ALJ/DOT/jva Mailed 4/22/2005

Decision 05-04-044 April 21, 2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Joint Application of AT&T Communications of California, Inc. (U 5002 C) and WorldCom, Inc. for the Commission to Reexamine the Recurring Costs and Prices of Unbundled Switching in Its First Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 01-02-024 (Filed February 21, 2001)
Application of AT&T Communications of California, Inc. (U 5002 C) and WorldCom, Inc. for the Commission to Reexamine the Recurring Costs and Prices of Unbundled Loops in Its First Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 01-02-035 (Filed February 28, 2001)
Application of The Telephone Connection Local Services, LLC (U 5522 C) for the Commission to Reexamine the Recurring Costs and Prices of the DS-3 Entrance Facility Without Equipment in Its Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-02-031 (Filed February 28, 2002)

Application of AT&T Communications of California, Inc. (U 5002 C) and WorldCom, Inc. for the Commission to Reexamine the Recurring Costs and Prices of Unbundled Interoffice Transmission Facilities and Signaling Networks and Call-Related Databases in Its Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-02-032 (Filed February 28, 2002)
Application of Pacific Bell Telephone Company (U 1001 C) for the Commission to Reexamine the Costs and Prices of the Expanded Interconnection Service Cross-Connect Network Element in the Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-02-034 (Filed February 28, 2002)
Application of XO California, Inc. (U 5553 C) for the Commission to Reexamine the Recurring Costs of DS1 and DS3 Unbundled Network Element Loops in Its Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-03-002 (Filed March 1, 2002)

OPINION GRANTING INTERVENOR COMPENSATION TO
THE UTILITY REFORM NETWORK FOR
SUBSTANTIAL CONTRIBUTION TO DECISION 04-09-063

This decision awards The Utility Reform Network (TURN) $272,898.48 in compensation for its contribution to Decision (D.) 04-09-063.

1. Background

Over a decade ago, the Commission initiated a rulemaking and investigation to determine the costs for the basic network functions of Pacific Bell (now SBC-CA) and GTE of California (now Verizon) in order to set "unbundled" prices for competitors to purchase access to these network functions. (See Rulemaking (R.) 93-04-003 and Investigation (I.) 93-04-002 to Govern Open Access to Bottleneck Services and Establish a Framework for Network Architecture Development of Dominant Carrier Networks, hereinafter "OANAD proceeding.") After passage of the federal Telecommunications Act of 1996, the terminology shifted from the "basic network functions" defined in the original rulemaking to "network elements" as defined by the Federal Communications Commission (FCC). (47 C.F.R. Section 51.5.) Network elements are now commonly referred to as "unbundled network elements," or UNEs. By purchasing UNEs, competitors are able to use portions of SBC-CA's network to offer competitive local exchange services.

As one step in the OANAD proceeding, the Commission issued D.99-11-050, which set prices for UNEs offered by SBC-CA. The prices were based on costs developed using the Total Element Long Run Incremental Cost (TELRIC) methodology, as set forth by the FCC in 1996.¹ In D.99-11-050, the Commission recognized that the TELRIC costs adopted by the Commission in 1998 (D.98-02-106) and used to set prices in D.99-11-050 were, or would soon become, outdated.

Accordingly, the Commission established a process in D.99-11-050 that invited carriers with interconnection agreements with SBC-CA to annually nominate up to two UNEs for cost review. That decision required a party nominating a UNE for review to include a summary of evidence demonstrating a cost change of at least 20% (up or down) from the costs approved in D.98-02-106 for the UNE to be eligible for nomination.

The instant proceeding resulted from nominations for cost review made in 2001 and 2002, which collectively came to be known as the "UNE Reexamination" proceeding. In February 2001, AT&T Communications of California and WorldCom, Inc. (carriers that purchase UNEs from SBC-CA) nominated four UNEs for cost review. The Assigned Commissioner and Administrative Law Judge (ALJ) found sufficient justification to accept two of the four UNE nominations, and directed SBC- CA to file updated cost studies. So long as SBC-CA's cost studies met three standards,² competing cost models from other parties would not be allowed. D.02-05-042 adopted interim rate changes on the two UNE services. The UNE Reexamination proceeding remained open for the Commission to review new cost study filings to set final rates for unbundled loops and switching.

In February and March 2002, the Commission received additional nominations for review of numerous further UNEs, and the Assigned Commissioner and ALJ found sufficient justification for review of four of the nominated UNEs. Review of the 2002 UNEs was consolidated with the ongoing 2001 UNE Reexamination, and a schedule was set for the 2001/2002 UNE Reexamination to allow the filing of cost studies for permanent rates for all UNEs under review.

The 2001/2002 UNE Reexamination included extensive litigation and numerous further procedural steps, all discussed in D.04-09-063. In that decision, the Commission revised the rates adopted in the OANAD decision for the six UNE services.

TURN was an active party to the OANAD proceedings and 2001/2002 UNE Reexamination. TURN was found eligible for compensation in the OANAD proceeding in an ALJ ruling issued on February 15, 1995, and was awarded intervenor compensation in D.96-11-040, D.00-07-016, and D.01-08-011.

On November 30, 2004, TURN submitted its request for $272,898.48 in compensation for its significant contributions to D.04-09-063. TURN contends it significantly contributed to the proceeding because it submitted comprehensive expert reply and rebuttal testimony and that the Commission had adopted TURN's positions on many issues. As one example, TURN pointed to the Commission's citations to TURN's expert's testimony showing that SBC-CA's cost model relied heavily on embedded network costs, rather than the appropriate forward-looking cost data.

Accompanying TURN's request for compensation was a motion requesting permission to late-file its Notice of Intent to Claim compensation. TURN's motion is addressed below. No party opposed TURN's request for compensation or its motion.