Appendix J: California Performance Incentives Plan

1. GENERAL PRINCIPLES

1.1 The Performance Incentive Plan (hereafter the Incentive Plan) consists of the following elements: (1) a collection of measures that assess service delivery; (2) a set of testing rules for deciding whether service delivery is in parity (where there are retail analogues) or in compliance (where there are benchmarks); (3) a mechanism for calculating incentive payments for those sub-measures found to be out of parity or out of compliance; (4) a specification of the payment amounts to be paid for out-of-parity or non-compliant performance; (5) a provision for Absolute and Procedural caps on payments; and (6) a provision for Root Cause analysis that can excuse service delivery failures that were outside the control of the Pacific Bell or Verizon.

1.2 Performance Measures. The performance measures used in the Incentive Plan are specified in the Performance Measurements Joint Partial Settlement Agreement (JPSA) as amended by D.01-05-087. Payments apply to those non-diagnostic sub-measures designated in Section 5 herein that have data for a given month when Pacific Bell or Verizon delivers out-of-parity or non-compliant performance.

1.3 Testing Rules. The rules for assessing whether specific sub-measures are out-of-parity or non-compliant are applied from Exhibit 3 attached to this plan.

1.4 Incentive Payment Calculations. Incentive payment calculations are applied to those performance results for each month that are deemed to be out-of-parity or non-compliant.

1.5 Incentive Payment Amounts. The size of the incentive payments depends on performance failure pervasiveness (that is, the number of performance failures affecting a CLEC), and whether performance failures are repeated. The incentive amounts increase as the number of performance failures increase or as they are repeated.

1.6 Absolute and Procedural Caps. In any month, the following caps on payments apply: (1) a procedural cap of $15,000,000 for Pacific Bell for all CLECs.; (2) a procedural cap of $4,500,000 for Verizon for all CLECs, and (3) an absolute monthly cap of 1/12 of 36% of annual net revenue from local exchange service for both Pacific Bell and Verizon. Using the same methodology that was used to determine these amounts, these amounts will be updated to reflect new ARMIS data published each year.

1.7 Root Cause Analysis. A procedure for Root Cause Analysis and subsequent action is included.

1.8 Modifications. The Commission shall retain authority to modify any element of this plan.

2. THE ASSESSMENT OF PARITY AND COMPLIANCE

2.1 The specific mechanism for assessing parity and compliance depends on the classification of the sub-measure being assessed. Sub-measures can be classified according to four dimensions: (1) the type of the comparison: parity where there is a retail analogue or benchmarks where no retail analogues are available or feasible, (2) the basis for the measurement: averages, percentages (proportions), rates, indices, or counts; (3) the direction of good service: either high values or low values; and (4) the applicability of aggregation rules. The table below gives a summary of the tests that are applied to sub-measures according to their first two dimensions. These tests are described in more detail below.

2.2 Statistical Criteria for Deciding Parity.

2.2.1. A statistical test is applied that yields a probability of the data given the null hypothesis of parity. Except where different critical alpha levels are applied conditionally, a sub-measure will be deemed out of parity (i.e., the sub-measure fails) if the probability is less than 10% (0.10 critical alpha). Otherwise the sub-measure passes.

2.2.2. Under the following conditions, the sub-measure will be deemed out of parity if the probability is less than 20% (0.20 critical alpha level): (1) When sample sizes are less than 30 for single-month individual CLEC tests where the aggregate sub-measure test indicates non-parity, or (2) for all tests for repeated failures.

2.2.3. Under the following conditions, the sub-measure will be deemed out of parity if the probability is less than 5% (0.05 critical alpha level): (1) When sample sizes are 100 or greater for single-month individual CLEC tests where the aggregate sub-measure test indicates parity, or (2) when single-month sample sizes are 500 or greater.

2.2.4. A step-by-step application of the above critical alpha applications is provided in the Decision Model attached as Exhibit 3.

2.2. Benchmarks. Small sample adjustment tables shall be used for both individual CLEC tests and industry-aggregate tests.

