6. Network Interconnection Method

6.1. NIM 4

SBC-CA says it is important to define each type of tandem because not all tandem provisions within the ICA apply to all different types of tandems. SBC-CA says the term is used in both its proposed language and five times in MCIm's proposed language, and should be defined in this ICA no matter whose disputing language is adopted.

MCIm says the issue is either not ripe, or is moot, because it is already resolved or addressed in the 13-State Amendment between SBC-CA and MCIm. If the Commission determines otherwise, MCIm says a definition is unnecessary because SBC-CA's architecture is different than in former Southwestern Bell states, with all SBC-CA's exchanges in California served by a local tandem.

MCIm contends that this issue is currently resolved or covered by the 13-State Amendment. SBC-CA does not disagree. In fact, SBC-CA states that the 13-State Amendment "will supersede any inconsistent terms in the ICA currently being arbitrated" until July 1, 2007. (SBC-CA Opening Brief, page 139.) Thus, no dispute presently exists, and the issue for now is either not ripe, or moot.

Moreover, as explained more below, the issue may never be in dispute. If it is, a venue can be made available at that time for parties to resolve the matter when the dispute is more imminent, and the basis of the dispute more certain.

This is also true for other issues. Including NIM 4, SBC-CA agrees with MCIm that this is the case for a total of 10 issues: NIM 4, 8 and 12, plus Reciprocal Compensation 2, 4, 5, 6, 8, 9 and 16.

The 13-State Amendment controls the outcome here for the following reasons. The original 13-State Amendment (to the then current ICA) was effective from February 1, 2001 through May 31, 2004. The replacement 13-State Amendment renews the same compromises reached in the original, is currently in effect, and remains effective until July 1, 2007. As MCIm correctly argues, the 13-State Amendment obviates the need for the Commission to decide certain issues here based on the issues not being ripe (i.e., no controversy currently exists or is imminent) and/or moot (i.e., the issue is resolved or settled).

As a result, the 13-State Amendment will preempt or override any outcome otherwise reached here on these 10 issues until at least July 1, 2007. As provided below, parties will have ample opportunity later to have the issue(s) decided when the disputes are more imminent or certain.

In fact, however, these issues they may never be in dispute. The FCC is reconsidering its decisions and rules on intercarrier compensation, and may issue new rules in its Intercarrier Compensation Rulemaking.17 This FCC proceeding is specifically designed to implement sweeping reform of the current intercarrier compensation regime. In the event of an FCC ruling, not only would the Commission's determination of these issues in this arbitration have no effect until the 13-State Amendment expires, but even then those determinations would almost certainly have to be revisited and revised in light of determinations pursuant to the FCC's new intercarrier compensation rules.

Moreover, both SBC and MCI have shown that they believe it to be in their best interests to negotiate successor agreements rather than allow an agreement to lapse. Thus, even if the issues resurface on July 1, 2007, parties might either extend or renegotiate the current 13-State Amendment.

It is unnecessary and unwise for the Commission to decide issues not now in dispute only because they might be in dispute at some future time. To do so might prejudice parties' renegotiations and potential compromises.

To resolve this matter, MCIm proposes that the Commission adopt the following relief:

With some modification, this approach is adopted.

First, the ICA language for these 10 issues is either that mutually agreed to, or the section is blank or omitted. For example, MCIm does not propose disputing clause language for some issues, and SBC-CA's disputed language is not adopted (e.g., NIM 4 regarding NIM Appendix § 1.8; NIM 8 regarding NIM Appendix 1.14). Unless there is mutually agreed to language, the section is blank or omitted. In all other cases there is a disputing clause proposed by MCIm if the matter is arbitrated here (e.g., NIM 12, NIM Appendix §§ 3.9, 3.11, 3.11.2). The issues are not arbitrated here, however, and MCIm's proposed language does not specifically reference the 13-State Amendment. Therefore, MCIm's language is not adopted. Neither is SBC-CA's disputed language, if any (e.g., Reciprocal Compensation 2, §§ 2.3(i) and (ii), 2.3.1(i) and (ii), 16.1). The result of this is that the 13-State Amendment controls until the amendment expires.

Second, parties have a mutual interest in a reasonable, professional business relationship. They should begin renegotiations as soon as they see fit, but are directed to meet for the purpose of further negotiation on these issues no later than March 1, 2007.

Third, by April 1, 2007, if:

This is before the May 14, 2007 date recommended by MCIm, but is not so soon as to miss taking advantage of the most current conditions.

This process is adopted to "provide a schedule for implementation of the terms and conditions by the parties to the agreement." (TA 96, § 252(c)(3).) Because it is not ripe to decide these issues now, the adopted "schedule for implementation" continues operation under the 13-State Amendment while that amendment controls, and provides for necessary process thereafter.

The ICA contains its own dispute resolution procedure. Parties may wish to use that process. If so, the only requirement is that they inform the Commission and the service list.18

Alternatively, if parties do not agree to use the dispute resolution provisions of the ICA but some of these issues remain unresolved, the same party that filed the arbitration application here (SBC-CA) shall file an application for arbitration. The application shall seek arbitration of any of the following issues that are unresolved at that time: NIM 4, 8 and 12, plus Reciprocal Compensation 2, 4, 5, 6, 8, 9 and 16. If nothing has changed by April 1, 2007, parties may simply ask that the record in this proceeding (including both facts and argument) be used in the new proceeding for purposes of reaching a decision. Alternatively, applicant can propose the latest information and argument, and respondent may reply. If parties are ready to proceed with arbitration at the Commission before April 1, 2006, SBC-CA may file the application whenever appropriate (but no later than April 1, 2006).

The arbitration schedule can largely be based on that in Resolution ALJ-181, but the time can be shortened since the number of issues is limited. Also, parties will have met by March 1, 2007 to reexamine resolution, thereby focusing issues, facts and argument reasonably clearly at that time. Because it is desirable to use the latest information, the arbitration should not start before necessary, and should move along quickly to reach a July 1, 2007 deadline. Therefore, a possible schedule could be:

This schedule assumes no evidentiary hearing. Rather, it assumes the same essential facts as presented in this proceeding, and provides parties the opportunity to present updated argument. If there are no new disputed material facts, this schedule should provide a reasonable opportunity to resolve disputes and have an amendment to the current ICA in place by July 1, 2007. Applicant and respondent, if they wish, may propose a different schedule with their application and response, respectively, or may do so at the IAM.

If there are new disputed material facts different from those in the instant application, however, that is precisely why the Commission should not now decide one or more of the 10 issues. Rather, those new material facts should be considered before a decision is reached for implementation on July 1, 2007. If parties raise new disputed material facts, parties should propose a revised schedule as soon as possible for the consideration of the assigned arbitrator, along with a proposal for interim treatment of these issues after July 1, 2007.

Finally, parties are not ordered to continue to operate under the existing 13-State Amendment after July 1, 2007. Rather, SBC-CA correctly points out that the 13-State Amendment is a mutually agreed to matter with a termination date. Absent more compelling circumstances than are present here, the Commission should decline to order the continuation of a voluntary agreement as a term in a mandatory arbitration. The disputing clauses on these points appear to contain different language than in the 13-State Amendment. Requiring the terms of the 13-State Amendment agreement to remain in place in California once it has terminated in the other 12 states would conflict with the premise of the 13-State Amendment itself. Nonetheless, parties should consider continuation of the 13-State Amendment as necessary, or other alternatives, to address treatment of these issues after July 1, 2007 pending a final Commission decision.

6.2. NIM 5

See positions and discussion under NIM 15

6.3. NIM 8

See NIM 4. The same outcome is adopted here.

6.4. NIM 9

See NIM 14.

6.5. NIM 11

SBC-CA asserts MCIm should be solely responsible for these facilities. MCIm says these facilities are an integral part of SBC-CA's interconnection obligations under § 251(c)(2), and must be priced at TELRIC rates.

SBC-CA's proposed language is adopted.

