ORDER NO. 98-021

ENTERED JAN 09 1998

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

ARB 3

ARB 6

DISPOSITION: PETITION DENIED

On September 5, 1997, the Public Utility Commission of Oregon (Commission) issued Order No. 97-341 in this consolidated proceeding. Order 97-341 approved executed interconnection agreements between AT&T Communications of the Pacific Northwest, Inc. (AT&T) and U S WEST Communications, Inc. (USWC), and between MCI Metro Access Transmission Services, Inc. (MCI) and USWC (jointly "the Agreements").

On October 27, 1997, USWC filed a petition requesting that the Commission reform the Agreements to conform with recent rulings of the United States Court of Appeals for the Eighth Circuit in Iowa Utilities Board v. Federal Communications Commission, 120 F3d 753 (8^th Cir.; 1997), modified, No. 96-3321, slip. op., (October 14, 1997). According to USWC, the Eighth Circuit held that interconnection agreements arbitrated under the Telecommunications Act of 1996 (Act) may not require incumbent local exchange carriers (ILECs) to (a) rebundle unbundled elements; (b) provide a combination of unbundled elements that equate to a finished service (e.g., retail flat rate business service); or (c) provide unbundled elements or services that have quality standards different from those used by the ILEC for their own services. USWC claims that the Agreements approved in this proceeding contain all of these impermissible requirements. Accordingly, it asks the Commission to convene a proceeding to reform and revise the Agreements. Pending the outcome of such proceeding, USWC further requests that the Commission stay enforcement of contract provisions pertaining to rebundling.

On November 13, 1997, AT&T and MCI filed responses in opposition to USWC’s petition. Respondents argue, inter alia, that USWC’s petition is premature and procedurally improper.

The Commission agrees that USWC’s petition is premature. Section 19.5 of the Agreements provides, in part:

In the event that any final and nonappealable legislative, regulatory, judicial or other legal action materially affects any material terms of this Agreement, or the ability of CLEC or ILEC to perform any material terms of this Agreement, CLEC or ILEC may, on thirty (30) days’ written notice (delivered not later than thirty (30) days following the date on which such action has become legally binding and has otherwise become final and nonappealable) require that such terms be renegotiated, and the Parties shall renegotiate in good faith such mutually acceptable new terms as may be required. (Emphasis added).

Section 19.5 requires that any judicial action which materially affects any material term of the Agreement must be final and nonappealable before the parties undertake to modify the Agreements. As MCI observes, this provision is designed to provide a orderly process for dealing with the legal uncertainties encountered implementing the Act.

The Eighth Circuit decisions regarding service quality and access to unbundled elements clearly affect material terms of the Agreements. Both AT&T and MCI have notified the Commission that they have appealed the Eighth Circuit decisions to the United States Supreme Court. That being the case, the judicial actions relied upon by USWC are not final and nonappealable and its request to modify the Agreements is premature.

The Commission finds that the petition should be denied for the reasons stated above. It is unnecessary to consider the remaining arguments advanced by the parties.

ORDER

IT IS ORDERED that the petition filed by USWC on October 27, 1997, is denied.

Made, entered, and effective ________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements in OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070(2). A party may appeal this order to a court pursuant to ORS 756.580.