11. Assignment of Proceeding
Rachelle B. Chong is the assigned Commissioner and Sarah R. Thomas is the assigned Administrative Law Judge in this proceeding.
1. Verizon is installing an all fiber network.
2. AT&T's U-Verse broadband network is a hybrid of copper and fiber.
3. No CLEC in SureWest's service territory obtains UNE loops from SureWest using copper plant.
4. The Small LECs are not building fiber optic networks to replace copper facilities, and have no CLECs leasing their lines.
5. No ILEC is currently permanently retiring copper loops in California.
6. Verizon's removal of copper drops is not permanent removal of copper loop facilities so long as it replaces such drop(s) upon request.
7. AT&T's actions to replace copper with fiber in Downieville and Watsonville, California, were not part of AT&T's U-Verse network or replacements with FTTH or FTTC facilities.
8. AT&T's actions to replace copper with fiber in Georgia relate to a Fiber to the Home overbuild in Georgia that predates the AT&T/Bell South merger.
9. Verizon's FiOS network and AT&T's U-Verse network are far from ubiquitous.
10. No party has made a showing of harm justifying the rules CALTEL proposes.
11. The Commission is addressing emergency preparedness issues related to fiber optic networks in a separate proceeding.
12. Customers who have switched to fiber-based service may not easily switch back to copper in an emergency.
13. Redundancy for emergency preparedness purposes exists, in part, via wireless services such as cellular service and Wi-Fi.
14. Cost issues regarding the copper network are complex and may take years to litigate.
15. The Commission is charged by our statutes to promote the deployment of broadband networks.
16. A requirement that the ILECs seek approval to retire their individual copper loops may deter or prevent the ILECs from fully deploying fiber-based networks.
17. A fair and equitable agreement for access to the copper loop should include all fair and reasonable costs to the ILEC for preserving and maintaining access to the copper loop facility for the requesting party, vis-à-vis the retirement of the copper loop facility.
18. For example, the price of access to the copper loops where the ILEC has retired its copper plant should include the total costs of operating and maintaining or preserving the copper cable, and all associated facilities used to provide the leased loops.
19. If a requesting party seeks to purchase the copper facility from the ILEC, the price shall be the fair market value of the copper facility to the ILEC, and all maintenance and operating costs of the copper facility shall be the responsibility of the purchasing party from the date of purchase.
20. The FCC permits ILECs to retire copper loops when deploying FTTH or FTTC facilities.
21. The FCC has existing rules providing notice to and an opportunity to object from interconnected CLECs that may be adversely affected by ILEC copper facility removal.
1. We have jurisdiction to impose rules regarding copper retirement.
2. It is this Commission's policy under Pub. Util. Code § 709 to promote the development and deployment of new technologies and the ubiquitous availability of a wide choice of state-of-the-art services.
3. The Commission is also charged with implementing Pub. Util. Code § 5800 et seq., which sets forth the goal to promote widespread access to the most technologically advanced cable and video services to all California communities.
4. The FCC adopted unbundling policies in the TRO to encourage swift and ubiquitous broadband deployment.
5. The extensive copper retirement rules proposed by CALTEL are not necessary.
6. We will require the ILECs to file concurrently with Commission's Communications Division a copy of their FTTH or FTTC related copper retirement notices that are filed with the FCC. The ILECs shall also serve these notices on CLECs that are interconnected with them, regardless of whether the CLEC is currently serving customers on the copper loop or not.
7. The process that we adopt for the ILECs and CLECs to negotiate with each other is consistent with the FCC's and our state's broadband policies, and competitively neutral.
8. The term "dispose of" in § 851 is broad enough to encompass copper loop retirements.
9. Consistent with the FCC's policy and our state policy to encourage the deployment of broadband networks, we decline to require an approval process for the ILECs' retirement of copper loops.
10. Pursuant to Section 853(b), we find that it is not necessary in the public interest for ILECs to obtain Section 851 approval prior to retirement of individual copper loops, provided that they comply with the notice and good faith negotiation process we set forth in this order.