SBC-CA's proposed NIM § 2.5 makes clear that MCIm is responsible for providing the facilities that MCIm uses to provide telecommunications services to its end users. The facilities in question are:

These are all ancillary services provisioned and transported over facilities specifically designed to serve only MCIm's end users. For example, Operator Services (OS) and Directory Assistance (DA) are provided by MCIm strictly for the benefit of its own end users. When an MCIm customer calls "0" or "411," it is not for the purpose of completing a call to an SBC-CA customer but rather to access the operator and directory assistance services provided by MCIm to its own customers.19 The 2001 FAR required MCIm to bear the costs for the facilities used to provide its own OS saying:

    "Pacific's position is adopted. There is a big difference between MCIm's OS/DA traffic, and traffic which passes over its local interconnection trunks. All of the OS/DA traffic is one-way, originated by MCIm's end users and terminating at Pacific's operator platform. MCIm should supply the necessary trunks to carry its customer's traffic to Pacific's operator platform." (2001 FAR dated July 16, 2001 in A.01-01-010, page 77.)

There is no reason for a different outcome here.

Moreover, with respect to 911 traffic, MCIm has already agreed to language in NIM §10.2 that obligates it to provide its own "facilities/trunks" between the MCIm switch and the 911 Selective Router. As such, there is no basis to dispute NIM §2.5 as it relates to 911 facilities, since NIM §2.5 merely confirms that MCIm is responsible to provide its own 911 facilities to the 911 Selective Router.

The same is true for "Meet-Point" facilities that connect MCIm's switch to interexchange carriers. An MCIm end user might take local service from MCIm but select Sprint as the presubscribed "1+" long-distance carrier. When that MCIm end user places a long distance call on a "1+" basis, the call is transported from the MCIm switch to the Sprint switch via the Meet Point trunk groups to the appropriate SBC-CA Access tandem, where Sprint is interconnected with SBC-CA via switched access (i.e., Feature Group D) trunks. SBC-CA need not be involved in, and should not be required to provide, the transport facilities used by MCIm in that situation.

SBC-CA's proposed language for NIM §2.5 clarifies that MCIm is responsible for the transport facilities necessary to provide services to its own end users. SBC-CA has no obligation to provide transport in these situations, and the ICA should so provide.

MCIm asserts the fact that these trunks all carry one-way traffic is irrelevant given that, according to MCIm, "[t]he right of an interconnection carrier to utilize one-way trunks for purposes of interconnection is well-established." (MCIm Opening Brief, page 75.) But whether the parties may establish one-way trunks for traffic that flows both ways (such as traditional voice traffic) is irrelevant. The traffic at issue here - OS-DA, 911, mass calling, and meet point traffic - never flows from SBC-CA to MCIm, but only from MCIm to SBC-CA, so there would never be any need to establish two-way trunks. Indeed, "MCIm agrees that the trunks at issue here will carry traffic in only one direction." (MCIm Opening Brief, page 74.) The Commission found this fact dispositive in 2001 with respect to OS facilities. The same logic compels the same conclusion with respect to the other traffic at issue here.

MCIm says the issue in essence is whether MCIm may use logical trunks rather than physical facilities to interconnect for the purpose of transporting this traffic and, if so, whether the price for such interconnection must be TELRIC-based. (MCIm Opening Brief, pages 75-76.) Where the appropriate OS/DA, mass calling, meet-point tandem, or the 911 selective router is located at the same place as the SBC-CA access tandem, SBC-CA agrees that MCIm may use logical trunk groups over the facilities it has already established to that point. But, where the appropriate OS/DA, mass calling, meet-point tandem, or the 911 selective router is located elsewhere, MCIm is responsible for the facilities used to get its traffic to that location in order to provide these services to its own customers. MCIm may lease those facilities out of the applicable SBC-CA tariff, or reach some other commercial arrangement, such as self-provisioning or obtaining those facilities for a third-party. SBC-CA has no obligation to assist MCIm complete its one-way traffic for services unrelated to SBC-CA's system. Thus, SBC-CA's proposed language is adopted.

Comments and Replies on DAR

MCIm comments that the outcome in the DAR on five issues (NIM 11, 13, 20; Price Schedule 24, 26) is directly contrary to the Commission's resolution of virtually identical issues in D.06-01-043 (the SBC TRO/TRRO Order issued January 26, 2006, six days after the filing of the DAR on January 20, 2006) and D.06-02-035 (the Verizon TRO/TRRO Order issued February 16, 2006.) MCIm argues that the outcome in the DAR must be reversed in order to harmonize the final arbitration decision here with these two recent Commission decisions in the TRO/TRRO proceedings. In reply, SBC-CA argues that this need not, and should not, be done. SBC-CA is correct.

While related, the issues here are neither identical, nor virtually identical, to those resolved in D.06-01-043 and D.06-02-035. As MCIm says, the five issues here "are at their core the same issue: namely, what pricing methodology should be used to determine the rates that Verizon Business [MCIm] will be required to pay AT&T California [SBC-CA] for interconnection facilities on the Verizon Business [MCIm] side of a designated Point of Interconnection ("POI")." (MCIm Comments, page 3.) The POI was not the controlling factor in the two recent Commission decisions, but is a fundamental element to the outcome in this arbitration. MCIm is responsible for the facilities on its side of the POI. That fundamentally controls the outcome here. As a result, there is no known inconsistency between the results here and in the two recent Commission decisions.

The two results are also distinguishable for another reason. Verizon California Inc. has sought rehearing of D.06-02-035, including a request that the Commission overturn the allegedly related outcome in D.06-02-035. (Application for Rehearing, February 27, 2006, page 12.) That would arguably result in the same outcome as in the arbitration here. MCIm cannot reasonably seek a "harmonization" of the results here, while its parent or affiliate, Verizon California Inc., seeks reversal of the potentially related matter in D.06-02-035.

The reasoning in this arbitration report on these issues is sound. If the Commission is not persuaded by the reasoning here as well as in the rehearing pleadings, however, the harmonization, if any, can be successfully executed at the time the rehearing order is adopted (if in fact the issues are similar enough to require a harmonization). Alternatively, if the issues are the same despite the relationship of the POI, parties may, once the rehearing order is issued, either employ the change in law provision of the ICA to achieve conformance, or one or both parties may file a petition for modification of the order adopting the FAR and the conformed ICA, as needed.

Thus, MCIm's comments on the DAR regarding these five issues do not result in any change in the outcome.

6.6. NIM 12

See NIM 4. The same outcome is adopted here.

6.7. NIM 13

SBC-CA says this issue is not arbitrable because neither § 251 nor any other provision of the Act requires ILECs to provide interconnection facilities on the CLECs side of the POI.

MCIm argues that transport facilities purchased for purposes of interconnection to exchange traffic must be based on TELRIC pricing and not SBC-CA's special access tariff.

SBC-CA's proposal is adopted.

The issue presented here is with respect to leased transport facilities by MCIm from SBC-CA for the purpose of interconnection without collocation. (NIM § 4.3.1 (iii).) This in turn relates to entrance facilities.

As SBC-CA points out, an entrance facility is a form of dedicated transport that provides a transmission path between the networks of SBC-CA and a CLEC.20 SBC-CA reports the FCC held in both the TRO and the TRRO orders that entrance facilities need not be unbundled and provided by SBC-CA at TELRIC rates. Conducting an impairment analysis pursuant to § 251(c)(3) in the TRRO, the FCC found that CLECs are not impaired without access to entrance facilities. Further, SBC-CA notes:

    "Critically, the FCC found that, `[b]ecause of this aggregation potential, entrance facilities are more likely than dedicated transport between incumbent LEC offices to carry enough traffic to justify self-deployment by a competitive LEC.' [footnote deleted; emphasis added.] The FCC also found that CLECs `are increasingly relying on competitively provided entrance facilities.' [footnote deleted.] No commenter disputed the supporting evidence, which only reinforced the FCC's conclusion that `wholesale alternatives to entrance facilities provided by incumbent LECs are widely available.' [footnote deleted.] Moreover, the FCC explained, `competitive LECs have a unique degree of control over the cost of entrance facilities, in contrast to other types of dedicated transport, because they can choose the location of their own switches' either by locating them `close to other competitors' switches, maximizing the ability to share costs and aggregate traffic'; `close to transmission facilities deployed by other competitors, increasing the possibility of finding an alternative wholesale supply;' or `close to the incumbent LEC's central office, minimizing the length and cost of entrance facilities.' [footnote deleted.]"21

Thus, entrance facilities need not be provided at TELRIC rates under § 251(c)(3).

