2. Background

On December 9, 1999, the Federal Communications Commission (FCC) released a decision requiring incumbent local exchange carriers (ILECs) to CLECs access to the high frequency portion of the local loop.² 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 (TA96 or 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. The FCC urges states to issue these awards as quickly as possible after a party petitions for arbitration under the Act, so that CLECs may begin providing advanced services on shared loops by June 6, 2000 (i.e., within 180 days of release of its order). (Line Sharing Order, ¶ 160.)

The Commission opened a new phase of the Open Access and Network Architecture Development (OANAD) proceeding to establish terms and conditions for access to the HFPL. The Commission also determined that the line sharing portion of OANAD would proceed in two phases; the interim arbitration phase concluded in September 2000 with Commission Decision (D.) 00-09-074, with further proceedings to be scheduled for the purpose of setting final rates, and addressing other line sharing issues, with all interim rates subject to true-up adjustment.

Ordering Paragraph 2 of D.00-09-074 indicated that the permanent line sharing phase of this proceeding would determine:

a. final prices, including the issue of double recovery of loop costs and disposition of balances in memoranda accounts;

b. the number of tie cables in an efficient line sharing configuration;

c. whether or not to continue the limitation on decommissioning copper local loop plant pending resolution of line sharing or transport over fiber facilities; and

d. other issues only to the extent specifically added by the ALJ (Administrative Law Judge).

At a Prehearing Conference (PHC), held on May 2, 2001, the assigned ALJ set a procedural schedule for the "permanent" line sharing (PLS) proceeding. She bifurcated the proceeding, and put the issue of a permanent price for the HFPL on a separate expedited track. A separate schedule was developed for the other so-called "noncosting issues." Pursuant to the schedule for the HFPL phase, parties submitted opening and rebuttal testimony in June 2001 on the issue of an appropriate price for access to the HFPL. Additionally, parties addressed whether, if the Commission retains a positive price for access to the HFPL, any portion of that price should be refunded to end users.

On July 2, 2001, parties filed briefs on the need for hearings. Parties agreed that the issue of the price for the HFPL was largely a policy issue, and hearings were not required. At the request of all active parties, on August 2, 2001, at a hearing in the noncosting phase, all the prefiled testimony in the HFPL phase was deemed to have been entered into evidence. Since parties concurred that no hearings were necessary, they agreed to waive the right to cross-examine witnesses. Opening briefs were filed on July 28, 2001, and Reply Briefs, on August 20 and August 27, 2001.