XI. Out Of Exchange Traffic

SBC proposes an appendix to address the terms and conditions of Level 3's and SBC's exchange of telecommunications outside of SBC's incumbent local exchange areas, i.e., where SBC is not the incumbent carrier. In the Draft Arbitrator's Report, I declined to arbitrate SBC's proposed Out of Exchange Appendix. As SBC cautions in its discussion on transit traffic, not every disagreement between carriers who are making an interconnection agreement is subject to arbitration under Section 252. To the contrary, the Commission's authority under Section 252 is limited to interconnection agreements between CLECs and ILECs. I concluded as a factual matter that the proposed Out of Exchange Appendix, by definition, concerns Level 3's exchange of telecommunications with SBC as a CLEC, not an ILEC, and is therefore not subject to arbitration.

In its comments, SBC states that the Draft Arbitrator's Report mischaracterizes the proposed Out of Exchange Appendix as governing SBC as a CLEC, and submits that the Appendix governs SBC's obligations as an ILEC with respect to activity outside of its ILEC territory, separate and apart from its obligations under Section 251(c). While I note SBC's clarification of relationship governed by the proposed Out of Exchange Traffic Appendix, I refer again to SBC's observation in its brief that Section 252 only requires negotiation and arbitration of the duties imposed by Sections 251(b) and 251(c). SBC concedes that the Appendix does not address its Section 251(c) duties, and neither party suggests that the Appendix addresses its Section 251(b) duties.

Although SBC addressed the merits of Level 3's proposal in its briefs, and did not raise its procedural objection at that time, it states in its comments that the Commission is procedurally barred from adopting Level 3's proposal to reject the Appendix on a wholesale basis. SBC states that, under Section 252(b)(4)(A), the Commission must limit its consideration to the issues presented by the parties in the petition and response pursuant to Sections 252(b)(1) and (3). Because neither party presented the overarching issue of whether there should be an Out of Exchange Traffic Appendix in either the petition or response, SBC submits that the Draft Arbitrator's Report improperly considered and addressed that question.

Although Level 3 proposes in its brief that the Out of Exchange Traffic Appendix should not be made a part of the parties' interconnection agreement, it did not identify this as an issue, or otherwise challenge the nondisputed terms, in its petition. Accordingly, this Final Arbitrator's Report makes no determination with respect to those portions of the Out of Exchange Traffic Appendix that were not identified as in dispute.

Most of these disputed issues either parallel the disputed issues regarding traffic that is not out of exchange or, where there is no apparent dispute over the intended treatment of out of exchange traffic, concern whether to restate in this appendix or merely reference the terms that apply to in exchange traffic. Where the suggested language is not identical to language elsewhere in the agreement, it creates uncertainty for the entirety of the agreement. I therefore resolve these issues as follows:

· OET-1: SBC's proposed § 2.1 is adopted. Level 3's objection to the language is that it may bar the out of exchange obligations from surviving the sale of an exchange to a third party. SBC's disputed language does not impact that concern, and Level 3 does not offer any language to address it.

· OET-2: Both SBC's and Level 3's proposed language in § 2.3 is rejected. SBC's proposed language presents a legal conclusion regarding what SBC is and is not obligated to do with respect to providing access to UNEs. This language is unnecessary to effect the purpose of the contract, and it is improper and unnecessary to require parties to contractually agree to a policy, factual or legal statement. Level 3's proposed alternative language that the agreement "contains terms and conditions related to SBC-13STATE's obligations under Applicable Law" adds nothing to the meaning or terms of the agreement.

· OET-3: SBC's proposed language in § 3.1 is rejected. SBC notes that its proposed language is identical to language already agreed to by the parties in the ITR section. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, e.g., "The provisions relating to the passing of SS7 signaling information contained in ITR Section 5.4.8 shall apply to out of exchange traffic." Level 3 objects to SBC's proposed language for not providing flexibility to consider alternate content and formats for the exchange of data. That objection has been considered and rejected elsewhere in this report.

· OET-4: SBC's proposed language in §§ 3.3 through 3.6 is rejected. SBC asserts that its proposed language is identical to language already agreed to by the parties in the GTC and ITR sections, except that it applies to traffic in outside of areas where SBC is the ILEC. Level 3 objects to the proposed language here as contradictory to the terms in the Performance Measurement Appendix and/or overly broad and vague. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-5: Both SBC's and Level 3's proposed language in § 4.1 is rejected. The disputed language in this section concerns disputed issues resolved elsewhere in this arbitration report with respect to the ITR, IC, NIM, and DEF issues. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-6: Both SBC's and Level 3's proposed language in § 4.2 is rejected. The disputed language in this section concerns issue ITR-4, which the parties resolved by stipulation with respect to in-exchange traffic. Neither party suggests that out of exchange traffic should be treated differently. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-7: Both SBC's and Level 3's proposed language in § 4.2 is rejected. SBC asserts that its proposed language is nearly identical to the relevant language in the ITR section, and Level 3's proposed language attempts to reference that language. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-8: Both SBC's and Level 3's proposed language in § 4.9 is rejected. This provision addresses trunking to SBC tandems. Nothing in the provision or in the parties' discussion identifies why the trunking provision for out of exchange traffic should be treated differently than for in-exchange traffic. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-9: Both SBC's and Level 3's proposed language in § 5.1 is rejected. Although the parties apparently agree that the compensation provisions that apply to in-exchange traffic should apply to out of exchange traffic, this dispute concerns the definition of traffic types and their compensation that is addressed and resolved elsewhere in this report with respect to the IC issues. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-10: This issue concerns transit traffic. Notwithstanding SBC's objection to arbitration of transit issues discussed (and rejected) elsewhere in this report with respect to the ITR and IC issues, SBC submits to arbitration of the Out of Exchange Traffic Appendix issues generally. SBC's proposed language in § 6.1 is rejected. The final agreement shall specifically identify and incorporate by reference the relevant terms and apply them to in-exchange traffic, without restatement, as described with respect to OET-3, above.

· OET-11 and OET-12:

Disputed issues OET-11 and OET-12 require a lengthier discussion. In addition to raising the debate over the definition of telecommunications traffic subject to this agreement (which is resolved elsewhere in this report), these issues concern the need to establish two-way direct final trunk groups for the exchange of traffic that originates and terminates within the same InterLATA Extended Area Service local calling area. Although it does not point to any particular citations, SBC states that the Modified Final Judgment and FCC rules prohibit such traffic from alternating route. SBC maintains that two-way direct final trunk groups are the best way to comply with the Modified Final Judgment and FCC rules, but (through its witness) expresses its willingness to negotiate other options.

Level 3 opposes requiring direct final trunk groups as a means to prevent alternating route, as it insists that telecommunications and IP-enabled traffic does not need to alternate route. SBC asserts that the issue is how to ensure that traffic is in compliance with these restrictions, and points out that if Level 3 does not believe such traffic needs to alternate route, it has no reason to oppose SBC's proposed language of § 9.2 that states the parties agree that the traffic will not alternate route.

I reject SBC's proposed language in § 9.1 specifying that the two-way trunk groups be "direct final," but adopt SBC's proposed language for § 9.2 requiring the parties to agree that the associated traffic will not alternate route. This language creates the legal assurance that SBC suggests it requires in order to comply with the Modified Final Judgment and FCC rules. Accordingly, I dispose of OET-11 and OET-12 as follows:

· The language of §§ 9, 9.1, 9.3 and 9.7 identifying the traffic that is subject to this section shall conform to the resolution of this dispute elsewhere in this report, e.g., regarding Issue IC-1.

· SBC's proposed language "direct final" in § 9.1 is rejected.

· SBC's proposed § 9.2 is adopted.