MCIm nonetheless proposes that SBC-CA be required to continue to provide interconnection, including entrance, facilities at TELRIC-based rates. Specifically, MCIm's proposed language for § 4.3.1(iii) states that when MCIm "leases such transport facilities [e.g., entrance facilities] from SBC CALIFORNIA, it shall be at TELRIC rates."

MCIm's proposal would contradict the FCC's holding with respect to entrance facilities. It is not a credible result that the FCC would negate its determination that carriers are not impaired without entrance facilities by requiring them to be unbundled at TELRIC rates under § 251(c)(2).

Nor could this be lawfully done. Section 251(c)(2) only requires an ILEC to provide interconnection "for the facilities and equipment" of a CLEC. It does not require the ILEC to provide the CLEC's own facilities that are to be interconnected with the ILEC's network. Rather, the CLEC itself must deliver the traffic to the POI within the ILEC's network. The CLEC may not demand that the ILEC also provide the transmission facilities on the CLEC's side of the POI, and deliver the traffic to the ILEC's own network for the CLEC.

SBC-CA clearly provides the capacity and space for the CLEC to run its own entrance facility through a vault and up through various cable racks and finally into an SBC-CA central office, where it can then interconnect on a fiber cross-connect panel.22 In other words, SBC-CA provides exactly what is required under section 251(c)(2): the ability "for the facilities and equipment of" MCIm to be interconnected with SBC-CA's network.

In support of its view, MCIm cites the Commission's decision in the 2001 arbitration between SBC and MCI, requiring SBC-CA to provide unbundled dedicated transport (UDT) at TELRIC rates. The 2001 holding, however, was based on the FCC's then-existing rules treating UDT as a UNE pursuant to §252(c)(3), as interpreted in the 1999 UNE Remand Order.23 As SBC-CA correctly explains (SBC-CA Opening Brief at 74-76), the FCC (in response to judicial reversal of its UNE rules) has now held in both the TRO and TRRO that UDT used as an entrance facility is no longer available as a UNE. Thus, the 2001 holding is not controlling here.

In further support of its position, MCIm contends that the TRO deals with modification of an ILEC's obligations to unbundle under § 251(c)(3), not an ILEC's interconnection obligations under § 251(c)(2). This is not persuasive. While §251(c)(3) requires "nondiscriminatory access to network elements on an unbundled basis," SBC-CA correctly points out that §251(c)(2) does not require an ILEC to provide any facilities. Rather, it only requires interconnection "for" the facilities and equipment of an interconnecting carrier. This shows Congress knew how to require an ILEC to provide facilities when it wanted to in subsection (c)(3), and it did not do so in subsection (c)(2). Inclusion in one section with omission in another must be honored as intentional and purposeful.24

In addition, §251(c)(2) requires only that interconnection be "at any technically feasible point within the carrier's network." MCIm's position that entrance facilities are required by §251(c)(2) contravenes the statutory text that interconnection (a) be at a "point" and (b) that the interconnection point be "within" the ILEC's network.

SBC-CA points out that the Ohio Commission very recently (November 2005) rejected CLEC claims that § 251(c)(2) requires the provision of any facilities at all. Their reasoning is consistent with that here:

    "We find that Section 251(c)(2) of the 1995 Act and §51.5 of the FCC rules as well as ¶140 of the TRRO, clearly require the ILEC (SBC in this case) to interconnect its network with the requesting carrier's (i.e., the CLEC's) facilities and equipment. Such CLEC facilities and equipment are provided by the CLEC, not leased from the ILEC, and are a part of the CLEC's network that starts from the point of interconnection (POI) between the two networks. Therefore, any facilities on the CLEC's side of the POI, including entrance facilities, are part of the CLEC's network regardless of whether they are used for transport and termination of traffic exchanged between that CLEC and the ILEC, used to access UNEs or used to backhaul traffic. We find that the CLEC may build its network by either purchasing facilities, including entrance facilities, from SBC's Special Access tariff if it chooses to do so, by self-provisioning entrance facilities themselves or by securing them from a third party. If a CLEC chooses to purchase entrance facilities from SBC's Special Access tariff, the rates specified in that tariff would apply, not TELRIC rates as proposed by the CLECs."25

Thus, leased transport facilities by MCIm from SBC-CA for the purpose of interconnection without collocation need not be at TELRIC rates. SBC-CA's proposal adopted.

6.8. NIM 9 and 14

SBC-CA argues that mutual agreement is necessary for establishing interconnection, including the fiber meet design option, and that interconnection must be at a point within SBC-CA's network. MCIm contends that SBC-CA must interconnect with MCIm at any technically feasible point, and may not refuse or deny interconnection methods required by TA 96.

Each party says its proposed language is a modification to that in the 2001 ICA, but contends it is substantially similar or reaches a substantially similar outcome. On balance, SBC-CA's position is more aligned with the 2001 ICA, current practice, practical considerations, the facts, and the law, and is adopted.

The 2001 ICA repeatedly specifies the requirement (a) for "mutual agreement" or (b) that parties "will agree." (2001 ICA, NIM §§1, 1.5.1, 2, 2.1, 3.2, 5, 5.1.) This language was legally proper then, and is so now. MCIm does not identify any instance where its use has been a problem between the parties. Disputes-including one party's belief that the other is unreasonably withholding agreement-are subject to the dispute resolution procedures of the ICA, and/or may be referred to the Commission. No new facts or law are presented here that merit a change.

MCIm is concerned that "mutual agreement" gives SBC-CA veto power over a method of interconnection. MCIm says this is contrary to SBC-CA's affirmative duty to provide interconnection at any technically feasible point within SBC-CA's network. (MCIm Opening Brief, page 70 citing TA 96, 47 U.S.C. 251(c)(2)(B).)

MCIm's concern is misplaced. Agreed-to language in the 2006 ICA already requires that:

    "Each Party shall act in good faith in its performance under this Agreement and, in each case in which a Party's consent or agreement is required or requested hereunder, such Party shall not unreasonably withhold or delay such consent or agreement." (2006 ICA, GT&C § 1.4.)

SBC-CA must act in good faith and cannot unreasonably withhold or delay agreement. MCIm may seek relief under the ICA if it believes SBC-CA has failed to act in good faith, or has unreasonably withheld or delayed agreement.26 Also, as MCIm points out, SBC-CA may not deny interconnection unless it proves to a state commission that such interconnection is technically infeasible. (MCIm Opening Brief at page 71, citing FCC Rule 47 CFR § 51,305(e).) Thus, MCIm has avenues for relief, if needed. 27

On the other hand, MCIm's proposed language fails to reasonably reflect legal requirements. For example, the interconnection between SBC-CA and MCIm is required to be at a point "within" SBC-CA's network. (TA 96, 47 U.S.C. 251(c)(2)(B).) MCIm's proposed language fails to implement this statutory requirement, and may lead to disputes.28

There are limited exceptions requiring a build-out of SBC-CA facilities to MCIm to accommodate interconnection.29 SBC-CA's proposal provides for such limited build-out (e.g., taking MCIm fiber from the last manhole before SBC-CA's network and pulling it into SBC-CA's building). (SBC-CA's proposed language at § 4.4.4.3.2.) MCIm's proposal is not limited in this way. Rather, it is an open-ended obligation that could arguably be read to require SBC-CA to construct facilities anywhere within the LATA, even outside SBC-CA's operating territory.

Thus, on balance, SBC-CA's proposed language is superior and is adopted.

6.9. NIM 5 and 15

NIM 5 and NIM 15 involve the types of traffic MCIm may route over local interconnection trunk groups. SBC-CA proposes that local trunks carry only § 251(b)(5) traffic, ISP-bound traffic, and intraLATA toll traffic where the traffic is exchanged only between SBC-CA and MCIm with no third-party interexchange carrier (IXC) handling any portion of the call. SBC-CA opposes commingling local traffic with interLATA traffic.

