II. Background
In D.02-05-042, the Commission adopted interim discounts to Pacific's unbundled loop and switching rates due to delays in this proceeding to reexamine Pacific's UNE rates. The delays were caused by certain deficiencies in Pacific's cost filing and the need to examine competing cost models. Specifically, the Commission adopted an interim discount of 69.4% to local switching rates and 79.3% to tandem switching rates. This interim discount resulted in a corresponding 69.4% discount to the basic (2-wire) port rate that had previously been set in D.99-11-050 in the Commission's Open Access and Network Architecture Development proceeding. (See Appendix A of D.99-11-050)
The level of the switching discount was based, in part, on application of an evidence sanction against Pacific for failing to comply with discovery rulings in the course of the proceeding. Pacific's failure to provide certain cost information resulted in the Commission deeming the missing material to support Joint Applicant's claim that switching rates should be lowered from the levels adopted in D.99-11-050. The Commission also found evidence to support the contention that switching prices for Illinois proposed by Pacific's sister corporation,
SBC-Ameritech, either equal or exceed the appropriate cost-based rates in California. (See D.02-05-042, mimeo. at 48.) This evidence included public data showing uniformity across geographic regions in switching cost trends, and Pacific's admissions that it buys switches for use in California at prices that are equal to, or more favorable than, the prices at which it can buy switches for use in Illinois. (Id.)
Parties commenting on the draft order before its adoption by the Commission maintained that the 69.4% switching discount should apply to all port types priced in Appendix A of D.99-11-050 rather than just the basic port. In D.02-05-042, the Commission declined this request, noting that Pacific was not given notice that the Commission might adopt an interim rate for anything other
than the basic port. The order directed the administrative law judge (ALJ) to solicit comments on this issue by further ruling.
The ALJ issued a ruling shortly thereafter inquiring whether it would be appropriate to apply the interim port discount of 69.4% to all port types. Pacific, AT&T Communications of California, Inc. and WorldCom Inc. (collectively "Joint Applicants"), Office of Ratepayer Advocates (ORA), The Utility Reform Utility TURN, Z-Tel Communications, Inc. (Z-Tel), Tri-M Communications d/b/a TMC Communications (TMC), and Anew Telecommunications Corporation d/b/a Call America (Call America) filed comments. Pacific and Joint Applicants filed reply comments. In response to an ALJ ruling seeking further information from the first round of filings, Joint Applicants and Pacific filed additional declarations from their respective witnesses.
The ports for which a discount is currently under consideration, and the current rates for these port, are as follows:
