2. Background

Level 3 Communications, LLC (Level 3) and Pacific Bell Telephone Company (Pacific) exchange telecommunications traffic pursuant to an existing interconnection agreement (ICA). On November 12, 1999, Level 3 and Pacific began negotiating a successor ICA. Having been only partly successful in their negotiations, Level 3 filed an application for arbitration on April 20, 2000. The application sought arbitration of 36 issues. On May 15, 2000, Pacific filed its response. Pacific identified five additional issues, for a total of 41 issues.

Arbitration hearings were held on June 13 and 14, 2000. Seven witnesses testified, and 23 exhibits were received as evidence. Opening briefs were filed and served on June 23, 2000. Reply briefs were filed and served on June 28, 2000. Parties briefed 26 issues, with 15 issues having been resolved by parties and removed from the arbitration.

The Draft Arbitrator's Report (DAR) was filed and served on August 9, 2000. Comments on the DAR were filed and served on August 21, 2000, by Level 3 and Pacific. Reply comments were filed and served on August 23, 2000, by Level 3 and Pacific. The Final Arbitrator's Report (FAR) was filed and served on September 5, 2000.

At the request of both parties, the Arbitrator waived Rule 4.2.1 (Resolution ALJ-178). As a result, parties did not file an entire ICA for approval within seven days after the filing of the FAR. Rather, the FAR directs that parties file a complete ICA within 30 days of the date of this decision.

In compliance with the FAR, parties each filed and served a statement seven days after the filing of the FAR. The September 12, 2000 statements (1) identified the criteria we must use to test the ICA that would result from decisions in the FAR, (2) explained whether such ICA would pass or fail each test, and (3) said whether we should approve or reject the resulting ICA.

Level 3's statement says that the ICA which would result from decisions made in the FAR would violate both the Telecommunications Act of 1996 (Act), and Commission local competition policies. Level 3 recommends changes to, or reversal of, the outcomes in the FAR on five issues: Issue 2 (deployment of NXX codes), Issue 18 (combinations of unbundled network elements (UNEs) generally), Issue 19 (enhanced extended loops), Issue 22 (dedicated transport), and Issue 26 (cross connects). According to Level 3, the resulting ICA would then pass the tests the Commission must use to approve the ICA.

Pacific's statement says that the FAR, and the resulting ICA, should be approved by the Commission in their entirety. Pacific asserts that it may not agree with each and every decision in the FAR. Nonetheless, Pacific says the FAR corrects errors in the DAR, and the resulting ICA will meet the criteria for approval contained in the Act and Commission rules.

A ruling dated September 18, 2000 memorialized parties' agreement to waive § 252(b)(4)(C) of the Act through the Commission meeting on October 19,2000.¹