III. DISCUSSION
In its Application for Rehearing, Applicant asserts that calculating each carrier's pro rata share of pooling costs based on the number of thousand-blocks held by a carrier violates the Telecommunications Act of 1934 (as amended by the Telecommunications Act of 1996 ("The Act")) mandate that "[t]he cost of establishing telecommunications numbering administration arrangements [e.g., pooling] ... shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission" as well as the FCC's clarification of this provision in the context of shared pooling costs. 47 C.F.R. 251(e)(2).3
Applicant argues that the thousand-block formula will force paging carriers, (and other non-paging carriers) to shoulder a grossly disproportionate share of pooling costs, which will threaten the industry's ability to provide low-cost telecommunication services. Applicant further asserts that the new formula penalizes paging carriers for being part of an industry that is not required to deploy LNP, or to participate in pooling.
Without unequivocally asserting legal error, Applicant appears to have used the rehearing process as a vehicle for requesting modification of a commission decision. Public Utilities (PU) Code Section 1732 requires that the "rehearing [application] shall set forth specifically the ground or grounds on which the applicant considers the decision or order to be unlawful." This rehearing application does not meet this requirement. Applicant's allegations are speculative in nature, unsupported by evidence, and do not establish legal error.
Furthermore, there is nothing in the Commission's decision to suggest that the Commission violated the competitive neutrality requirement of Section 251(e)(2), or that the Commission intends to force paging carriers to shoulder a disproportionate share of the pooling costs.
According to the FCC's Telephone Number Portability Order:
"...a `competitively neutral' cost recovery mechanism should not give one service provider an appreciable, incremental cost advantage over another service provider, when competing for a specific subscriber." Second, the cost recovery mechanism "should not have a disparate effect on the ability of competing service providers to earn more normal returns on their investments."4
As stated in considerable detail in D.01-04-029, the Commission is aware of the FCC's Numbering Resource Optimization Order (NRO) and Section 251(e)(2)s requirement that shared industry costs are to be recovered through a competitively neutral mechanism. In fact, the FCC's Order permitted states to implement individual pooling trials pursuant to existing delegations of authority, and until the national pooling implementation occurs, directed states conducting their own pooling trials, to develop their own cost recovery plan for both shared and carrier-specific costs.
Through its authority and acting within the requirements set forth in Section 251(e)(2), the Commission achieved its primary objectives with the adoption of the thousand-blocks model as a cost allocator. Specifically, the Commission ensured that the costs of number pooling be recovered in a competitively neutral manner and that the information collected therefrom would be protected.
As we pointed out in D.01-04-029 at page 4, a modification of the allocation of pooling costs was necessary so as to enable NeuStar, the PA, to access each carrier's number utilization data in order to make the pro rata calculations of billings to individual carriers based upon numbers assigned to customers. As discussed at length in D.01-04-029 on pages 3 and 4, a carrier's number utilization data is confidential, and would require a separate Commission order to allow the PA access to such data. Thus, we concluded in D.01-04-029, that we could avoid releasing confidential carrier-specific information, and still achieve a reasonable allocation of number pooling costs in compliance with the competitive neutrality requirement, via the modification of the numerical formula used for the pro rata calculation. (D.01-04-029 at p. 4). We explained that the total number of blocks assigned to carriers, as opposed to the quantities of numbers utilized, is publicly available information. Accordingly, NeuStar would be able to determine each carrier's NXX holdings and share of pooling costs without having to access confidential carrier-specific data.
Furthermore, the Commission does not find the use of the thousand-blocks model to be discriminatory. As we pointed out, the use of thousand-blocks as a cost allocator conforms to the principle of competitive neutrality in that it effectively takes from all carriers (both LNP and non-LNP carriers) equally, recovering costs uniformly, irrespective of whether the carrier participates in pooling. (D.01-04-029 at p.4).
As our decision stated, we found that even non-LNP carriers still derive benefits from the pool.5 Fewer carriers compete for the remaining NXX codes allotted through the lottery process. As a result, the non-LNP capable carriers that do not participate in the number pooling face less competition for the remaining NXX codes made available via the lottery. Thus, it is reasonable and competitively neutral that all carriers providing service within a NPA share in the costs of pooling within the NPA.6
Applicant's argument also centers on the FCC's finding that allocating the costs of numbering pooling on a "per number charge, based on the quantity of numbers held by a carrier, would not comply with the section 251(e)(2) requirement that all telecommunications carriers bear the cost of numbering administration on a competitively neutral basis." (Application for Rehearing at p. 3; FCC Order 00-109, 207). The flaw in this argument is that the FCC's statement pertains to the FCC's determination to base a federal pooling cost-recovery mechanism on interstate, intrastate and international telecommunication end-user revenues in a future order. In the interim, until the FCC has adopted a pooling cost-recovery mechanism to be implemented in conjunction with the national rollout of number pooling, states are free to fashion their own pooling cost-recovery mechanisms so long as they are consistent with the FCC's cost-recovery principles. First and foremost, a state's pooling cost-recovery methodology cannot disproportionately impact any industry segment. Use of thousand-blocks as the cost allocator is consistent with that principle for several reasons.
