ALJ/TRP/hl2 DRAFT Agenda ID #3764
9/2/2004 Item 37
PROPOSED DECISION OF ALJ PULSIFER (Mailed 7/28/2004)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking on the Commission's Own Motion into Competition for Local Exchange Service. |
Rulemaking 95-04-043 (Filed April 26, 1995) |
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Order Instituting Investigation on the Commission's Own Motion into Competition for Local Exchange Service. |
Investigation 95-04-044 (Filed April 26, 1995) (FCC Triennial Review Nine-Month Phase) |
OPINION REGARDING HOT CUT PROCESSES AND PRICING
(See Appendix 5 for Appearances)
II. Requirements of the TRO Relating to Hot Cuts: Standards for Approval 66
III. Procedural and Operational Background 1212
IV. SBC Hot Cut Processes (47 C.F.R. § 51.319(d)(2)(ii)(A)(2));-Overview 1414
V. Batch Size, Capability of SBC's Processes to Meet Demand, and
Provisioning Interval 1717
VI. Verizon's Proposed Hot Cut Processes (47 C.F.R. § 51.319(d)(2)(ii)(A)(2))
and Volume Limitations (47 C.F.R. § 51.319(d)(2)(ii)(A)(1)) 3333
VII. Capability of Verizon's Hot Cut Processes to Meet Demand 47 C.F.R.
§ 51.319(d)(2)(ii)(A)(3) 3535
B. Positions of Other Parties 3636
D. Verizon's Provisioning Intervals (47 C.F.R. § 51.319(d)(2)(ii)(A)(2)) 4343
VIII. Proposed Revisions to Existing ILEC Processes to Provide Seamless
Transition for Migrating Customers (47 C.F.R. § 51.319(d)(2)(ii)(A)(2)) 4444
A. Mechanization of Manual Processes 4444
B. 911 Database Coordination Issues Require Resolution 4848
C. Number Portability Coordination Issues Require Resolution 5151
D. Directory Listing Issues Require Resolution 5353
E. Updating of LIDB and CNAM Databases as Part of Hot Cut Process 5454
IX. Additional Migration Scenarios to be In Included in BHC Processes
(47 C.F.R. § 51.319(d)(2)(ii)(A)(2)) 5656
X. Batch Hot Cut Costing and Pricing (47 C.F.R. § 51.319(d)(2)(ii)(A)(4)) 7676
A. Framework for Analysis 7676
1. SBC Hot Cut Prices Position of SBC 7777
2. Response of MCI and AT&T to SBC Cost Study 8080
3. Disposition of Cost Adjustments for SBC TELRIC Prices 8383
B. Verizon's Proposed TELRIC Pricing for Hot Cut Processes 101101
XI. Performance Measures for Batch Hot Cut (47 C.F.R. § 51.319(d)(2)(ii)(A)(2)) 110110
B. Performance Measures Proposed For SBC Hot Cut Processes 110110
C. Performance Measures Proposed For Verizon Batch Hot Cut Processes 114114
XII. Batch Hot Cut Testing Requirements (47 C.F.R. § 51.319(d)(2)(ii)(A)(2)) 120120
XIII. Comments of ALJ Proposed Decision 124124
XIV. Assignment of Proceeding 125125
Appendix 1: Schematic Diagram Illustrating Hot Cut Process
Appendix 2: Schematic Diagram Illustrating Hot Cut for Line Splitting
Appendix 3: Hot Cut Process Prices: Adopted vs. Proposed
Appendix 4: Explanation of Commission-Adopted Pricing Adjustments
Appendix 5: List of Appearances
I. Introduction
This decision addresses the implementation of "hot cut" processes1 and related pricing applicable to Pacific Bell Telephone Company doing business as SBC California (SBC) and Verizon California, Inc. (Verizon) pursuant to the Federal Communications Commission (FCC) Triennial Review Order (TRO), adopted on February 20, 2003.2 The FCC released the text of its TRO on August 21, 2003, which was published in the Federal Register on September 2, 2003 and which became effective on October 2, 2003. The TRO required state commissions, among other things, to approve within nine months of the effective date of the TRO, or by July 2, 2004, a batch cut migration process to be implemented by ILECs. Alternatively, state commissions were directed to make detailed findings explaining why such a process would not be necessary in a particular market.
As originally initiated, these proceedings relating to hot cut processes were part of a larger inquiry to identify those markets, if any, in which competitive local exchange carriers (CLECs) are not impaired without access to designated unbundled network elements (UNEs) offered by incumbent local exchange carriers (ILECs). In such markets, the TRO required that the ILEC be relieved of obligations to offer the designated network elements on an unbundled basis. The combination of UNEs typically offered to CLECs, including loops, ports, and switching, is generally referred to as the "UNE Platform" (UNE-P).
