II. Confirmation of the ALJ Ruling
A copy of the Administrative Law Judge (ALJ) Ruling is attached as Appendix A hereto. We hereby confirm, with some modifications, the ALJ Ruling in accordance with the provisions of Pub. Util. Code § 310 which states, in part:
The evidence in any investigation, inquiry, or hearing may be taken by the commissioner or commissioners to whom the investigation, inquiry, or hearing has been assigned or, in his, her, or their behalf, by an administrative law judge designated for that purpose. Every finding, opinion, and order made by the commissioner or commissioners so designated, pursuant to the investigation, inquiry, or hearing, when approved or confirmed by the commission and ordered filed in its office, is the finding, opinion, and order of the commission.
Because the ruling is attached to this decision, we do not repeat its full contents. In brief, the ALJ Ruling analyzed the proxy resale rates proposed by the CLECs and by AT&T. The ALJ took elements from each and developed a revised proxy resale rate of $25.19. This compares with the $20 proxy rate proposed by the CLECs, and the $37.24 rate proposed by AT&T. The ALJ used AT&T's basic methodology, but made two significant changes to AT&T's model. It changes the business usage AT&T proposes--$23.99 for unlimited usage--to the CLEC's proposed $2.70 for 500 minutes of use. It also eliminates the $3.40 for access charges proposed by AT&T, since most of the CLECs use other carriers to provide long distance service.
The Ruling directs AT&T to charge $25.19 for all UNE-P lines that have not been transitioned, and suspends the interconnection agreements' requirement that CLECs first pay and then dispute charges. The ruling also allows AT&T to true-up actual usage and custom calling features, for those UNE-P lines that are ultimately transitioned to resale service.
In their comments on the Draft Decision (DD), the Joint CLECs indicate that most custom calling services are available at discounted resale rates in various packages. The CLECs point out that AT&T offers a "Power Pack" of Caller ID and five to nine additional features.1 We concur with the CLECs that a CLEC is unlikely to buy three custom calling features individually, when the features are much less expensive when purchased as part of a package. The "Power Pack" package that sells for $6.64 provides caller ID and 5 to 9 additional features for business customers. We reviewed AT&T's resale tariff for a package offering for residential customers and found the "u-Select 3"2 package, which provides Caller ID plus two other features. It is appropriate to use this particular package in our model since the ALJ originally modeled three custom calling features. The rate for "u-Select 3" is $9.35 per month. We have modified our model for both residential and business customers to reflect the two features packages, in lieu of the individual feature rates modeled by AT&T.
In its comments on the DD, AT&T points out that usage rate proposed by the movant CLECs and adopted by the ALJ Ruling is incorrect. According to AT&T, the usage estimate based on the CLECs' own assumptions would be $5.55 rather than $2.70. AT&T speculates that the CLECs omitted to include any initial minutes. In their Reply Comments, the CLECs concur that the business usage figure should be $5.55 rather than $2.70. We have made that adjustment in our model. With those two changes, the resulting proxy rate, weighted by the number of business and residential lines, is $23.16. AT&T is to charge this rate for all UNE-P lines that were not converted by the March 11, 2006 deadline, with the exception of unconverted lines purchased by Fones4All.
In its comments on the DD, Fones4All asserts that the assumptions in the proxy rate do not apply to Fones4All. First of all, Fones4All does not serve any business customers. Therefore, it is inappropriate to use any price for the access line that has a component of business pricing. Fones4All also indicates that minute-of-use charges are not appropriately levied on residential resale lines, since each access line comes with unlimited usage at no extra charge.
Fones4All also asserts that an assumption of three custom calling features is inappropriate, but we note that the ALJ Ruling states that Fones4All's website says that 3 features or more is common. Therefore, the rate for Fones4All will include the residential access line, the "u-Select 3" feature package, and the EUCL for a total of $22.60
We find that the rates we have adopted here are consistent with our finding in D.06-01-043 as follows:
We find that adopting SBC's [AT&T's] market based rates would be unduly punitive for failure to make the deadline to transition services from ULS/UNE-P arrangements. We will instead adopt the CLECs' TSR [Total Service Resale] rates that we previously approved.3
The proxy rate proposed by AT&T is very close to the market based rates we rejected in D.06-01-043. Allowing AT&T to charge that rate would be inconsistent with our intent that CLECs pay TSR rates for their unconverted lines. Therefore, the $37.24 rate AT&T proposes to charge is not in compliance with D.06-01-043, and it would be inappropriate to allow AT&T to charge that rate for unconverted UNE-P lines. We believe that the proxy rates here we have developed for TSR rates are in accord with our intent in D.06-01-043.
We clarify that the rates adopted in this decision are effective as of March 11, 2006, the date when AT&T could start charging TSR rates for unconverted UNE-P lines.
1 SBC California, Schedule Cal.P.U.C. No. 175-T, Original Sheet 787-A-7-A.
2 SBC California, Schedule Cal.P.U.C. No. 175-T, 17th Revised Sheet 787-A-3.
3 D.06-01-043 Mimeo., at 47.
