Conclusion

At the issuance of D.02-09-050, we did not consider our job with respect to Section 709.2(c) to be over. Our focus then and now is with the development of adequate competitive safeguards for the intrastate interLATA market. While acknowledging that D.02-09-050 was not appealed, most of the parties insist that we have further Section 709.2(c) proceedings and urge us to revisit issues that we have repeatedly declined to entertain. Notwithstanding the demands, we do not consider it appropriate to transplant the bulk of the major telecommunications policy matters to this proceeding. We believe that specific allegations should be pursued in a case dedicated to examining those allegations, not assembled with a vast assortment of past and recent accusations.

Anticompetitive conduct by Pacific that is substantiated will be sanctioned. Any improper cross subsidization will be uncovered and remedied. Last December, Pacific chose to address Section 709.2(c) through its overall demonstration of compliance with Section 271. We were not persuaded that that showing sufficiently enabled us to make the determinations required under our state law. We reject the notion that extensive discovery and exhaustive hearings are the only way to fulfill our obligations under Section 709.2(c)(2)-(4). We also decline to indefinitely delay Pacific's entry in the intrastate long distance market until all the disputed issues before us are resolved. We believe the better approach is to erect competitive protective measures so that illegal conduct is prevented, revealed and punished.

Continuing Staff's review of the joint marketing scripts when substantial changes are made will inform the Commission about any anticompetitive conduct that emerges in the scripts, and enable us to immediately address it. The EDR process, once promptly conformed to our rules, will be a significant competitive safeguard against any unfair conduct or operational disputes. Additionally, requiring Pacific to make existing special access performance measure results available to Staff as well the competitors will allow us to monitor the data and discuss the issues from a common source of information. With the assurance of these added safeguards, we find in accordance with Section 709.2(c)(2) that there is no anticompetitive behavior by the local exchange telephone corporation.

The current NRF proceeding, R.01-09-001, will determine in one of its phases whether or not Pacific has cross subsidized its operations. We need not replicate that case here. Federal and California law requires separate accounting records "to allocate costs for the provision of intrastate interexchange telecommunications service." As stated in D.02-09-050, we directed that an audit of SBC Long Distance take place once it is operating, pursuant to OP 8 in D.99-02-013. That audit shall include an examination of the methodology of allocating intrastate interexchange telecommunications service costs. We affirm the satisfaction of these requirements under Section 709.2(c)(3), and find that there is no cross subsidization by Pacific based on the record before us in this proceeding and as defined by Section 709.2(c)(3).

The Staff review of the marketing scripts, the EDR process, and the availability of special access performance measure results together provide a significant safeguard against potential harm to the intrastate interexchange market. The competitors insist that delaying Pacific's entry into the intrastate long distance market until the Commission resolves various policy questions is an appropriate response to future harm to the market. We consider such an approach to be resource-intensive and unproductive. For our part, we expect these safeguards to mitigate projected damage. Thus, with the safeguards we adopt today and those set out in D.02-09-050, we find that possibility of harm to the competitive intrastate long distance market to be less than substantial. In accordance with Section 709.2(c)(4), we find that there is no substantial possibility of harm to the competitive intrastate interexchange telecommunications markets.

In making the remaining determinations under Section 709.2(c), we find that it is appropriate that Pacific shall have the authority to operate and provide intrastate interexchange telecommunications services provided that it has received full authorization from the FCC pursuant to Section 271 of the Telecommunications Act of 1996. Thus, we grant Pacific the authority to provide interexchange telecommunications services within state of California.