VI. The Interconnection Agreements
We now turn to the language of the interconnection agreements to determine whether these agreements release Verizon from its obligation to provide unbundled Local Switching and Common Transport network elements when it changes its hardware from a circuit to a packet switch. For this analysis, we turn to the specific language in the various interconnection agreements. We first analyze the AT&T interconnection agreements and then address the remaining agreements.
A. AT&T
1. Verizon's Obligation to Provide Local
Switching and Common Transport Network
Elements Under the Interconnection Agreements
Complainants in the AT&T case currently have two valid interconnection agreements with Verizon: (1) the AT&T Communications ICA; and (2) the TCG ICA.11 The AT&T Communications ICA requires Verizon to provide AT&T Communications with access to UNEs identified in Attachment 2 to the
agreement.12 Attachment 2 to the AT&T Communications ICA lists and defines Local Switching and Common Transport network elements as two of the network elements to which Verizon must provide AT&T access. (See Sections 60 and 63 of Attachment 2, respectively.)
Attachment 2, § 60 to the AT&T Communications ICA defines Local Switching as "the Network Element that provides the functionality required to connect the appropriate originating lines or trunks wired to the Main Distributing Frame (MDF) or Digital Signal Cross Connect (DSX) panel to a desired terminating line or trunk. Such functionality shall include all of the features, functions, and capabilities of the [Verizon] switch including but not limited to ... ." (Italics added.)
The AT&T Communications ICA definition of Local Switching speaks in terms of "functionality," e.g., the functional means to accomplish the task of Local Switching. Local Switching is not defined in terms of the underlying technology used to "connect the appropriate originating lines or trunks...to a desired terminating line or trunk." Nowhere does the ICA state that Verizon's obligations to provide Local Switching are limited by the type of technology used to provide it. Additionally, Verizon does not dispute that the packet switch it anticipates deploying can "connect the appropriate originating lines ... wired to the Main Distribution Frame (MDF) or Digital Signal Cross Connect (DSX) panel to a desired terminating line or trunk."13
Attachment 2, § 63 to the AT&T Communications ICA defines Common Transport as "an interoffice transmission path between ... Network Elements that carries the traffic of more than one carrier and is not dedicated to a single carrier." Nothing in the ICA defines Common Transport based on the technology used to provide it, nor does the ICA permit Verizon not to provide Common Transport based on the type of switching technology deployed.
Similarly, the TCG ICA requires Verizon to provide TCG Companies with access to unbundled Local Switching and Common Transport network elements.14 This agreement also speaks in terms of functionality, and provides that Verizon shall have the full burden of proving that access requested by TCG is not technically feasible. Article VI, §§ 7 and 8 of the TCG ICA define Local Switching and Common Transport respectively, in language similar to the AT&T Communications ICA.
Thus, we conclude that the interconnection agreement language above requires Verizon to provide AT&T with unbundled Local Switching and Common Transport network elements, regardless of the technology used. We next examine the sections of the interconnection agreements which Verizon believes relieve it of this obligation.
2. Verizon's Arguments
Verizon believes that several sections of the AT&T Communications ICA and the TCG ICA permit Verizon to unilaterally discontinue AT&T's access to the Local Switching and Common Transport network elements of the UNE-P. First, Verizon states that the interconnection agreements must be interpreted under the law existing at the time the interconnection agreements were entered into. Verizon argues that, as early as 1996, the FCC determined in the Local Competition Order that packet switches were not subject to unbundling. Verizon believes that the definition of "local switching" in the parties' interconnection agreements tracks the definition of "Local Switching" in the FCC's Local Competition Order, and does not include packet switching within its ambit.
As stated above, we disagree with Verizon. In 1996, because of an insufficient record, the FCC did not finally decide the issue of whether to unbundle packet switches in the Local Competition Order. The law at the time these interconnection agreements were entered into was unsettled as to whether packet switches were to be unbundled.
Verizon also argues that each of the interconnection agreements at issue in this case define "local switching" in a manner substantively identical to the FCC's definition of "local circuit switching" in the Triennial Review Order, and that this definition therefore conclusively demonstrates that the agreements contemplate only the unbundling of circuit, and not packet switches. However, all of the underlying agreements at issue in this proceeding were executed prior to the date the FCC released the Triennial Review Order (August 21, 2003). Verizon's argument applying a definition from an order that was not released when the underlying interconnection agreements were executed is not persuasive.
