VIII. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed on November 5, 2007, and reply comments on November 13, 2007.

AT&T generally supported the PD but sought clarification that the applicable cap would be incumbent carrier in the area which the competitive carrier was providing service. AT&T opposed the one-year transition period or competitive carriers and the requirement that it and Verizon file Tier 3 advice letters to raise their access charges. AT&T recommended that the advice letter process used prior to D.06-08-030 be retained.

Verizon also generally supported the PD but requested changes to close what it termed a "loophole" in the decision which would allow competitive carriers to charge for services they do not perform, and to clarify three points in the ordering paragraphs. Verizon provided helpful recommended revisions for the Ordering Paragraphs.

SureWest and Frontier jointly requested that their access charges rates should be reduced by the amount of SureWest's TIC, $0.00909 per minute, rather than capped at the higher of AT&T's and Verizon's. These carriers argued that the focus of this proceeding has been non-cost-based elements, such as TIC, and that the cost structures of the largest carriers are not comparable to SureWest's or Frontier's.

The small local exchange carriers requested no revisions to the PD.

CALTEL sought clarifications to the proposed cap based on incumbent local exchange carriers' access charges.

Cox generally supported the PD but sought modifications to allow voluntary agreements with different access charges, eliminate the proposed officer statement in the competitive carriers' advice letters, delete language the might suggest that competitive carriers must adopt certain rate structures, and clarify that no carrier's access charges are cost-based.

Qwest agreed with Verizon that competitive carriers should be prohibited from charging for services they do not perform, and asked the competitive carriers be required to serve their advice letters lowering their rates on all parties to this proceeding.

Telscape disagreed with Qwest and Verizon and explained that competitive carriers' networks are configured differently from the incumbent carriers', and that access charges should be set based on the functional equivalence of the networks. Telscape stated that the FCC recognized this difference and found that competitive carriers provide the functional equivalent of all rate elements usually included in incumbent carriers' access charges.

The coalition of competitive carriers urged the Commission to modify the PD to eliminate the PD's cap on these carriers' charges, and set hearings to take evidence on whether AT&T's or Verizon's rates are sufficient to allow the competitive carriers to recover their costs of providing access services.

Paetec Communications submitted reply comments opposing AT&T's proposed changes to the PD. Paetec stated that it supported overall the PD's recommendation because it allows competitive carriers to cap their intrastate access rates at Verizon's intrastate access charges anywhere in the state, which is a more realistic price than AT&T's, and that AT&T's insistence that the competitive carriers charge the same as the incumbent carrier would result in the competitive carriers failing to recover their costs. Paetec joined Telscape in supporting a "functional equivalence" standard for access charges rather than an element-by-element charge.

Fones4All Corp. and Light-Year Innovations opposed using incumbents' rates as the cap on competitive carrier's rates because competitive carriers' costs are higher than the larger incumbent carriers.

In reply, AT&T urged the Commission to reject the competitive carriers' assertions, and to adopt the cap proposed in the PD. Verizon disputed the competitive carriers' contention that higher costs justified higher access charges for the competitive carriers. Verizon concluded that the price cap based on the incumbent's rates as reflected in the PD was supported by substantial evidence and should be adopted. Verizon also supported the proposed reduction of both SureWest's and Frontier's access charges by an amount equal to SureWest's TIC.

SureWest and Frontier, jointly, stated that reducing their access charges to the higher of Verizon's or AT&T's would require an increase in local service charges of over $4.00 per month, which is much more than the increases of less than a dollar necessary when the Commission reduced Verizon's and AT&T's access charges in D.06-04-071. SureWest and Frontier also emphasized the complexities created by capping access charges at the incumbent carrier's rates, specifically whether the price should be on an across the boards basis, as supported by the competitive carriers, or on an element by element basis, which AT&T and Verizon favor. SureWest and Frontier concluded that removing the TIC amount, as they proposed, was a simpler and fairer way to accomplish the Commission's goals.

The coalition of competitive carriers reiterated their claim that the PD violates § 1757 which requires that Commission decisions be based on substantial evidence. These carriers also contended that the competitive carriers lack market power over access charges.

Cox disputed AT&T's comments that the PD "adopted" the FCC approach, and pointed out that the PD "adapted" the FCC such that the competitive carriers are not required to mirror the incumbent's rate structure.

Qwest opposed Cox's request that the PD be modified to allow competitive carriers to negotiate voluntarily lower access charges. Qwest argued that §§ 532 and 453 require these carriers to charge tariffed rates and not to discriminate. Qwest explained that it was aware of "off-tariff pricing arrangements" between certain carriers and incumbents which have not been made available all competitive carriers.

CALTEL supported the PD, and Cox's interpretation that the PD did not require competitive carriers to mirror the incumbent's rate structure.