Discussion

1. Definition of "retail special access services"

The commenting parties assert that the term "retail special access services" is confusing and questions whether there is a distinction between "retail" and "wholesale" special access services.

Specifically, AT&T asserts that the term "retail special access" should be changed to "special access" as it offers the same special access tariff to both retail and wholesale customers.⁷ AT&T states that if the Commission does not grant pricing flexibility for its "retail" special access services as it requested,⁸ then its current special access tariffs will continue to apply to both retail and wholesale special access services and that there is no distinction between these special access services.

CALTEL also explains that CLECs do not offer "retail" special access and that we should eliminate any reference to "retail" special access offered by carriers other than ILECs.⁹ CALTEL asserts that confusion may result from the term "retail special access" as applied to CLECs, because the Commission's consideration of whether to grant pricing flexibility for "retail special access" applied only to ILECs. CALTEL contends that CLECs offer a variety of point-to-point dedicated services to business customers, but that CLECs only use the term "special access" to refer to the services offered at wholesale to other carriers.¹⁰ SprintNextel and TimeWarner assert that there is confusion about the meaning of "retail special access" and the Commission should defer ruling on the ACR at this time.¹¹ They argue that the ACR's proposed advice letter treatment for such services is acceptable if the Commission also adopts safeguards to prevent discriminatory or anticompetitive pricing.¹²

As an initial matter, we clarify what we mean by "special access services" in this decision. In D.08-09-015, we defined the term "special access service" for the purpose of determining whether to grant ILECs pricing flexibility for this service and referred to "special access service" as the ILECs' offering of non-switched lines dedicated to a customer's use between two points.¹³ However, in this decision, we are determining the proper advice letter treatment for all "special access" services, and thus do not limit the definition only to ILECs. Consistent with our past decisions, we clarify that special access service is the service offering of non-switched lines dedicated to a customer's use between two points¹⁴ (whether offered to a retail or wholesale customer and whether offered by an ILEC or non-ILEC).

Moreover, upon review of the comments and prior Commission decisions, we agree with commenters that there is currently no meaningful distinction between retail and wholesale special access services, as carriers are required to offer special access services at the same price, terms, and conditions to all customers.¹⁵ We affirmed in D.08-09-015 that there shall be no "use" or "user" restrictions on special access services.¹⁶

Therefore, we agree that the term "retail" special access does not have relevance for the purposes of determining the proper advice letter treatment for these services, and refer herein to "special access services" and not "retail" special access.

2. Advice Letter Tiers for ILECs' Special Access Services:

The ACR proposed certain tiers for filing price changes for ILEC special access services, based on prior Commission decision treatment for the ILECs' special access services in Category II.¹⁷ However, AT&T pointed out that some of its special access services were deemed Category III services prior to URF and that the Commission has provided more flexible filing procedures for these services than identified in the ACR.¹⁸ Specifically, AT&T asserts that the Commission classified various services as Category III services, including many that are included in AT&T's D12 tariff. The prior filing rules for Category III services provided that if there is a current rate and a maximum rate for a service:

● The current rate can be modified on one-day notice, as long as the new rate is below the maximum rate.

● If there is a decrease in the maximum rate, it is temporarily effective on one-day notice and permanent on the 20^th day after filing if not protested.

● Increases in the maximum rate of less than 5% are temporarily effective on the five-day notice and permanent on the 20^th day after filing if not protested.

● Increases in the maximum levels of 5% or greater would become effective on 30-days notice, permanently if no protest is entered, temporarily if a timely protest is filed.

AT&T proposes that all price changes for these Category III services be filed in Tier 1, or at a minimum, and that the price changes for D12 tariff services be filed as follows:

● Tier 1 for price changes below the maximum price and for increases in the maximum price of 5% or less, and

● Tier 2 for an increase in the maximum price greater than 5%.¹⁹

Verizon argues that there are some Category III services under the prior regulatory framework that should qualify for Tier 1 treatment in filing advice letters.²⁰ Verizon asserts that some of these services (Dedicated Sonet ring, frame relay) may be included in its special access tariff, but they are "not traditional special access services (non-switched, dedicated private line)."²¹

In the ACR, we noted that for special access services, ILECs have had to file applications to raise the prices above previously approved ceilings and that ILECs must continue to do so for such services.²² We also noted that ILECs that wish to lower retail special access prices below previously approved floors may do so by advice letter in Tier 2, with appropriate cost support. Any price changes between the previously approved floor and ceilings are permitted to be filed in Tier 1 under GO 96-B. We affirm that this is the proper filing treatment for special access services that are in Category II.

However, because there are some ILEC special access services that the Commission classified as Category III under NRF, the proposed tier treatment in the ACR may be more restrictive than prior filing requirements. If there is a special access service for which an ILEC has obtained Category III regulatory treatment (as described by AT&T), we conclude that AT&T's proposed tiers for filing these special access services are reasonable. By classifying certain special access services as Category III, the Commission granted pricing flexibility for those services. Verizon argues that some Category III services are in its "special access" tariff, but are not traditional special access services. To the extent that a service is not "special access" and was granted pricing flexibility in D.06-08-030, that service shall be filed in Tier 1. Any ILEC special access services that were classified as Category III shall be subject to the following filing treatment:

● ILECs may adopt any decreases in maximum rates and increases of 5% or less by Tier 1 advice letters for Category III special access services; and

● ILECs may adopt increases in maximum rates greater than 5% by Tier 2 advice letters for Category III special access services.