2.3. Statistical tests shall be applied as specified in the Interim Opinion, D.01-01-037, unless otherwise specified herein. The test applications are summarized in the following table:

Testing Procedures Applied to Sub-measures According to their Basis and Type
Basis	Parity	Benchmarks
Averages	Modified t-test applied to the logs of the data except for Measures 34 and 44 for which the test is applied to the raw data.	Benchmark is used as an absolute comparison standard
Percentage	Fisher's exact test applied to all sub-measures.	Small Sample Adjustment table is applied where applicable, otherwise the benchmark is used as an absolute standard.
Rates	Binomial test applied to all sub-measures	Small Sample Adjustment table is applied where applicable, otherwise the benchmark is used as an absolute standard.
Index	The performance difference is compared to an absolute standard	The performance is compared to an absolute standard
Count	No sub-measures of this kind	The CLEC numerator is compared to the benchmark as an absolute standard. Applicable to LNP sub-measures in Measures 20 and 23.

3. CALCULATION OF INCENTIVE VALUES

3.1 The assessment of incentive payments for non-compliance is performed in three ways: (1) on a CLEC-by-CLEC basis, each month, by examining all the sub-measures "touched" by an individual CLEC (hereafter the portfolio of touched sub-measures) that do not fall into the specialized categories discussed below, (2) on an industry aggregate basis, each month, for those sub-measures covering processes that only involve computer processing and are therefore designed to automatically provide parity (covered by Measures 1, 24, 38, 42, and 44, and the fully-electronic sub-measures of 2, 3, and 18), and (3) on an industry aggregate basis, each month, for those parity measures that have chronic conditional failures. The calculation and assessment of incentive amounts are different for each of these four categories of sub-measures. Categories A, and B are termed Tier I categories. Tier I payments are made to the CLECs. Category C is termed Tier II, and payments are made to the ratepayers.²

3.2 A base amount (BA) of $38 will be used as a starting point for calculating Pacific Bell's payment amounts.

3.3 A base amount (BA) of $23 will be used as a starting point for calculating Verizon's payment amounts.

3.4 Actual payment amounts will be calculated using an adjusted base amount. The base amount (BA) will be adjusted according to the total number of observations (total number of sub-measure performance results for all CLECs) each month. The adjusted base amount (ABA) will be determined by the following formula: ABA = BA x (total number of observations listed for each ILEC in Appendix G / current total number of observations for each ILEC), rounded to the closest dollar. For example, if in a future month Pacific had a 5000 observation total, then the adjusted base amount would be $38 x (4243/5000) = $32.

3.5 Tier I incentive payments will be limited to an amount equal to the total amount that each CLEC pays for OSS and wholesale local exchange services. Any payment surplus amounts generated by Tier I payment mechanisms shall be added to Tier II payment amounts for distribution.

3.6 Category A. Includes all sub-measures for all incentive payment measures (specified in Section 5), except those included in Category B. In this category there is a portfolio of touched sub-measures for each CLEC. The following description applies to this portfolio for a single CLEC.

3.6.1 Ordinary Failures. To calculate payments for Ordinary Failures, the following steps are required for each CLEC.

3.6.1.1 Calculate the size of the portfolio of touched sub-measures for each CLEC. Those sub-measures that fall into Category B are excluded in calculating the size of the CLEC's portfolio of touched sub-measures.

3.6.1.2 Determine the CLEC's portfolio failure rate in percentage points by calculating its percentage of touched sub-measures that failed the statistical tests or benchmarks.

3.6.1.3 The amount paid to the CLEC for each failure is then determined by multiplying its Ordinary Failure rate percentage points by the adjusted base amount. (E.g., with a $40 adjusted base amount and a 12% Ordinary Failure rate: 12 x ABA = $480.)

3.6.2 Chronic Failures. Sub-measure failures that occur for three or more consecutive months are called Chronic Failures. The procedure for Chronic Failures is similar to that for Ordinary failures.

