11. Digital Subscriber Line and Line Sharing (xDSL)

11.1. xDSL 2

SBC-CA proposes specific liability and indemnity language for the xDSL Appendix in addition to that in the General Terms and Conditions.

MCIm asserts SBC-CA's proposed language conflicts with prior decisions, is unnecessary and is too broad.

Discussion

SBC-CA's proposed language is adopted.

MCIm is correct that in September 2000 the Commission considered and rejected SBC-CA's argument that it needed special liability and indemnification language for non-standard xDSL technologies in its line sharing appendix. (D.00-09-074, mimeo., pages 9-10.) Nonetheless, this outcome was superseded one year later, in September 2001, with the Commission's adoption of such language in the 2001 ICA. (D.01-09-054.)

The 2001 ICA contains substantially the same language that SBC-CA proposes here. For example, proposed §§ 3.7.1 and 3.8 in Appendix xDSL are nearly the same as §§ 3.7 and 3.8 in the 2001 ICA Appendix xDSL. SBC-CA's proposed language in Appendix xDSL §§ 3.8.2 through 3.8.5 addresses procedure, similar to the procedures used in the 2001 ICA by cross-reference to § 27 of the General Terms and Conditions. MCIm fails to convincingly present any new facts or law which would merit a change from the outcome in 2001.

MCIm argues that the additional language is duplicative of that in the General Terms and Conditions and is therefore unnecessary. This is not correct. For example, General Terms and Conditions § 15.3 specifically provides for no consequential damages. In contrast, the language proposed here for xDSL Appendix § 3.8.1 specifically includes consequential damages. (This is also true in § 3.8.1 in the 2001 ICA.)

Similarly, as SBC-CA points out, the indemnification in the xDSL Appendix is not limited by a "fault" concept, but applies to any damages caused by the indemnifying party's election to use a non-standard xDSL technology. In contrast, the indemnification provisions in the General Terms and Conditions indemnify almost exclusively against losses to third parties and only in specific instances (e.g., in agreed-upon language in the 2006 ICA GT&C regarding finding of fault in § 16(a), slander/privacy in § 16(b), intellectual property in § 16(c), Communications Assistance to Law Enforcement Act of 1994 in § 16(d), and law compliance indemnity in § 16(e)).

MCIm argues SBC-CA's language is too broad. To the contrary, as SBC-CA says, the 2001 xDSL liability/indemnification language did not require proof of negligence. No change is proposed by SBC-CA on that point here. Because negligence will invariably be difficult or impossible to prove, neither party should be permitted to avoid liability/indemnification responsibilities to the other if it elects to deploy a non-standard xDSL technology that interferes with, or damages, another service. This provision was not excessively broad in the 2001 ICA, and is not in the 2006 ICA.

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

11.2. xDSL 3

SBC-CA contends these charges should be as set forth in SBC-CA's tariff.

MCIm proposes that the rates be in the Pricing Appendix.

Discussion

SBC-CA's proposed language is adopted.

According to SBC-CA, parties agree to the inclusion of time and material rates in the ICA Pricing Appendix that will apply to services under the xDSL Appendix. Parties also agree that these rates must be those in SBC-CA's tariffed Maintenance of Service charges. The disagreement is whether (a) Maintenance of Service charges may be changed from time to time in accordance with tariff modifications, or (b) should be established in the Pricing Appendix and not be subject to change during the life of this ICA (except by amendment to the ICA).

SBC-CA correctly states that the 2001 ICA adopted similar rates with reference to an FCC-approved tariff and these rates were subject to tariff changes. (2001 ICA, Appendix xDSL, § 10.) No new facts or law compel a change from this approach.

SBC-CA originally proposed use of rates in FCC Tariff No. 1, Section 13.2.6. For consistency among various time and material charges applicable to the products and services under this ICA, SBC-CA now proposes use of the Maintenance of Service charges under its California state tariff, Schedule CAL. P.U.C. No. 175-T, Section 13.3.1. (See October 11, 2005 Joint Revised Statement of Unresolved Issues, and SBC-CA Opening Brief dated November 4, 2005.) MCIm presented no objection to that specific proposal. (See MCIm Reply Brief dated November 18, 2005.) Consistency among the use of various charges is desirable and is adopted.

MCIm argues that these rates should be set in the Pricing Appendix, and not subject to change, in order to ease MCIm's contract administration. Otherwise, MCIm will have to keep track of prices in ICAs and tariffs in all 13 states, thereby administering 26 documents rather than 13, according to MCIm. This concern is not credible. The telecommunications market and industry is already quite complex. MCIm does not show that the added complexity of referring to rates set by tariff is unreasonably burdensome. In fact, these are sophisticated companies already familiar with tariffs, and the use of tariffs. There should be no increased burden by the use of tariffs here, especially since that was the practice in the 2001 ICA.

MCIm also says that SBC-CA has unilateral control over its tariffs. As such, MCIm is concerned that SBC-CA will unilaterally amend its tariff, without having to undergo the more difficult process of negotiating or arbitrating changes with MCIm, and this will create substantial uncertainty for MCIm. To the contrary, tariff changes require regulatory approval. That regulatory approval will provide MCIm the protection it desires against unilateral change and uncertainty.

