3. Discussion

3.1 Negotiated Portions of IA

Section 252(e)(2) of the Act provides that the Commission may only reject an IA (or any portion thereof) adopted by negotiation if we find that the IA (or portion thereof) discriminates against a telecommunications carrier not a party to the agreement, or that implementation of such agreement (or portion thereof) is not consistent with the public interest, convenience, and necessity. Commission rules provide that the Commission may reject a negotiated agreement (or portion thereof) if it discriminates against a telecommunications carrier not a party to the agreement; its implementation would be inconsistent with the public interest, convenience, or necessity; or the agreement would not meet other rules, regulations, and orders of the Commission, including service quality standards.³

No party or member of the public alleges that any negotiated portion of the IA should be rejected. We find nothing in any negotiated portion which results in discrimination against a telecommunications carrier not a party to the IA; is inconsistent with the public interest, convenience and necessity; or does not meet other Commission rules, regulations and orders, including service quality standards. Thus, we approve the negotiated portions of the IA.

3.2 Arbitrated Portions of IA

Section 252(e)(2) of the Act, and our Rule 4.2.3 of Resolution ALJ-181, provide that we may only reject an IA (or any portion thereof) adopted by arbitration if we find that the IA does not meet the requirements of § 251 of the Act, including the regulations prescribed by the Federal Communications Commission (FCC) pursuant to § 251, or the standards set forth in § 252(d) of the Act.⁴ Rule 4.2.3 also provides that we may reject agreements or portions thereof which violate any requirements of the Commission including, but not limited to, quality of service standards adopted by the Commission.

As noted above, neither party alleges that IA violates any of the foregoing statutory provisions or rules. Nonetheless, each party asks that we reverse the Arbitrator on issues she decided against it. They repeat the arguments they made on the DAR, which the Arbitrator rejected. We believe the Arbitrator decided each issue correctly, and are not persuaded to make any changes in the FAR.

3.2.1 Issue 1: Local Over Access

The first issue, known as the "local over access" issue, arises because of Sprint's desire to implement a "new" service, and disputes over how it should compensate Verizon for using Verizon's network to facilitate that service. Sprint contends that the service should be compensated as local traffic pursuant to the reciprocal compensation scheme, while Verizon contends that since the service would use access lines Sprint leases from Verizon, the calling should be compensated at higher access charge rates. The Arbitrator agreed with Verizon that Sprint should pay Verizon access charge rates.

Sprint proposes a voice-activated dialing arrangement whereby a Verizon customer would pick up the phone, dial 00 or a Carrier Identification Code (CIC) such as 10-10-333, state "Call [name of called party residing in same local calling area]," and have the call automatically placed to that party.

During the arbitration hearing, the parties used an example of a Verizon customer named "Steve" who desired to call his mother ("Mom"), also a Verizon customer, who lived across the street in the same local calling area. Steve's chosen long distance carrier is Sprint. Steve would pick up the phone and dial 00 or the 10-10-333 CIC. This dialing pattern would direct the call over access trunks that Sprint leases from Verizon to the Sprint OS platform. Once the call reached the Sprint OS platform, Steve would say, "Call Mom," and Mom's telephone number would dial automatically from a stored list residing in Sprint's database. Because the voice activated dialing service would be a Sprint service, rather than a Verizon service, the information necessary to place the call would reside in Sprint's, not Verizon's, network. It is this detour to Sprint's OS platform that is fundamental to the Sprint-Verizon dispute on this issue.

Sprint contends that despite the OS detour, the call remains a local call and that Sprint should compensate Verizon only for a local call. Verizon contends, on the other hand, that the detour to the OS platform takes the call over access lines Sprint leases from Verizon, thereby rendering the call an access call, for which access charges are due.⁵ Verizon similarly contends that any time a CIC code is used to gain access to an interexchange carrier (IEC) such as Sprint, the call is an access call for which access charges are due. Both parties agree that access charges are higher than charges for local calls.

The FAR found that Verizon should prevail on this issue. We will not repeat the Arbitrator's reasoning in detail here, but rather incorporate the FAR by reference as if fully set forth here. Briefly, the Arbitrator found that it made no sense for Verizon to receive no compensation for Sprint's extra use of its network. Indeed, the Arbitrator found that Sprint's offer during the hearing to pay Verizon certain out-of-the-ordinary compensation - for "incremental switching charges - constituted a concession that the ordinary reciprocal compensation scheme was inadequate. The Arbitrator also found that the "Call Mom" calling scheme was not functionally different from other calling patterns in which Sprint compensates Verizon for use of its network through access charges. Finally, the Arbitrator noted that Sprint has agreements in other states in which its position is inconsistent with its proposal for California.

