of new services?

This issue is resolved. As requested by MCImetro in the matrix, I am adopting MCImetro's proposed contract language.

Issue 13--Should GTE be required to offer public pay phone lines to MCImetro at wholesale rates?

Issue 14--Should GTE be required to offer semi-public pay phone lines to MCImetro at wholesale rates?

Issue 15--Should GTE be required to offer COCOT coin and COCOT coinless lines to MCImetro at wholesale rates?

GTE must offer public, semi-public, and COCOT coin and COCOT coinless pay phone lines to MCImetro at wholesale rates. MCImetro's contract language is adopted.

All the listed services must be offered to MCImetro at wholesale rates. Contrary to GTE's assertion, public pay phone providers who purchase public pay phone lines are subscribers who purchase the service at retail rates. FCC Order ¶ 876. Issue 13 addresses pay phone lines. I do not understand MCImetro's proposal to request resale of telephone booths and pay telephone equipment.

The fact that semi-public pay phone lines are deregulated does not exclude them from the definition of telecommunications services under the Act. The definition of telecommunications services set forth in the Act is binding on the determinations in this arbitration. These services are telecommunications services under 47 U.S.C. § 153(51). These services must be offered at wholesale. GTE claims that COCOT coin and coinless line services are sold under tariff and that there is no additional wholesale discount. I conclude that these are retail services sold to subscribers. They must be sold at the wholesale discount. The issue of selling services at or below cost is addressed above.

Issue 16--Should each and every retail rate have a corresponding wholesale rate?

See Issues 8 to 10 above.

III. Operator Services and Directory Assistance

Issue 17--Should GTE be required to route operator services and directory assistance calls to MCImetro’s platforms where MCImetro purchases unbundled network elements and resold services?

GTE must route OS/DA calls to MCImetro's platforms where MCImetro purchases either resold services or unbundled network elements. MCImetro's proposed contract language is adopted.

GTE will sell OS/DA services that it now sells at retail on a resale basis. It claims that it is not required to unbundle portions of OS/DA that are not sold separately at retail. GTE offers to provide those aspects of OS/DA that it currently offers at retail along with local service at just and reasonable rates for its avoided cost. GTE has agreed to unbundle GTE-provided OS/DA. However, it claims that switch routing capability is not an unbundled element and that current switch limitations would require adding new capacity and conditioning existing switches. Finally, it asserts that a long-term industry standard must be established.

MCImetro states that GTE must unbundle the functionalities of OS/DA in connection with resold services, to the extent technically feasible. GTE must prove to the State Commission that customized routing at a particular switch is not technically feasible.

I adopt MCImetro's position and contract language. The FCC has required GTE to unbundle customized routing functions provided by the switch, as has the Commission. 47 C.F.R. § 51.319(c)(i)(C)(2). Order No. 96-283 at 2. GTE's concerns are focused on the requirement to add capacity and condition its switches. GTE has the burden of demonstrating to the Commission that customized routing in a particular switch is not technically feasible.

At this point, there are no prices for customized routing of OS/DA approved in UM 351, Phase II. GTE was directed to file rates in compliance with Order No. 96-283. Prices for this element shall be set, after Commission review and approval of GTE's compliance filing in Order No. 96-283.

Issue 18--Should GTE be required to provide access to its directory assistance database so that MCImetro may provide its customers with MCImetro-branded directory assistance?

When an electronic gateway is established, GTE must provide MCImetro access to its directory assistance database so that MCImetro can provide its customers with MCImetro-branded directory assistance. MCImetro's contract language is adopted. GTE must take all reasonable steps necessary to facilitate agreements between MCImetro and other ILECs to allow MCImetro to access database information from other ILEC companies that is resident in the GTE database. GTE's proposal to provide directory assistance information on magnetic tape, updated each business day is adopted. MCImetro must pay the cost of providing and transporting the tape at rates based on the methodology described above.

The Commission and the FCC have required ILECs to unbundle access to their directory assistance databases. Order No. 96-283. FCC Order ¶ 536. This access must include the entry of a requesting carrier’s customer information into, and the ability to read ILEC customer information from, the database. Entry of the CLEC's customer information into the ILEC’s directory assistance database can be mediated by the ILEC to prevent unauthorized use. FCC Order ¶ 538.

GTE has agreed to give MCImetro access to GTE's listing information once an electronic gateway is developed. Until the gateway is developed, GTE agrees to provide MCImetro with directory assistance information on magnetic tape, with updates provided every business day. GTE asks for a set uniform standard pricing rate that is consistent and equal for all telecommunications providers within the state.

MCImetro requests that GTE provide the same directory assistance access that it provides its own subscribers. Until a national gateway is established MCImetro agrees with GTE's interim solution, but wants the price of providing the magnetic tapes specified. I adopt the pricing methodology set forth by the Commission in Order No. 96-284 and discussed above. In the absence of a calculated price, the carriers should use the same price methodology used in ILEC-to-ILEC data transfers. If the parties are unable to resolve the issue, they may request dispute resolution by the Commission.

In addition, MCImetro requests access to data for subscribers of the independent companies whose territory is adjacent to GTE. I conclude that GTE should make best efforts to facilitate such access.

Issue 19--Can MCImetro route directory assistance calls to either the MCImetro directory assistance service platform or the GTE directory assistance service platform?

GTE must route directory assistance calls from MCImetro subscribers as directed by MCImetro at MCImetro's option. Unless GTE demonstrates that customized routing of directory assistance is not technically feasible in a particular switch., it must provide the service on an unbundled or resale basis. MCImetro's contract language is adopted, with the following modification:

MCImetro shall submit reasonable requests and identify those geographic areas where it wants customized routing;

Within 14 days of receiving MCImetro's notification, GTE will identify its switches serving in the designated area, specify any claim of technical infeasibility, including an inadequate number of Line Class Codes, and provide a quote for the cost to provide the customized routing;

Absent a showing by GTE, by clear and convincing evidence, that customized routing is not technically feasible, GTE must provide customized routing within 56 days of MCImetro's subsequent notification that it will accept the terms of the offer;

MCImetro and other CLEC's must pay the costs associated with providing customized routing on a competitively neutral basis; and

The parties shall work to establish a long-term industry solution.

