II. UST's Complaint

UST alleges that Pacific has violated Pub. Util. Code Section 451, its obligations under federal law, and the Commission's decisions that require incumbent local carriers, such as Pacific, to provide interconnections, unbundled network elements, and collocation arrangements to competing carriers, such as UST.

UST asks that Pacific be ordered to cooperatively plan and carry out the migration of the collocation facilities and arrangements used by ATG to UST's account, and other activities necessary to transfer the acquired customers.

In support of its complaint, UST made the following allegations:

1. ATG occupies and uses collocation facilities at certain of Pacific's wire centers pursuant to leases or contracts between ATG and Pacific.

2. ATG has installed its equipment to and within the collocation spaces, and has interconnections between its facilities and Pacific's facilities. These facilities are used by ATG to serve its customers.

3. ATG is currently operating under the protection of the Bankruptcy Code.

4. ATG and UST have entered into an asset sale agreement whereby UST will acquire specified ATG assets, including customer accounts and all of the equipment used to serve the acquired customers.¹

5. The asset sale agreement was approved by the Bankruptcy Court by an order dated June 7, 2002.

6. UST and ATG filed advice letters seeking approval of the sale and transfer of customers on June 6, 2002.²

7. In order for UST to provide service to the acquired customers without interruption, the collocation facilities ATG uses must be migrated to UST's account without any physical changes.

8. UST and Pacific are parties to an interconnection agreement that permits UST to occupy and use collocation facilities in the same manner as ATG at the wire centers used by ATG to serve the acquired customers.

9. UST did not enter into an agreement with ATG for the assignment, transfer to, or assumption by UST of ATG's collocation arrangements, collocation agreements, leases or other rights to use Pacific's facilities.

10. UST has agreed to be responsible for Pacific's reasonably incurred costs of migrating ATG's collocation facilities to UST's account. UST has also proposed terms and conditions relating to the migration.

11. UST asked Pacific to cooperatively plan for the above migration.

12. Pacific has stated that it will not allow UST to occupy or use the collocation facilities used by ATG pursuant to the UST interconnection agreement. Pacific has insisted that UST may use the ATG collocation facilities only if there is a transfer or assignment by ATG of the ATG collocation agreements or other rights to UST in a manner that would allow Pacific to collect from UST amounts that have or would be discharged under the Bankruptcy Code. In addition, Pacific refuses to cooperate with UST with respect to migration of other facilities and interconnections that UST will need to serve the acquired customers until UST assumes responsibility for ATG's collocation-related debts.

13. UST believes that its ability to transfer the acquired customers is impaired by Pacific, and that as a result, service may be interrupted.

14. UST claims Pacific's above actions or failures will result in irreparable harm to customers, UST's reputation and good will, and telecommunications competition.

UST says it has the right to access and use the subject collocation facilities under the asset sale agreement and federal law without taking an assignment of ATG's interconnection agreement. UST argues that the right to collocate is an independent right granted to competitive local carriers ("CLCs") by federal law. Under section 251(c)(6) of the Telecommunications Act of 1996 ("1996 Act"), an incumbent local exchange carrier, such as Pacific Bell has:

"The duty to provide, on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, for physical collocation necessary for interconnection or access to unbundled network elements at the premises of the local exchange carrier . . . ."

Thus, UST argues that ATG did not acquire its collocation rights at the subject wire centers through its interconnection agreement. Instead, ATG already had those rights under federal law.

UST believes that ATG's interconnection agreement establishes mutually agreed rates, terms, and conditions for collocation, which are in lieu of the rates, terms, and conditions for collocation specified in Pacific's tariff or in other interconnection agreements that were available to ATG under section 252(i) of the 1996 Act.³ Therefore, UST says, the right to collocate is distinct from and independent of the specific rates, terms, and conditions for collocation in the interconnection agreement.

UST further argues that ATG can convey specific collocation rights without having to assign its interconnection agreement. In this instance, ATG has not assigned its interconnection agreement to UST. However, the subject collocation rights are intangible assets covered by the catch-all provision of the asset sale agreement that includes within the assets transferred to UST "all other assets, tangible or intangible, directly associated with the markets." Thus, by the asset sale agreement's terms, ATG effectively has conveyed its collocation rights to UST, even though there has been no attempt to assign ATG's interconnection agreement. Therefore, UST says, the plain language of the asset sale agreement, which must be followed so long as it is clear and not absurd,⁴ provides for UST to have the full, unfettered and exclusive right to access and use the subject collocation facilities, and neither ATG nor any potential successor will have any right to stand in UST's way.

UST further argues that its interpretation is consistent with the parties' intent as manifested in other provisions of the asset sale agreement. For example, under section 1.3(b) of the asset sale agreement, UST has agreed to be responsible for various costs accrued on or after June 1, 2002, including "co-location facility costs for the Markets," which contemplates the transfer of collocation rights to UST, rather than their retention by ATG, as Pacific contends. Indeed, under Pacific's view of the asset sale agreement, UST would be on the hook indefinitely for paying ATG's collocation costs without ever having the right to take over the collocation facilities, which is an impermissibly absurd intent to attribute to the asset sale agreement.⁵