11. If an ILEC is advertising its new fiber-based service to customers, it should not represent that the customer must purchase the fiber-based service.
IT IS ORDERED that:
1. We decline to adopt the rules proposed by the California Association of Competitive Telecommunications Companies (CALTEL) in this proceeding on the ground that such rules are not necessary.
2. Incumbent Local Exchange Carriers are exempted from the requirements of Pub. Util. Code Section 853(b) when they retire copper loops and deploy fiber-to-the-home or fiber-to-the-curb facilities, provided that they comply with Ordering Paragraphs 3-4.
3. If an Incumbent Local Exchange Carrier (ILEC) seeks to retire a copper loop facility with fiber-to-the-home or fiber-to-the-curb facilities, the following
4. Process shall apply within the 90 days that follows the ILEC's decision to retire a copper loop:
a. The ILEC shall file concurrently with Communications Division a copy of its notice of network change that it files with the FCC pursuant to 47 C.F.R. 51.333 when that copper loop is being used by a CLEC. The ILEC shall serve at the same time the notice on all CLECs that are interconnected with the ILEC, regardless of whether a CLEC is currently serving a customer on that loop or not.
b. A CLEC that is interconnected with the ILEC shall file with Communications Division a copy of any objection that it files to a proposed copper retirement with the FCC under 47 C.F.R. 51.333(c).
c. Any CLEC that seeks to use that copper loop facility shall provide to the incumbent carrier within 20 days of the FCC notice a request for negotiations in writing either to purchase or lease the loop facilities and file a copy of its request with the Communications Division. The CLEC shall include in its request for negotiations the following information:
i) Whether the CLEC seeks to purchase the copper loop facility, or whether the CLEC seeks only to have the ILEC maintain access to a loop facility;
ii) the number of current or planned customers on the copper loop;
iii) the services that the CLEC provides over the loop facility or
plans to provide over the loop;
iv) the number of UNEs that the CLEC currently purchases
d. Upon receipt of the CLEC's request for negotiations, the ILEC shall negotiate in good faith with the CLEC for a period of 60 days either to:
i) sell the copper loop facility to the CLEC; or
ii) reach a fair and equitable agreement with the CLEC on price and terms to ensure access to loop facilities.
5. When retiring copper loops, ILECs shall also offer to their retail end-user customers a comparable service over fiber that the customer was previously receiving.
6. Rulemaking 08-01-005 is closed.
This order is effective today.
Dated November 6, 2008, at San Francisco, California.
MICHAEL R. PEEVEY
President
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
I reserve the right to file a dissent.
/s/ DIAN M. GRUENEICH
I will file a concurrence.
/s/ JOHN A. BOHN
I reserve the right to file a concurrence.
/s/ TIMOTHY ALAN SIMON
Dissent of Commissioner Dian M. Grueneich
I do not support the decision approving a process for the retirement of copper loops (Decision) by incumbent local exchange carriers (ILECs). First, I am concerned that the process defined in the Decision does not provide enough protection to maintain a strong level of competition in California and may further limit the provider choices that residential and small business telecommunications customers have in the future. Eventually this lack of protection may lead to the elimination of many competitive local exchange carriers (CLECs). Secondly, I am strongly opposed to the exemption from Public Utilities Code § 851 requirements for ILECs seeking to retire or remove copper loops.
I am pleased that the Decision made the right call in finding that the California Public Utilities Commission (Commission) has the jurisdiction to address the issues raised in this proceeding and to establish a process for the ILECs to follow when retiring or removing copper loops. Especially relevant is the Decision's reference to the Federal Communications Commission's (FCC) explicit statement in the Triennial Review Order stressing that the FCC is "not preempting the ability of any state commission to evaluate an incumbent LEC's retirement of its copper loops to ensure such retirement complies with any applicable state legal or regulatory requirements."