3.6.2.1 Determine the number of Chronic Failures for each CLEC.

3.6.2.2 The amount paid to the CLEC for each Chronic Failure is then determined by multiplying the Ordinary Failure payment amount by five (5). (E.g., with a $40 adjusted base amount and a 12% Ordinary Failure rate, 12 x $40 x 5 = $2400).

3.6.2.3 To identify Chronic Failures for the first two months of implementation, performance results from the CLEC's current month and two previous months will be used.

3.6.2.4 Except where there are three consecutive months of inactivity by a CLEC, the months immediately preceding and following these months without individual OSS sub-measure activity by that CLEC, will be considered consecutive months for the purposes of identifying Chronic Failures. Exception: Measures and sub-measures identified as having no minimum sample size will have no limit to the number of intervening months of inactivity that will be ingored for the purposes of determining Chronic Failures. See Exhibit 4.

3.6.3 Extended Failures. Sub-measure failures for five or six out of six consecutive months are called Extended Failures.

3.6.3.1 To identify Extended Failures for the first five months of implementation, performance results from the current month and the five previous months will be used.

3.6.3.2 The amount paid to the CLEC for each Extended Failure is determined by multiplying the Ordinary Failure payment amount by ten (10). (E.g., with a $40 adjusted base amount and a 12% Ordinary Failure rate, 12 x $40 x 10 = $4800).

3.6.3.3 Except where there are three consecutive months of inactivity by a CLEC, the months immediately preceding and following these months without individual OSS sub-measure activity by that CLEC, will be considered consecutive months for the purposes of identifying Extended Failures. Exception: Measures and sub-measures identified as having no minimum sample size will have no limit to the number of intervening months of inactivity that will be ingored for the purposes of determining Extended Failures. See Exhibit 4.

3.7 Category B (Industry Aggregates). All those sub-measures that fall under treatment as an Industry Aggregate are considered as a single portfolio. The procedure for determining incentive payments for this portfolio is as follows.

3.7.1 Calculate the size of the portfolio for the Industry Aggregates for:

3.7.1.1 Performance Measures 1, 16, 24, 38, 42, and 44 (all sub-measures except for manual processes in Measure 1).

3.7.1.2 Performance Measures 2 and 3, all sub-measures where orders are electronically received and electronically handled.

3.7.1.3 Performance Measure 18, Sub-measures 1800101 (LEX/EDI LASR), 180201 (LEX/EDI CLEO), 1800502 (LEX/EDI LASR - not reported by DSS), and 1800503 (LEX/EDI CLEO - not reported by DSS), only. Sub-measures 1800502 and 1800503 track additional conditions that must be met in order to pass 1800101 and 1800201, respectively, and are not assessed penalties independently.

3.7.2 Determine the number of failures.

3.7.3 The incentive amount is then determined by multiplying the failure rate percentage points by the adjusted base amount and then by 10 for the Ordinary Failures, 50 for Chronic Failures and 100 for Extended Failures .

3.7.4 The sum of all payments for Industry Aggregate sub-measures is divided equally among all CLECs eligible for incentive payments.

3.8 Category C (Tier II). Includes all sub-measures for all incentive payment measures (specified in Section 5). Each sub-measure is aggregated on an industry basis and the set of aggregated sub-measures is considered as a single portfolio. The aggregate sub-measures are tested using the same procedures as for individual CLEC tests. To create industry-aggregate performance results for the count-based sub-measures in Performance Measures 20 and 23, the average count over all CLECs shall be compared to the benchmarks.

3.8.1 Calculate the size of the portfolio for the Tier II Industry Aggregates.

3.8.2 Determine the number of Category C single-month failures.

3.8.3 Determine the failure rate percentage points. (E.g., 0.15 = 15 percent = 15 percentage points.)

3.8.4 Determine the number of sub-measures that have failed the current month and the previous two months.

3.8.5 The payment amount for each failed sub-measure is then determined by multiplying the Industry Aggregate single-month failure rate percentage points by the adjusted base amount (e.g., with a $40 base amount and a 15 percent failure rate: 15 x ABA = $600), and then by 25.