Next, Verizon states that its actions comply with the interconnection agreements because both the AT&T Communications and TCG ICAs expressly limit the network elements that must be unbundled to those offered "in accordance" with Verizon's statutory obligations under § 251(c)(3) of the Act, and relevant FCC rules.15 Verizon believes that applicable federal law does not require unbundling of packet switches under any circumstances.
As stated above, we disagree with Verizon's interpretation. At the time the agreements were entered into (i.e., 1997 and 1998), federal law was unsettled as to whether Verizon was required to unbundle packet switches under any circumstances, and federal law does not prohibit Verizon from so doing. Moreover, the sections cited by Verizon are general provisions requiring Verizon to perform its obligations under federal law, and in some cases in accordance both with federal law and the ICA. We read these general references to federal law at the time the interconnection agreements were entered into, and not to changes of law that may occur over the life of the ICA. More specific ICA provisions set forth the parties' conduct under changed circumstances of fact or law.
Section 3.3 of the General Terms and Conditions in the AT&T Communications ICA addresses how a network change contemplated by Verizon should be handled.16 According to § 3.3, Verizon may unilaterally discontinue an unbundled network element, such as the Local Switching and Common Transport network elements, only after proper notice, "to the extent required by network changes or upgrades." (Emphasis added.)
Verizon admits that it is technically feasible to provide AT&T (and other CLECs) with UNE-P through a packet switch, but will not do so because Verizon believes it is not legally obligated to do so. Verizon also argues that it is not technically feasible to reconfigure its network to provide for circuit switching because it would be too costly, time consuming, and challenging to go back now and reconfigure its network.
Verizon tried to install its Nortel switches as pure packet switches for the main purpose of "immunizing against UNE-P business erosion."17 Verizon did not install a pure packet switch because its switch still contains the ENET, which is the TDM fabric used in circuit switching. According to Verizon, the ENET is not there for switching voice traffic, but has been retained as an interface with other legacy devices to provide alarm and monitoring functions and is slated for elimination in an upcoming Nortel release to provide greater efficiencies. Verizon also argues that any modifications this will be costly and take at least six months to accomplish.
Verizon was aware of its obligations under the interconnection agreements to provide Local Switching and Common Transport when it installed its packet switches. It chose to ignore these obligations and specifically designed its network with the intent to eliminate UNE-P. Verizon is not relieved of its obligation under the AT&T interconnection agreements to provide access to these network elements because modifications may be time consuming and costly, especially under these circumstances.18
Section 3.3 also provides that, (a) in the event a final order by the court or the FCC allows but does not require discontinuance of an unbundled network element, the parties must try to reach agreement, and if unsuccessful, (b) either party may submit the matter to alternative dispute resolution. Thus, assuming for the sake of argument that, subsequent to the Local Competition Order, the FCC determined that Verizon was not required to unbundle packet switches under any circumstances, Verizon would still have to follow these change of law provisions and could not unilaterally discontinue providing the Local Switching and Common Transport network elements to AT&T. These change of law provisions are as follows: If a change of law materially affects any material term, the parties, after proper notice, may renegotiate in good faith mutually acceptable new terms. If such terms are not renegotiated within 90 days after such notice, the dispute then proceeds to alternative dispute resolution.19
B. Other CLEC Interconnection Agreements
Other CLECs' interconnection agreements also require Verizon to provide unbundled local switching. Telescape Communicaitons and Wholesale Airtime, Inc. have each adopted the existing ICA between Verizon and Pac-West Telecomm, Inc. (Telescape/Wholesale Airtime ICA).20 nii Communications, Inc. adopted the existing agreement between Verizon and Rural West-Western Rural Broadband, Inc.21 The pertinent language in these two agreements is identical.
Section 10 of the Network Elements Attachment of the Telescape/Wholesale Airtime ICA describes Verizon's obligations to provide unbundled local switching as follows:
"...Verizon shall provide [Telescape/Wholesale Airtime] with access to the local switching element and the tandem switching element in accordance with, but only to the extent required by, Applicable Law.
....
