V. Submission of Proceeding

This case was deemed submitted on June 1, 2005, when Pac-West and AT&T both submitted reply briefs on the issues litigated at the
April 12-13 hearings. As noted in footnote 23, Pac-West filed a motion to set aside submission of the case on June 8, 2005, to which AT&T responded on June 17, 2005 and Pac-West replied on June 24, 2005. Because it is unnecessary to decide the issues raised by Pac-West's June 8 motion, this decision deems that motion denied.

Findings of Fact

1. AT&T and Pac-West are both CLECs.

2. As a CLEC, AT&T cannot be compelled under § 252 of the 1996 Telecommunications Act (47 U.S.C. § 252) to enter into an interconnection agreement with another CLEC.

3. No interconnection agreement is in effect between AT&T and Pac-West, but they exchange traffic indirectly by using the transit services of ILECs such as Pacific Bell Telephone Company and Verizon.

4. Many of the customers served by Pac-West are ISPs.

5. The overwhelming majority of the traffic terminated by Pac-West for AT&T is traffic that originates with local exchange customers on AT&T's network who use dial-up telephone service to connect with their ISPs.

6. Pac-West's website indicates that Pac-West carries approximately 20% of the total dial-up Internet service in California.

7. The volume of local exchange traffic terminated by Pac-West for AT&T is many times greater than the volume of local exchange traffic terminated by AT&T for Pac-West.

8. Under a bill-and-keep regime, neither of two interconnecting networks charges the other for terminating traffic that originates on the other network, but instead recovers from its own end-users (a) the costs of originating traffic that it delivers to the other network, and (b) the costs of terminating traffic that it receives from the other network.

9. AT&T did not prove that it is a common practice within the telecommunications industry for CLECs to exchange traffic among themselves on a bill-and-keep basis.

10. Since 1998, Pac-West has had on file with this Commission a tariff, Schedule Cal. CLC 1-T, that sets forth Pac-West's charges for terminating local and IntraLATA toll traffic originated by CLECs with which Pac-West has not entered into an interconnection agreement. This tariff has been amended several times since 1998.

11. In its decision concerning the ISP Remand Order, Worldcom, Inc. v. FCC, 288 F.3d 429 (D.C. Cir 2002), cert. denied sub nom. Core Communications, Inc. v. FCC, 538 U.S. 1012 (2003), the United States Court of Appeals for the District of Columbia Circuit remanded the order to the FCC but did not vacate it, so the ISP Remand Order remains in effect.

12. AT&T did not make and, as a CLEC could not make, the mirroring offer described in ¶ 89 of the ISP Remand Order.

13. In the T-Mobile Ruling, the FCC held that LECs could lawfully impose transport and termination charges on CMRS providers by means of a state tariff, because at the time these tariffs were in effect, the LECs were not entitled under federal law to compel the CMRS providers to enter into interconnection agreements or negotiate reciprocal compensation arrangements with the LECs.

14. When calculated at the rates set forth in the Pac-West tariff described in Finding of Fact (FOF) 10, the charges due for the traffic originating on AT&T's network and terminating on Pac-West's network, for the period from July 1, 2001 to January 31, 2005, total $7,115,014.16.

15. The Commission is not required to award interest in situations where utilities seek to recover unpaid tariff charges pursuant to Pub. Util. Code § 737.

16. In situations where utility customers have sought to recover overcharges paid as a result of the utility's application of the wrong tariff to the customer, this Commission has sometimes refused to award interest to the customer on the amounts that were overpaid to the utility.

17. The decision whether to award late payment charges on unpaid amounts due under a utility's tariff is a matter within this Commission's equitable discretion.

Conclusions of Law

1. In order to invoke the New Markets Rule set forth in ¶ 81 of the ISP Remand Order, a carrier must also make a mirroring offer as described in ¶ 89 of the Remand Order.

2. Only ILECs are in a position to make a mirroring offer of the kind described in ¶ 89 of the ISP Remand Order.

3. Because AT&T did not make a mirroring offer, it may not invoke the New Markets Rule set forth in ¶ 81 of the ISP Remand Order.

4. Because AT&T cannot invoke the New Markets Rule, it is not entitled to exchange ISP-bound traffic that originates on its network with Pac-West on a bill-and-keep basis.

5. Because Pac-West does not have a right under federal law to compel AT&T, a fellow CLEC, to negotiate an interconnection agreement, the situation here is analogous to the one described by the FCC in the T-Mobile Ruling.

6. Neither the ISP Remand Order nor any other federal decision dictates what compensation, if any, should be paid by one CLEC originating ISP-bound traffic on its network to another CLEC that terminates such traffic on its network.

7. In the absence of any controlling federal authority on the issue described in the preceding Conclusion of Law (COL), this Commission has discretion to determine the compensation, if any, that should be paid by one CLEC that originates ISP-bound traffic on its network to another CLEC that terminates such traffic on its network.

8. In the absence of either an interconnection agreement or any other reciprocal compensation arrangement between the parties, it is reasonable to require AT&T to compensate Pac-West for terminating ISP-bound traffic originating on AT&T's network at the minute-of-use and set-up rates set forth in the tariff described in FOF 10.

9. Under the circumstances of this case, it is not reasonable to require AT&T to pay Pac-West interest or late charges on the amounts computed pursuant to the preceding COL.

10. Pac-West's June 8, 2005 motion to set aside the submission of this case for the purpose of supplementing the record is moot and should be deemed denied.

ORDER

IT IS ORDERED that:

1. Within 30 days after the effective date of this decision, AT&T Communications of California, Inc. shall pay to Pac-West Telecomm, Inc. (Pac-West), the sum of $7,115,014.16.

2. Pac-West may not collect interest or late-charges that would otherwise be due under its tariff, Schedule Cal. CLC 1-T, on the amount set forth in Ordering Paragraph 1.

3. Pac-West's June 8, 2005 motion to set aside the submission of this proceeding for the purpose of supplementing the record is denied.

4. This proceeding is closed.

This order is effective today.

Dated June 29, 2006, at San Francisco, California.

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