ORDER NO. 98-268

ENTERED JUL 07 1998

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UT 144

DISPOSITION: MEMORANDUM OF UNDERSTANDING APPROVED;

TARIFF COMPLIANCE FILING ORDERED

Procedural Background

On March 20, 1998, U S WEST Communications, Inc. (U S WEST) filed tariff schedules in Transmittal No. 98-009-PL. At its April 21, 1998, public meeting, the Public Utility Commission of Oregon suspended the tariff and ordered an investigation, subsequently docketed as UT 144. On May 22, 1998, and on June 18, 1998, U S WEST filed Supplements 1 and 2, respectively, to the tariff.

Commission Staff, U S WEST, and other interested parties met on May 4, May 8, June 8, and June 23, 1998, in an effort to resolve issues surrounding the filing. On July 7, 1998, the Commission considered this matter at its regularly scheduled public meeting. Staff and U S WEST presented and supported a Memorandum of Understanding (MOU) addressing a number of issues raised in this proceeding. At the public meeting, Staff, U S WEST, and other interested parties discussed the MOU and related issues, and responded to the Commission’s questions. The Commission approved the MOU subject to minor modifications to paragraph 1. Those modifications have been made and are reflected in the MOU attached to this Order as Appendix A and incorporated herein by reference.

ORDER

IT IS ORDERED that:

1. The Memorandum of Understanding dated July 7, 1998, attached to this Order as Appendix A, is hereby approved and adopted by the Commission.

2. U S WEST shall file a revised tariff, denominated Transmittal No. 98-009-PL Supplement No. 3, which shall include the terms of Supplement No. 2, except it also shall:

(a) incorporate the terms of the MOU into the tariff;

(b) modify the non-recurring charge for MegaSubscriber Service per Access Link from $145 to $110, and the MegaSubscriber Change Charge from $75 to $45; and

(c) change the date when U S WEST will begin accepting orders for MegaSubscriber Service from August 17 to August 19, 1998.

3. Filing of the revised tariff on less than statutory notice is hereby approved, pursuant to ORS 759.190, to be effective July 8, 1998.

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 applicable law.

APPENDIX A

U S WEST MEGABIT MEMORANDUM OF UNDERSTANDING

July 7, 1998

1. The implementation of the MegaBit Services tariff in Oregon will be staggered. The Company will begin taking MegaCentral orders on the effective date of the tariff (July 8, 1998). Where required DS1 and DS3 facilities, MegaBit local loop support and MegaBit switching infrastructure exist, and no construction is required, the Company will, prior to August 19, l998, make a reasonable effort to complete all MegaCentral orders (signed contract) placed by ISPs by July 15, l998. For MegaCentral orders signed by July 15, 1998, where an ISP orders DS3 facilities and they are not initially available, the Company will: (a) provision DS1 services up to DS3 equivalent capacity and charge DS1 recurring rates, for which the total recurring charge will not exceed the DS3 recurring rate, (b) loan the required terminating equipment at no charge to the MegaCentral customer on an interim basis until such time as the DS3 is provisioned, and (c) not impose any nonrecurring charges for the DS1 services. Upon provisioning of the DS3, DS3 recurring and non-recurring rates will apply and there will be no charge for terminating the DS1 contract. If the ISP cancels its DS3 order but retains the DS1 service, the ISP shall pay the DS1 nonrecurring charges. The Company will not accept any MegaSubscriber orders until August 19, l998.

2. The Company will keep the Commission Staff apprised of completion of MegaCentral orders and will not give USWEST.net preferential treatment with respect to the provisioning of MegaCentral service. The Company will cooperate with the Commission in exploring any allegations of preferential treatment for USWEST.net. See also, paragraphs 9 and l0, below.

3. For testing purposes, the Company will provide up to two MegaSubscriber modems to be provisioned over qualified loops to any provider who has placed a MegaCentral order. If a MegaCentral customer desires a testing period, a due date prior to August 19 should be established, if possible. The Company will begin billing for MegaCentral services on the "due date" negotiated between the Company and the customer or the date the service is actually completed, whichever is later.