MCIm proposes a definition for local interconnection trunk groups that allows the exchange of local, intraLATA toll, interLATA and transit traffic. MCIm seeks to commingle intraLATA and interLATA traffic (subject to access charges) with § 251(b)(5) traffic (subject to reciprocal compensation) on the same interconnection trunks, as long as factors are provided to permit proper rating of traffic.

SBC-CA's proposed language is adopted.

The definition of local interconnection trunk group controls the traffic that may be properly routed over local trunks. SBC-CA permits intraLATA toll traffic over local trunks by MCIm (without a third-party IXC handling any portion of the call) because it is possible to determine the proper intercarrier compensation. MCIm's proposal, however, would permit both intraLATA and interLATA traffic over local trunks even when carried by a third-party IXC. This creates the potential for improperly billed traffic because SBC-CA's local trunks are not designed to capture the proper billing data necessary for such traffic.

In an undisputed portion of the proposed ICA, MCIm has already agreed to deliver IXC-carried traffic on meet-point trunks. (2006 ICA, NIM § 9.1.) This is consistent with the current ICA, which provides for the delivery of such traffic over separate trunk groups. (2001 ICA, Appendix ITR, §§ 3.1 and 3.2.) In short, MCIm has already agreed to separate out all IXC-related traffic, both in the existing ICA, and agreed-to language in the proposed ICA. MCIm's disputed clause language for NIM Appendix §§ 1.10, 7.1.1, and 7.1.1.1 would create unnecessary and unreasonable ambiguity, and is rejected.

The remaining dispute is whether MCIm can route non-IXC traffic over local trunks when it is interLATA traffic. SBC-CA has already agreed to route non-IXC, intraLATA traffic over local trunks. Current practice between SBC-CA and MCIm is that interLATA traffic is terminated over switched access trunks, not local trunks. It is reasonable to continue existing practice. LATA boundaries have existed for over two decades, carriers are familiar with both these boundaries and LATA-related types of traffic, and SBC-CA's proposal is in line with current practice in California. As explained more below, no departure is justified.

MCIm claims it would have to establish or maintain additional trunk groups for interLATA traffic if the status quo is maintained. SBC-CA correctly points out, however, this is not the case. Rather, MCIm may simply route that traffic over the same meet-point trunks it has already agreed to establish to route IXC-carried traffic. Thus, efficient trunk utilization does not require commingling.

More importantly, MCIm's proposal would give MCIm (or any CLEC adopting this ICA pursuant to 47 U.S.C. § 252(i)) a ready means to avoid paying access charges. Continuing the current practice of maintaining separate trunk groups allows SBC-CA to much more effectively monitor and detect this sort of otherwise improper activity. SBC-CA's concern is not mere conjecture. SBC-CA's witness Albright testified that there has always been, and continues to be, a strong incentive to avoid paying access charges. Several disputes have occurred, and considerable distrust results. There is no need to adopt a provision here that would encourage further disputes and distrust.

Moreover, the governing regime is one of reciprocal compensation and access charges. This regime may or may not be changed as a result of the FCC's re-examination of its intercarrier compensation mechanisms. Unless and until changed, however, it must be implemented and honored in a way the permits accurate billing while minimizing disputes and distrust. To do otherwise would seriously jeopardize the current governing compensation structure.

MCIm argues that its proposal permits efficiency gains. To the contrary, the record here does not convincingly establish the degree or amount of efficiency gains, if any, from commingling traffic. Efficiency gains, if any, however, might be weighed by the FCC in its reconsideration of intercarrier compensation (e.g., assessing the tradeoffs between any engineering and cost efficiencies, if any, compared to market definition, accounting, accurate compensation, regulatory or other efficiencies). In the meantime, the existing definitions of traffic and markets, plus the existing compensation schemes, should be followed and implemented in a reasonable way that seeks to minimize the incentives and opportunities for abuse. Continuation of existing practice, as recommended by SBC-CA, does that more effectively than would MCIm's proposal.

MCIm's proposal, for example, would permit traffic to be commingled "provided such combination of traffic is not for the purpose of avoiding access charges, and facilities charges..." (MCIm proposed clause in NIM Appendix, § 7.1.1.) It would not be a trivial task, however, to determine the purpose for which particular traffic was commingled. This provision would invite disputes, and would be difficult, if not impossible, to administer and enforce.

MCIm argues that:

    "with today's new technologies, in particular the use of the Internet to transmit Voice over Internet Protocol ("VoIP") traffic, geographic distinctions are meaningless except only to the question of legacy compensation mechanisms, such as access charges." (MCIm Opening Brief, page 93.)

Until the FCC changes the access charge regime, however, that regime is the current system. California should not prejudge what the FCC should or will do to that regime. The current method of handling traffic is working reasonably well (including MCIm commingling of MCIm intraLATA toll traffic with local traffic on local trunks) and should continue.

MCIm contends that jurisdictional allocators may be used to track and bill multi-jurisdictional traffic, such as the Percent Interstate Usage (PIU) method used by the FCC for interstate traffic. MCIm proposes use of PIU factors for this ICA, with audits to verify proper allocation of charges. Allocation factors and audits are a poor substitute for continuing the treatment of traffic now employed in the 2001 ICA. VOIP traffic is increasing under the existing scheme, the existing treatment is working reasonably well, and it can continue to do so until the FCC addresses intercarrier compensation (which is expected reasonably soon).

In support of its position, MCIm cites an Indiana Commission decision permitting commingling of interLATA traffic. The issue there was different, however, as it concerned whether the CLEC would have to establish a new, third set of trunks in addition to the local and meet-point trunks already in existence. As SBC-CA has explained here, MCIm may route its non-IXC interLATA traffic over the meet-point trunks that have already been established. Moreover, other state commissions, including this Commission, have not permitted such commingling.

Therefore, SBC-CA's language is adopted, and the status quo continued, with MCIm routing its non-IXC-carried interLATA traffic over switched access trunks (which may include meet-point trunks).30

6.10. NIM 17

SBC-CA says each party should be financially responsible for the facilities on its side of the POI.

MCIm proposes a method of allocating the costs for two-way trunks used by both parties based on each party's relative use.

SBC-CA's proposed language is adopted.

A typical method of interconnection is for a CLEC to provide its own facility (e.g., a DS1 or DS3) to a POI on SBC-CA's network, after which each party provisions a two-way trunk group in the appropriate switch on its side of the POI. SBC-CA's proposed language provides that MCIm bears the financial responsibility for "the transport facility underlying the trunks to a MCIm designated POI, without regard to the direction of the traffic on the trunks."31 That is, each party pays its own costs for facilities on its side of the POI.

MCIm's proposed language provides that "the provider of a two-way trunk facility will share the cost of such trunk facility with the other Party by applying a relative use factor ("RUF")."32 In this way, the party that receives the most traffic would be able to bill the originating party for a portion of its trunk facility cost.

In support, MCIm cites the FCC's First Report and Order:

    " `....The amount an interconnection carrier pays for dedicated transport is to be proportional to its relative use of the dedicated facility. For example...if the providing carrier provides two-way trunks between its network and the interconnecting carrier's network, then the interconnecting carrier should not have to pay the providing carrier a rate that recovers the full cost of those trunks. These two-way trunks are used by the providing carrier to send terminating traffic to the interconnecting carrier. Rather, the interconnecting carrier shall pay the providing carrier a rate that reflects only the proportion of the trunk capacity that the interconnecting carrier uses to send the terminating traffic to the providing carrier.' "33

MCIm, however, does not convincingly show that there has been a failure to implement this FCC order via the reciprocal compensation or access charge regime. On the other hand, SBC-CA shows existing compensation mechanisms properly recover these costs.

The FCC order says that the "amount an interconnecting carrier pays for dedicated transport is to be proportional to its relative use of the dedicated facility."34 But under the subsequently released TRRO, SBC-CA shows that the FCC clarified that dedicated transport is available only for transmission facilities connecting the incumbent LEC switches and wire centers within a LATA. Dedicated transport is not available for use as an entrance or interconnection facility between a CLEC's own network and the point of interconnection established within the incumbent's network. Since unbundled dedicated transport is not available for the facilities in question, MCIm must bear the cost of setting up its trunking over those facilities and cannot require SBC-CA to underwrite part of that cost. It is MCIm's responsibility to interconnect within SBC-CA's network.

