2. Background
The goal of the Telecommunications Act of 1996 (Act)1 is to foster rapid development of competition in local telecommunications services. To achieve that goal, the Act requires that incumbent local exchange carriers (ILECs) share their networks with competitors seeking entry into the traditionally monopolistic local service market. Specifically, the Act requires that ILECs provide interconnection for competitive local exchange carriers' (CLEC) facilities and equipment.2 ILECs also must provide CLECs with nondiscriminatory access to unbundled network elements (UNEs),3 and allow CLECs to collocate their equipment in ILEC wire centers as necessary to accomplish interconnection.4 Attendant to collocation is the ability of CLECs to cross-connect their equipment with that of other carriers also collocated within an ILEC's premises.5 The Federal Communications Commission (FCC) has held that the Act imposes a general requirement that ILECs bill CLECs for cross-connects at Total Element Long Run Incremental Cost (TELRIC) rates, the same cost-based pricing that is applicable to the provision of Section 251(c)(2) interconnection and Section 251(c)(3) access to UNEs.6
Pacific Bell Telephone Company d/b/a AT&T California (AT&T) and XO Communications Services, Inc. (XO) are telecommunications carriers authorized to do business in California as an ILEC and a CLEC, respectively. Pursuant to the Act and the terms of an interconnection agreement (ICA), XO maintains physical collocation in several of AT&T's California wire centers.7 In addition, AT&T provides connections which allow XO to cross-connect with various other CLECs collocated in AT&T's premises.8 The type of cross-connect AT&T provides XO that is at issue here is cabling between XO's termination on AT&T's main distribution frame (MDF) and another CLEC's termination on AT&T's MDF (hereinafter referred to as cross-connects via the MDF).9 Initially, XO obtained these cross-connects by ordering them out of AT&T's federal special access tariff.10 As an example, the tariffed rate for so-called "cage-to-cage interconnection" via the MDF for a DS3 transport circuit can range as high as $723.96 per month.11
In approximately 2007, XO requested that AT&T convert its pricing for cross-connects via the MDF to lower TELRIC rates incorporated into the ICA.12 AT&T did so for cross-connects in wire centers that are deemed "impaired" for UNE transport (i.e., non-competitive). However, it continued to bill at the higher, federal tariff rate in "unimpaired" (i.e., competitive) wire centers.13
On approximately January 1, 2008, XO began to withhold any cross-connect payments (for those cross-connects via the MDF in "unimpaired" wire centers) by the amount they were in excess of TELRIC prices incorporated into the ICA.14 XO and AT&T attempted, unsuccessfully, to resolve the billing dispute informally for over a year.15 On July 20, 2009, XO filed a formal complaint with this Commission seeking a determination that AT&T must bill for all disputed cross-connects at the TELRIC rate incorporated into the ICA rather than the federal special access tariff rate.
In D.10-07-005, we agreed with XO and directed AT&T to write off any portion of any bill in excess of TELRIC rates after January 1, 2008. (D.10-07-005 at 6-7 [Ordering Paragraphs 1 and 2].)
AT&T filed a timely application for rehearing asserting that D.10-07-005 is unlawful because: (1) it violates the "filed rate doctrine" by requiring AT&T to charge other than the federal tariff rate; and (2) the Commission impermissibly altered the terms of the ICA. XO filed a response.
In the rehearing decision D.11-07-032, we concluded that the parties may contract out of the regulatory regime under the Act to negotiate different terms and rates pursuant to an ICA, and in this instance the parties had an ICA covering collocation service (which includes cross-connects). We thus agreed with AT&T that these services are governed by Section XI of the ICA (entitled "Collocation and Mid Span Meets"), which in turn incorporates the rates set forth in AT&T's state tariff, Schedule Cal. P.U.C. Tariff 175-T, Section 16 (Tariff 175-T).16 Accordingly, we modified D.10-07-005 to require the disputed charges to be paid in accordance with Section XI of the ICA and simultaneously denied rehearing of D.10-07-005 as modified. Following the issuance of D.11-07-032, both parties belatedly discovered that Tariff 175-T did not in fact contain a rate for cross-connects via the MDF.17 They then filed timely petitions for modification of D.11-07-032.