GTE asserts that customized routing of directory assistance is fraught with technical problems, including the need to add new switch capacity and condition existing switches. In addition, GTE would have to install separate trunk groups and assign unique line class codes to MCImetro. GTE also claims that the use of line class codes will destroy the ability to bill for customized routing and that there is a limited availability of line class codes. I conclude that none of these problems rise to the level of technical infeasibility. In fact, MCImetro points out that Bell Atlantic and Southwestern Bell have promised to use an AIN solution to solve the problem. If MCImetro and other CLEC's are willing to pay for the modifications, GTE must provide the service.

GTE states that it is willing to provide directory assistance on an individual case basis. GTE’s proposed procedure, as set forth in its brief, is reasonable, except that the burden should be on GTE to demonstrate that a specific request by MCImetro is not technically feasible. I have modified GTE's procedure to provide firmer time lines and to impose the burden of demonstrating technical infeasibility on GTE. Disputes over the cost to provide customized routing and the cost recovery mechanism shall be resolved as described above.

Issue 19A--Should GTE be required to provide MCImetro with Line Class Codes (LCCs) for customized routing?

I conclude that GTE shall be required to provide MCImetro LCCs for customized routing, unless it can demonstrate to the Commission that there is an inadequate number of LCCs to meet the needs of the subscribers of all telecommunications carriers. MCImetro's contract language is adopted. The procedures set forth in Issue 19 will apply.

Issue 20--Should service ordering and provisioning of Network Elements features, functions, and resale services be measured by real time?

Service ordering and provisioning of network elements features, functions, and resale services should be measured in real time, according to national standards. Until national standards are adopted, GTE shall provide, at MCImetro's expense, a standard format and order process. GTE shall provide the interim process as soon as reasonably practicable. MCImetro's contract language is adopted, except that the date of implementation for the interim arrangement is eliminated.

Standards for real time, electronic service ordering and provisioning are being established by a national work group. Until the standards are developed, MCImetro may choose to use GTE's proposed solution or another interim method that MCImetro may specify. The cost of developing an alternative to GTE's National Order Management Center shall be borne by MCImetro.

Issue 21-- Should GTE be required to provide directory listing information to MCImetro via electronic data transfer on a daily basis so that MCImetro may update its directory assistance database and provide its customers with MCImetro-branded directory assistance?

GTE has agreed to provide directory assistance listings on magnetic tape. GTE should provide those tapes on a daily basis. If requested by MCImetro, GTE shall transfer the data electronically. The cost of transmitting the tapes should be borne by MCImetro. MCImetro's contract language is adopted.

GTE has agreed to provide MCImetro with its directory assistance listings on magnetic tape until adequate provisions for third party access have been established. This short term solution appears to be consistent with MCImetro’s interim proposal.

Issue 22--Should GTE be required to accommodate MCImetro’s branding requests concerning operator services and directory assistance?

The parties have reached agreement on branding directory assistance. When customized routing is implemented, GTE agrees to uniquely brand on behalf of any ILEC. In the interim, GTE has offered to unbrand its directory assistance services in a resale environment for use by MCImetro (where it is lawful to do so), and MCImetro has accepted this offer. MCImetro's contract language is adopted.

Issue 22A--Can MCImetro route local operator services to either the MCImetro operator services platform or the GTE operator service platform?

This issue is resolved on the same basis as Issues 18 and 19.

Issue 23--On what basis should GTE be required to distribute directories to MCImetro customers?

This issue is resolved by stipulation.

Issue 23A--Should GTE make secondary distributions of directories to MCImetro’s customers without charge?

This issue is resolved by stipulation.

Issue 24--How should PIC changes be made for MCImetro’s local customers and should GTE identify PIC charges separately?

GTE indicated that this issue is resolved. MCImetro's contract language in the matrix is adopted.

Issue 25--What authorization is required for the provision of customer account information to MCImetro?

I adopt GTE's position that, until the FCC issues its rules, MCImetro must provide a written letter of authorization before GTE gives MCImetro access to customer record information in the GTE data base. The base contract should be modified to reflect this decision.

This is a legal dispute over the interpretation of § 222(c) of the Act. That provision governs the disclosure of customer proprietary number information (CPNI). MCImetro proposes that it be allowed to self-certify that the customer has actually requested to change local carriers from GTE to MCImetro with no change in the service offerings or other arrangements.

The general rule is that a telecommunications carrier may disclose CPNI upon affirmative written request by the customer of any person designated by the customer. 47 U.S.C. § 222(c)(2). The Act provides a limited exemption for the disclosure of CPNI to initiate, render, bill, and collect for telecommunications services. 47 U.S.C. § 222(d)(2).

MCImetro asserts that the exemption allows GTE to provide CPNI to MCImetro upon MCImetro's self-certification that the customer has requested a change of carrier. GTE contends that MCImetro's reading is stilted and contrary to the legislative history.

I conclude that until the FCC issues its rules, MCImetro must provide a written letter of authorization. For years, the area of customer privacy and unauthorized carrier changes has been a burden on the public, the Commission, and carriers in the provision of interexchange services. The potential for extending those problems to the local exchange market is of great concern. The FCC now has pending a rulemaking proceeding to determine how CPNI should be protected when a customer changes local service providers. FCC Docket No. 96-115. GTE indicated its intention to comply with the procedures that the FCC adopts in a final order regarding the release of CPNI to CLECs. Until that time, it is prudent to adopt procedures that strictly protect the interests of the customers.

Issue 26--Should GTE provide directory pages to MCImetro as GTE has for its own use for branded service information?

GTE is not required to place MCImetro's logo and a statement regarding MCImetro's customers on the cover of GTE's directory. The remaining sub-issues have been resolved by stipulation.

GTE indicated that this issue is resolved except for the dispute regarding the cover of GTE's directory. I can see no reason why GTE should have to publish its directory with MCImetro's logo on the cover. Even MCImetro's brief acknowledges that a reasonable alternative is for MCImetro to have the directories delivered to MCImetro, rather than to the subscribers, so that MCImetro can place its own cover on the directories.

IV. Parity and Service Standards

Issue 27--What type of testing is GTE required to perform on any operational interface or process?

I adopt GTE’s position that it should perform any testing for any operational interface or process that it performs for itself. GTE will perform any other technically feasible testing upon MCImetro's agreement to pay for the testing on a time and materials basis.