Even if considered for implementation now, it is contrary to the requirement that interconnection must occur within the ILECs's network. (TA 96 § 251(c)(2); also see NIM 13, 20, 21.) Requiring SBC-CA to pay the cost of a portion of the facilities used by MCIm to bring its network to interconnect at SBC-CA's network would be tantamount to requiring SBC-CA to build out its network to interconnect outside of where it currently exists. This is not permissible. Therefore, MCIm's RUF is not adopted.

There are several other reasons why MCIm's RUF proposal should be rejected. First, as SBC-CA explains, each carrier must provision a "trunk" on its switch in order to enable an end-to-end call path. If just one carrier does so, then no call path is created and no call can complete. Therefore, trunk provisioning is always equivalent between the carriers and there is no reason why one carrier should charge the other.

Second, the RUF would amount to a double recovery by MCIm. Costs would be recovered once via reciprocal compensation (for costs associated with transporting and terminating the originating carrier's traffic). Under MCIm's proposal, costs would be recovered again by charging an RUF based upon traffic imbalances.

Third, MCIm's proposal would create a revenue stream by allowing the carrier that is on the receiving end of more traffic to charge the originating carrier. Since MCIm receives more traffic from SBC-CA than it originates, the effect of this scheme would be to allow MCIm to charge SBC-CA for MCIm's own trunks. While this might benefit MCIm in the short term, it would create a perverse incentive for carriers to seek to terminate more traffic than they originate in order to be paid a greater relative use factor.

Fourth, the proposal is ripe for abuse because nothing would prevent MCIm (or an adopting CLEC) from installing more trunks than needed, and then charging for those trunks. This proposal would permit the CLEC to charge SBC-CA for those trunks whether or not they are efficiently utilized.

Finally, MCIm's proposal is unreasonably vague and will likely engender disputes. MCIm proposes that the cost sharing begins by the parties "assuming an initial RUF." (MCIm Proposed § 8.6.1.) Parties might agree to an initial RUF of fifty percent (50%), but there is no certainty that they will. The RUF may then be adjusted, but the mechanism is unclear. The RUF is based on "actual minutes of use during the most recent calendar month" and "actual accumulated minutes of use during the most recent calendar month." The formula for the RUF, however, is never stated. For example, it is neither in NIM Appendix § 1 (Definitions), § 8.6 (Relative Use Factor), nor the General Definitions Appendix. Further, while parties agree there is an important distinction between trunks and facilities, MCIm's proposal refers to the apportionment of costs for a "trunk facility." Also, the costs of the trunk facility are unknown and subject to dispute (e.g., are they to be based on depreciated accounting cost, TELRIC, or other cost basis).

According to SBC-CA, the Illinois Commission rejected the same MCIm proposal, and MCIm does not show otherwise. The rationale is largely the same as that used here, wherein the Illinois Commission said:

    "The Commission finds that MCIm's proposed "relative use factor" ("RUF") is a novel approach that would depart from the well-established methodology of apportioning the costs to LECs for facilities on their side of the POI. The Commission also shares SBC's concern that the RUF would create opportunities for double recovery and arbitrage. SBC explained that nothing would limit MCIm from over-building capacity and charging for all of it, whether or not it is needed. MCIm did not refute that contention. Nor does MCIm counter SBC's claim that MCIm already recovers its cost as an embedded component of reciprocal compensation. Accordingly, the Commission rejects MCIm's proposed RUF."35

MCIm argues in support of its position that deference should be given to the outcome of the 2001 SBC-CA/MCIm arbitration. This outcome was reflected in one sentence in the Introduction to Appendix NIM:

    "Where the parties interconnect by a method other than mid-span fiber meet, each Party shall bear interconnection facility costs for two-way trunks in proportion to the percentage of originating traffic for which its customers are responsible."

SBC convincingly shows, however, that the adopted language was contained only in an introductory paragraph of the NIM appendix, there was no language explaining how to apportion the interconnection facility costs, and the parties never implemented that provision. MCIm does not show otherwise.

Finally, MCIm argues that SBC-CA has failed to carry its burden to overcome the deference that should be given to the result in the 2001 ICA, which MCIm argues its proposal implements here. To the contrary, the facts and law discussed above require adopting SBC-CA's proposed language.

6.11. NIM 20

SBC-CA contends 911 interconnection trunk groups are not 251/252 facilities and not subject to TELRIC prices.

MCIm asserts they are 251/252 interconnection facilities subject to TELRIC prices.

SBC-CA's proposed language is adopted.

The transport facilities at issue here connect MCIm's switch to the Selective Router in the 911 tandem office, which in turn connects MCIm's end users to the public safety answering points that respond to 911 calls. These are not interconnection facilities under § 251(c)(2). While MCIm may lease entrance facilities that connect the two parties' networks, it cannot secure those facilities at TELRIC, but must order them out of the applicable tariff or reach some other commercial arrangement, including self-provisioning or obtaining those facilities from a third-party.

MCIm has the sole obligation to provide E911 services to its own end user customers. Hence, MCIm is financially responsible for providing a facility from MCIm's switch or Point of Presence to the SBC-CA E911 Selective Router. There are no provisions of the Act that require ILECs to provide transport facilities for the purpose of section 251(c)(2) interconnection. Consequently, the provision of such facilities/trunks is not properly part of this arbitration, nor should they be priced at TELRIC.

The Commission held in a 1999 arbitration that the rates, terms, and conditions for 911 facilities should be provided pursuant to SBC-CA's tariff, and therefore not at TELRIC rates. (A.99-03-047, FAR, page 74, cited by SBC-CA Reply Brief, page 7.) SBC-CA's proposal here is consistent with that result, and should be adopted.

MCIm asserts that one obvious requirement to begin providing local service is to not disrupt the provision of 911. According to MCIm, local service cannot be provided by those who do not provide access to 911. Because of this linkage, MCIm says any of the so-called ancillary trunks required in the provision of local service must be considered local interconnection trunks. This is incorrect. Not all ancillary trunks or interconnection facilities are the same. As discussed under issue NIM 13, the FCC has determined some facilities need not be unbundled and provided at TELRIC rates, having found that CLECs are not impaired without access to those facilities. Rather, certain facilities are now more widely available from alternative providers.

Moreover, MCIm's argument is contrary to the plain language of the statute. Section 251(c)(2) establishes the following duty:

    "Interconnection. The duty to provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection with the local exchange carrier's network..."

That is, § 251(c)(2) requires an ILEC to provide interconnection "for the facilities and equipment" of a CLEC. It does not require the ILEC to provide the CLEC's own facilities that are to be interconnected with the ILEC's network.

Thus, SBC-CA's position is adopted.

6.12. NIM 21

SBC-CA says the point of interconnection for 911 should be at the SBC-CA 911 selective router.

MCIm says that interconnection for 911 at the selective router may be appropriate in certain circumstances, but it should not be the only option available to MCIm since it is also possible to interconnect through a central office or a collocation point.

SBC-CA's proposed language is adopted.

Unlike normal interconnection trunking, 911 trunking does not use the Public Switched Telephone Network ("PSTN"). Instead of being used for two-way end-user-to-end-user calling, 911 trunking connects to a dedicated private network that is intended only for one-way calling to Public Safety Answering Point ("PSAP") agencies. SBC-CA's language provides that "MCIm's Point of Interconnection (POI) for E911/911 Service shall be at the SBC-CALIFORNIA 911 Selective Router." By contrast, MCIm proposes that "MCIm's Point of Interconnection (POI) for E911/911 Service can be at the SBC CALIFORNIA Central Office, a Collocation point, or via a facility provisioned directly."

MCIm has already agreed to provide trunking and facilities directly to the Selective Router in NIM § 10.2. Specifically, the agreed-to language in § 10.2 provides that MCIm "shall establish dedicated trunks from MCIm's Central Office to each SBC CALIFORNIA E911 Selective Router (i.e., E911 Tandem Office) for the provision of E911 services," and that will do so "by providing its own facilities/trunks." This inherently establishes a point of interconnection at the 911 Selective Router. MCIm cannot be allowed to undo that agreement by the language it proposes in § 10.7. The two sections must be consistent.

