II. Overview of Pac-West's Motion

In its motion, Pac-West asks the Commission to order each ILEC to take certain actions prior to any implementation of the FCC Order in California. Specifically, Pac-West seeks a Commission order requiring that before any ILEC may implement the FCC Order, it must first:

· submit to the Commission in this proceeding, and to all certificated carriers in California, detailed plans for implementing the FCC Order;

· identify any California certificated carriers with whom it has an Interconnection Agreement and with which the ILEC does not propose to implement the FCC Order's rate caps on the same date and in the same manner as with any other carrier certificated in California;

· refrain from implementing any rates based upon the FCC Order until it in fact has offered effective and available rates for all Section 251(b)(5) applicable to ISP-bound traffic;

· honor its existing Interconnection Agreement obligations until modified in accordance with the terms of those agreements and the Commission's applicable rules; and

· establish memorandum accounts to track all out-of-balance traffic and related reciprocal compensation payments.

Finally, Pac-West requests that the Commission establish an expedited process for addressing challenges to the FCC's rebuttable presumption regarding the nature of any out-of-balance traffic.

Responses to the motion were filed on June 27, 2001. Opposition to the motion was expressed in responses of Pacific Bell Telephone Company (Pacific), Verizon California Inc. (Verizon), and Roseville Telephone Company (RTC). Support, in part, for the motion was expressed in responses filed by Focal Communications Corporation of California (Focal), AT&T Communications of California (AT&T) and AT&T Wireless.

The ILECs oppose the motion. Verizon cites four principal reasons for its opposition to the motion. First, Verizon claims that the FCC Order divests state commissions of jurisdiction to order the measures sought by Pac-West. Second, Verizon believes the actions sought by Pac-West would entail a rewriting of the FCC rules for implementing intercarrier compensation for Internet-bound traffic (which it believes would be imprudent and an unlawful infringement on FCC jurisdiction). Third, Verizon claims it has properly initiated every action required by the FCC to implement the order, and more. Fourth, Verizon believes that Pac-West's proposals would undermine the FCC's goal of transitioning "immediately away" from the existing ISP reciprocal compensation regime which Verizon views as "anticompetitive and anticonsumer."

In the event, however, that the Commission pursues the issues in the motion, Pacific argues that any procedural rules adopted should address the application of the FCC rate caps to all traffic, not just ISP-bound traffic, and should afford comparable rights to ILECs and CLECs.

AT&T supports the relief measures proposed in the motion (but does not concur with all of Pac-West's characterizations of the FCC Order). AT&T attached a letter ruling from the Maryland Public Service Commission, interpreting an interconnection agreement between Verizon and Core Communications, Inc. The Maryland Order concluded that, in the circumstances of that case, Verizon is not entitled to begin withholding reciprocal compensation payments until such negotiated amendments have been approved by the Maryland Public Service Commission.

AT&T Wireless supports Pac-West's request that ILECs adhere to existing obligations under their interconnection agreements. To the extent that revised language is required in a particular interconnection agreement, AT&T Wireless believes that the revisions should be filed as amendments by Advice Letter under Rule 6.2 of the Commission's Rules for Implementing the provisions of Section 252 of the Act. AT&T Wireless opposes other proposals in the motion, however, arguing they are unnecessary and will only serve to delay implementation of the new "capped" rate structure. AT&T Wireless takes no position on the memo account proposal.

Focal supports the motion, arguing that the Commission could play a useful limited role in ensuring that the ILECs implement the FCC's Order in a uniform fashion in California. More specifically, before receiving the benefit of a reduced rate payable to CLECs for terminating Internet traffic, an electing ILEC must satisfy the condition that it offer to terminate all "§ 251(b)(5) traffic"⁴ originated by other carriers at the same rate applicable to ISP-bound traffic.⁵ Focal argues that Verizon cannot unilaterally implement the new rate caps without amending the underlying agreement. Focal's agreement with Verizon requires any amendment to be negotiated pursuant to effective notice and reduced to writing.