GTE's proposal is reasonable. GTE should not have to test every interface or process for MCImetro if it does not test those items for itself. If MCImetro wants the higher level of service, it should pay for it. See also the discussion in Issue 28.

Issue 28--What type of testing is GTE required to perform on unbundled Network Elements, Ancillary Functions, and service for resale?

This issue is resolved, in part, by stipulation. MCImetro's contract language is adopted, with the understanding that MCImetro must order specially and pay for a level of testing that is greater than the level GTE provides for itself.

GTE agrees to test non-voice grade circuits. It does not test every voice grade circuit for itself and argues that it should not be required to do so for a competitor. MCImetro merely asserts that it needs the complete results of loop testing prior to the start of service in order to provide competitive services.

GTE's position is adopted. GTE does not test all voice grade circuits before providing the service to a customer. If MCImetro wants all circuits tested, it must pay for the additional service. The FCC requires that, where technically feasible, GTE must provide MCImetro the access or unbundled network elements at least equal in quality to that which GTE provides to itself. FCC Order ¶ 312. However, the Act requires requesting carriers to pay the costs of unbundling, and thus ILECs must be fully compensated for any efforts they make to increase the quality of access or elements within their own networks. FCC Order ¶ 314.

Issue 29--Should GTE be required to provide dialing parity through presubscription, and if so, on what schedule?

While the parties agree in principle on dialing parity, I adopt MCImetro's more specific contract language.

Issue 30--Should the contract include terms which require GTE to provide resold services, unbundled network elements, ancillary functions, and interconnection on terms that are at least equal to those that GTE uses to provide such services and facilities to itself?

The contract should include MCImetro's language that requires GTE to provide resold services, unbundled network elements, ancillary functions, and interconnection on terms that are at least equal to those that GTE uses to provide such services and facilities to itself.

As required by the FCC, GTE must provide facilities that are superior in quality to that which it provides itself. The FCC rules provide:

To the extent technically feasible, the quality of an unbundled network element, as well as the quality of the access to such unbundled network element, that an incumbent LEC provides to a requesting telecommunications carrier shall, upon request, be superior in quality to that which the incumbent LEC provides to itself. If an incumbent LEC fails to meet this requirement, the incumbent LEC must prove to the State commission that it is not technically feasible to provide the requested unbundled network element or access to such unbundled network element at the requested level of quality that is superior to that which the incumbent LEC provides to itself. Nothing in this section prohibits an incumbent LEC from providing interconnection that is lesser in quality at the sole request of the requesting telecommunications carrier.

47 C.F.R. § 51.311(c).

As discussed above, MCImetro must pay for the additional quality.

Issue 31--After connection occurs, what time intervals for ordering and provisioning should be implemented?

I do not adopt MCImetro's proposed contract language regarding time intervals for ordering and provisioning.

At this time, it is impossible for me to determine whether the time intervals set forth in MCImetro's proposed contract are reasonable. However, it is important that MCImetro know the level of service to which it and its subscribers are entitled and the level of service that GTE provides its own subscribers. Consequently, GTE must provide all information requested by MCImetro on GTE's internal standards for the time for ordering and provisioning services. The information must be provided within 14 days of a request by MCImetro.

Issue 32--Should there be remedial measures for substandard performance?

GTE is obligated to provide service that does not discriminate against other carriers or which is inferior in quality to that provided to itself. FCC Order ¶ 224. 47 C.F.R. § 51.311(b). Upon request and to the extent technically feasible, GTE is also obligated to provide MCImetro superior quality network elements and access to that which GTE provides to itself. MCImetro is required to pay the costs incurred by GTE to provide the requested services. GTE shall make available to MCImetro any and all information regarding its own internal quality standards. The contract should not include MCImetro's proposed performance standards or remedies for failure to achieve performance.

The FCC rules require GTE to provide network elements and access that is at least equal in quality to that which the ILEC provides to itself. 47 C.F.R. § 51.311(b). The rules also require that upon request and if technically feasible, GTE must provide superior quality service. 47 C.F.R. § 51.311(c). The ILEC bears the burden of showing the requested service is not technically feasible. Id. at (c).

GTE agrees to provide service quality to CLECs that is equal to that which it provides to itself and its affiliates. For resold services, MCImetro will be in the same position as all customers. For unbundled elements, GTE will provision and maintain services in accord with its normal operation. GTE points out that the "equal in quality" language of the Act appears only in the interconnection section and not in unbundling and resale provisions. GTE insists that to the extent MCImetro requires network modifications, MCImetro must pay for them.

MCImetro requests that the contract include specific, detailed service performance standards to insure that the level of service that GTE provides MCImetro will be at least equal in quality to that provided by GTE to itself, and superior to the quality GTE provides for itself, when MCImetro requests superior quality. GTE provides general assurances, while MCImetro would require detailed standards as benchmarks. In addition, MCImetro recommends service credits for noncompliance.

I agree with MCImetro that GTE should provide service according the standards set forth in the FCC rules. Anything less could undermine MCImetro's ability to compete for local exchange customers. As MCImetro points out, it should be able to differentiate its services by offering a higher quality of service than that offered by GTE. Of course, MCImetro must pay for network modifications, especially when it asks for superior quality service.

I do not adopt MCImetro's proposed performance standards. While MCImetro is entitled to know the level of quality that GTE is expected to provide, I cannot evaluate the reasonableness of MCImetro's proposed standards. Furthermore, given the complexity of MCImetro's proposed contract terms, the remedies for failure to comply, including performance and service guarantees, should be eliminated. To insure that reasonable and mutually agreeable performance standards are adopted, the contract should contain language requiring GTE and MCImetro to negotiate minimum standards for quality to reflect GTE's current internal standards. If the parties fail to reach agreement, either party may request the Commission to adopt a rule or tariff specifying the level of quality that GTE must provide to CLECs.

Finally, the contract should require GTE to provide to MCImetro any documentation that it possesses detailing the quality standards that GTE requires of its own network. This requirement is in response to MCImetro’s assertion that it proposed the service standards because GTE refused to provide any information regarding its own internal standards for quality or to even confirm or deny the existence of a comprehensive list of standards.

V. Unbundling Network Elements

Issue 33--When should GTE offer unbundled network elements and services to MCImetro?