"The unbundled Local Switching Element includes line side and trunk side facilities (e.g. line and trunk side Ports such as analog and ISDN line side Ports and DS1 trunk side Ports), plus the features, functions, and capabilities of the switch. It consists of the line-side Port (including connection between a Loop termination and a switch line card, telephone number assignment, basic intercept, one primary directory listing, presubscription, and access to 911, operator services, and directory assistance), line and line group features (including all vertical features and line blocking options that the switch and its associated deployed switch software is capable of providing and are currently offered to Verizon's local exchange Customers), usage (including the connection of lines to lines, lines to trunks, trunks to lines, and trunks to trunks), and trunk features (including the connection between the trunk termination and the trunk card)."
As in the interconnection agreements discussed above, nothing in this interconnection agreement limits Verizon's obligation to provide local switching a specific type of hardware. Changing hardware from a circuit to a packet switch does not affect that obligation.
Verizon argues that other portions of the interconnection agreements relieve it from the requirement of providing local switching to these CLECs. As an example, Verizon cites § 1.1 of the Network Elements Attachment of the Telescape/Wholesale Airtime ICA, which Verizon states limits its obligation to provide unbundled UNE to those required by applicable law.
"...notwithstanding any other provision of this Agreement, Verizon shall be obligated to provide unbundled Network Elements (UNEs) and Combinations to [Telescape/Wholesale Airtime] only to the extent required by Applicable Law and may decline to provide UNEs or Combinations to [Telescape/Wholesale Airtime] to the extent that provision of such UNEs or Combinations is not required by Applicable Law." (Emphasis added.)22
Other sections of the interconnection agreement contain similar language. Based on our discussion of federal law above, Verizon has not been relieved of its obligation to provide the Local Switching and Common Transport network elements because it changes its switch from a circuit to a packet switch.
The interconnection agreements of MCI,23 Call America24 and Navigator25 contain identical language with the Telescape/Wholesale Airtime, and nii interconnection agreements. Our conclusion regarding these interconnection agreements is the same.
ACN adopted the interconnection agreement between Verizon and Sprint Communications, L.P. pursuant to an advice letter dated July 31, 2003. The Commission approved the underlying interconnection agreement in D.01-03-044, 2001 Cal PUC LEXIS 191. This agreement expired on April 15, 2004. (See § 5 of the Verizon/Sprint Interconnection Agreement.) Although ACN states that it is involved in the Commission's interconnection arbitration proceeding, Application 04-03-014, this proceeding is not the vehicle by which ACN can extend the Sprint interconnection agreement beyond its termination date. Because the underlying interconnection agreement is not currently in force, we deny ACN its requested relief.
Although Fones4All intervened in these cases, it has not otherwise requested relief or participated in this proceeding. Fones4All failed to file a motion for summary judgment or respond to the other pleadings, failed to participate in the hearings and post-hearing briefing, and failed to provide a copy of its interconnection agreement, as the ALJ required.26 We therefore hold that Fones4All has not met its burden of proof, and therefore deny it relief.
C. State Law Issues
Several CLECs argue that the Commission may require Verizon to continue to provide unbundled local switching under its independent state authority to compel compliance with California's unbundling policy. Because of our resolution in this case, we need not reach this issue.