While the Decision adopts a notification process mirroring the FCC's process and requires ILECs to enter into commercial negotiations with the CLECs, I remain skeptical regarding the light-handed regulatory approach embraced in the decision. By relying on "good faith negotiations" by the ILECs, the Decision establishes a one-sided approach to address this issue - favoring the ILECs and their plan to build out fiber networks, yet leaving little assurance for the continued use of copper loops by CLECs. The lack of assurances for the CLECs may lead to more competitors forced to close their businesses thus leaving California customers with fewer telecommunications carriers from which to choose.
I acknowledge the California Legislature's directive to the Commission that we bring affordable and widespread high quality telecommunications to California. However, we must not execute this directive at the expense of the competitors' demise. The Decision recognizes that copper facilities are another viable alternative in the competitive marketplace and are, therefore, another way to meet the obligations to advance broadband deployment. Thus, preservation of copper facilities is beneficial to the telecommunications industry, the Commission, and, because of the resulting competition, beneficial to California customers. The Decision claims to carefully balance the rapid deployment of high speed telecommunications services against ensuring fair competition. Yet, it ignores its own conclusion that copper facilities are another way to meet the Commission's obligations to advance broadband deployment. For, these reasons, I find the process set forth in the Decision unfairly balanced toward the needs of the ILECs in their endeavor to construct a ubiquitous fiber network.
My other concern with the Decision is the exemption of Public Utilities Code § 851 requirements for ILECs retiring copper loops. Although the exemption is predicated on the condition that the ILECs negotiate in good faith with the CLECs, this is a door that once opened may not be closed again. § 853 gives the commission the authority to exempt any public utility from the requirements of § 851 if such application is not in the public interest. The Decision argues that "it is not necessarily in the public interest for ILECs to obtain § 851 approval for the retirement of copper loops." Based on that weak conclusion, the Decision "decline[s] to interfere with the network investment plans of ILECs, by requiring § 851 approvals for copper retirement." Here again, the Decision tips the scales in the direction of promoting ILEC fiber investment at the expense of the competitors that use the copper network for the same advanced services. The exemption of § 851 requirements further facilitates the elimination of the competition.
The approach of the Decision - exempting § 851 approval and relying solely on good faith negotiations by the ILECs to ensure fair competition - adds up to an approach that tips too far to one side in addressing the retirement of copper loops. Because of this imbalance, I oppose the Decision.
Dated November 6, 2008, at San Francisco, California.
/s/ DIAN M. GRUENEICH |
Dian M. Grueneich Commissioner |
Commissioner Bohn's Concurrence to D.08-11-033
I support this decision which weighs carefully the Commission's responsibility to ensure that the communications utilities we regulate do not engage in anti-competitive behavior against the Commission's position that it should not micro-manage those utilities or their copper networks. We made our determination that copper retirement rules are not needed at this time based on our assumption that there is adequate competition in the communications marketplace. I have two concerns that stem from this assumption.
First, it would have been better if this decision had adopted an arbitration process to ensure that ILECs and CLECs will work to reach an agreement on a fair price to buy or lease copper loops. If an arbitration process had been adopted, the Commission could have more closely monitored whether ILECs and CLECS are able to reach equitable agreements. Instead, this decision adopts a process requiring ILECs and CLECs to enter into commercial negotiations upon request by CLECs.
While the Commission will not be involved in the negotiation process approved by this decision, ILECs and CLECs should bring to the Commission any claims that a party failed to negotiate in good faith. Thus, even though this Commission did not adopt an arbitration process, ILECs and CLECs may come to the Commission, by filing a complaint for example, to have their concerns heard, as long as they follow the negotiation process outlined in the decision. In this way, the Commission will be able to monitor whether anti-competitive behavior is occurring with regard to the sale or lease of copper loops. Anti-competitive behavior includes unreasonable prices and terms. In its review of any complaints, the Commission will consider whether negotiations were not made in good faith and whether unreasonable terms were proposed in negotiations, as these are hallmarks of anti-competitive behavior.
