III. Disposition of Pac-West's Motion

A. Submission of Implementation Plans

Parties Position

Pac-West proposes that each ILEC desiring to implement the FCC Order in California be required to provide to the Commission and all interconnecting parties with "detailed implementation plans," including plans

for satisfying the FCC's "fairness" condition. In other words, the FCC Order requires that an ILEC cannot benefit from paying the FCC's lower capped rates for ISP-bound traffic termination unless and until all other carriers within the state are permitted to pay the ILEC the same rate for termination of all Section 251(b)(5) traffic. Yet, Pac-West states that it is not aware that any ILEC has offered to amend its interconnection agreements in California to apply the lower capped rates to all traffic terminated by the ILEC.

Pac-West argues that it would be premature for any ILEC to implement the FCC's capped rates for ISP-bound traffic while continuing to require other carriers to pay higher rates for Section 251(b)(5) traffic contrary to the FCC's directive.

Focal claims that Verizon has made an "imperfect" attempt to elect the FCC price cap scheme in California, in that Verizon did not provide general concurrent notice to all California carriers of its intention to elect the FCC scheme for all traffic, as required by the FCC Order. In particular, Focal claims that Verizon's attempt to implement the FCC's capped rates was "imperfect" because it received letters addressed to Focal Communications Corporation of Washington and Focal Communications of Virginia, but did not receive a letter addressed to Focal Communications Corporation of California. Verizon contends that Focal's claim is misleading because: (1) the interconnection agreement between Verizon and Focal Communications Corporation of California expressly requires Verizon to send notices to Focal Communications Corporation - not Focal Communications Corporation of California; and (2) Verizon claims that it did in fact send a letter to Focal Communications Corporation, as required by the California interconnection agreement.

In its Opening Comments in response to the Draft Decision, Verizon attached a copy of a letter, dated May 14, addressed to Focal Communications Corporation. However, Focal notes that the initial May 14 notices sent by Verizon to Focal referenced only Virginia and Washington. Moreover, Focal states that it did not receive the letter attached to Verizon's Opening Comments, purportedly addressed to Focal Communications Corporation. But even if it had received such a letter, Focal argues it would be of little import since the FCC plan must be elected on a state-by-state basis and the exhibit to Verizon's comments does not indicate the state in which it seeks to invoke the plan. Focal has exchanged subsequent correspondence from Verizon in which Verizon ultimately clarified that it does seek to invoke the FCC plan in California. However, Focal argues this is more than merely "form over substance" as the effective date of Verizon's election has real economic consequence. Focal claims that Verizon may be attempting to "slow-roll" the implementation of lower rates for the wireless traffic that flow predominantly to it, while insisting upon an earlier effective date to cap the rate on traffic it sends to CLECs. Focal claims that Verizon is ignoring a central condition of the FCC's order: that it not attempt to implement a cap on the rate it will pay for Internet-bound traffic until it effectively offers to terminate CLEC-originated traffic at the same rate.

Focal further claims that Verizon's proposed offer to amend the existing agreement to implement the FCC rate caps for ISP traffic terminated by CLECs, Verizon has failed to offer to terminate the CLECs' 251(b)(5) traffic at the same rate as is applicable to the Internet traffic as required by the FCC Order. Instead, Verizon has merely invited the CLECs to negotiate a future amendment to reduce the rate paid by the CLECs to Verizon for termination of 251(b)(5) traffic originated by CLECs. Thus, Focal claims that Verizon is improperly seeking to reduce the rate that it pays to CLECs for traffic that it originates prior to reducing on a concurrent basis the rate that Verizon receives for traffic that it terminates.

Verizon objects to Pac-West's proposal, arguing that this Commission lacks jurisdiction to impose additional requirements beyond those already contained in the FCC Order. Verizon further claims that it has properly implemented the provisions of the FCC Order. Verizon claims that on May 15, 2001, it sent a letter to every CLEC and CMRS provider with which it has an interconnection agreement in California, offering an optional rate plan to apply the FCC's rate caps to all Section 251(b)(5) traffic. Verizon quotes an excerpt from the letter indicating that it has offered to mirror the FCC's capped rates for ISP traffic and to apply those rates to all local traffic. The offer in the May 15 letter of precisely mirrored rates was referenced again in a second letter sent by Verizon on June 21, 2001 to every California CLEC with which Verizon has a resale or facilities-based interconnection agreement. Verizon claims it has the right to unilaterally implement the capped rates through the change-of-law provisions in its existing interconnection agreements.