I adopt GTE's proposed contract language specifying that it provide unbundled network elements as soon as practicable after execution of an agreement using existing ordering and provisioning facilities.

MCImetro proposed that GTE provide for resale and unbundled network element, no later than January 1, 1997, the capability to order local and toll services by entering the MCImetro subscriber’s choice of carrier on a single order. MCImetro proposed that GTE provide the capability to order separate interLATA and intraLATA carriers on a line or trunk basis.

It is obvious that January 1, 1997 is an unrealistic date. MCImetro did not provide a more realistic option. GTE's proposal is adopted.

Issue 34--What unbundled network elements should be provided to MCImetro?

This issue is resolved, in part, by stipulation. In addition, MCImetro must notify GTE when it intends to deploy any service-enhancing copper cable technology (e.g., HDSL, ISDN) and, if so, certify that such technology will not interfere with GTE's existing or future technology within a given cable sheath or other GTE facility. MCImetro must furnish GTE with the NCI codes for the line or service ordered by MCImetro.

The parties agreed to a non-exclusive list of unbundled network elements that GTE must provide. In addition, MCImetro's witness agreed that the condition regarding notification, noted above, is reasonable and that MCImetro could furnish GTE NCI codes. GTE also expressed concern regarding cost recovery. That issue is addressed above.

The parties have reached general agreement on the network elements that GTE should provide to MCImetro. GTE listed as agreed-upon elements:

Network Interface Device (NID)

Loop distribution, loop feeder and loop concentrator/multiplexer

Local switching

Dedicated Transport, Common Transport

Signaling Link Transport, Signal Transfer Points (STPs), Service Control Points/Databases (SCPs)

Directory Assistance Service

Advanced Intelligent Network (AIN) capabilities

If desired by MCImetro, GTE must unbundle and make available all services and network elements ordered by the Commission. Order Nos. 96-188 and 96-283. Each of these building blocks meets the definition of a network element under the Act.

As proposed by GTE, the contract should require MCImetro to notify GTE when it intends to deploy any service-enhancing copper cable technology and to certify that the technology will not interfere with GTE's existing or future technology within a given cable sheath or other GTE facility. See GTE Proposed Interconnection Contract, VI-5.

MCImetro shall also pay all costs associated with unbundling the loop from the switch, including the costs of testing MCImetro's technology and the costs of any loop conditioning.

Issue 35--To what extent should MCImetro be permitted to combine network elements?

Issue 36--Should MCImetro be permitted to request a combination of network elements which would enable it to replicate services GTE offers for resale?

I adopt the MCImetro contract language that GTE must provide combinations of unbundled elements without restriction. The contract terms should specify that those combinations are technically feasible and will not undermine the ability of other carriers to access unbundled elements or interconnect with the ILEC.

New entrants should be able to purchase unbundled elements, individually or in common, regardless of whether they provide their own facilities or purchase elements in such a way that they would comprise a service comparable to resold services under 47 U.S.C. § 251(c)(4). This conclusion is consistent with the Act, FCC rules, and the Commission’s order. 47 U.S.C. § 251(c)(3), FCC Order ¶¶ 293-296, and 47 C.F.R. § 51.315(c), and Order No. 96-188 at 93. There is no provision in the Act or the FCC's order for imposing limitations on the sale of unbundled elements.

GTE argued that the Act distinguishes between resale and unbundled network elements. Allowing a CLEC to recombine unbundled network elements to provide a finished service, GTE claims, would provide an unwarranted opportunity to create arbitrage. This issue was addressed above in the section on pricing.

GTE requested a limitation on unbundling the switch and recombining the elements to by-pass resale offerings to eliminate the possibility that MCImetro would be able to avoid access charges. Without this restriction, GTE claims it would not be able to determine whether a call routed by MCImetro is a local call, an intraLATA call, or an interLATA call. GTE is obviously correct that MCImetro must pay appropriate access charges. However, this concern must be addressed in ways that do not impose burdensome restrictions on the provision of unbundled network elements.

GTE's concern should be addressed in the FCC's docket regarding access charge reform. In the interim, the FCC allows GTE to require MCImetro to track inter- and intrastate toll minutes of use and make appropriate payments through June 30, 1997. 47 C.F.R. § 51.515(b). The Commission addressed this issue in Order No. 96-283, Appendix C at 2. Interexchange carriers, such as MCImetro are currently required to distinguish the jurisdiction of toll/access minutes of use under the percentage of interstate usage (PIU) reporting method. That would seem to be a reasonable method for insuring that MCImetro pays access charges. This method is discussed further under Issue 38.

Finally, GTE's concern, while valid to a point, may be somewhat academic. CLECs should be wary of the consequences for improperly avoiding their obligation to pay access charges. Such an action could constitute fraud and may constitute breach of the contract, resulting in termination of the CLEC’s right to purchase unbundled network elements.

Issue 37--Is sub-loop unbundling technically feasible, and if so, under what terms and conditions should it be offered?

This issue is resolved by stipulation. MCImetro's proposed contract language is adopted.

Issue 38--What should the unbundled switch element include?

GTE is required to unbundle all features, functions, and capabilities of the local switch element. To the extent MCImetro requests switch functions that GTE does not use and has not purchased from the switch manufacturer, MCImetro must pay the associated costs for use of the functionality and the costs of switch augmentation. GTE must negotiate a cost recovery mechanism that spreads the initial costs across current and future users of the functionality. MCImetro's proposed contract language is adopted.

The Commission has addressed this issue in Order No. 96-283 at 4-5. The FCC addressed the issue in 47 C.F.R. § 51.319(c). Local switching element must be unbundled. Such unbundling is technically feasible. Order No. 96-283 at 4-5. FCC Order ¶¶ 410-424. GTE objects based on the cost of providing this function. GTE notes that this provision would allow MCImetro to obtain access to both the local switching element and the trunk side of the switch. This would allow MCImetro to avoid access charges, because GTE could not identify calls routed to an interexchange carrier. These concerns address cost recovery, not technical feasibility.

The Commission addressed the access charge issue in Order No. 96-283 at 4-5:

Compensation for interexchange (toll) traffic will continue to be assessed based on the PIU method, whereby carriers report the percent interstate usage for terminating access minutes. A similar method could also be used to compensate carriers for terminating local and EAS minutes of use. That method has been referred to as PLU, or percent local usage. The absence of a measurement system such as that recommended by USWC does not make it technically infeasible to unbundle local switching.