3.8.6 To identify Tier II failures for the first two months of implementation, performance results from the current month and the two previous months will be used.

3.8.7 Except where there are three consecutive months of inactivity, the months immediately preceding and following these months without CLEC aggregate OSS sub-measure activity will be considered consecutive months for the purposes of identifying Tier II failures. Exception: Measures and sub-measures identified as having no minimum sample size will have no limit to the number of intervening months of inactivity that will be ingored for the purposes of determining Chronic Failures. See Exhibit 4.

3.8.8 Payments calculated for this category are paid to the ratepayers as follows:

3.8.8.1 Pacific and Verizon shall deposit Tier II incentive payments monthly into an interest-bearing memorandum account with a monthly-compounded interest rate equal to the tariffed rate the respective ILEC's charge their customers for late payment.

3.8.8.2 Each ILEC shall be responsible for maintaining these performance incentive accounts, which will be subject to audit by Commission staff.

3.8.8.3 When the annual Price Cap filings are made and the surcharge and surcredit amounts are calculated, the most recent twelve-month's incentive payments (August of the previous year through July of the current year) shall be added to the surcredit amounts included in Pacific's Rule 33 (Schedule Cal. P.U.C. No. A2.1.33) and Verizon's Tariff 38 (Schedule Cal. P.U.C. No. 38) disbursement mechanisms.

3.8.8.4 Interest shall accrue beginning with the first monthly incentive payment due date and shall continue to accrue on all amounts not yet credited to the ratepayers.

3.8.8.5 Pacific Bell shall identify in its Intrastate Earnings Monitoring Report (IEMR), NRF monitoring report code PD-01-27, an adjustment clearly identifying the annual performance incentive payments. This adjustment shall remove from the California intrastate results of operations, and the earnings monitoring reports, the payments made to the memorandum account.

3.8.8.6 Verizon shall identify in its Recorded and Adjusted Separated Results of Operations Report, NRF monitoring report code GD-04-01, an adjustment clearly identifying the annual performance incentive payments. This adjustment shall remove from the California intrastate results of operations, and the earnings monitoring reports, the payments made to the memorandum account.

3.9 Payment reduction. When the conditions in both of the following sub-paragraphs are met, $60,000 shall be deducted from the total payment amount. Any amounts in excess of the $60,000 shall be disbursed through Tier II mechanisms.

3.9.1 All Category A, B, and C failure rates are less than or equal to the following respective rates

Category A:

Ordinary Failures 4.0 percent

Chronic Failures 0.33 percent

Extended Failures 0.062 percent

Category B:

Ordinary Failures 1.7 percent

Chronic Failures 0.2 percent

Extended Failures 0.0 percent

Category C:

Ordinary Failures 3.4 percent

Chronic Failures 0.85 percent

3.9.2 None of the measures or sub-measures listed in Exhibit 4 have chronic or extended failures.

4. SPECIFIC MEASURES TO WHICH INCENTIVE PAYMENTS APPLY

4.1 Payments for Pacific Bell's failure to meet specified performance measures will only apply to the Specified Measures listed below:

4.2 Pre-Ordering

Measure 1-Average Response Time (to Pre-Order Queries)

4.3 Ordering

Measure 2 - Average FOC Notice Interval

Measure 3 - Average Reject Notice Interval

· For Measure 3, remedies will be paid on the service group type disaggregations only. Error type levels of disaggregation will be reported diagnostically, and not subject to incentive payments.

