Findings of Fact
1. In D.99-11-050, the Commission established a process by which carriers with interconnection agreements with Pacific Bell could annually nominate up to two UNEs for consideration of their costs by the Commission.
2. In February 2001, the Commission received four requests to nominate UNEs for cost re-examination and a motion by Pacific to defer the cost re-examination proceeding.
3. On June 14, the Assigned Commissioner and ALJ issued a joint ruling denying Pacific's motion to defer any cost re-examination and finding sufficient justification to begin a reexamination of the costs of two UNEs, namely unbundled switching and unbundled loops.
4. On July 11, the Assigned Commissioner and ALJ issued a joint ruling identifying three criteria that Pacific's cost model filing must adhere to in order to be used for this cost re-examination proceeding.
5. Pacific's cost filings in this matter do not perform new runs of the SCIS model, the Cost Proxy Model, or other expense and support investment models.
6. Pacific's cost filings involve adjustments to the outputs of the prior OANAD models and it is not possible to provide the previously adopted models with new inputs.
7. On August 20, Joint Applicants filed a motion requesting interim UNE prices for unbundled loops and unbundled switching.
8. On September 28, the Assigned Commissioner and ALJ ruled that Pacific's August 15 cost filing did not meet the criteria set forth in the earlier ruling and that interim relief would be considered.
9. In Turn v. CPUC, the California Supreme Court held that the Commission could set interim rates as long as the rate is subject to refund and sufficiently justified.
10. Pacific and Joint Applicants agree that DLC equipment prices have fallen in recent years from the levels used in the prior OANAD cost proceeding.
11. Publicly available ARMIS data indicates declines in switching investment costs, declines in switch expenses, growth in the number of access lines served, and growth in call volume.
12. Pacific purchases switches under an SBC-wide agreement and can obtain switches in California at prices that are as favorable as, or more favorable than the prices it pays for switches in Illinois.
13. Pacific's cost filing does not allow parties or staff to test the effects of switching investment changes, DLC equipment declines, line growth, or call volume changes.
14. Commission staff have been able to understand how the HAI model derived its results for unbundled loops and switching and have modified HAI model inputs and assumptions to produce varying results. Although the HAI model does not exactly replicate the costs adopted in prior OANAD decisions, staff have been able to replicate Joint Applicants' HAI model runs.
15. Section 252(d) of the Telecommunications Act requires the Commission to set UNE rates based on cost.
16. On January 7, 2002, Joint Applicants and Pacific jointly requested the Commission take notice of a decision by the D.C. Circuit Court in Sprint Communications Company v. FCC.
17. On October 9, Pacific filed an Appeal to the Full Commission of the September 28 ruling and on October 19, Pacific filed a motion to vacate the September 28 ruling.
18. On August 13 and again on October 3, the assigned ALJ and the Law and Motion ALJ directed Pacific to produce material relevant to the issues in this proceeding.
19. On October 12, Pacific filed an appeal and stay request regarding the ALJs' discovery rulings, which has not been acted on by the Commission.
20. Pacific did not comply with the August 13 and October 3 ALJ rulings ordering it to produce certain documents until the Assigned Commissioner issued a ruling imposing sanctions on Pacific.
21. Pacific produced documents and witnesses of SBC and SBC-Ameritech in the course of this proceeding.
22. The Commission does not generally entertain interlocutory appeals of ALJ rulings.
23. The Assigned Commissioner issued a ruling on February 21, 2002 imposing sanctions on Pacific for failure to comply with the ALJ's earlier discovery rulings.
24. Joint Applicants request a 36% discount from the current statewide-average loop rate of $11.70 based on a trend analysis of 1994 and 2000 data input into the HAI model.
25. In their trend analysis for loops, Joint Applicants have attributed 24 lines to each DS-1 line and 672 lines to each DS-3 line because these lines, respectively, carry 24 and 672 "voice grade equivalent" channels.
26. A DS-1 line consists of two copper loops and a DS-3 line is provisioned over fiber and does not involve any copper loops.
27. The record of this case is disputed on whether 70% of growth involves plant extensions and whether plant extension costs offset other loop cost reductions because of certain demographic, line growth, and ARMIS investment data.
28. The prior OANAD cost models assumed that all remote terminals (RTs) were above ground.
29. Although Pacific asserts that underground CEVs are replacing RTs in many locations, the record is disputed on whether CEVs are more or less expensive than RTs on a per line basis because both Pacific and Joint Applicants mix costs and line capacities from various size CEVs in their calculations.
30. The current record of this case does not support changing the original OANAD assumptions regarding RTs.
31. The HAI model uses expense to investment ratios to replicate forward-looking expense adjustments.
32. ARMIS data indicates an increase in total loop expenses from 1994 to 2000.
33. Joint Applicants request interim UNE switching rates equivalent to one of two alternative switching rates that SBC-Ameritech has proposed in Illinois.
34. In the September 28 ruling, the Assigned Commissioner and ALJ required Joint Applicants to reformulate their interim switching request to entail a percentage reduction from the current switching rate structure.
35. Public data shows a substantial degree of uniformity across geographic regions in switching cost trends.
36. ARMIS data shows that Pacific has far more switched lines per switch than Illinois.
37. California and Illinois are nearly identical with respect to the percentage of host versus remote switches in each state.
38. The record shows that switching costs in California are likely to be no higher than the rates that SBC-Ameritech proposed in Illinois.
39. If the SBC-Ameritech proposal in Illinois is reformulated based on the current switching rate structure in California, local switching rates would be reduced by 69.4% and tandem switching prices would fall by 79.3%.
40. Joint Applicants requested interim UNE rates subject to "true down," meaning that if final rates are lower than interim rates, Pacific should provide refunds to UNE purchasers, but not vice versa.
41. The Commission adopted deaveraged loop rates in D.02-02-047 until superseded by action for this proceeding.
42. Joint Applicants have presented a summary of evidence indicating a reasonable presumption of cost declines for unbundled loops and unbundled switching based on declining DLC equipment costs, SBC-wide switching purchases, ARMIS data indicating declines in switching investments and expenses, and growth in access lines and call volume.