This 911 traffic is also quite different from ordinary voice traffic exchanged between MCIm and SBC CA. SBC-CA does not charge MCIm for transport and termination (i.e., reciprocal compensation) of 911 traffic, so SBC-CA is not otherwise compensated for providing the transport MCIm seeks. In addition, MCIm has the sole obligation to provide E911 services to its end users, who alone benefit from such services. SBC-CA should not be required to provide free transport to assist MCIm in its legal obligation to provide emergency telecommunications capabilities to its own end users. Hence, MCIm should be financially responsible to provide a facility from MCIm's switch or Point of Presence to the SBC-CA E911 Selective Router.

While MCIm says it will be responsible for the cost of the logical trunk that SBC California provides on its facilities to the Selective Router, this financial responsibility provision is not clearly found in MCIm's proposed language for § 10.2. In fact, MCIm's proposed language could be read to imply it is SBC-CA's responsibility to deliver MCIm's E911 traffic from MCIm's POI to the correct Selective Router. That is inconsistent with current practice, and not adopted here.

Accordingly, SBC-CA's proposal for § 10.7 is adopted.

6.13. NIM 22

SBC-CA proposes that the parties mutually agree on the physical interconnection necessary for inward operator assistance calls, subject to the dispute resolution section of the ICA.

MCIm proposes that MCIm may route calls requiring inward operator assistance through its designated interexchange carrier (IXC) Point of Presence (POP), and SBC-CA shall route such calls through its designated IXC POP. Alternatively, the parties may establish separate trunks or trunk groups per LATA.

MCIm's proposal is adopted.

Operator Service and Directory Assistance trunk groups facilitate voice connections between operator service platforms. These connections are established between companies that each provide their own operator services, and they allow operators for one carrier to hand off calls to operators of the other carrier. The question here is whether the ICA should designate the IXC POP as the point at which each party hands off calls requiring inward operator assistance, as MCIm proposes.

MCIm says its proposal continues the parties' current practice for the routing of inward operator assistance calls. MCIm proposes language which MCIm says is virtually verbatim from the existing ICA.36 Given that the parties have been operating under that provision since it went into effect, and have been routing calls in accordance with that provision, the practice should continue. No new facts or law justify a change.

In contrast, SBC-CA would make the decision subject to "mutual agreement," and in turn subject to the dispute resolution portion of the ICA if agreement is not reached. There is no reason to adopt such an open ended requirement for the routing of inward operator assistance calls given satisfactory current experience.

6.14. NIM 23

Trunk forecasts are estimates of the number of trunks a carrier expects to have in service over a given time period. SBC-CA reasonably needs to obtain MCIm's forecast of its future trunk requirements in order to determine when SBC-CA must acquire more equipment. Accordingly, SBC-CA proposes to require forecasts from MCIm "for all trunking required in this Appendix."37 This is consistent with language in the 2001 ICA which requires that MCIm provide trunk forecasts "for all trunk groups described in this Appendix."38 No new facts or law are presented justifying a change.

It is reasonable that MCIm be required to provide all material forecasting data so that SBC-CA can predict with some degree of certainty what it will have to do to accommodate the future interconnection needs of MCIm. This is necessary for system reliability.

MCIm asserts that the issue here is relatively straightforward, with SBC-CA asking for more information under its proposed ICA language than MCIm has provided in the past. To the contrary, the 2001 ICA language is nearly parallel to that proposed here.

The specific dispute concerns CLCI-MSG data, which MCIm resists providing. MCIm claims it has never provided this data to SBC-CA. SBC-CA persuasively shows, however, that MCIm has provided this data, and that it is reasonable to continue to do so.

Therefore, SBC-CA's position is adopted.

6.15. NIM 24

SBC-CA proposes that trunk design blocking criteria be based upon "time consistent average busy season busy hour twenty (20) day averaged loads." (§ 17.1.) SBC-CA proposes underutilization be measured by using "a monthly average basis." (§ 18.7.)

MCIm proposes that trunk design blocking criteria be based upon "a weekly peak busy hour average." (§ 17.1.) MCIm proposes that underutilization be measured by using "a weekly peak busy hour basis." (§ 18.7.)

SBC-CA's proposed language is adopted.

The optimal number of trunks between any two switches is a function of the volume of traffic between them. Network engineers seek to ensure that the number is appropriate for each pair of switches (i.e., that there are enough trunks to support the traffic between those switches without having an excessive, non-economic number of trunks). The question presented here is how best to balance the objectives of minimizing both blocked calls (from too few trunks) and unused capacity (from too many trunks). Plainly, with enough trunks no call would ever be blocked, but that would almost certainly be wastefully expensive.

Neither party's proposed language is exactly the same as that in the 2001 ICA, but the 2001 ICA should be given weight in considering the proposals here. On balance, SBC-CA's proposal is reasonably consistent with the existing ICA, and should be used. For example, the 2001 ICA uses a study period of 20 business days.39 SBC-CA's proposal here to use 20 days is more in line with the 2001 ICA than is MCIm's proposal to use one week.40 Also, the 2001 ICA provides that data is applied to "industry standard Neal-Wilkinson Trunk Group Capacity algorithms."41 SBC-CA's proposed use of Neal-Wilkinson Trunk Group Capacity algorithms is consistent with the 2001 ICA, while MCIm's proposal to use Erlang B tables is not.

The 2001 ICA also provides that trunk requirements be based on "peak busy hour" data typically using 20 business days. MCIm proposes use of "a weekly peak busy hour average." SBC-CA proposes use of "time consistent average busy season busy hour twenty (20) day averaged loads." SBC-CA seeks this language to improve the opportunity for optimal utilization. That is, the facts in this case show that trunks between SBC-CA and MCIm are underutilized. This is likely to be because "peak busy hour" averages can skew results by chasing the highest hour, which may vary from day to day. This may in turn cause wider swings between forecasts, and will likely cause larger investment in trunks. SBC-CA's method provides greater statistical confidence by using time consistent data that is still within the busy season and busy hour. The evidence shows this is more likely to produce consistent forecasts of greater statistical confidence. This will help ensure optimal investment without being excessive.

MCIm says it respects SBC-CA's right to adopt its own methods for use in forecasting traffic flows on its network. In turn, MCIm says SBC-CA should respect MCIm's rights to determine what methods are most appropriate for use in measuring and forecasting traffic requirements that impact MCIm's customers. In short, MCIm asserts that a CLEC faces very different circumstances than an ILEC.

In response, SBC-CA correctly points out that this is not the issue. The trunks in question connect two networks and the capacity on each side of the interconnection should match. As a result, each party should use the same criteria, and the criteria should rely on industry standards, to the fullest extent possible. The accepted industry-standard here is the one proposed by SBC-CA, which SBC-CA points out it also uses with other CLECs both in California and other states. That standard is a 20 average business day basis applied to the industry-standard Neal-Wilkinson Trunk Group Capacity algorithms.

MCIm claims the SBC-CA method does not rely on current data. To the contrary, SBC-CA's proposal uses 20 recent days, similar to the 2001 ICA language. Moreover, agreed-upon language regarding trunk resizing will be based on any three consecutive month period, not years of past traffic data as incorrectly asserted by MCIm. Finally, the busy season busy hour data to be used is recent, not years old.

Therefore, SBC-CA's proposed language is adopted.

6.16. NIM 25

SBC-CA says no.

MCIm says yes.

SBC-CA's proposal is adopted (i.e., agreed-to language is adopted and MCIm's proposed additional language is rejected).

The issue here is whether the provisioning intervals for this trunk augmentation activity should be set at 30 days or be more flexible. SBC is correct that a hard-and-fast requirement is inappropriate. Some events (e.g., large orders, complex orders) may prevent a party from augmenting trunks within 30 days, but failure to do so could place that party in breach of the ICA if MCIm's proposal is adopted.

SBC-CA cannot reasonably be expected to guarantee that every order to provision trunks can be completed within 30 days. For example, there may be instances where there are insufficient trunk ports available at the SBC-CA Tandem or End Office where the trunk group is to be established or augmented. Or, if there are no facilities available to a SBC-CA Tandem or End Office where the trunk group is to be provisioned, SBC-CA again cannot guarantee that a trunk group could be completed within 30 days. Nonetheless, SBC-CA states that when it has the trunks or facilities available at the SBC-CA Tandem or End Office, it then makes every effort to ensure that the trunk order is completed within 30 days.