Measure 4 - Percentage of Flow Through (once measures of success are ordered for this measure by the Commission)

4.4 Provisioning

Measure 5 - Percentage of Orders Jeopardized

Measure 6 - Average Jeopardy Notice Interval

Measure 7 - Average Completed Interval

Measure 9 - Coordinated Customer Conversion as a Percentage On-Time

Measure 9A - Frame Due Time Conversions as a Percentage On-Time

Measure 10 -LNP Network Provisioning

Measure 11 - Percent of Due Dates Missed

Measure 14 - Held Order Interval

Measure 15 - Provisioning Trouble Reports (Prior to Service Order Completion)

Measure 16 - Percent Troubles in 30 Days for New Orders (Specials)

Measure 17 - Percent Troubles in 10 Days for New Orders (Non-Specials)

Measure 18 - Average Completion Notice Interval

4.5 Maintenance

Measure 19 - Customer Trouble Report Rate

Measure 20 - Percent of Customer Trouble Not Resolved Within Estimated Time

Measure 21 - Average Time to Restore

Measure 23 - Frequency of Repeat Troubles in 30 Day Period

4.6 Network Performance

Measure 24 - Percent Blocking on Common Trunks

Measure 25 - Percent Blocking on Interconnection Trunks

Measure 26 -NXX Loaded by LERG Effective Date

4.7 Billing

Measure 28 - Usage Timeliness

Measure 29 - Accuracy of Usage Feed

Measure 30 - Wholesale Bill Timeliness

Measure 31 - Usage Completeness

Measure 32 - Recurring Charge Completeness

Measure 33 - Non-Recurring Charge Completeness

Measure 34 - Bill Accuracy

· For Measure 34, incentive payments will be paid on the service group type disaggregations only. Charge types will be reported diagnostically, and will be not subject to incentive payments.

Measure 35 - Billing Completion Notice Interval

Measure 36 - Accuracy of Mechanized Bill Feed

4.8 Database Updates

Measure 37 - Average Database Update Interval

Measure 38 - Percent Database Accuracy

Measure 39 - E911/911 MS Database Update Average

4.9 Collocation

Measure 40 - Average Time to Respond to a Collocation Request

Measure 41 - Average Time to Provide a Collocation Arrangement

4.10 Interfaces

Measure 42 - Percentage of Time Interface is Available

Measure 44 - Center Responsiveness

5. ROOT CAUSE ANALYSIS

5.1 Pacific Bell may use Root Cause Analysis to demonstrate that an apparent out-of-parity condition was attributable to an atypical event beyond the reasonable control of Pacific Bell. The list of "excludable events" that could be considered as part of Pacific Bell's Root Cause Analysis is reflected in Exhibit 1 hereto. In addition, the following provisions apply to Root Cause Analysis:

5.2 Where performance data suggests an out-of-parity condition exists, Pacific Bell may use Root Cause Analysis to demonstrate there was no discriminatory treatment (the situations in which Pacific Bell may invoke Root Cause Analysis - referred to as "excludable events" - are reflected in Exhibit 1). When Root Cause Analysis is invoked, Pacific Bell will have the burden of proving that but for the occurrence and nature of an "exclusion event" Pacific Bell would have succeeded on the measure in question.

5.3 If a dispute arises over whether Pacific Bell's Root Cause Analysis is sufficient to excuse an apparent out-of-parity condition, the Parties will first attempt to resolve the disagreement through an informal discussion. Pacific Bell will prepare a Root Cause Analysis report and provide it to any affected CLEC. If the Parties agree that the Root Cause Analysis report is sufficient to excuse Pacific Bell, the Parties will sign the report and Pacific Bell will be relieved from any associated payments. If CLEC does not accept Pacific Bell's Root Cause Analysis, the Parties agree to seek resolution by the Commission.

5.4 Pending the resolution of any dispute, Pacific Bell shall place the payments in an interest-bearing escrow account. The funds in question will be transferred to the CLEC when and if it is determined through the EDR process that Pacific's Root Cause Analysis is not sufficient to excuse Pacific Bell.

5.5 Exhibit 1 identifies the categories of events that may form the basis of Root Cause Analysis and provides examples of the types of events within each category. The list is only illustrative; it is not definitive.

5.6 Force majeure events will be treated as excludable events.

5.7 Pacific Bell will provide to the CLEC, at the time of submitting a Root Cause Analysis report to the CLEC, all non-confidential documents that were used as part of Pacific Bell's Root Cause Analysis.