We agree with the Arbitrator's reasoning and conclusion on the local over access issue, and adopt the same for purposes of this decision.

3.2.2 Issue 2: Resale of Vertical Features

This issue involves Sprint's contention that Verizon should sell it vertical features (call waiting, call forwarding, and the like) at wholesale prices without also requiring it to purchase the basic dial tone line. The FAR found in favor on Sprint on this issue, based on prior Commission precedent, the lack of factual distinctions between prior cases and this case, and the Arbitrator's belief that the precedent articulated the correct state of the law.

In Decision (D.) 00-10-031, the Commission resolved the identical issue in Sprint's favor in its arbitration with Pacific Bell. Thus, the only basis to decide the case here differently would be factual. However, Verizon's sole attempt to distinguish D.00-10-031 was not based on distinguishable facts. Rather, Verizon simply cited to its tariff, stating that "Verizon's tariff makes clear that vertical features are not offered on a stand-alone basis at retail to subscribers who are not telecommunications carriers."⁶ However, Pacific Bell made - and the Commission rejected - precisely the same argument in the proceeding leading up to D.00-10-031. Thus, the FAR rejected Verizon's attempt to distinguish D.00-10-031. We agree with the FAR's conclusion.

The FAR also found that D.00-10-031 is legally correct. We agree with the Arbitrator that the Commission decided that decision properly. Thus, as we stated in D.00-10-031:

Section 251(c)(4) [of the Act] requires the resale of vertical features, without purchase of the associated dial tone . . . . [I]t constitutes an unreasonable restriction under Rule 51.613(b)⁷ for [Verizon] to require that Sprint purchase the dial tone, in order to have access to the vertical services for that line . . . . In this case, the law clearly requires resale of vertical features in the manner requested by Sprint.

We affirm the arbitrated outcome.

3.2.3 Issue 3: New UNE Combinations

This issue involves whether or not Verizon must provide Sprint UNEs in any combination "ordinarily and commonly combined" in the Verizon network. Sprint asserts that it should have the right to order these "new UNE combinations" without regard to whether the specific customer who is subject to the local service request has that precise combination with Verizon at the time of the order. Sprint contends that even if federal law on this issue is currently uncertain and in a state of flux, the Commission has "independent state authority" to require Verizon to provide new combinations to Sprint.

The Arbitrator found in Sprint's favor on this issue, once again based on the Commission's decision in Sprint's favor and against Pacific Bell on the identical issue.⁸

Once again, Verizon contended that the FAR was legally wrong, and once again, the Arbitrator rejected Verizon's contentions in favor of factually indistinguishable Commission precedent. We agree with the Arbitrator that we decided this issue correctly in D.00-10-031, and affirm the arbitrated result.

3.3 Preservation of Authority

Section 252(e)(3) of the Act provides that nothing shall prohibit a state Commission from establishing or enforcing other requirements of state law in its review of an agreement, including compliance with intrastate telecommunications service quality standards. Our Rules 4.2.3 and 4.3.1 provide that we may also reject agreements or portions thereof which violate other requirements of the Commission, including but not limited to, quality of service standards. Other than the matters addressed and disposed of above, no party or member of the public identifies any clause in the IA that potentially conflicts with any state law, or requirement of the Commission, including service quality standards, and we are aware of none.

3.4 Filing the Conformed IA

We affirm the order in the FAR that within 30 days of the date of this decision, parties shall file and serve an entire IA that conforms to the decisions herein. Parties should also serve a copy on the Director of the Telecommunications Division. Parties should sign the conformed IA before it is filed so that it may become effective without additional delay. Unless suspended by the Director of the Telecommunications Division, the signed IA should become effective five days after filing.

Parties should jointly file and serve a statement along with the IA for the purpose of assisting the Director confirm that the signed IA conforms to this order. The statement should cross-reference each issue resolved in the FAR with the relevant appendix and section number in the IA. The statement should also quote the language from the IA which parties adopt in compliance with the decisions in the FAR and this order.