Consistent with this performance, agreed to language already provides for due dates and intervals based on the CLEC online handbook (which MCIm's additional language would seek to constrain to 30 days). No evidence shows that due dates and intervals in the CLEC online handbook are unreasonable. In fact, SBC-CA asserts (and MCIm does not refute) that the due date interval in the handbook is generally 20-business days.

MCIm is concerned that SBC-CA may simply change the dates in the handbook, and MCIm's customers will suffer degraded service as a result. MCIm, however, fails to show that SBC-CA can simply change its handbook unilaterally and at will. To the contrary, SBC-CA convincingly asserts that it provisions trunks for requesting carriers in parity with how SBC-CA provisions trunks for itself based on SBC-CA's § 271 requirements.

MCIm says it "recognizes that there are circumstances that could limit SBC California's ability to meet hard deadlines." MCIm asserts its "language does not impose on SBC California a hard requirement that is unwavering" but if the first due date (i.e., 30-days) cannot be met, a new date can be established. (MCIm Reply Brief, page 111.) Already agreed to language, however, provides that if the due date is infeasible in a given circumstance, "the other Party will provide with [sic] a requested revised service due date that is no more than thirty (30) calendar days beyond the original service due date." This renders MCIm's proposal relatively pointless, and all the more confusing. In fact, MCI's proposal (to limit the entire provisioning period to a total of 30 days) is inconsistent on its face with the plain meaning of the agreed to language, and MCIm's additional language should be rejected.

Moreover, the agreed-upon language in § 19.4 is similar to that in the 2001 ICA (Appendix ITR, § 6.12). The 30-day trunk augmentation requirement now proposed as added language by MCIm does not appear in the 2001 ICA. MCIm fails to convincingly show that the language in the 2001 ICA has resulted in unacceptable performance by SBC-CA. No evidence shows the timeframe in the online handbook has failed to provide adequate results. No new facts or law justify the change proposed by MCIm.

Finally, both parties must act in good faith in their performance under the ICA. (2006 ICA GT&C, § 1.4.) MCIm may seek relief under the dispute resolution provisions of the ICA for unreasonable actions by SBC-CA of which MCIm here seems concerned (e.g., improperly changing the online handbook, unreasonable delays beyond 30 days). This may include bringing an action before the Commission. Thus, not only is this provision as proposed by SBC-CA reasonable, but MCIm has adequate means of relief, if necessary.

Therefore, SBC-CA's proposal is adopted.

6.17. NIM 26

SBC-CA believes transit service is not required under §§ 251 and 252 of the Act, and is, therefore, not subject to this arbitration. If the Commission determines otherwise, SBC-CA offers a Transit Traffic Service Appendix, which it says is more comprehensive than that offered by MCIm.

MCIm says transit traffic is an integral part of indirect interconnection, is subject to negotiation and arbitration under that Act, and must be priced at TELRIC rates. According to MCIm, it has traditionally been included in ICAs, and should be here. MCIm asserts that requiring a separately negotiated transit service agreement has the potential to jeopardize the quality of service available to subscribers.

MCIm's proposed language is adopted.

MCIm demonstrates that transit service is a requirement under §§ 251(a)(1) and 251(c)(2). These sections state:

    "Each telecommunications carrier has the duty to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers." (§ 251(a)(1).)

    "...each incumbent local exchange carrier has the... duty to provide...interconnection with the local exchange carrier's network for the transmission and routing of telephone exchange service and exchange access." (§ 251(c)(2)(A).)

Parties agree that that duty to interconnect directly or indirectly pursuant to § 251(a)(1) applies to all carriers, not just incumbents.

As described by SBC-CA:

    "Transit traffic refers to a call between a customer of a third-party carrier and the customer of MCIm that is handed off in the middle to SBC-CA for transiting between the other two carriers' networks. Thus, as the transiting carrier, SBC-CA is neither the originating nor terminating carrier." (SBC-CA Opening Brief, page 102.)

MCIm clearly explains SBC-CA's role in the interconnection and transit:

    "Because SBC California is the incumbent in its traditional service territories and currently provides the local access lines that serve the vast majority of customers, every CLEC providing service in those areas seeks to interconnect with SBC California so that the CLECs' customers can place calls to, and receive calls from, SBC California's customers. As a result, it is most common for the interconnection between two different CLEC networks to be accomplished 'indirectly' by the interconnection of each of them with the incumbent LEC's network." (MCIm Opening Brief, page 112.)

Section 251(a)(1) expressly recognizes that the duty of interconnection borne by all carriers can be accomplished indirectly. When SBC-CA provides transit service it is providing indirect "interconnection with the local exchange carrier's network for the transmission and routing of telephone exchange service and exchange access." (§ 251(c)(2)(A).) In its discussion of shared transport, the FCC recognizes the interrelationship between indirect interconnection and transit service:

    "Shared transport between local tandem switches sometimes is used by competing carriers for `transiting' - a means of indirectly interconnecting with other competing carriers for the purpose of terminating local and intraLATA traffic." (TRO, ¶ 534, footnote 1640; emphasis added.)

MCIm further explains this obligation by citing to a recent Arbitrator's' Report approved by the Missouri Commission:

    "In its Clariton Valley Order, the Commission stated, `Transit service falls within the definition of interconnection service...[b]ecause the transit agreement is an interconnection service, it must be filed with the commission for approval.' Section 252 ICAs are negotiated or arbitrated for the purpose of implementing § 251 obligations. Thus, transiting service is a necessary part of these ICAs and is a matter within the jurisdiction of the Commission and thus of the Arbitrator.

* * *

    "As explained in the Commission's Clariton Valley Order, the existence of the obligation of indirect interconnection imposes by implication a transiting obligation - how else can there be indirect interconnections? Indirect interconnection is effected by the fact that the two carriers in question are each directly interconnected to an intermediary carrier. This intermediary carrier, for the purposes of the present discussion, is a dominant ILEC like SBC. SBC is not indirectly interconnected to the two carriers in question, it is directly interconnected. Its duties are set out in § 251(c)(2). That section requires SBC to interconnect with any requesting carrier for the purpose of exchanging traffic. The statute does not specify that the traffic must be intended for termination, or that it must have originated, on the two interconnected networks." (Attachment A, pages 2-3 to MCIm Reply Brief, Excerpted from the Final Arbitrator's Report, June 21, 2005, Section I(C), "Transit Traffic," p. 1-9 in Missouri Public Service Commission Arbitration Order, Case No. TO-2005-0336, July 11, 2005.)

Thus, transit traffic is a method of indirect interconnection covered under §§ 251 and 252.

In arguing against MCIm's position, SBC-CA says that nowhere does the Act mention transiting traffic. That is probably because Congress believed it was covered as explained above (since this is at least one important way indirect interconnection is accomplished, as required).

SBC-CA is concerned that this interpretation, if adopted, would allow any telecommunications carrier to demand that any other carrier provide transiting service. Indeed, that is consistent with the pro-competitive intent of the Act.

SBC-CA notes that the FCC in particular has said that "the FCC's `rules have not required incumbent LECs to provide transiting.'" (SBC-CA Opening Brief, page 103.) Importantly, however, the FCC goes on to say: "The Commission plans to address transiting in its pending Intercarrier Compensation rulemaking proceeding." (TRO, ¶ 534, footnote 1640.) Thus, it is not required, but also not prohibited, by FCC rule at this time. Rather, it is an open issue the FCC is considering, and apparently has not yet finally decided.

SBC-CA argues that the FCC has held that interconnection under § 251(c)(2) refers only to the physical linking of two networks for the mutual exchange of traffic. Even if true, this ignores that the duty is to interconnect directly or indirectly. If it is indirect (as permissible, and an obligation of all LECs under the Act) it can be accomplished by transit.