5.8 Inadequate forecasts shall also be treated as an excludable event. Pacific Bell may demonstrate as part of its Root Cause Analysis that but for the inadequate forecast provided by CLEC, Pacific Bell would have complied with the performance measure at issue. Exhibit 2 hereto provides the terms of the forecasting exclusion.

5.9 Delays or other problems resulting from actions of a Service Bureau Provider acting on the CLEC's behalf for connection to Pacific Bell's OSS, including Service Bureau Provider provided processes, services, systems or connectivity shall be treated as excludable events.

5 PERFORMANCE INCENTIVE PAYMENTS

6.1 Payments/Credits

6.1.1 Schedule. Pacific Bell will provide billing credits for the incentive amounts generated by the plan, on or before the 30th day following the due date of the performance report for the month in which the obligation arose.

6.1.2 Absolute and Procedural Caps. In any given month, the payment to CLECs shall not exceed the following amounts. When the limit is reached, payments shall be prorated among the CLECs in the amounts proportional to what they would otherwise be entitled to collect absent a cap: 1) a procedural cap of $15,000,000 (Pacific) and $4,500,000 (Verizon) for all CLECs; 2) an absolute cap of 1/12 of 36% of annual net revenue from local exchange service. If a procedural cap is reached in a month, the Commission should conduct a hearing to determine whether it would be reasonable under the circumstances, and in light of the evidence, to require Pacific to pay any amounts in excess of the procedural caps. If the procedural cap is met, the amounts owed up to the cap will be prorated among the CLECs to whom incentive payments are owed and will be paid regardless of the outcome of the hearing.

6.1.3 Eligibility. Only CLECs who have submitted orders for services to Pacific during the month under report shall be eligible for incentive payments.

6. Clarifications and illustrations to aid performance incentive plan implementation.

General Issues.

Application of the Small Sample Adjustment Table to sub-measures where low values are associated with good service is done by subtracting the benchmark from 1 and using the result as the point of entry into the table.

The Small Sample Adjustment table is applied to aggregates as well as CLEC observations.

Aggregations of Count-based sub-measures are evaluated by comparing the average of the numerators for all the CLECs in the aggregation to the benchmark for the sub-measure.

The following definitions are used throughout:

An Observation is the data for a single CLEC on a sub-measure in a single month.

An Aggregate is any collection of observations within a given sub-measure in a single month.

A Single-month evaluation is a pass/fail test on an observation or an aggregate using the single-month evaluation rules given in Exhibit 3, section B.

A Repeated Failures evaluation is a pass/fail test on an observation or aggregate using the repeated failures evaluation rules given in Exhibit 3, section B.

An Ordinary Failure is a failure determined using a single-month evaluation.

A Chronic Failure is an observation or aggregate failure that is determined using the repeated failures evaluation and is at least the third in a string of consecutive months of repeated failures (allowing for months with inactivity). Once a sub-measure has a chronic failure, all subsequent failures using the repeated failures critical alpha criterion will be deemed chronic until two consecutive passes are obtained or three months intervene with no activity.

An Extended Failure is an observation or aggregate failure that is determined using the repeated failures evaluation and that is preceded by at least five repeated failures in the preceding six months of tests (allowing for months with inactivity) Once a sub-measure has an extended chronic failure, all subsequent failures using the repeated failures critical alpha criterion will be deemed extended chronic until two consecutive passes are obtained or three months intervene with no activity.

The denominator used to calculate the Adjusted Base Amount is taken as the total number of remedy-relevant observations for those CLECs having reportable data for the month. The aggregate measures, 24, 42, and 44, contribute just the number of sub-measures with data.

The following formulae specify how payments are calculated in each category

General Parameters.

M = the number of remedy-relevant observations in the month.

K = 4243 / M

ABA = $38 x K (rounded to the nearest dollar).

Category A.

N(A) = the number of observations for a CLEC in a month excluding Category B sub-measures.

FO(A) = the number of ordinary failures for the CLEC.

FC(A) = the number of chronic failures for the CLEC.

FE(A) = the number of extended chronic failures for the CLEC.