GTE also notes that MCImetro may wish to use capabilities of the switch that GTE does not use, and has not purchased from the switch manufacturer. As discussed above, I agree with GTE that MCImetro must pay the costs associated with purchasing these functions.

VI. Interconnection—Feasibility and Cost Issues

Issue 39--Should GTE provide MCImetro access to its Advanced Intelligent Network (AIN), and if so, under what terms and conditions?

This issue is resolved. MCImetro's proposed contract language is adopted.

Issue 40--Should GTE be required to exchange AIN transaction capabilities application part message between GTE end offices and MCImetro service control points via interconnection of MCImetro’s SS7 network to the GTE SS7 network?

This issue is resolved. MCImetro's proposed contract language is adopted.

Issue 41--Should GTE provide MCImetro access to GTE’s SS7 system, and if so, at what points and under what terms and conditions?

This issue is resolved. MCImetro's proposed contract language is adopted.

Issue 42--Is GTE required to provide unbundled signaling elements (STP, SCPs, Links, etc.) at cost-based rates? Is GTE’s SCP database an unbundled network element as defined in the Act?

This issue has been resolved with the exception of the cost recovery issue. MCImetro's proposed contract language is adopted.

The Commission unbundled SS7 signaling elements in Order No. 96-283. The prices are to be determined through the UM 351, Phase II, compliance process. In the interim, subject to true-up, the prices set forth MCImetro’s proposed contract, Appendix N, should apply.

Issue 43--Should MCImetro have the ability to create service applications from the GTE Service Creation Environment and Service Management System AIN Access?

This issue is resolved. MCImetro's proposed contract language is adopted.

Issue 44--Should MCImetro have access to GTE’s unused transmission media ("dark fiber")?

GTE must make dark fiber available on an unbundled basis. Order Nos. 96-188 and 96-283. GTE shall retain full control over any MCImetro connections to dark fiber. The parties should mutually agree to connections at locations that minimize the risk of customer service impacts.

Dark fiber is a fiber optic facility that is installed in a cable sheath, but not "lit" by GTE-provided electronics. MCImetro wishes to purchase access to these facilities so that it may install its own electronics. The record indicates that MCImetro can provide unique services, not otherwise available from GTE, if it has the capability to supply its own electronics to GTE's transmission facilities.

Dark fiber is a network element as defined in the Act. Network element means:

… a facility or equipment used in the provision of telecommunications service. Such term also includes features, functions, and capabilities that are … used in the transmission, routing, or other provision of telecommunications service.

 

47 U.S.C. § 153(a)(45).

 

GTE argues that, because the fiber optic facility installed in the ground is not actually transporting telecommunications, it is not used in the provision of telecommunications. The facility will only be "used" when lit by GTE electronics. This argument cannot be adopted. To do so would place any spare equipment or facility off limits to unbundling. Dark fiber is a network element.

GTE compares dark fiber to cable stored on a reel in the warehouse. GTE claims that the cable is in the ground only because it makes better economic sense to do so from a network planning and construction cost perspective. GTE's distinction demonstrates that the fiber is actually used in the provision of telecommunications services. Dark fiber is not stored. It is installed and ready for use when there is a demand. As soon as MCImetro makes a demand, the fiber is converted from "ready for use" to "used." The Act does not limit the "user" of the facility in the definition of telecommunications service to the ILEC.

GTE raises practical and operational concerns. GTE claims that handing dark fiber over to CLECs could compromise its system planning efforts and could strand significant investments. The parties must mutually agree on the appropriate utilization of the facilities to avoid waste.

Furthermore, GTE asserts that, if ILECs are compelled to make dark fiber available, they should have full control over connections to avoid damage to the fiber and CLECs should pay for the extra costs of necessary precautions and maintenance. I agree that GTE should have full control over MCImetro connections to the dark fiber. The issues regarding cost recovery are addressed above.

Issue 45--Should GTE be required to provide both dedicated and common local transport to MCImetro on an unbundled basis?

GTE is required to provide both dedicated and common local transport to MCImetro on an unbundled basis. MCImetro's proposed contract language is adopted.

The Commission unbundled and priced dedicated and common transport in Order Nos. 96-188 and 96-283. The FCC also unbundled these services. 47 C.F.R. § 51.319(d). These services must be provided on an unbundled basis.

GTE argues that these services are available under tariff and MCImetro is purchasing them. GTE claims the Act does not require the services to be unbundled so that they can be sold at a discount. This issue was resolved in the Commission's orders.

Issue 46--What are the appropriate interconnection points for the transport and termination of traffic?

This issue is resolved by stipulation. MCImetro's proposed contract language is adopted.

Issue 47--Should GTE be required to provide tandem-to-tandem switching for the purpose of terminating MCImetro local and intraLATA toll traffic?

This issue is resolved by stipulation. MCImetro's proposed language is adopted.

VII. Operations Support Systems

Issue 48--How should the cost of access to OSS be recovered?

Operations support services (OSS) were unbundled in Order No. 96-283 at 3 and 47 C.F.R. § 51.319(f). GTE filed tariffs for this element. MCImetro should bear the costs of access to OSS through rates approved by the Commission.

In the tariff filing process pursuant to Order No. 96-283, GTE can propose what it believes to be the appropriate costs and a reasonable mechanism for cost recovery. MCImetro will have an opportunity to participate in the proceeding. The price will determined under the pricing methodology discussed above.

GTE claims the cost of access to OSS should be paid by the cost causer. GTE asserts that it should not be compelled to pay for OSS access changes made to accommodate MCImetro. The Commission's pricing methodology was established in the UM 351, Phase II, and UM 773 proceedings. This methodology is consistent with the FCC's methodology described above. Application of this methodology to OSS costs should assure that GTE receives appropriate recovery of its costs.

Issue 49--Should GTE be required to provide MCImetro direct access to GTE’s OSS systems through electronic interfaces?

Issue 50--On what basis should OSS electronic interfaces be implemented?

Issue 51--Should MCImetro have access to GTE’s OSS processes through electronic interfaces for unbundled elements?

GTE indicates that these issues are resolved. GTE will provide electronic interfaces as soon as national standards are in place. The expected date for completion is April-May 1997. MCImetro's proposed contract language for these three issues is consistent with the need for national standards and is adopted. CLECs should bear the cost of implementing the national gateway on a competitively neutral basis.