To the extent that there are special access services that were not granted Category III treatment and were subject to requirements in D.96-03-020, the ILECs shall:

● file price changes within the previously approved floor and ceilings by advice letter in Tier 1;

● file price reductions below previously approved floors by Tier 2 advice letter (with cost support); and

● file price increases above previously approved ceilings by application.

This treatment most closely approximates our practice before creation of the tiered advice letter system.

3. CLECs' Special Access Services

CALTEL asserts that rates for comparable services offered by CLECs or IXCs should be subject to Tier 1 advice letter treatment.²³ We agree that special access services offered by CLECs and IXCs should be subject to Tier 1 advice letter treatment, as these carriers have always had pricing flexibility for these services.

SprintNextel and TimeWarner also ask us to rule that CLECs and IXCs that are affiliates of ILECs may not offer special access services on a detariffed basis and that URF Carriers may not distinguish between retail and wholesale special access services.²⁴ They are concerned that the ILECs might have their CLEC and IXC affiliates offer "retail special access" services on a detariffed basis rather than file advice letters themselves. They interpret Conclusion of Law 26 from D.07-09-018 (our detariffing decision) as flatly prohibiting the detariffing of special access services by any type of carrier: "Detariffing of resale or other services that were not granted full pricing flexibility in D.06-08-030 [such as special access services] is not in the public interest."

We have already stated that CLECs and IXCs may offer special access services on a detariffed basis. In our most recent URF decision, we specifically clarified that CLECs and IXCs have already had full pricing flexibility for these services and that they may currently detariff their special access services.²⁵ To the extent that a CLEC or IXC detariffs special access services, the carrier must post the generally available rates, terms and conditions on its website and is subject to the non-discrimination requirements of Pub. Util. Code § 453. We further reiterate that URF Carriers may not impose use and user restrictions on special access services and that the URF Carriers shall offer the same special access service to both retail and wholesale customers.

GO 96-B shall be revised to reflect that price changes to special access service shall be made in the appropriate tiers, consistent with the Commission's order. See Appendix A.

⁷ Comments of Pacific Bell Telephone Company d/b/a AT&T California (U 1001 C) on the Assigned Commissioner's Ruling Seeking Limited Additional Comment on Proper Advice Letter Tier Filings for Retail Special Access Price Changes ("AT&T Comments") at 2.

⁸ AT&T and Verizon sought full pricing flexibility for retail special access earlier in this proceeding. In D.08-09-015, we declined to grant the ILECs full pricing flexibility for "retail" special access services.

⁹ Comments of the California Association of Competitive Telecommunications Companies on the Assigned Commissioner's Ruling Seeking Limited Additional Comment on Proper Advice Letter Tier Filings for Retail Special Access Price Changes ("CALTEL Comments") at 2-3.

¹⁰ CALTEL comments at 2.

¹¹ Reply Comments of SprintNextel and tw telecom of california in Response to Assigned Commissioner's Ruling Seeking Limited Additional Comment on Proper Advice Letter Tier Filings for Retail Special Access Price Changes ("Joint Commenters' Reply Comments") at 1-2.

¹² Ibid. at 2-7.

¹³ D.08-09-015 at 85, 87, and n.93.

¹⁴ In D.94-09-065 (which concluded the Commission's implementation rate design under the New Regulatory Framework), the Commission defined "private line" as allowing communications from one customer location to another customer location within the same LATA without the use of a LEC's switches and defined "special access" as identical to private line circuits, except that one leg of the special access connection is to an IXC point of presence. In D.94-09-065, the Commission permitted the ILECs to merge the retail private line tariff into the wholesale special access tariff, so that there was no distinction between a private line and a special access line.

¹⁵ In D.97-08-059, the Commission noted that special access and private lines are available for resale under the LECs' existing wholesale tariff and that there is no retail tariff for such services. The Commission affirmed in D.97-08-059 that special access service is "essentially wholesale in nature" and that there should be no distinction between the price a CLEC reseller and an IXC pays for the service.

¹⁶ D.08-09-015, Section 4.2.2: "We further note, however, that the CLECs and IXCs should not impose use or user restrictions on their service offerings, as such practice would be inconsistent with Pub. Util. Code § 453."

¹⁷ See ACR, dated August 18, 2008 at n.1 (citing D.96-03-020 in which the Commission assigned special access and private line services to Category II under the New Regulatory Framework).

¹⁸ AT&T Comments at 3-4.

¹⁹ Ibid. at 4-5.

²⁰ Verizon Reply Comments at 3.

²¹ Ibid.

²² ACR dated August 18, 2008, at 2, n.1.

²³ AT&T Comments at 3.

²⁴ Joint Commenters' Comments at 2-7.

²⁵ See D.08-09-015 at 41-42 ("we clarify that ... this decision applies only to ILECs' special access services, [and] nothing prohibits a CLEC or an IXC from seeking to detariff ... their special access services.").