Responses of the Parties

In response to the ACR, Pacific asserts that no further proceedings are required because no outstanding Section 709.2(c) issues exist. It declares that there is no anticompetitive conduct, cross subsidization or substantial possibility of competitive harm. Pacific argues that sufficient state and federal safeguards exist to protect the intrastate long distance market. It disagrees that any benefits will come from the Section 709.2(c) directives established in D.02-09-050; and that such "continuing safeguards" should have a definitive sunset date. Alternatively, Pacific asks the Commission to clarify that the Section 709.2 safeguards shall remain in effect until they are discontinued on further order of the Commission, based on a motion by it demonstrating that the safeguards are no longer necessary or appropriate, or that the burden of compliance is outweighed by the potential benefits. (Pacific Comments at 19-20.)

Pac-West Telecomm, Inc., Working Assets Long Distance and XO California, Inc. (Joint Commenters) strongly oppose the ACR's proposal. They maintain that with the issuance of D.02-09-050, the Commission's Section 709.2 appraisal was complete: Pacific failed to meet three out of the four statutory requirements. The Joint Commenters claim that the ACR is an improper reconsideration or rehearing of Section 709.2, and neglects to give interested parties a true opportunity to be heard on the issues by soliciting written comments in a condensed period of time. They further contend that the resolution of any outstanding Section 709.2 issues requires the reopening of the proceeding and the full development of a new record.

Joint Commenters insist that "disputed issues of fact" continue to exist, and envision that there will be a need for discovery, the submission of additional evidence, and "public" hearings. Regarding safeguards, they urge the Commission to accelerate consideration of the feasibility of implementing a neutral PIC administrator, and ask that Pacific's marketing scripts be submitted to all interested parties. In conjunction with other competitors, they support performance measures and incentives for Pacific's provisioning of special access services. The Joint Commenters also argue that the Commission should direct Pacific to resubmit its application for a Certificate of Public Convenience and Necessity, and determine the application before Pacific may begin offering long distance service in California. Finally, the Joint Commenters state that the effectiveness of the safeguards cannot be ably evaluated until after they are implemented.

The Greenlining Institute and Latino Issues Forum comment that they have repeatedly stated three ways in which Pacific can ensure that its entry into the long distance market is in the public interest. They ask Pacific to: (1) address the importance of protecting ratepayers from consumer fraud in the long distance transition; (2) develop a strategic plan to increase telephone penetration for low-income communities; and (3) create a viable residential market competitor to ensure local competition. (Greenlining Institute and Latino Issues Forum Comments at 3.) They assert that the Commission should use its authority to compel Pacific to comply with public interest provisions that protect the poor.

WorldCom, Inc. (WorldCom) also considers the ACR to be an improper attempt to rehear or reconsider D.02-09-050, citing the limited set of issues posed and the limited opportunity that parties have to be heard on the overall issue of Section 709.2. It contends that the Commission lacks record support or any other reasonable basis for concluding that protections to be implemented in the future will be sufficient to overcome the anti-competitive problems already found in the record. (WorldCom Comments at 3.) Thus, WorldCom urges the Commission to strengthen the safeguards adopted in D. 02-09-050, and to establish and implement additional protective measures. It insists that the Commission promptly approve switched access charge reform; establish performance measures and incentives for special access services; and finalize the collocation terms, conditions and rates. WorldCom asserts that the regulatory safeguards should remain in place as long as Pacific retains market power.

AT&T asserts that the ACR does not present either a legal or factual basis to justify reassessing the existing Section 709.2 record. AT&T offers several incidents as examples of new evidence of Pacific's anti-competitive conduct that the Commission should receive into the record and consider. It contends that an ongoing Section 709.2 inquiry is needed to establish and enforce the safeguards that the Commission plans to impose pursuant to D.02-09-050. AT&T wonders whether the ACR's desire to expeditiously resolve the Section 709.2 portion of the proceeding implies that the Commission has abdicated its responsibilities to regulate Pacific and competition in California. (AT&T Comments at 4.) It urges the Commission to include the findings of the 2002 "PacBell Audit Report" in this proceeding.

AT&T also questions the efficacy of performance measurements and incentives when Pacific evades regulatory performance monitoring by moving functionality away from organizations or processes that the existing performance measures cover. Additionally, the company continues to criticize the accuracy of the data on which Pacific's performance is measured. With regard to the safeguards, AT&T proposes specific alternative language for Pacific's joint marketing scripts which could lessen the "significant undue advantage" that the incumbent has over competing long distance providers before a customer has requested or authorized Pacific to market its affiliate's services. Finally, AT&T insists that, at a minimum, the existing safeguards and additional stronger safeguards should remain in place so long as Pacific is a dominant local service provider.

The Office of Ratepayer Advocates (ORA) and The Utility Reform Network (TURN) contend that Section 709.2(c) requires further proceedings. They state that parties' fundamental rights at issue here are inadequately protected where only limited comments are entertained under a tight timeline. ORA and TURN argue that in further proceedings, parties "must be allowed to address the question of whether the reaffirmed safeguards can establish that Pacific has met the requirements of Section 709.2(c)."

They caution the Commission against changing D.02-09-050 "well in advance of the thirty days allowed for parties to apply for rehearing on any matter determined therein." (ORA and TURN Comments at 4.) They also list several "bad acts" that they maintain further illustrate Pacific's anticompetitive conduct, and prevent this Commission from either ultimately making the outstanding determinations or finding Pacific to be acting in the public interest under Section 271 of the Federal Telecommunications Act of 1996.

ORA and TURN urge the Commission to indeed implement a "workable, expedited dispute process" for operational problems between Pacific and the competitors. They note that the process is critical to ensure that the requirement that SBC/Pacific's entry into the California long distance market does not harm competition, "and that it does not harm customers of competitors." (ORA and TURN Comments at 7-8.) ORA and TURN call for the creation of a schedule that accommodates "appropriate discovery," filing of testimony, and evidentiary hearings addressing the Section 709.2 issues.

Telscape Communications, Inc. (Telscape) asserts that the current safeguards are not effective to ensure a competitive telecommunications market in California, or to mitigate potential harms. It advises the Commission to quickly restrict Pacific's existing win-back activities, and adopt rules preventing the recurrence of win-back practices that are anticompetitive. Additionally, Telscape asks for the establishment of new procedures that will expeditiously resolve business-to-business issues and other disputes between competitive local exchange carriers (CLECs) and Pacific in a manner that also promotes the interests of competitive telecommunications markets. It insists that further Section 709.2 proceedings are necessary.

Several parties⁸ comment that additional hearings need not be held, and this inquiry should be concluded swiftly. Specifically, the Communications Workers of America (CWA) argues that the Commission should reconsider the Section 709.2 portion of D.02-09-050 because the necessary findings could be made immediately if analyzed under "the correct standard." CWA further asserts that the joint marketing safeguard established in the decision inappropriately addresses future actions, does not apply to competitors, and should be removed as quickly as possible.