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

11.3. xDSL 5

SBC-CA says it recognizes its obligation under TA 96 to provide conditioning, maintenance and repair of xDSL loops, but voluntarily agrees to also provide Acceptance Testing and Cooperative Testing. SBC-CA proposes that the applicable rates be from its tariff for Maintenance of Service charges, and be subject to change if and when tariff rates change. SBC-CA contends it neither engaged in, nor consented to, negotiations under §§ 251 and 252 for these voluntary offerings, and, therefore, they are not subject to arbitration here. If MCIm does not agree with SBC-CA's provisions, SBC-CA says the voluntary offerings should be eliminated from the ICA entirely.

MCIm says SBC-CA is required to provide MCIm with access to DSL-capable loops, including not only conditioning, maintenance and repair but also testing. MCIm says inclusion of such language in the ICA is prima facie evidence that SBC-CA voluntarily negotiated these topics with MCIm and thus these topics are subject to compulsory arbitration under § 252(b)(1) of the Act.

Discussion

SBC-CA's proposed language is adopted.

SBC-CA claims that MCIm states the issue too broadly. According to SBC-CA, most of the language regarding conditioning, maintenance and repair of xDSL loops is agreed to language. Rather, SBC-CA says there are only "two extremely narrow disputes under this issue." (Supplemental Response, November 23, 2005, page 13.)

The first dispute is the same as that under xDSL 3: whether the rates should be (a) from the tariff and subject to change as tariff rates change, or (b) fixed in the Pricing Appendix for the life of this ICA. For the same reasons as stated under xDSL 3, the applicable rates shall be those from the tariff, and the rates shall be subject to change as tariff rates change. Thus, SBC-CA's language is adopted.

According to SBC-CA, the "second dispute relates to whether Acceptance Testing and Cooperative Testing are within the scope of SBC-CA's unbundling obligations under § 251(c)(3) of the Act." (Supplemental Response, November 23, 2005, page 13.) The actual dispute focuses on whether or not an asterisk should apply to certain sections45 with the accompanying endnote:

    "* SBC CALIFORNIA's Position: It is SBC CALIFORNIA's position that the provisions noted above with asterices are voluntary, non-251(b) or (c) provisions/offerings that were not subject to the Parties' negotiations under Sections 251 and 252 of the Act and are not subject to arbitration under Section 252 of the Act. SBC CALIFORNIA disputes MCIm's submission of the issues for arbitration under Section 252 of the Act. Without waiving said objection, SBC CALIFORNIA has shown in this section the language it can agree to and the substantive disputes between the Parties as to the language itself in the event that the Commission does not exclude the issues associated with SBC CALIFORNIA non-251(b) and (c) offerings from this Section 252 arbitration proceeding. SBC CALIFORNIA does not waive, but instead reserves all its rights, arguments and positions that the provisions noted with asterices (including disputed and non-disputed provisions) are not subject to Sections 251 and 252 of the Act, including without limitation, negotiations under Sections 251/252 of the Act and Section 252 arbitration. Nothing herein shall constitute a concession by SBC CALIFORNIA that the provisions are subject to negotiation and arbitration under Sections 251/252 of the Act." (Appendix xDSL, page 18.46)

This specifically relates to Acceptance Testing and Cooperative Testing. SBC-CA agrees to include these two testing protocols. There is no dispute about including these protocols or the language in §§ 9 and 10, with the exception of pricing which is resolved separately above. As a result, no fundamental dispute is presented for arbitration.

Moreover, Acceptance Testing was included in § 9, and Cooperative Acceptance Testing in § 6.3, of the 2001 ICA. They met all tests for inclusion under the Act in 2001, and there is no reason not to continue the services here.

Thus, these portions of the ICA shall be included as worded by SBC-CA. The issue of whether these terms are subject to arbitration is not ripe, and need not be resolved to conclude this proceeding.

SBC-CA's proposed asterisk and endnote shall be included for the same reasons certain reservation of rights language is included pursuant to Issue PM 1. That is, the asterisk and endnote neither place any obligations on, nor harm, MCIm. The endnote makes clear that that SBC-CA has reserved its rights, and cannot be said to have waived those rights. This clarifies more general reservation of rights language in the General Terms and Conditions, and may usefully prevent future conflicts. It does not prejudge the outcome should SBC-CA later seek legal review in an appropriate forum, and does no harm here.

When the ICA is signed, however, these provisions shall apply for the life of the ICA. That is, the adopted language does not contain an "early termination" provision within the two testing protocols nor in the endnote. Specifically, nothing in Appendix xDSL, including nothing in § 9 (Acceptance Testing) or § 10 (Cooperative Testing), states a term or termination date. Thus, the term of the ICA applies. That term is 3 years, subject to extension until the ICA is superseded or terminated. (2006 ICA, GT&C § 7.2.) This will control unless SBC-CA later exercises its right to challenge these provisions as not subject to §§ 251/252 in an appropriate forum and prevails, including success on a claim in that forum of early termination.

The one exception is in § 6.0 of Attachment YZP, wherein proposed and adopted language states that "Term and Termination: Either Party may terminate this Attachment upon 180 days advance written notice to the other Party." MCIm opposes SBC-CA's position that this entire matter is not subject to arbitration, but, unlike alternative language for pricing, MCIm proposes no alternative language for the 180-day notice and termination. Thus, in this one case, the term and termination provision applies.

45 §§ 2.9, 6.2, 7.4 , 9 (all) 10 (all), Attachment YZP (all), Attachment RABT YZP (all).

46 A similar footnote (with slightly different wording but the same substantive result) is also included with Attachment YZP, page 6 of 6, and Attachment RABT YZP, page 4 of 4.

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