ALJ/DOT/hkr Mailed 10/23/2006
Decision 06-10-043 October 19, 2006
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Rulemaking on the Commission's Own Motion to Govern Open Access to Bottleneck Services and Establish A Framework for Network Architecture Development of Dominant Carrier Networks. |
Rulemaking 93-04-003 (Filed April 7, 1993) |
Investigation on the Commission's Own Motion into Open Access and Network Architecture Development of Dominant Carrier Networks. |
Investigation 93-04-002 (Filed April 7, 1993) (Verizon UNE Phase) |
OPINION GRANTING INTERVENOR COMPENSATION
TO THE UTILITY REFORM NETWORK
FOR SUBSTANTIAL CONTRIBUTIONS TO DECISION 06-03-025
This decision awards The Utility Reform Network (TURN) $510,479 in compensation for its substantial contributions to Decision (D.) 06-03-025.
I. Background
This consolidated proceeding, known as Open Access and Network Architecture Development (OANAD), was initiated to set prices that California's two largest incumbent local phone companies, Verizon California Inc. (formerly GTE California)1 and Pacific Bell Telephone Company d/b/a SBC California (SBC, formerly Pacific Bell2), charge competitors who lease specified portions of their respective networks. By leasing network components known as "unbundled network elements" (UNEs), competitors are able to use portions of the incumbent's network to offer competitive local exchange services.
D.06-03-025 resolved issues and adopted final UNE rates applicable to Verizon (the "Verizon UNE Phase" of OANAD). The rates in the order replace Verizon's interim rates for loops and switching established earlier in D.03-03-033, and later modified in D.05-01-057. It also replaced the rates for other UNEs originally adopted when the Commission approved an interconnection agreement between AT&T Communications of California, Inc. (AT&T) and GTE California in D.97-01-022.
On December 5, 2005, the United States District Court in San Francisco found the interim rates in D.03-03-033 did not comply with federal law (Verizon v. Peevey, (N.D. Cal. 2005) Case No. C03-2838 TEH). Those rates were then vacated and the UNE rates previously adopted in D.97-01-022 were reinstated, subject to adjustments (or "true-ups") once permanent rates were established.
D.06-03-025 evaluated two cost models. The first model was proposed by Verizon (known as "VzCost") that included UNE rates based on recently developed UNE costing proceedings. The second model was jointly proposed by AT&T and MCI (known as the Joint Commentors or "JCs") that included UNE rates based on the latest version of a model known as "HM 5.3." The two proposals differed greatly from each other, as well as from the interim UNE rates currently in place for basic loops and switching.
We carefully reviewed both cost models. We found the Verizon model failed to comply with state and federal requirements that cost models be "forward-looking" as it attempted to replicate Verizon's embedded network configuration. It also failed to efficiently size and deploy current technology, contained errors in the preprocessed inputs and assumptions related to expense and switch modeling, and lacked integration. The latter deficiency complicated the task of testing for input sensitivity.
Regarding the HM 5.3 model, we found the method it uses to model customer locations, create customer clusters, and estimate the cost of reconstructing Verizon's loop network is reasonable. We also found that most of the inputs and assumptions in HM 5.3 can be modified. We ultimately used the HM 5.3 model run to set Verizon's UNE rates.
This is a lengthy proceeding involving many phases and Commission decisions. TURN participated in all phases from the outset, and already has been awarded approximately $420,000 for its substantial contributions to five earlier decisions.3 We plan to establish a procedure for reexamination of Verizon's UNE rates in the next phase of this proceeding.
1 This decision refers to GTEC as the incumbent local exchange carrier (ILEC) that existed at the time this proceeding was initiated and prior to GTE's merger with Bell Atlantic. The decision refers to Verizon as the successor to GTEC, following the merger with Bell Atlantic in July 2000.
2 Pacific Bell adopted the name SBC for business purposes in late 2002. This order will refer to Pacific Bell as the entity involved in OANAD prior to 2002, and will refer to SBC as the current entity. We note that SBC has since merged with and adopted the name of AT&T.
3 D.96-11-040, D.00-07-016, D.01-08-011, D.03-05-027, and D.03-06-010.
