XI. Comments on the Revised Proposed Decision

Although not required by Commission rules, the Commission mailed the ALJ's revised Proposed Decision (RPD) to allow one further round of comments following changes in response to comments filed in June 2004. Comments were filed on August 25, 2004 by AT&T, CALTEL, CWA, MCI, Mpower, Navigator, ORA/TURN, PacWest, SBC-CA, and XO. Reply comments were filed September 1, 2004 by AT&T, CALTEL/Navigator, Covad, CWA, DOD/FEA, MCI, Mpower, ORA/TURN, PacWest, SBC, and XO. After review of these comments, minor corrections were incorporated into the text. Below we address only the more salient comments from this secondary comment round.

AT&T contends the unbundled transport rates in the RPD are overstated and it proposes modifications to reflect the "best available evidence" of costs for these UNEs. SBC-CA responds that AT&T's attempt to offer new unbundled transport rate calculations is procedurally improper. We agree with SBC-CA that AT&T is introducing new argument regarding how to calculate unbundled transport rates, argument that it should have provided before submission of the case. AT&T's comments in this area are ignored.

Mpower notes that on August 20, 2004, the FCC issued an interim "standstill" order in its UNE rulemaking proceeding that directs incumbent LECs such as SBC-CA to continue providing UNEs at the rates under their interconnection agreements as of June 15, 2004, except if those rates are superseded by voluntary negotiated agreements, an intervening FCC order, or a state public utility commission order raising the rates for UNEs.⁹⁴ Mpower requests that before adopting any new UNE rates for voice grade and DS-1 loops, the Commission should secure assurance from the FCC that DS-1 loop rate reductions would be permitted to take effect concurrent with any basic loop increases.

We find it inconceivable that after this Commission's exhaustive review of SBC-CA's UNE prices to set cost-based and TELRIC compliant DS-1 rates, the FCC's latest order could preclude the rates in this order from taking effect. This result would, in our view, violate Section 252(d) of the Telecommunications Act requiring incumbent LECs to charge cost-based rates for UNEs, and we cannot comprehend that the FCC intended this result. We will proceed to adopt the rates set forth in this order and presume that they will take effect as consistent with the requirements of Section 252(d).

MCI, Mpower and CALTEL comment that the Commission must revise the RPD to remedy the 21% shared and common cost markup added to all SBC-CA UNE costs following the recent 9^th Circuit decision finding the markup is incorrect.⁹⁵ MCI suggests that the Commission note the prices adopted in this order are interim until the markup is corrected. We have modified the language in the decision to clarify that issues surrounding review of the markup will be taken up expeditiously along with issues surrounding payment of the true-up. This will allow the Commission to consider whether the net effect of UNE rate changes and markup changes ordered by the court should take effect simultaneously.

PacWest urges the Commission to refine language in the RPD regarding true-up payments. The RPD stays implementation of true-up payments pending further proceedings to review the size of any payments. According to PacWest, several CLC's, including PacWest, are entitled to refunds from SBC-CA as a result of the newly adopted UNE rates. PacWest requests the decision be modified to only stay payment of any true-up if a carrier can certify that payment would constitute a financial hardship. We decline to modify the language as PacWest requests because we prefer to assess this issue after further proceedings once the size of true-up payments are known.