II. The Settlement Agreement

The following summarizes the settlement terms. The complete settlement agreement is attached to this order as Appendix A.

· All existing interim collocation rates billed under the FCC Tariff 128, CPUC 175-T tariff, 175-T discounted tariff, Accessible Letters (AL) CLECC00-064, AL CLECC00-111, and AL CLECC99-200, shall become fixed rates and charges for a period of three years from the effective date of the settlement agreement.

· Upon expiration of the three-year period, all rates and charges shall convert to the rates and charges in AL CLECC00-064 and AL CLECC00-111 unless otherwise negotiated and mutually agreed to or ordered by the Commission.

· CLECs may elect individually to convert the pricing on its collocation arrangements to the rates and charges in AL CLECC00-064 and AL CLECC00-111.

· All orders for new collocation arrangements and/or augments to existing arrangements shall be billed at the rates and charges under AL CLECC00-064 and AL CLECC00-111.

· AT&T California shall eliminate the charge for redundant power, if any, on all existing and all new collocation arrangements and/or augments, on a prospective basis.

· All parties agree to waive any rights to true-up. AT&T California, Qwest Communications Corporation, Qwest !nterprise America, Inc., and Telscape Communications, Inc., however, reserve any rights they may have relative to the pending complaint case, C.05-05-030, the outcome of which will determine the rates that AT&T California will bill Qwest Communications Corporation, Qwest !nterprise America, Inc. and Telscape from 1999 through the three year period from the effective date of the Settlement Agreement. Qwest or Telscape may make an election to convert to AL CLECC00-064 and AL CLECC 00-111 (if applicable) on a going forward basis.

· All parties agree to waive the provisions of Section 1542 of the California Civil Code, with the exception of certain claims relating to C.05-05-030 and a current specified dispute between AT&T California and Eschelon.

The Settlement Agreement would take effect immediately upon the Commission's approval and provides that each party will amend existing interconnection agreements to conform to the settlement.

The ALJ's ruling sought responses to several questions. The following presents those questions and summaries of the responses of the settling parties:

· What is the significance of making "fixed" those rates and charges included in FCC Tariff 128 and CPUC Tariff 175-T? Are the prices in each of those tariffs and agreements generally higher or lower than those in AL CLECC00-64, AL CLECC00-111, and AL CLECC99-200? The settling parties respond that fixing collocation charges would make those rates permanent for a three year period and make moot the issue of whether those rates should be trued-up. The parties did not compare the proposed rates to the existing rates.

· What would be the range of AT&T California's outstanding liability if it were to true-up all charges and rates billed to all settling CLECs so that the true-up amount equaled the difference between the rates in FCC Tariff 128 and CPUC Tariffs 175-T and corresponding rates in AL CLECC00-64, AL CLECC00-111 and AL CLECC99-200? The settling parties did not perform an analysis of AT&T California's outstanding liabilities.

· What is the significance of AT&T California's elimination of the charge for redundant power? What is redundant power? What is AT&T California's outstanding liability if related past charges were to be refunded? The settling parties state that redundant power refers to the feeds the CLEC uses to power collocation equipment. Redundant power assures that the failure of one power feed does not interrupt power to the equipment. AT&T California has charged for power at both feeds. The settlement would reduce CLEC liability for redundant power by half because AT&T California would charge only for a single power feed. The parties did not analyze the impact of this rate reduction on AT&T California's revenues.

· Are the rates in the relevant tariffs cost-based? If not, are those rates based on a reasonable proxy of costs? If they are not cost-based, what authority does the Commission have to adopt them under existing state and federal law? For purposes of the settlement, the parties state that they were willing to accept existing tariffs and AL rates as reasonable and based on accepted cost-based models. The parties agree that the rates are not discriminatory under the terms of the settlement. The parties state that these rates would be incorporated into interconnection agreements by way of amendments, which the Commission has authority to approve.

· Does the settlement or state or federal law require the Commission's approval of changes to interconnection agreements that would be affected by the settlement? If so, how would that approval be secured? The parties state the amendments to their interconnection agreements would be effected when the Commission approves the settlement.

· Does the settlement filed in this rulemaking change the relevance of the motion filed by AT&T California in Case 05-05-030 on October 10, 2006? The settling parties state that Qwest and AT&T California have settled all outstanding issues in C.05-05-030, making moot the referenced motion.

AT&T California and other settling parties jointly filed a response to these questions.