4. Positions of the Parties Regarding Arbitrated Portions of the
Conformed Agreements

Section 252(e) of the Act and our Rule 4.2.3 provide that we may only reject an agreement (or any portion thereof) adopted by arbitration if we find that the agreement does not meet the requirements of Section 251 of the Act, including the regulations prescribed by the FCC pursuant to Section 251, or the standards set forth in Section 252(d) of the Act.⁶

Petitioners argue that the arbitrated portions of the Conformed Agreements do not satisfy the Section 251 requirements or the Section 252(d) standards. Specifically, Petitioners allege as follows:

Arbitrated Issue 1: the FAR wrongly requires Petitioners to terminate traffic at unreasonably low rates⁷ in violation of Section 252(d)(2)(A).⁸

Arbitrated Issue 2: the FAR wrongly applies the reciprocal compensation regime to traffic between wireless carriers and IXCs⁹ in violation of FCC Rule 51.701(b)(2).¹⁰ Petitioners point out that their interpretation of this Rule has been adopted by the state commissions of Oregon, Colorado and Texas.¹¹

Arbitrated Issue 4: the FAR wrongly requires Petitioners to transport traffic off their network¹² in violation of Section 251(c)(2)(B).¹³

Respondents support approval of the Conformed Agreements. Each Respondent addresses a different set of issues in its statement of support. The AT&T Statement addresses Arbitrated Issue 1 and various sub-issues. The T-Mobile Statement addresses Arbitrated Issues 2 and 4.

With regard to Arbitrated Issue 1, Respondents argue that Petitioners were unable to provide factual support for their proposed 2.25¢ per minute termination charge. Corrections to the cost model inputs ordered by the arbitrator after taking evidence from the parties reduced the allowable termination charges to between 1/10^th¢ per minute for the least-cost RLEC and 1¢ per minute for the highest-cost RLEC.¹⁴ These revised charges are the output of the Petitioners' cost studies when the corrections ordered by the arbitrator are made to the inputs.

Although there are 15 separately arbitrated cost sub-issues, seven major cost sub-issues account for virtually the entire difference between the Petitioners' proposed rate and the rates approved in the FAR and adopted in the Conformed Agreements. Accordingly, the AT&T Statement addresses only those seven major sub-issues in detail. We discuss these points further in Section 5, below.

With regard to Arbitrated Issue 2, Respondents point out that FCC Rule 51.701(b)(1) defines traffic between a LEC and a carrier other than a CMRS provider as telecommunications traffic. By implication, the definition includes traffic between a LEC and an IXC.¹⁵

With regard to Arbitrated Issue 4, Respondents point out that the position taken by the FAR has also been taken by the FCC and by every Federal court that has considered this issue.¹⁶

⁶ Section 251 describes the interconnection standards. Section 252(d) identifies pricing standards.

⁷ Petitioners' Statement, pp. 6-7.

⁸ Section 252(d)(2)(A) Charges for transport and termination of traffic:

(A) In general. For purposes of compliance by an incumbent local exchange carriers with section 251(b)(5) of this title, a State commission shall not consider the terms and conditions for reciprocal compensation to be just and reasonable unless:

(i) such terms and conditions provide for the mutual and reciprocal recovery by each carrier of the costs associated with the transport and termination on each carrier's network facilities of calls that originate on the network facilities of the other carrier; and

(ii) such terms and conditions determine such costs on the basis of a reasonable approximation of the additional costs of terminating such calls.

⁹ Petitioners' Statement, pp. 7-8.

¹⁰ FCC Rule 51.701(b):

For purposes of this subpart, telecommunications traffic means:

(1) Telecommunications traffic exchanged between a LEC and a telecommunications carrier other than a CMRS provider, except for telecommunications traffic that is interstate or intrastate exchange access, information access, or exchange service for such access.

(2) Telecommunications traffic exchanged between a LEC and a CMRS provider that, at the beginning of the call, originates and terminates within the same Major Trading Area as defined in § 24.202(a) of this chapter.

¹¹ Petitioners' Statement, p. 7.

¹² Petitioners' Statement, pp. 8-9.

¹³ Section 251(c)(2) Interconnection-The duty to provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection with the local exchange carrier's network.

(A) for the transmission and routing of telephone exchange service and exchange access;

(B) at any technically feasible point within the carrier's network;

(C) that is at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection; and

(D) on rates, terms and conditions that are just, reasonable, and nondiscriminatory, in accordance with the terms and conditions of the agreement and the requirements of this section and Section 252 of this title.

¹⁴ AT&T Statement, p. 2.

¹⁵ T-Mobile Statement, pp. 3-6.

¹⁶ Ibid., pp. 7-9.