4. Discussion

In principle, any customer of SBC-CA may switch his or her local voice service to a CLEC with one phone call to the CLEC. SBC-CA, however, does not follow that principle if the customer has SBC Yahoo! DSL. That customer must make multiple phone calls to both the CLEC and SBC-CA, as well as find a new DSL provider in order to regain DSL service.

Complainants assert that refusing to process otherwise complete and accurate requests to change local voice service is, on its face, anticompetitive and in violation of the mandate of Sec. 451 that "[a]ll rules made by a public utility affecting or pertaining to its charges or service to the public shall be just and reasonable."21 SBC-CA offers three justifications for its practice. First, SBC-CA contends that the complainants have shown not that customers are harmed, but merely that they are inconvenienced, by SBC-CA's refusal to allow local voice migrations of customers with SBC Yahoo! DSL. Second, SBC-CA claims that its rule is justified because numerous operational difficulties would ensue if it allowed the local service migration order to be executed. Third, SBC-CA asserts that, regardless of the impact of its rule, it is consistent with state and federal legal requirements.

SBC-CA's assertion that the complainants failed to demonstrate harm to customers is not supported by the record. The record shows that thousands of customers who wanted to change their local voice service to a CLEC were prevented from doing so when SBC-CA rejected the LSRs for the change. Many customers who want to make this change are preemptively informed by the CLECs that they will not be able to do so. The harm to the customer is SBC-CA's frustration of the customer's intention to take advantage of competitive services in the local voice marketplace, and complainants have amply demonstrated the existence of that frustration.

SBC-CA's affirmative claim that only minor inconvenience to customers results from its policy is supported neither by the record nor by common experience. In making that argument, SBC-CA puts great weight on the availability of free web-based e-mail services, such as hotmail.com and Yahoo.com. These services, SBC argues, allow anyone to have a stable e-mail address (e.g., janecustomer@hotmail.com) regardless of whether the customer maintains SBC Yahoo! DSL service.

This point is accurate as far as it goes, but it does not go far enough to justify SBC-CA's policy.22 If free web-based e-mail were all that customers needed, there would be no market for SBC Yahoo! DSL, which SBC promotes at a charge of more than $20.00 per month.23 More fundamentally, ending SBC Yahoo! DSL service means not simply ending the customer's e-mail address; it means ending the customer's DSL access. A hotmail.com e-mail address does not help customers who have lost the ability to connect to the internet because they have had to cancel their SBC Yahoo! DSL as a step in the process of transferring their local voice service.

SBC-CA also ignores the impact of the process itself on the customer's ability to change local voice provider. The SBC Yahoo! DSL subscriber must have at least three interactions in order to change local voice providers and regain DSL access-with SBC-CA to cancel SBC Yahoo! DSL, with the CLEC to arrange the local voice service change, and with a new DSL provider-while the SBC-CA customer without SBC Yahoo! DSL who wants to change local voice providers merely has to call the CLEC. Even if the customer is willing to give up DSL service altogether, he or she still needs to have at least two interactions, with both SBC-CA and the CLEC, to make the local voice service change.

SBC-CA does not argue that it is not technically possible to allow the migration of the local voice customer with SBC Yahoo! DSL to the local voice service of a CLEC using UNE-P. Rather, as AT&T points out, most of the operational issues SBC-CA advances are related to the administration of possible line splitting arrangements between the new voice CLEC and the DSL provider.24 These fears are not realistic, since the two line-splitting CLECs have the active roles, and the ILEC has a very limited role. Indeed, the FCC has reminded ILECs that they must facilitate line splitting.25 Nothing in the record supports SBC-CA's speculation that it would be overwhelmed by the administrative problems of line splitting if it stopped blocking SBC Yahoo! DSL customers' changes in local voice provider.

SBC-CA also identifies a potential operational problem in billing the SBC Yahoo! DSL customer whose local voice service has been moved to a CLEC, since SBC-CA will no longer be providing a bill for local voice service, on which it had been including the SBC Yahoo! DSL charge. AT&T points out, however, that the current requirements of a credit card or Yahoo! "wallet" account on file for SBC Yahoo! DSL customers gives the SBC Yahoo! DSL providers options for billing a customer who no longer has SBC-CA local voice service. Whether or not these are the best ideas, they demonstrate that there are likely to be solutions to the potential billing issues. The record does not show that billing would be such an insuperable problem as to justify SBC-CA's refusal to allow the migration of the SBC Yahoo! DSL customer's local voice service to a CLEC.

Finally, SBC-CA asserts that its policy is in accord with federal and state regulatory requirements, and thus cannot be in violation of Sec. 451. SBC-CA's regulatory arguments fall into three broad groups: SBC-CA is in compliance with its obligations to support line sharing and line splitting; it is in compliance with its obligations to make UNEs available and cannot be forced to create new UNEs; and it is not depriving customers of choice.

