I. INTRODUCTION

In this Order we dispose of the application for rehearing of Decision
(D.) 08-04-055 ("Decision") filed by CBeyond Communications, LLC ("CBeyond"), Covad Communications Company ("Covad"), XO Communications Services, Inc. ("XO"), Mpower Communications Company ("Mpower"), and U.S. TelePacific Corp. (collectively, "the CLECs").

The Decision resolves a complaint filed by Pacific Bell Telephone Company, dba AT&T California ("AT&T") against CBeyond, Covad, and Arrival Communications, Inc. ("Arrival").¹ The complaint sought a Commission determination that AT&T had properly designated certain wire centers² as non-impaired (competitive) for purposes of its obligation to offer high capacity loops and dedicated transport to CLECs at Commission-approved unbundled network element ("UNE") rates.³

Impairment⁴ issues are governed generally by the 1996 Telecommunications Act ("1996 Act") and the Federal Communications Commission ("FCC") Triennial Review Remand Order ("TRRO").⁵ The TRRO adopted two proxies for determining whether there is a competitive marketplace at a particular wire center: the number of fiber based collocators ("FBCs"); and the number of business lines.⁶ Where wire centers meet or exceed the established thresholds, they may be designated as non-impaired by an ILEC.⁷ At that point, a CLEC is no longer entitled to the lower UNE rate and must either: (a) find other third party carriers willing to provide wholesale high capacity loops or transport at lower rates; (b) invest in their own additional facilities; or (c) convert existing agreements with ILECs to those subject to higher Special Access rates.

The TRRO took effect on March 11, 2005.⁸ Under its procedures, the ILECs act first to designate wire centers they believe meet the non-impairment thresholds. The CLECs then review and self-certify whether the designations are accurate.⁹ Based on the TRRO AT&T made designations on March 11, 2005. CBeyond, Covad, and Arrival contested those designations, and consistent with dispute resolution procedures under the TRRO, AT&T filed the instant complaint to bring the matter before the Commission for resolution.¹⁰

Our Decision resolved specific disputes regarding: the vintage of data to be used for purposes of the March 11, 2005 non-impairment designations; the proper counting methodology for FBC's and business lines; and four other factual disputes. We affirmed only those designations that had not been challenged by the CLECs,¹¹ and we directed AT&T to revise the remaining designations to correct any inaccuracies and reflect our determinations regarding data vintage and counting methodology.¹²

On May 29, 2008 a timely application for rehearing was filed by the CLECs.¹³ They challenge the Decision on the grounds that: (1) it is procedurally flawed; (2) it contains substantive errors; and (3) it denies them adequate due process. A response was filed by AT&T.

On June 13, 2008 CBeyond and Covad filed a motion to stay D.08-04-055, arguing: (1) they will suffer irreparable harm if a stay is denied; and (2) they are likely to prevail on the merits of the application for rehearing. A response was filed by AT&T. A reply to AT&T's response was filed by CBeyond and Covad.¹⁴

We have carefully considered the arguments raised in the application for rehearing and are of the opinion that while the Decision is lawful, we see the need to modify the Decision to clarify our explanation of certain changes that were made between the Presiding Officer's Decision ("POD") and our final Decision (Modified Presiding Officer's Decision or "MODPOD"). Specifically, we will clarify our statements relating to: data vintage; and the elimination of POD Ordering Paragraph Number 3(c). Good cause has not been established to grant rehearing. Accordingly, we deny the application for rehearing of D.08-04-055, as modified herein, because no legal error has been shown. We also deny the related motion for stay of D.08-04-055.

¹ AT&T is an incumbent local exchange carrier ("ILEC") providing local and intra-local access and transport area ("intraLATA") toll services in California. CBeyond, Covad, and Arrival are competitive local exchange carriers ("CLECs") certified to provide local service in California.

² A wire center is the location of an ILEC local switching facility containing one or more central offices. The wire center boundaries define the area in which all customers served by a given wire center are located.

³ UNE rates are based on Total Long Run Incremental Costs.

⁴ The term impaired is used to mean that the level of activity at a wire center is presumptively insufficient to support competition and market entrance by interconnecting CLECs. (See TRRO ¶ 10 which states: "...a requesting carrier is impaired `when lack of access to an incumbent LEC network element poses a barrier or barriers to entry, including operational and economic barriers, that are likely to make entry into a market uneconomic'". In that circumstance, CLECs can obtain high capacity (DS1 and DS3) loops and dedicated transport from ILECs at lower UNE rates. However, if an ILEC demonstrates that a wire center is competitive and thus, non-impaired, it is presumed there are sufficient alternatives for CLECs to obtain the needed services without ILEC access and rate assistance.

⁵ Order on Remand, Unbundled Access to Network Elements; Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, 20 FCC Rcd 2533 (2005) ("Triennial Review Remand Order" or "TRRO"), as affirmed by Covad Communications Company v. FCC (D.C. Cir. 2006) 450 F.3d 528 (codified as 47 C.F.R. § 51.319(a)(4) & (a)(5).) The TRRO vacated Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers (2003) 18 F.C.C.Rcd 16978 ("Triennial Review Order" or "TRO").

⁶ TRRO ¶¶ 93, 94, 104.

⁷ TRRO ¶¶ 66, 114-124; 47 C.F.R. §§ 51.5 & 51.319(a)(4) & (a)(5).

⁸ TRRO ¶¶ 235, 239.

⁹ TRRO ¶ 234.

¹⁰ TRRO ¶ 234; see also Application of Pacific Bell Telephone Company d/b/a SBC California for Generic Proceeding to Implement Changes in Federal Unbundling Rules Under Sections 251 and 252 of the Telecommunications Act of 1996 [D.06-01-043] (2006) 2006 Cal.PUC LEXIS 33, __ Cal.P.U.C.3d __, Attachment to Amendment ("Att. to Amend.") §§ 4.1, 4.1.1.4, 4.1.1.6, 4.1.3 (slip op.).

¹¹ D.08-04-055, at pp. 3, 31-32 [Ordering Paragraph Number 1].

¹² D.08-04-055, at pp. 3, 30 [Conclusion of Law Number 13] & p. 32 [Ordering Paragraph Number 2].

¹³ XO, Mpower, and U.S. TelePacific Corp. were granted leave to intervene in the proceeding, and Arrival was dismissed by stipulation of the parties after AT&T"s amended complaint was filed. (D.08-04-055, at p. 9.)

¹⁴ Commission procedures normally do not allow an applicant for rehearing to file a reply. However, permission was granted in this instance. CBeyond and Covad, and AT&T also filed certain confidential information under seal along with motions for their acceptance. Some of the confidential information was already in the record of the proceeding. None of it was dispositive to resolving the legal issues attendant to stay. Thus, it is not necessary to separately act on those motions.