2. Background

On December 9, 1999, the Federal Communications Commission (FCC) released a decision requiring incumbent local exchange carriers (ILECs) to provide competitive local exchange carriers (CLCs) access to the high frequency portion of the local loop.¹ In its order, the FCC finds that the high frequency portion of the loop meets the statutory definition of a network element, and must be unbundled pursuant to §§ 251(d)(2) and 251(c)(3) of the federal Telecommunications Act of 1996 (Act).

The FCC order strongly encourages states to issue interim arbitration awards setting out the necessary rates, terms, and conditions for access to this unbundled network element (UNE), with any unresolved issues subject to a true-up adjustment when the state commission completes its arbitration. (FCC Line Sharing Order, ¶ 160.) The FCC urges states to issue these awards as quickly as possible after a party petitions for arbitration under the Act, so that CLCs may begin providing advanced services on shared loops by June 6, 2000 (i.e., within 180 days of release of its order). (FCC Line Sharing Order, ¶ 160.)

The California Legislature addressed this issue in Assembly Bill (AB) 991.² AB 991 requires that the California Public Utilities Commission (CPUC) "comply with, and implement, in a manner that the Public Utilities Commission determines to be appropriate, [the FCC's] order, as it pertains to loop access, pricing, and cost allocation" within 90 days from its publication in the Federal Register. The FCC published its order on January 10, 2000. The 90^th day was April 10, 2000.

To meet the time requirements of AB 991, the Chief Administrative Law Judge issued a ruling on January 31, 2000. The ruling ordered that no later than March 1, 2000, Pacific Bell Telephone Company (Pacific) and GTE California, Incorporated (GTE) each file an offer to amend existing interconnection agreements (ICAs) with CLCs to provide line sharing services.³ The ruling further required that Pacific and GTE submit signed amendments by advice letter to the CPUC's Telecommunications Division within five days of reaching agreement with a CLC (i.e., as early as March 6, 2000, for offers made on March 1, 2000). The advice letters would be deemed approved 30 days after the date of filing, unless rejected. (Rule 6.2, Resolution ALJ-178.) This process allowed CLCs to institute line sharing by April 10, 2000. The ruling also directed that ILECs and CLCs negotiate line sharing services if the CLC either did not have an existing ICA, or chose not to amend its existing ICA based on the ILEC's offer.

By joint ruling of the Assigned Commissioner and Administrative Law Judge (ALJ) on February 25, 2000, a new phase of this combined Open Access and Network Architecture Development (OANAD) proceeding was opened to address unresolved line sharing issues. A schedule was adopted providing for an interim arbitration, with interim line sharing awards effective by June 6, 2000. The ruling provided for further proceedings after the interim arbitration for the purpose of setting final rates, and addressing other line sharing issues, with all interim rates subject to true-up adjustment. Parties were ordered to negotiate diligently and in good faith throughout the month of March 2000 to reach agreement on amended contract language for interim line sharing services. Parties were ordered to file on March 27, 2000, either (a) signed agreements ready for CPUC approval, or (b) requests for arbitration.