P(A) = 100 x FO(A) / N(A)

PPM(A) = ABA x P(A) (pay-per-miss amount)

PO(A) = PPM(A) x FO(A) (payment for ordinary failures)

PC(A) = PPM(A) x FC(A) x 5 (payment for chronic failures)

PE(A) = PPM(A) x FE(A) x 10 (payment for extended chronic failures)

Category B.

N(B) = the number of Industry Aggregate sub-measures falling in Category B.

FO(B) = the number of ordinary failures for Category B.

FC(B) = the number of chronic failures for Category B.

FE(B) = the number of extended chronic failures for Category B.

P(B) = 100 x FO(B) / N(B)

PPM(B) = ABA x P(B) (pay-per-miss amount)

PO(B) = PPM(B) x FO(B) x 10 (payment for ordinary failures)

PC(B) = PPM(B) x FC(B) x 50 (payment for chronic failures)

PE(B) = PPM(B) x FE(B) x 100 (payment for extended chronic failures)

Category C.

N(C) = the number of Aggregate sub-measures falling in Category C.

FO(C) = the number of ordinary failures for Category C.

FC(C) = the number of chronic failures for Category C.

P(C) = 100 x FO(C) / N(C)

PPM(C) = ABA x P(C) (pay-per-miss amount)

PC(C) = PPM(C) x FC(C) x 25 (payment for chronic failures)

Special Issues.

The CLECs qualifying for Category B incentive payments are those that touch sub-measures in Measure 2, 3, and 40.

Category C is applied to all sub-measures.

The Category C failure rate is determined by the number of single-month failures in the month in question.

The rules for entering and leaving the chronic state (there is no extended chronic state) are the same as those for the other categories.

EXHIBIT 1

FACTUAL ANALYSIS

The following incidences are reasonable exceptions that can be used to mitigate a statistical finding of out-of-parity (or benchmark miss) provided that the incident impacted the CLEC to such a degree as to make otherwise compliant performance non-compliant:

I. Significant activity by a third party external to Pacific Bell* (not controllable by Pacific Bell)

A. Damage to facilities :

· major cable cuts

· gas/water main break

· manhole/structure fire

· central office/facilities fires not caused or under control of Pacific Bell

· other damage to facilities cause by a third party

B. Failure of third party systems

· LNP-service degradation/out-of-service of NPAC

C. Threats to personal safety

· Bomb threat causing evacuation of a Pacific Bell building (service center, central office, etc.)

· Other threats to personal safety which impact the execution of Pacific Bell's activities on behalf of the CLEC

II. Environmental events not considered force majeure

A. Environmental events causing service center evacuation/building condemnation

· building fire

· building damage cause by external force

· hazardous condition (gas or chemical leaks, presence of hazardous material)

III. Failure of CLEC process/system or those of a third party vendor, including a Service Bureau Provider, acting on behalf of CLEC

A. CLEC ordering system with degraded service or out-of-service for an extended period of time, resulting in:

· a backlog of requests sent all at once

· the CLEC changing from electronic transmission to manual (fax) for duration of the outage

B. Chronic, severely impaired testing capabilities on part of CLECs

C. Chronic failure on the part of the CLEC to provision their own network in a timely manner in establishing new or migrated end user service which also involves activities on the part of Pacific

*Note: Pacific Bell's sub-contractors or other Pacific Bell agents are not considered an external third party.

EXHIBIT 2

FORECASTING PLAN

CLECs shall submit forecasts to Pacific Bell for the following categories of products/services:

· Collocation

· Interconnection Trunks

· Service Requests by:

· Resale

· Non-designed

· Designed

· UNE

· Loops

· Non-designed

· Designed

· Loop/Port Combinations

· Unbundled Transport

· Forecasts shall cover a six-month period (two quarters) and shall be submitted one quarter in advance of the commencement of the six-month period.

· Forecasts may be updated quarterly, or sooner, if the CLEC determines that conditions warrant an update.