SBC-CA says even if SBC-CA has a duty to transport and deliver transit traffic, it cannot be an obligation subject to the compulsory arbitration requirement under § 252. SBC-CA is incorrect. As noted above, transiting is an obligation under § 251(c). In particular, § 251(c)(1) requires negotiation by the ILEC of all the duties in § 251(b) and (c). If unable to resolve by negotiation, the matter is eligible for arbitration. Pursuant to § 251(c)(2)(A), each ILEC is required to negotiate interconnection with any requesting CLEC for the transmission and routing of service and access. Any CLEC may interconnect directly or indirectly under § 251(a)(1). An indirect interconnection is a right given to each CLEC that the ILEC cannot by itself deny or vacate. The ILEC has the duty to negotiate the provision of interconnection, including indirect interconnection. Even if possible to accomplish indirect interconnection in other ways, this includes indirect interconnection accomplished by transit. The ILEC cannot deny or vacate the right of indirect interconnection via transit by refusing to negotiate and arbitrate terms and conditions for transit.

MCIm's position is also based on terms and conditions for transit traffic in the 2001 ICA. Those provisions have worked successfully. No new facts or law justify a change.

SBC-CA acknowledges that it now provides transit pursuant to the ICA. SBC-CA says it should not-and cannot-be required to continue to do so because it did so voluntarily before.42 To the contrary, transit is noted in the 2001 ICA in parts identified as "represents a Non-Voluntary Arrangement." Transit was part of at least two arbitrated issues.43

Moreover, transit is consistent with the pro-competitive goals of the Act. It was included in the 2001 ICA. No evidence was presented here demonstrating that it was unworkable, or will be during the life of the 2006 ICA. Therefore, it should continue unless and until the FCC makes some other determination in its Intercarrier Compensation rulemaking. Parties may invoke the provisions of the ICA regarding change of law should the FCC make a determination contrary to the outcome in this arbitration.

Regarding rates, SBC-CA says it will offer transiting at the same rates as in the currently effective ICA, which is the same as proposed by MCIm, except that SBC-CA proposes increasing the rate after the first 50 million minutes. SBC-CA's proposal is rejected. Existing prices have been found to be TELRIC compliant by the Commission, while the cost basis of SBC-CA's proposal is unclear.44

Therefore, for all these reasons, MCIm's proposal is adopted.

6.18. NIM 28

Issue:

SBC-CA:

17 See Further Notice of Proposed Rulemaking, Re Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92 (March 3, 2005), FCC 05-33 ("Intercarrier Compensation Rulemaking"), ¶¶ 3-5.

18 For example, parties may use informal dispute resolution. (GT&C § 12.3.2.) Alternatively, parties may use either the Commission or a non-Commission entity (e.g., American Arbitration Association) under the provisions for formal dispute resolution. (GT&C § 12.3.3.)

19 That fact that MCIm may choose to lease the OS/DA services from SBC-CA does not change the fact that MCIm uses those leased services to provide OS/DA services to its own customers and not to send and receive calls to or from SBC-CA end users. MCIm may also self-provide or lease those services from another carrier.

20 SBC-CA Opening Brief, page 74 citing TRRO ¶136.

21 SBC-CA Opening Brief, page 75, in turn citing from TRRO at ¶¶138 and 139 and n.393.

22 See diagram of SBC-CA's facilities in Exhibit 1, Albright Direct at 47; 1 Tr. 79-82 (Albright for SBC-CA).

23 See MCIm Br. at 83 (quoting 2001 FAR, which relied on ¶346 of the UNE Remand Order).

24 SBC-CA Reply Brief, page 5, citing Supreme Court decisions Duncan v. Walker, 533 U.S. 167, 173 (2001), quoting Bates v. United States, 522 U.S. 22, 29-30 (1997), quoting, in turn, Russello v. United States, 464 U.S. 16, 23-24 (1983).

25 SBC-CA Reply Brief, page 5, quoting from Re Establishment of the Terms and Conditions of an Interconnection Agreement Pursuant to the Federal Communications Commission's Triennial Review Order and Its Order on Remand, Case No. 05-887-TP-UNC, Arbitration Award, at 22-23 (Ohio P.U.C. Nov. 9, 2005).

26 This may include formal dispute resolution procedures, such as submitting the matter to the Commission. (See agreed-to language in the 2006 ICA, GT&C § 12.3.3.)

27 In its Reply Brief, MCIm recommends that "language should be incorporated which provides that neither party may unreasonably withhold agreement. That is, they must negotiate in good faith..." (MCIm Reply Brief, page 10.) This is already required by undisputed, agreed-to language in 2006 ICA at GT&C § 1.4.

28 As SBC-CA correctly points out, MCIm proposes at § 4.4.1 that SBC-CA establish "a fiber meet at one or more locations in each LATA." This fails to reasonably restrict the interconnection to a point within SBC-CA's network. Similarly, at § 4.4.4.3.1, MCIm requires SBC-CA to provide the working side of a two fiber system, again ignoring that the POI must be within SBC-CA's network.

29 For example, SBC-CA points out that Paragraph 553 of the FCC's Local Competition Order may describe one such exception. (SBC-CA Opening Brief, page 66.)

30 Both SBC-CA and MCIm agree that the 2001 ICA should be strong precedent for the result in the 2006 ICA, absent a change in law or material fact. (Respective Opening Briefs at p. 7 and 9.) For the first time in a footnote in its Reply Brief, MCIm seeks to carve out exceptions for portions of the 2001 ICA that (a) were not raised as issues before or (b) were negotiated outcomes. (MCIm Reply Brief, p. 8, footnote 28.) Regarding the first point, a new issue, not raised before, must be decided on the facts and law in this case, according to MCIm. This Arbitrator's Report does so by applying the facts and law in this case to reach the result, as explained in the text. Regarding the second point, a previously negotiated result should not be binding precedent nor prejudice MCIm's position in this case, according to MCIm, because to do so would violate public policy favoring settlements, and settlements would be discouraged because parties would run the risk of having their agreements used against them as binding precedent. Here, however, MCIm characterizes this issue (NIM 15 and related NIM 5) as one that was not previously negotiated. ("It simply reflects that MCIm did not seek the arrangement or raise the issue in previous ICA negotiations and arbitrations in California. This is a new issue, one not addressed in the existing ICA." See MCIm Reply Brief, page 8, footnote 28, emphasis added.) Thus, the issue was not raised in 2001 for negotiation, according to MCIm. As such, reliance on the 2001 ICA cannot violate any previously negotiated outcome. Nonetheless, it does demonstrate the technical and economic feasibility of the adopted result.

31 SBC-CA Proposed § 8.6.1.

32 MCIm Proposed § 8.6.1.

33 MCIm Opening Brief, page 100, citing Local Competition Order, ¶ 1062 (portions omitted, emphasis added by MCIm).

34 Local Competition Order ¶1062 (emphasis added).

35 Illinois SBC/MCIm Arbitration Order at 104.

36 MCIm states this comes from existing ICA, ITR Appendix ¶ 5.6.1. That is incorrect. There is no such section, and no such section in the NIM Appendix. Nonetheless, MCIm asserts, and SBC-CA does not disprove, that somewhere within the existing ICA there is such a section, and that MCIm's proposal virtually mirrors that language.

37 NIM §16.4.1 (SBC-proposed language).

38 2001 ICA, Appendix ITR, Section 5.1.

39 2001 ICA, Appendix ITR § 4.1. The 2001 ICA at § 4.1 also says that "a study period on occasion may be less than twenty (20) days..." This is understood to be an exception rather than the rule.

40 The FAR on the 2001 ICA says it adopts MCIm's position on this issue. (2001 FAR, Issue ITR-22, pages 53-55.) MCIm's position there, however, was "over a 20-day period." (Id., page 54.) In contrast, for the 2006 ICA, MCIm proposes a weekly period.

41 2001 ICA , Appendix ITR § 4.1.

42 SBC-CA says it will do so again only voluntarily on a commercially negotiated, separate stand-alone basis.

43 See Issues ITR-2 and ITR-3 in July 16, 2001 FAR.

44 SBC-CA says the higher rate (a) provides an incentive for MCIm to establish direct connections and (b) permits SBC-CA to increase prices to help cover the very high cost of additional tandem switches. The record here does not show whether the increased price covers less, all, or more than the cost of additional tandem switches.

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