GTE should immediately implement a mutually acceptable electronic real-time gateway for local service delivery as an interim measure while the electronic interface is being developed. To the extent possible, the interim measure should be based on the work of the standard setting group. Electronic Data Interchange (EDI), Electronic Bonding Trouble Administration (EBTA), and Carrier Access Billing System (CABS) or Integrated Access Billing System (IABS) appear to be the best interim solutions. Once the national standards are met, GTE will modify its network if necessary and if requested by MCImetro.

The FCC has required ILECs to provide, by January 1, 1997, nondiscriminatory access to OSS functions for pre-ordering, ordering, provisioning, maintenance and repair, and billing functions under the same terms and conditions that GTE provides such interfaces to itself. 47 C.F.R. § 51.313. FCC Order ¶¶ 316, 516-528. GTE indicates that the project will not be completed until the Spring. If there is difficulty meeting the Spring deadline, the parties should inform the Commission. Either party may request that the Commission take action to address the causes for the delay.

VIII. Number Portability

Issue 52--What methods of interim number portability should GTE be required to provide?

Consistent with Order No. 96-021 at 78-79, the parties have agreed that GTE shall provide MCImetro with Remote Call Forwarding and Directory Number Route Indexing capabilities for interim number portability. As GTE proposed, GTE shall also provide Local Exchange Routing Guide (LERG) reassignment involving six-digit routing only where (1) at least 70 percent of an entire NXX code is taken by no more than three MCImetro subscribers or (2) at least 45 percent of an entire NXX code is taken by one subscriber, and the remainder is reserved by that subscriber. MCImetro's proposed contract language is adopted with the GTE condition on LERG reassignment.

On an interim basis, MCImetro requested LERG reassignment in every end office. LERG insures that large and small customers can change service providers with minimum disruption. However, GTE points out that a long-term solution is less than two years away, the cost of providing LERG is significant, and LERG cannot be instituted in Oregon unless it is also implemented industry-wide. As GTE proposed, the contract should require that GTE provide LERG reassignment in cases where it would be beneficial to serve large customers. This approach avoids the problem of instituting an expensive interim measure without a clear understanding that LERG reassignment will be useful.

IX. Collocation

Issue 53--When and in what circumstances should collocation be permitted?

 

This issue is resolved by stipulation. MCImetro's proposed contract language is adopted.

Issue 54--What types of telecommunications equipment may be collocated on GTE’s premises?

GTE must permit collocation of any type of equipment necessary for interconnection or access to unbundled network elements, including remote switching units. The remote switching units must perform multiplexing and may not be used to avoid access charges. MCImetro’s proposed contract language is too broad and must be revised in conformance with this decision.

The Act requires that the ILEC must provide for physical collocation of equipment necessary for interconnection and access to unbundled elements. 47 U.S.C. § 251(c)(6). GTE would allow transmission, concentration, and multiplexing equipment, but prohibit switching, enhanced services, and customer premises equipment. MCImetro insists on any type of equipment used for interconnection or access to unbundled elements.

The principle dispute here is over MCImetro's ability to collocate remote switching units, which are switches that also have interconnection functions. The FCC has determined that any equipment that is necessary in the sense that it is used and useful must be permitted. FCC Order ¶ 579. I conclude that MCImetro may collocate remote switching units as long as they provide multiplexing. While less robust equipment can also perform multiplexing, MCImetro should be able to choose equipment that will perform the interconnection and access function most efficiently.

GTE's concern that remote switching units are of such size that they will quickly exhaust GTE facilities is not persuasive. If GTE can prove to the Commission that space constraints make restrictions necessary, GTE can set maximum space limits for CLECs. 47 C.F.R. § 51.323(f)(6). The collocator should be able to use its space as it sees fit, so long as the use falls within the bounds sets forth in the Act.

Issue 55--Should GTE be required to provide interconnection between carriers at cost based rates when those carriers are both collocated at a GTE premises?

This issue has been resolved by stipulation. The parties are negotiating the appropriate contract language.

Issue 56--What limits, if any, may GTE impose upon the use of the collocated space?

MCImetro must comply with reasonable security, safety, and network integrity requirements. GTE's proposed contract language on safety and network reliability is adopted. MCImetro's proposed contract language regarding degree of care for MCImetro's equipment and access to collocated equipment is adopted.

GTE indicated that it is confident that details regarding safety and security can be worked out by the parties with regard to each collocation. Absent a negotiated resolution, I have adopted MCImetro’s proposed language because of MCImetro’s legitimate interest in detecting and correcting inadequate security and monitoring and maintaining its equipment.

Issues 57--Does GTE have the right to reserve central office space for its own use or deny access for lack of physical space reasons?

Issue 58--Is GTE required to make additional space/capacity available to MCImetro for collocation if GTE does not have current space available? If so, in what time frame should GTE make such capacity available?

GTE may not reserve central office space for its own use or deny access for lack of physical space, on terms that are more favorable than the terms applying to other telecommunications carriers seeking to reserve collocation space for their own future use. GTE is not required to construct additional space for collocation when existing space is exhausted. GTE is required to take into account projected demand for collocation of equipment when planning additions to its facilities. GTE is required to make contiguous space available for collocation. GTE must relinquish space under certain circumstances. GTE must provide a detailed floor plan to the Commission if it claims that space is exhausted. MCImetro's proposed contract language is adopted.

The FCC rules on space allocation are in effect and must be followed. 47 C.F.R. § 51.323(f).

GTE proposes that it be allowed to reserve space in its central office on a five year planning horizon. This period is inconsistent with the requirement that GTE reserve space on terms no more favorable to itself than the terms available to other telecommunications carriers seeking to reserve collocation for their own future use. 47 C.F.R. § 51.323(f)(4).

Further the FCC rules require that, to the extent possible, GTE must make contiguous space available to requesting telecommunications carriers that seek to expand their existing facilities. Id. at (2). GTE must take MCImetro's needs into account when planning renovations of existing space or leasing new space. Id. at (3). Finally, GTE must relinquish space held for future use before denying a request for virtual collocation on the grounds of space limitations, unless virtual collocation at that point is not technically feasible. Id. at (5). The FCC order provides that the ILEC claiming space exhaustion must provide the State commission with a detailed floor plan of its premises and justify the denial of space on the grounds of space exhaustion. FCC Order ¶ 602.