4. The Company will not engage in unhooking (as defined in OAR 860-35-0020) ISP customers when they call with inquiries about or to place a MegaSubscriber order. To enhance this commitment, the Company has established a "safe harbor". Accordingly, when customers dial "1-888-MEGAUSW (634-2879), a voice response unit (VRU) will advise them to press "1" if they are interested in MegaBit services with USWEST.net and "2" if interested in MegaBit service with any other ISP. Callers who press "2" will be transferred to the safe harbor. Callers who press "1" will be asked if they currently have an ISP and, if so (other than for USWEST.net customers), they will be immediately transferred to the safe harbor. In the "safe harbor" the sales reps will not market USWEST.net. If the customer’s current ISP does not have a completed or pending MegaCentral order, U S WEST will recommend that the customer contact their ISP to see if they will be supporting MegaBit Services soon. The customer will also be advised that a complete listing of ISPs can be found in the yellow pages and that many of them do support MegaBit services. If the customer still wishes to order MegaSubscriber services, the Company will advise the customer that the Company offers an Internet access service and that similar services are available from other providers. If the customer indicates an interest in USWEST.net, the customer will be transferred out of the safe harbor.

5. For the first 30 days MegaSubscriber service is available in Oregon, the Company will advise customers who call to order MegaSubscriber service who do not request a specific ISP that multiple providers offer MegaBit compatible service and will direct customers who express an interest in other providers to a Web page that identifies all MegaBit compatible ISPs.

6. An ISP may place an order for MegaSubscriber as well as order a MegaSubscriber-compatible modem on behalf of a US WEST customer by providing the Company with an appropriate letter of authorization. In such cases, the modem will be shipped directly to the customer. The price charged for the modem will be the same as the price charged for a modem when the customer orders it directly from the Company. ISPs may also purchase modems directly from the manufacturer or distributor and provision them to the customer.

7. The Company does not anticipate any changes to the underlying DSL architecture that would be significant enough to require replacement of the CPE required for MegaSubscriber services. If the Company deploys newer technology, it will continue to support the existing MegaSubscriber technology until at least July 31, 2001, provided that the supplier continues to provide the appropriate hardware. If a MegaBit customer experiences a service problem, the Company will address and resolve the problem in a manner which allows the customer to receive the same level of performance received prior to the occurrence of the problem. If a MegaSubscriber customer moves outside of an area served by the Company, the Company will not assume any responsibility for the CPE.

8. The Company will update its Part 64 Manual within 90 days of the effective date of the MegaBit tariff to reflect the costs of providing MegaBit services and will cooperate fully in any investigation of costs and revenues associated with providing MegaBit services in any subsequent rate case proceeding.

9. The Company agrees that it will not give USWEST.net preferential treatment over other ISPs with respect to provisioning of MegaCentral services. The Company will fully cooperate with the Commission in researching and resolving any such allegations provided that the Company is given the facts needed to explore the allegation, e.g., the date of the occurrence, what allegedly occurred and with whom the complainant spoke.

10. The Company agrees to comply with the requirements of Oregon law and the Commission rules regarding transactions between U S WEST and !nterprise America involving the provisioning or marketing of USWEST.net.

11. After approval of the tariff, the Company will provide any ISP who so requests with copies of technical publications or other written material which describes how DSL services should be designed and provisioned, including U S WEST’s testing protocol for layers 1 and 2, provided an appropriate non-disclosure agreement is executed, if necessary. In addition, the Company will make engineering support available if requested by an ISP.

12. USWC agrees to make a status report to the Commission regarding the provisioning of MegaCentral service on August 12, 1998, and agrees that the Commission reserves the right to, and may, delay the date on which the company begins accepting MegaSubscriber orders if it is not satisfied that the company has made reasonable progress in the provisioning of MegaCentral to ISPs consistent with the provisions of this MOU. In making this determination, the Commission will take into account the location of ISPs who have signed contracts by July 15 and the number of such contracts. The Commission will act promptly to advise the company whether its provisioning progress is reasonable. The company will not accept orders for MegaSubscriber if the Commission orders the company to delay the MegaSubscriber order acceptance date of August 19, 1998.

13. In the event the terms of this MOU and the terms of Transmittal No. 98-009-PL, Supplement No. 2, conflict in any manner, the terms of this MOU shall control.