Despite what Applicant would like the Commission to believe, using the number of thousand-blocks held as a cost allocator is not the equivalent of a per number charge. By contrast, it is simply a way of assigning costs among carriers in direct relation to the drain they place on the availability of numbering resources. It provides for a full accounting of cost responsibility for all of the numbers under the control of the non-pooling participant, not just those currently being utilized.7
Furthermore, the FCC acknowledged that these classes of carriers, particularly the paging carriers, are significant users of numbering resources.8 Similarly, in D.01-04-029, the Commission addressed this specific point. The Commission held that irrespective of how much a revenue a carrier generates from a given number block, the draw down of each thousand-number block from the pool still affects other carriers in the same manner. Specifically, whenever a carrier obtains a thousand-number block, whether an ILEC or a CLEC, it is placing the same drain on numbering resources within an NPA. Telephone numbers are a valuable public resource that carriers need to provide service, regardless of whether they take numbers in blocks of 1,000 or 10,000. Thus, the Commission determined that allocating pooling costs based upon thousand-blocks requires each carrier to bear an equivalent share of costs in direct proportion to the resources that they have withdrawn from the system.
Applicant argues, however, that this Commission should permit carriers who place the same drain on numbering resources as LNP carriers, but who generate lower revenue services, to pay less for the same services as higher generating services. We have considered and now reject this argument on the grounds that it is in direct violation of the competitive neutrality requirements set forth in the Act. Specifically, it asks the Commission to discriminate against higher generating carriers in favor of paging carriers, which, on its face, violates Section 251(e)(2) of the Act and is contrary to the public interest.
As the decision explains, the thousand-block allocator, like our setting of uniform prices for unbundled network elements (UNEs), is not anti-competitive. CLECs with fewer customers are required to pay the same UNE prices as larger carriers (ILECs) with more customers. Carriers with a lower number utilization rate cannot be afforded the benefit of paying less for a commodity merely because they have lower utilization rates. (D.01-04-029, p. 5). Carriers with both small and large customer bases place the same drain on public number resources. As a result, other carriers forgo access to that thousand-number block irrespective of whether it is assigned to an ILEC, a CLEC, or a paging carrier, and irrespective of the particular utilization rate involved. It is not the Commission's responsibility to ensure that paging carriers recover costs in excess of the costs associated with the operation of their business. By contrast, the Commission's obligation is to ensure that pooling costs are recovered from all carriers, in a competitively neutral fashion, based on the resources they have withdrawn from the system.
Furthermore, pursuant to the authority delegated to this Commission in the FCC's Order, the Commission is authorized to implement a recovery mechanism of its choice. We have determined that the mechanism adopted in D. 01-04-029 is an efficient use of numbering resources and will act as a method by which we can continue to ensure the efficient use of valuable and scarce numbering resources. Thus, we find no inconsistency between the FCC's competitively neutral standard for cost recovery and the use of thousand-blocks as a cost allocator among carriers.9 In fact, the cost recovery mechanism we have selected is premised on the critical link between the costs associated with pooling and a carrier's use of the number resources.
Applicant's argument that the use of thousand-blocks held is discriminatory as to paging carriers is unsupported by evidence, and is a misrepresentation of the facts as they stand. Specifically, we point out that the reasons paging carriers are unable to participate in pooling, yet still derive the benefits from the efforts of those who do pool, in no way is the result of any act of this Commission. Rather, it is because of specific requests made by the paging carriers to the FCC, that the FCC granted paging carriers permanent exemption from porting requirements.10
In addition to permanent exemption from pooling requirements, paging carriers receive benefits not afforded to other carriers. For instance, in order to participate in pooling, all carriers are required to pay a portion of shared-industry and carrier-specific costs. However, because paging carriers are permanently exempted from having to be LNP capable, and from having to pool, they avoid paying carrier-specific costs associated both with deploying LNP technology, and with pooling. Therefore, Applicant's discrimination and unfair treatment argument is clearly without merit since paging carriers are currently receiving the cost-saving benefits of both permanent exemption from pooling requirements and payment of carrier-specific costs, neither of which are afforded to other carriers.
Applicant's argument that the thousand-block methodology places a disproportionate financial burden on non-pooling carriers is equally without merit. We reject this argument in that the hypothetical illustrated in their application for rehearing fails to state sufficient facts, is unsupported by evidence, and is speculative in nature with respect to the alleged financial differential between the two methodologies. Applicant has, in essence, failed to prove that the thousand-blocks method disproportionately impacts affect on its ability to earn a normal return on investment in violation of the Act.
We further deny Applicant's request that the Commission order the allocation of shared-industry costs on the basis of telecommunication revenues. This request is simply a reargument of comments and reply comments made in response to the Administrative Law Judge's (ALJ's) Draft Decision. After careful review of the comments, the Commission declined to adopt them. Furthermore, since Applicant did not assert legal error with respect to this request, we need not give it further consideration in this rehearing.
As for the remaining public policy arguments stated in its Application for Rehearing, the Commission's findings are amply supported by the underlying evidence as stated in D.01-04-029.11
Applicant has not established error to demonstrate that a modification to the method of allocating shared-industry costs is warranted. Therefore, modification of the decision is not warranted. We point out, however, that at some unspecified point in time, the FCC will establish its own mechanism of recovery, and we will, in due course, transition to the cost recovery mechanism set forth in such order.
3 We note the actual language of section 251(e)(2) reads as follows:- "The costs of establishing telecommunications numbering administration arrangements and number portability shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission."