X. Poles, Ducts, and Rights-of-Way

Issue 59--Should MCImetro have access to GTE’s poles, ducts, conduits, and rights-of-way at parity with GTE?

MCImetro should have access to GTE's poles, ducts, conduits, and rights-of-way on the same conditions that GTE gives to itself. MCImetro's proposed contract language is adopted, except the reference to pathways as described in the Issue 60 discussion.

The Act requires LECs "to afford access to poles, ducts, conduits, and rights-of-way of such carrier to competing providers of telecommunications services on rights, terms, and conditions that are consistent with Section 224." 47 U.S.C. § 251(b)(4). Section 224 requires LECs to provide nondiscriminatory access. The FCC has defined nondiscriminatory to mean on the same terms and conditions as the ILEC gives to itself. FCC Order ¶ 1170.

GTE argues that the proper interpretation of the term "nondiscriminatory access" is that the owner of the facility must treat all other companies seeking access equally. GTE claims the owner’s access is synonymous with its ownership right and that the FCC definition would interfere with the ownership of GTE's property.

I conclude that the FCC's definition of the term "nondiscriminatory" is in effect. The federal law must be followed.

Issue 60--Does the term "rights-of-way" in §224 of the Act include all possible pathways for communicating with the end user?

GTE must provide MCImetro access to all distribution network facilities which it owns or controls for the provision of telecommunications services, subject to factors related to capacity, safety, reliability, and engineering considerations. MCImetro's proposed language, regarding building entrance facilities, equipment rooms, cable vaults, telephone closets, and building risers, is overly broad.

The Act requires that GTE provide MCImetro nondiscriminatory access to any pole, duct, conduit, or right-of-way owned or controlled by it. 47 U.S.C. § 224(f)(1). FCC Order ¶ 1123. The FCC concluded that the "intent of Congress in section 224(f) was to permit … telecommunications carriers to ‘piggyback’ along distribution networks owned or controlled by utilities, as opposed to granting access to every piece of equipment or real property owned or controlled by utility. FCC Order ¶ 1185. Further, the FCC declined to establish an exhaustive list of equipment that may be attached when access to utility facilities is mandated. FCC Order ¶ 1186. Finally, the FCC concluded that access disputes should be decided on factors such as size, weight, and other characteristics that have an impact on capacity, safety, reliability, and engineering considerations. FCC Order ¶ 1186.

MCImetro and GTE agree that this requirement does not apply to facilities over which GTE does not have legal ownership or control. They also agree that access is subject to legitimate safety, reliability, and engineering concerns.

MCImetro wants access to all pathways. GTE objects claiming that the term rights-of-way does not encompass all possible pathways including cable vaults, entrance facilities, equipment rooms and telephone closets. The term should be given its everyday meaning. Rights-of-way does not mean all possible pathways, but it does include distribution network facilities.

Issue 61--May GTE reserve space for its future use on/in its poles, ducts, conduits, and rights-of-way?

MCImetro's contract language should be modified to reflect the following provisions:

GTE may not reserve space for its own use to the detriment of a new entrant.

GTE may reserve space for its own use based upon a bona fide development plan that reasonably and specifically projects a need for space in the provision of its core utility service.

GTE should provide current detailed engineering on the facilities as well as any information on environmental conditions. Once a request is made for space, GTE should reserve those facilities pending attachment and or installation of MCImetro facilities.

MCImetro’s reservation of space must be based on a bona fide development plan.

GTE may maintain space capacity for its maintenance and administrative purposes.

GTE may reserve space, for the purposes described above for a one year period. MCImetro may reserve space for a six-month period. MCImetro shall pay for space reservations at the full price for use of the facilities.

 

The Act governs access to poles, ducts, conduits and rights-of-way. 47 U.S.C. § 251(b)(4) and § 224. MCImetro's proposal better implements the FCC's requirement that GTE take reasonable steps to accommodate requests for access, including modifying its facilities to increase capacity. FCC Order ¶¶ 1161-1164. The FCC concluded that an ILEC may not reserve space for local exchange service, to the detriment of the new entrant, because doing so would favor the future needs of the ILEC over the current needs of the CLEC. FCC Order ¶ 1170.

GTE asserts that it must be able to reserve space to serve new customers readily and to meet its carrier of last resort obligations. In addition, GTE claims that depriving it of the right to reserve space will eliminate its incentive to construct facilities to meet future needs. The provisions above accommodate GTE's concerns.

Issue 62--Is GTE required to make additional capacity available to MCImetro for poles, ducts, conduits, and rights-of-way if it does not have spare capacity, and if so, in what time frame should GTE make such capacity available?

GTE is required to make a good faith effort to accommodate MCImetro's requests for capacity, if it does not have spare capacity. This includes all reasonable steps to accommodate requests for access. No time limits are imposed. To the extent reasonable, GTE should facilitate negotiations with grantors and licensers of the facilities. GTE must exercise its powers of eminent domain to expand an existing right-of-way over private property to accommodate a request for access.

When an ILEC does not have available space to meet access requests from a CLEC, the FCC requires the ILEC to modify the facility to increase capacity, when reasonable. The FCC describes a number of reasonable steps that the ILEC can take to increase capacity. FCC Order ¶ 1161. The FCC's conclusion is based on the principle of nondiscrimination. If the ILEC can take all reasonable steps to increase capacity to accommodate its own needs, it should be required to take the same steps on behalf of the CLEC. FCC Order ¶¶ 1162-1163. The FCC points out a number of situations where expansion of the ILEC facilities would be unreasonable. All the FCC requires of the ILEC is a good faith effort to make accommodations, before denying a request because it lacks capacity. FCC Order ¶ 1163.

The requirements to facilitate negotiations and exercise powers of eminent domain are compatible with the FCC's conclusions regarding the ILECs obligations to make additional capacity available. FCC Order ¶ 1181.

XI. Contract Terms

Issue 63--What should the term of the agreement be?

I adopt GTE's position that the term of the contract should be two years.

There are many decisions in this arbitration order that should be revisited within a fairly short period of time. This a new environment with a great deal of uncertainly. No party should be left with an unintended advantage or disadvantage merely because the operation of the contract did not comport with vague predictions about how competition for local exchange service might develop. As a noted commenter has stated, "It is anyone’s guess as to what market contours this chaos will eventually produce."

