Parties

Verizon is an Incumbent Local Exchange Carrier (ILEC) that interconnects with Pac-West, as required by 47 U.S.C. § 251, under the terms of an ICA that became effective in 1996. The ICA that is the subject of this arbitration will be the successor to that agreement.

Pac-West is a facilities-based Competitive Local Exchange Carrier (CLEC) serving customers in California, including those within portions of Verizon's service area. Pac-West has fewer than 10,000 customers, the majority of which are small businesses. Pac-West provides basic telephone service, dial tone, telephone numbers, custom calling features, local and toll calling, and Internet access to Internet service providers (ISPs) for its customers.

Pac-West's network is comprised of its own equipment and facilities, combined with equipment and facilities such as OC-48s, DS-3s, DS-1s, local interconnection trunks (LITs), direct end-office trunks (DEOTs), and feature group access services leased from Verizon and other competitive carriers. Pac-West's services tend to be concentrated in less urbanized areas of California, and in many of those Pac-West is the only alternative local service provider to Verizon for small businesses and ISPs.

Pac-West owns seven Alcatel 600E class 4 (tandem) switches, two in Oakland, three in Los Angeles, and two in Stockton. These switches are clustered together in order to minimize transport, operations, and other facilities costs. Pac-West claims that its switches are located in the geographic areas where its customers are concentrated, in the same way that ILECs' tandem switches are located where their customers are concentrated. All Pac-West switched traffic, including local traffic, is routed through at least one of its switches, regardless of the type of service or class of customer. The switches are connected to each other using inter-machine trunks paid for by Pac-West. There are points of physical interconnection (POIs) with Verizon, and although Pac-West does not collocate (i.e., co-locate) at any Verizon central offices, Pac-West acquires transport facilities from third party carriers that often collocate at Verizon's offices.

Pac-West's switches are extended to the POIs in other LATAs served by Verizon, using facilities leased from interLATA carriers and paid for by Pac-West. Currently, Pac-West has established transport facilities to Verizon POIs at Verizon's Sanger tandem office in the Fresno LATA; the Verizon Manteca tandem office in the Stockton LATA; the Verizon Santa Barbara tandem office in the San Luis Obispo LATA; the Verizon Palm Springs tandem office in the Palm Springs LATA; and three different POIs in the Los Angeles LATA.

All of Pac-West's trunking to Verizon is via two-way trunks, which means that calls originated by either party and destined to be terminated by the other use the same trunk group. Since they entered into their initial ICA the two carriers have established end office trunks based upon the volume of traffic exchanges between them. Thus, all trunks between the parties are established between two switches, either a Pac-West switch and a Verizon tandem switch, or a Pac-West switch and a Verizon end office.³ Pac-West has trunks connecting to nine Verizon California tandems and approximately 150 Verizon end offices associated with those tandems. Of these connections, approximately 35,000 are DEOTs and 5000 are tandem trunks.

Because of their historically different origins and vastly different sizes, the two companies have greatly differing network architectures. That of Pac-West, which relies on just seven switches in three locations, requires nearly every call between a Verizon customer and a Pac-West customer to be routed out of the Verizon customer's calling area for delivery to the Pac-West switch handling the call for termination. This is true even where the respective customers are next door to one another. The only exception is that of calls originated by Verizon customers served by an end office switch located in close proximity to one of Pac-West's switch locations. In order to eliminate this peculiarity of the two carriers' disparate network operations, Pac-West claims it would essentially have to duplicate Verizon's network facilities, an option that is prohibitively expensive because of the small size of its customer base and overall traffic volume.