The TRO recognized that an efficient and economical process would be required to migrate customer loops from the ILEC switch (under UNE-P) to the CLEC switch utilizing the unbundled loop (UNE-L) and to support competition in local markets after the elimination of UNE-P. Accordingly, an integral part of our state proceeding involved development and implementation of "hot cut" processes to migrate both the embedded base of UNE-P loops on a batch basis and to accommodate increased ongoing demand for hot cuts due to the elimination of UNE-P in designated markets.
On March 2, 2004, however, the United States Court of Appeals for the District of Columbia Circuit issued an opinion in United States Telecom Association v. Federal Communications Commission, No. 00-1012 (USTA II).3 USTA II vacated provisions of the TRO relating to both the delegation of state authority to determine whether CLECs are impaired without access to unbundled elements and the substantive tests that the FCC promulgated for making such determinations. On June 16, 2004 the District Court's vacatur order became effective. On June 18, 2004, an Assigned Commissioner's Ruling suspended those provisions of the TRO proceeding that were vacated by the Court, setting aside submission, until such time as the FCC issues new or interim local competition rules.
On July 2, 2004, a supplemental Assigned Commissioner's Ruling was issued, indicating the portion of the proceeding relating to hot cut issues would continue forward. As noted in the ruling, although USTA II vacates portions of the TRO relating to the deployment analysis for designated UNEs, nothing in USTA II exempts this Commission from the provisions related to development of a batch cut process. While the Court explicitly vacated the national impairment finding, it was conspicuously silent as to the FCC's order to states to develop a batch hot cut process. In any event, implementation of a low-cost, efficient batch hot cut process will be a critical part of any post UNE-P world.
Accordingly, in this decision, we complete the four tasks that the FCC assigned to states concerning the batch cut process: determining the volume of loops in the batch, adopting a specific process, evaluating the ability of an ILEC to timely migrate lines now served by UNE-P, and adopting Total Element Long Run Incremental Cost (TELRIC) rates for the batch cut process.4
In addition, we recognize that because no immediate change in UNE-P availability will occur as a result of this order, the hot cut processes addressed in this order may not be immediately required.
For SBC, our performance of these four tasks leads us to conclude:
1. SBC's volume limitations of 50 loops for daily batch, 100 for defined batch, and a negotiated higher amount for bulk project are approved on an interim basis.
2. SBC's proposed batch cut process is approved, but we identify other issues, such as 911 coordination, that require resolution before final implementation.
3. SBC's ability to migrate customers through a seven-day notice option reasonable and workable.
4. We adopt TELRIC based prices for SBC, and a detailed price schedule contained in Appendix 1.
Concerning SBC's batch cut process, we conclude that additional work is required in various aspects of the proposed hot cut provisioning, as well as some resolution of pricing issues, before those processes will be adequate for use by CLECs in a seamless, efficiently priced manner. We outline in the order below the additional steps that SBC must accomplish in order to make the hot cut processes acceptable for use in a seamless manner and provide directives for completion of these additional steps.
For Verizon, our performance of these four tasks leads us to the following conclusions:
1. Verizon proposes to set a batch volume based on a "critical mass approach" in each central office and does not propose a specific numerical batch size. We approve this on an interim basis.
2. Verizon's proposed batch cut process is approved on an interim basis, but we identify other issues, such as 911 coordination, that require resolution before final implementation.
3. Verizon's proposal to migrate customers in an interval between 6 and 26 days fails to provide a seamless migration. We order Verizon to provide specific provisioning intervals to CLECs.
4. Verizon's proposed TELRIC prices for the batch hot cut process exceed those of SBC by large amounts and are not justified as reasonable. We order further proceedings to develop reasonable prices.
In summary, Verizon's proposed hot cut process is deficient in major elements, and incapable of providing a "seamless" transition. Further proceedings are essential.
1 A "hot cut" is the process whereby the incumbent carrier manually disconnects the customer's loop from the incumbent's switch and physically rewires it to the competitive LEC switch, while reassigning the customer's telephone number from the incumbent switch to the competitive local carrier's switch
2 Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, In the Matter of Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers (CC Docket No. 01-338); Implementation of the Local Competition Provisions of the Telecommunications Act of 1996 (CC Docket No. 96-989); Deployment of Wireline Services Offering Advanced Telecommunications Capability (CC Docket No. 98-147), FCC No. 03-36, ¶ 669 (rel. Aug. 21, 2003) (hereinafter, "TRO").
3 This Circuit Court Opinion is known as USTA II, where USTA I refers to a prior Circuit Court Opinion in United States Telecom Association v. FCC, 209 F.3d 415 (D.C. Cir. 2002) which had invalidated much of the FCC's previous efforts to identify network elements to be unbundled.
4 47 C.F.R. §51.319(d)(2)(ii)A