Issue 64--Should the contract provide for an accelerated dispute resolution procedure in case of "service affecting" disputes?

I adopt MCImetro‘s proposed dispute resolution procedures. The penalties provisions are not adopted.

Accelerated dispute resolution is important for implementation of the contract. GTE proposes dispute resolution procedures that are more typical of a commercial contract. MCImetro's procedures reflect the Commission's continuing jurisdiction over this contract.

Issue 65--Should the contract provide for a Most Favored Nations Clause?

This contract should not include a most favored nations clause.

The Eighth Circuit Court of Appeals stayed the FCC's requirement that each term of a contract should be subject to a "pick and choose" provision. This provision would allow MCImetro to incorporate into its contract a term from another CLEC's contract that MCImetro deems preferable. Such a term discourages comprehensive contract negotiations, a result inconsistent with the purposes of the Act.

Issue 66--Should the contract provide for a Bona Fide Request Process?

I adopt MCImetro’s proposed bona fide request process.

The parties agree that the contract should include a bona fide request process. MCImetro proposes a process that is to be used when MCImetro requests GTE to provide a proposed price and availability date for certain services, features, capabilities or functionality that the parties agree should be ordered as Bona Fide Requests. MCImetro's process is more detailed than the GTE process and is, therefore, more likely to avoid delays in the provision of a service.

XII. Billing Issues

Issue 67--Should GTE be required to accept financial responsibility for uncollectable and/or unbillable revenues resulting from GTE work errors, software alterations, or unauthorized attachments to local loop facilities?

GTE should not be required to accept financial responsibility for uncollectable or unbillable revenue resulting from GTE's work errors, software alterations, or unauthorized attachments to local loop facilities, unless the losses were the result of GTE's willful misconduct. MCImetro is entitled to service credits pursuant to GTE's tariffs.

GTE notes that, for resold services, it has a tariff that specifies service credits for interruptions. For unbundled services, GTE proposes adoption of the comparable provisions in GTE's access tariff.

The Commission addressed the issue of liability for lost revenues in Order No. 96-079 at 14-15. The Commission stated:

In spite of USWC's request for absolute protection from liability, we will require willful misconduct as the threshold of liability for USWC with respect to revenue losses arising from interruptions in services provided under this (virtual collocation) tariff. USWC, as a competitor, has an incentive to delay actions and otherwise interfere with the quality of service of the collocators. We are reluctant to allow any limitation of liability, but willful misconduct is the standard for loss of revenues for services offered under other tariffs. If necessary, the issue can be revisited at a later date.

 

The contract should incorporate the following language based on the limitation of liability in Order No. 96-079, Appendix A, at 10:

In the absence of willful misconduct, GTE shall have no liability for any interruption of MCImetro's service under this contract or for interference with the operation of MCImetro's facilities, except for a credit allowance for service interruption.

 

Issue 68--Should GTE be required to provide billing and usage recording services for resold services, interconnection, and unbundled elements, and if so, what terms and conditions apply to such services?

The parties agree that billing and usage recording systems should be implemented. MCImetro's proposed contract language should be adopted.

The parties agree that billing and usage systems should be implemented. The billing system should be based on national standards. The CABS and IABS are preferable to GTE's proprietary system CBSS. The CABS and IABS are used for billing interexchange traffic.

Issue 69--If GTE is required to provide the services identified in Issue 67, how should the costs of providing these services be recovered, and from whom?

MCImetro shall pay GTE for any enhancement to its billing and usage recording services incurred to meet MCImetro's demands. The costs must be recovered in a competitively neutral manner, whereby other CLECs will pay for provisioning the service, if they request to use it. Unless the parties can negotiate another mechanism, MCImetro shall pay the cost of provisioning the services and refund amounts paid. GTE shall refund any amounts paid that are subsequently paid by other carriers. MCImetro can request that this service be unbundled and priced based on the Commission's costing and pricing methodology.

GTE is willing to provide these services so long as it recovers its costs. GTE supports a means of refunding to MCImetro any amounts paid which may subsequently be shared with other CLECs. The cost recovery principles are discussed above. GTE's proposal is one of several reasonable cost recovery mechanisms.

Issue 70--Should MCImetro be charged for 800/888 database dips that result in that call being routed to GTE as the 800/888 service provider?

MCImetro should not pay for GTE's 800/888 data bases.

This issue arises when an MCImetro customer initiates an 800/888 call. The call is routed to GTE's DB800 data base on the company’s SS7 switch. GTE must "dip" into its SS7 database to determine the appropriate carrier for routing the call to the end customer. GTE's network then completes the call to GTE's customer.

GTE claims it should be compensated for looking up the appropriate routing, so that the MCImetro's customer’s call can be completed. MCImetro claims that it receives no revenue from its customer originating the 800 call and should not have to pay for the data base inquiry. MCImetro points out that GTE receives revenue from the customer subscribing to the 800/888 service.

GTE should absorb the cost of the data base inquiry and seek cost recovery through a charge on the carrier receiving the revenue for the 800/888 call. It is unfair for MCImetro to pay for the data base inquiry and have no way to recover its costs.

ARBITRATOR’S ORDER

IT IS ORDERED THAT:

MCImetro shall submit to GTE a contract incorporating terms that reflect the Commission's final decision in this proceeding. The contract shall bear the signature of a person authorized by MCImetro to sign this contract.

 

Within 15 days of receipt of the contract from MCImetro, GTE shall notify MCImetro of any provisions of the revised contract that GTE believes are inconsistent with the terms of the final Commission decision.

 

If GTE does not contest MCImetro's language incorporating the terms of this decision, GTE shall return the contract to MCImetro with the signature of a person authorized by GTE to sign the contract. GTE shall also file a copy of the contract with the Commission.

 

If MCImetro and GTE are unable to resolve disputes over the language that embodies the decisions in this order, the parties may request the Commission to resolve the dispute on an expedited basis. The Commission will make the final determination and issue a binding contract.

 

The contract is effective immediately upon delivery of the signed agreement to GTE.

 

Dated this 3rd day of January, 1997, in Salem, Oregon.

________________________________

Thomas G. Barkin

Arbitrator