· For example, a forecast of 3^rd and 4^th Quarter 2001 must be submitted by March 31, 2001. However, the 4^th Quarter forecast may be updated as part of the quarterly submission on or before June 30, 2001 (which covers 4^th Quarter 2001 and 1^st Quarter 2002).

· For Service Request forecasts, forecasts shall be submitted on a statewide basis. For Interconnection forecasts, forecasts shall be submitted by wire center. Tandem interconnection shall be by tandem with identification of estimated traffic to and from subtending end offices.

· For collocation, forecasts shall be submitted by wire center.

· Forecasts shall be disaggregated on a monthly level.

· If Pacific Bell misses a mapped sub-measure (see Exhibit 2) for which a CLEC's actual volumes are 20% greater than the forecasted volume, on a monthly basis, a root cause analysis may be triggered.

· If Pacific Bell misses a mapped sub-measure (see Exhibit 2) for which the CLEC has not provided any forecast, a root cause analysis may be triggered.


· Pacific Bell may address the effect on Pacific Bell of an inaccurate forecast in its limited root cause analysis of a missed mapped sub-measure. In this review, Pacific must document how, but for the variance in the CLEC's forecast and actual volumes for one of the categories above (i.e., service requests, interconnection trunks or collocation), Pacific Bell would not have missed the mapped sub-measure. For purposes of the limited root cause analysis, the performance measures potentially affected by forecasting are set forth, or mapped, on the attached chart.

· Forecasts may contain commercially sensitive information and must be kept confidential.  Pacific shall protect forecasts against disclosure to any unauthorized persons, including personnel responsible for retail sales or marketing.  In addition, Pacific shall limit the disclosure of CLEC forecasts to personnel with a need to know for the purpose of ensuring Pacific's compliance with OSS performance measures and their applicable incentive plan, including compliance with the underlying wholesale obligations.

EXHIBIT 2

FORECAST MAPPING TO PERFORMANCE MEASURES

	TYPE OF FORECAST
	Service Order	Collocation	Interconnection
Pre-Ordering · 1 - Av. Response Time	X
Ordering · 2 - Av. FOC Notice Interval · 3 - Av. Reject Notice Interval	X X		X X
Provisioning · 5 - Percent of Orders Jeopardized · 6 - Av. Jeopardy Notice Interval · 7 - Av. Completed Interval · 9 - Coordinated Customer Conversions · 9A - Frame Due Time Customer Conversions · 10 - PNP Network Provisioning · 11 - Percent of Due Dates Missed · 14 - Held Order Interval · 15 - Provisioning Trouble Reports · 16 - Percent Troubles in 30 Days for New Orders · 18 - Av. Comp. Notice Interval	X X X X		X X X
	TYPE OF FORECAST
	Service Order	Collocation	Interconnection
Maintenance · 19 - Customer Trouble Report Rate · 20 - Percent of Customer Trouble not Resolved within Est. Time · 21 - Av. Time to Restore · 23- Frequency of Repeat Troubles in 30 day period
Network Performance · 24 - Percent Blocking on Common Trunks · 25 - Percent Blocking on Interconnection Trunks · 26 - NXX Loaded by LERG Effective Date			X
Billing · 28 - Usage Timeliness · 29 - Accuracy of Usage Feed · 30 - Wholesale Bill Timeliness · 31 - Usage Completeness · 32 - Recurring Charge Completeness · 33 - Non-recurring Charge Completeness · 34 - Bill Accuracy · 35 - Billing Notice Completion Interval · 36 - Accuracy of Mech. Bill Feed	X X X		X X X
	TYPE OF FORECAST
	Service Order	Collocation	Interconnection
Database Updates · 37 - Av. Database Update Interval · 38 - Percent Database Accuracy · 39 - E911/911 MS Database Update Interval	X
Collocation · 40 - Av. Time to Respond to Collocation Requests · 41 - Av. Time to Provide a Collocation Arrangement		X X
Interfaces · 42 - Percent of Time Interface is Available · 44 - Center Responsiveness

Exhibit 3

Decision Model

Revised from D.01-01-037, Appendix C