In their numerous and extensive filings in this docket, including the cross-petitions for modification, the parties-most particularly AT&T-have repeatedly shifted their legal arguments and made seemingly inconsistent references to portions of the record, detailed in Section 3 below.18 Accordingly, on November 15, 2011, the assigned Administrative Law Judge (ALJ) issued a ruling directing the parties to answer detailed questions designed to clarify the ambiguities in the parties' positions, especially with regard to their understanding of the meaning and operation of key terms of the ICA and its relation to the Act and related regulations of the FCC. The ALJ noted that the parties had failed to accurately and comprehensively address relevant legal and factual issues at an earlier stage in the proceeding, thus wasting Commission time and resources. On December 8, 2011 the parties filed responses to the ALJ ruling.
1 Pub. L. No. 104-104 (Feb. 8, 1996), 110 Stat. 56, codified at 47 U.S.C. §§ 151 et. seq.
2 47 U.S.C. §§ 251(a)(1) & (c)(2). The term ILEC is defined in 47 U.S.C. § 251(h).
3 47 U.S.C. § 251(c)(3). UNEs include loops, switches, and transport facilities. To determine what network elements ILECs must make available under Section 251(c)(3), the Federal Communications Commission considers whether the failure to provide access to the network element would "impair" the CLEC's ability to provide telecommunications service. Id. § 251(d)(2). This impairment analysis applies only to the Section 251(c)(3) unbundling obligation. Id.
4 47 U.S.C. § 251(c)(6); In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996; Interconnection Between Local Exchange Carriers and Commercial Mobile Radio Service Providers (Local Competition Order) (1996), 11 FCC Rcd 15499 ¶¶ 28, 594-95.
5 See In the Matter of Deployment of Wireline Services Offering Advanced Telecommunications Capability (Collocation Order) (2001), 16 FCC Rcd 15435 ¶¶ 1, 2, 55-84. ILEC-provided cross-connects are required and considered part of the terms and conditions of collocation. Id. ¶¶ 62, 79-80, 82.
6 See, e.g., Local Competition Order, 11 FCC Rcd 15499 ¶¶ 29, 618-629. See also 47 C.F.R. §§ 51.501, 51.503, and 51.505.
7 Joint Factual Stipulation, dated January 27, 2010, ¶¶ 4, 5. The applicable ICA was originally entered into between AT&T and XO's predecessor in interest, Nextlink California, Inc. See id. ¶ 3; Complaint of XO, filed July 20, 2009, Exh. A.
8 Joint Factual Stipulation, dated January 27, 2010, ¶¶ 6-8.
9 Id. ¶ 8. Another type of cross-connect is direct cabling between two CLECs' collocation spaces (hereinafter referred to as direct cross-connects). Id. ¶ 7.
10 Id. ¶ 9. At the time XO placed the initial orders for cross-connects, both parties apparently believed that AT&T's federal tariff applied to such orders. They subsequently have conceded that the federal tariff does not explicitly apply. See n.52 below.
11 Id. [Showing the applicable charges as: $61.98 (cross-connect); $61.98 (cross-connect); $600 (special access transport)].
12 Id. ¶ 10 [Showing the applicable charges as: $45.68 (cross-connect); $45.68 (cross-connect); $0 (UNE transport)].
13 Id. ¶¶ 10-11. See discussion of Section 251(c)(3) impairment analysis, supra n.3.
14 Id. ¶ 12.
15 Id. ¶ 13.
16 Application of AT&T for Rehearing of D.10-07-005, dated August 11, 2010, (Reh'g App.) at 3; D.11-07-032 at 6.
17 Responses of AT&T to ALJ Ruling Directing Parties to Supplement Record, dated December 8, 2011 (AT&T Dec. 8 Responses) at 20; XO's Responses to ALJ's Request to Supplement the Record, dated December 8, 2011 (XO Dec. 8 Responses) at 27; AT&T Petition for Modification of Order Modifying D.10-07-005, dated August 16, 2011 (AT&T Petition for Modification) at 4-5; Petition of XO for Modification of D.11-07-032, dated August 25, 2011 (XO Petition for Modification) at 2-3.
18 See. infra nn. 20, 22, 47.