11 On January 23, 1997, AT&T Communications entered into the Interconnection, Resale and Unbundling Agreement between GTE California Incorporated, Contel of California, Inc. and AT&T Communications of California, Inc. (AT&T Communications ICA). The Commission approved the arbitrated AT&T Communications ICA in D.97-01-022, 70 CPUC2d 609. In 1998, the TCG Companies adopted the terms of the arbitrated Interconnection Agreement between MCImetro and GTE (TCG ICA). The Commission approved the TCG ICA in Resolution T-16185. Verizon is the successor in interest to GTE and, as such, assumed GTE's obligations under these agreements. Both agreements continue in effect on a month-to-month basis by mutual agreement until AT&T and Verizon enter into a new agreement under 47 U.S.C. § 252. Because the interconnection agreements are quite lengthy, we discuss only the most relevant provisions in this order. 12 See General Terms and Conditions Section 29 and 30. Specifically, Section 29, Introduction, provides that "This Part II sets forth the unbundled Network Elements that [Verizon] agrees to offer AT&T in accordance with its obligations under Section 251(c)(3) of the Act and 47 CFR 51.307 to 51.321 of the FCC Rules. The specific terms and conditions that apply to the unbundled Network Elements are described below and in Attachment 2. Prices for Network Elements are set forth in Part V and Attachment 14 of this Agreement." 13 AT&T's Separate Statement of Fact 9. 14 See Sections 23.2 and 23.5. Because the TCG Companies adopted the MCImetro ICA, the language of the agreement that refers to MCIm should be read to refer to the TCG Companies. 15 Verizon cites, among other similar provisions, the AT&T ICA at 36, Part II: Unbundled Network Elements § 29 (Introduction) ("This Part [II] sets forth the unbundled Network Elements that [Verizon] agrees to offer to AT&T in accordance with its obligations under Section 251(c)(3) of the Act and 47 CFR 51.307 to 51.321 of the FCC rules"; id. At 36, Part II: Unbundled Network Elements § 30.1 ("[V]erizon will offer Network Elements to AT&T on an unbundled basis on rates, terms and conditions that are just, reasonable, and non-discriminatory in accordance with this Agreement, the Telecommunications Act of 1996, and applicable (and in force) State, and FCC Rules and Regulations." 16 "3.3 [Verizon] will not discontinue any unbundled Network Element, Ancillary Function or Combination thereof during the term of this Agreement without AT&T's written consent which consent shall not be unreasonably withheld, except (1) to the extent required by network changes or upgrades, in which event [Verizon] will comply with network disclosure requirements stated in the Act and the FCC or the Commission as a result of remand or appeal of the FCC's [Local Competition Order]. In the event such a final order allows but does not require discontinuance, [Verizon] shall make a proposal for AT&T's approval, and if the parties are unable to agree, either Party may submit the matter to the Alternative Dispute Resolution procedures described in Attachment 1..." Section 2.1 of the TCG ICA contains a similar provision. 17 See Exhibit C501, Attachment 2, pp. 1-2 [May 5, 2004 letter.]. 18 Verizon's cost estimates are general observations at best. Peeler states he obtained his cost estimate by speaking with a Nortel director with costing experience, but did not give specifics of the cost estimates (other than they were in the millions) in order for other parties or the Commission to determine the basis for the costs. 19 See Section 8.3 of the General Terms and Conditions of the AT&T Communications ICA and Section 12.1 of the TCG ICA. 20 The Commission approved this agreement on May 22, 2003, in D.03-05-075 (2002 Cal. PUC LEXIS 945.) This agreement expires on May 29, 2006. 21 Resolution T-16761 approved the interconnection agreement between Verizon California Inc. and RuralWest-Western Rural Broadband, Inc. nii adopted this interconnection agreement by advice letter which became effective on October 19, 2003. The underlying Verizon/RuralWest interconnection agreement became effective on April 25, 2003, and remained in effect until April 22, 2005. nii states it has the option under 47 U.S.C. § 252(i) of adopting the interconnection agreement between Verizon California Inc. and Pac-West Telecomm. 22 Other sections of this interconnection agreement contain similar language. (See, e.g., Network Elements Attachment § 2, § 10.1.) 23 On February 28, 2003, MCI opted into the interconnection agreement between ICG Telecom Group, Inc. and Verizon California Inc. f/k/a GTC California Incorporated for the State of California. The underlying interconnection agreement was approved by the Commission on February 7, 2002 in Resolution T-16631. According to § 2.1, the initial term of the agreement is until June 20, 2004, and thereafter the agreement continues in effect until terminated as provided by the agreement. Neither MCI nor Verizon states that the underlying agreement has terminated. 24 On February 18, 2003, Call America filed an advice letter with the Commission adopting the interconnection agreement between Z-Tel and Verizon, which underlying agreement was approved by the Commission on September 20, 2001 in Resolution T-16574. Pursuant to § 2.1 of this agreement, the initial term of the agreement ended June 8, 2003 and thereafter continues in full force and effect until cancelled or terminated by the parties. Neither party has indicated that it has cancelled or terminated the agreement. 25 On July 17, 2002, the Commission approved the interconnection agreement between Navigator and Verizon in Resolution T-16672. Pursuant to §2.1 of this agreement, the initial term of the agreement ended February 19, 2004 and thereafter continues in full force and effect until cancelled or terminated by the parties. Neither party has indicated that it has cancelled or terminated the agreement. 26 See October 8, 2004 Transcript at p. 25; see also March 30, 2005 ALJ Ruling.