Second, this decision grants ILECs an exemption from Public Utilities Code Section 851 pursuant to Public Utilities Code Section 853(b) by finding that it is not necessary in the public interest for ILECs to obtain Section 851 approval for the retirement of copper loops. I think it is difficult to know fully at this point whether our grant of a Section 853(b) exemption is actually "in the public interest." Given the evidence in the record at this time, I have concluded that an exemption is appropriate.
I recognize that the Commission may need to revisit its grant of a Section 853(b) exemption. If CLECs assert or demonstrate that ILECs are engaging in anti-competitive behavior with regard to copper loop retirements, then this Commission will reconsider whether to continue granting ILECs an exemption to the requirements of Section 851. A showing that ILECs are retiring copper loops in order to drive competitors out of the marketplace, for example, would be a persuasive argument in demonstrating that a Section 853(b) exemption is not in the public interest.
I want to be very clear to the ILECs and put them on notice: while you are exempted from the requirements of Section 851 for the time being (subject to the notice and negotiation process adopted in this decision), in the future the Commission may find that an exemption is no longer appropriate, and may require you to file Section 851 advice letters to retire copper loops. The Commission has determined in this decision that it is not necessary to regulate copper loop retirement now. But it may find that more regulation is necessary in the future to ensure that there is sufficient competition.
/s/ John A. Bohn
John A. Bohn | |
Commissioner |
|
Concurring Opinion of Commissioner Timothy Alan Simon
on the Rulemaking Regarding Whether to Adopt, Amend, or Repeal Regulations Governing the Retirement by Incumbent Local Exchange Carriers of Copper Loops and Related Facilities Used to Provide Telecommunications Services
(Rulemaking 08-01-005.)
There is substantial public benefit in safeguards that foster the preservation of competitive markets. I commend Commissioner Chong for the changes she has made to her Proposed Decision over these intervening weeks in recognition of concerns voiced by my office, the other Commission offices, and, in particular, Commissioner Bohn. I have withdrawn my Alternate because the Revised PD sufficiently-although not completely-addresses policy considerations that I would have proposed.
The revisions permit this Commission to act proactively to protect against the significant threat to competition, customer choice, and public safety that copper retirement poses.
The original PD declined to adopt rules requiring ILECs to obtain Commission approval before permanently removing copper wire local loops from their networks. Although the Revised PD continues to see no current or imminent harm to CLECs, it nonetheless adopts a process for ILECs and CLECs to negotiate in good faith for continuing access to copper loop facilities. Notable, ILECs are admonished to negotiate in good faith with requesting CLECs seeking to purchase copper facility or to have the ILEC maintain access to the loop. Price of competitive access is established at the fair market value of the facility including the ILEC's maintenance and operating costs.
The adopted limited process supports the legislative mandate under Public Utilities Code section 790 for widespread broadband deployment to all Californians. Since the FCC's TRO decision, new technologies unleash the existing copper network-that the FCC had written off-are capable of broadband speeds of 20 Mbps to 100 Mbps and supporting state of the art services such as video-conferencing and video on demand. These new emerging broadband technologies, such as VDSL2, ADSL2, and Ethernet over Copper speeds are critical to small and medium sized business customers typically located in buildings not served by fiber and or cable. Wireless is often not practical to meet the high data communications volume needs of these business customers.
It is disconcerting that the Revised PD exempts ILECs from Public Utilities Code section 851's requirements regarding cooper loop retirement. The Revised PD may be technically legal, but as a policy matter, I disagree with Commissioner Chong in this respect. Clearly, competitive access to ILEC copper facilities is useful and necessary to support the Commission's obligations under Public Utilities Code section 790 to advance broadband deployment and to CLECs whose very survival depends on access to ILEC copper loop facilities.
In the end, the Revised PD addresses my bottom line-that we facilitate continued competitive access to ILEC owned copper facilities and establish that ILECs and competitors must negotiate in good faith on the terms. To this extent, the Revised PD serves the public interest. Competitive and end-user consumer choice is preserved and protected.
/s/ TIMOTHY ALAN SIMON
Timothy Alan Simon
Commissioner
San Francisco, California
November 6, 2008