SBC-CA's compliance with its regulatory obligations to support line sharing and line splitting is not relevant to this proceeding. It is not the provision of DSL services that is at issue, but the effect of SBC-CA's practices related to SBC Yahoo! DSL on the market for local voice services. This distinction between DSL and the impact of DSL practices on competition in local voice markets has also been made by other state commissions, in varying circumstances.26 Similarly, complainants do not question, and we do not need to decide, whether SBC-CA has properly unbundled the HFPL or made the HFPL available to CLECs on a nondiscriminatory basis. We take as given SBC-CA's unbundling of the HFPL and the existence of its line sharing arrangements with, e.g., ASI.

SBC-CA fears that, if we find it in violation of its legal obligations, we would require it to unbundle the LFPL. SBC-CA, relying on the FCC's conclusion that unbundling the LFPL is not required,27 asserts we cannot order such relief. In fact, however, SBC-CA would not have to unbundle anything more than it already has if it allowed SBC Yahoo! DSL customers to switch local voice service to a UNE-P CLEC. The CLEC "wins" the loop when it wins the voice customer, thus setting the stage for, if anything, a conventional line splitting arrangement. Looking at the same situation from another angle, SBC-CA urges that we would force it to provide DSL service when it is no longer the voice provider, contrary to the policy announced by the FCC in Joint Application by BellSouth Corporation, BellSouth Telecommunications, Inc. and BellSouth Long Distance, Inc. for Provision of In-Region, InterLATA Services in Georgia and Louisiana, CC Docket No. 02-35, 17 F.C.C.R. 9018 (May 15, 2002), ¶157. But since SBC-CA does not provide the DSL service, we cannot and do not force it to continue to do so. 28

SBC-CA argues that its practices cannot be harming consumers or competition because consumers continue to have choices in high-speed internet access services-for example, cable modem, wireless services, or DSL providers other than SBC Yahoo! DSL. SBC-CA is, however, confusing the market for high-speed services with the market for local voice services. Nothing in the record supports SBC-CA's suggestion that choice of high-speed internet access service is a substitute for choice of local voice service.

SBC-CA compounds this confusion when it argues in its reply brief that the application of federal antitrust analysis shows that it has not violated Sec. 451 because it does not have market power in the provision of broadband services. The Legislature did not incorporate antitrust doctrines into Sec. 451 (compare Official Code of Georgia Annotated, Section 46-5-169(4)), though it is well-settled that we may consider antitrust issues in our decisions on certificates of public convenience and necessity. Northern California Power Agency v. PUC (1971) 5 Cal.3d 370. No party cites any case in which we have based our interpretation of Sec. 451 on federal antitrust doctrines, and we see no need to do so in this case.

AT&T urges that, in addition to violating Sec. 451, SBC-CA's policy of refusing to process orders for changing the local voice service of a customer with SBC Yahoo! DSL is discriminatory, in violation of Sec. 453(a)29 The SBC-CA local voice customer without SBC Yahoo! DSL may simply choose another local voice provider; the SBC Yahoo! DSL customer may not. This, AT&T argues, is unjustifiable discrimination against some SBC-CA local voice customers. We agree. In enacting sec. 453(a), the Legislature created "a broad ban on discriminatory conduct." Gay Law Students Assn. v. Pacific Tel. & Tel. Co. (1979) 24 Cal.3d 458, 478. A customer who wants to use a "mix and match" approach to acquiring different services from different providers is deprived by SBC-CA's policy of one of the principal advantages of a competitive telephone marketplace. SBC-CA's policies subject such a customer to disadvantage in the marketplace. The arguments advanced by SBC-CA with respect to complainants' claims under sec. 451, which we have analyzed above, for the same reasons do not provide an adequate defense to the claims under sec. 453(a).

SBC-CA has not justified the barrier to competition and discrimination among customers in the local voice market that it has created by its refusal to allow its local voice customers with SBC Yahoo! DSL service to take their local voice business to a UNE-P CLEC. SBC-CA must cease this anticompetitive and discriminatory behavior. The record does not support the same conclusion if the CLEC is using UNE-L. We therefore limit our decision to situations where the CLEC provides services using UNE-P.

Although SBC-CA protests that any relief we order would have to include ASI and SBC IS, neither of which is a party, we can require SBC-CA to cease its unlawful practice without ordering ASI or SBC IS to do anything at all. Our order today may lead SBC-CA, ASI, and SBC IS to reevaluate their relationships with respect to SBC Yahoo! DSL, but we do not impose any legal obligations on non-parties ASI and SBC IS.30

The record shows that, in its residential local voice service winback efforts, SBC-CA has systematically suggested to former customers that they may have been slammed. Because SBC-CA does not verify that its suggestions about slamming have been made to the only person in a household authorized to change local voice service, this practice has the potential for generating inaccurate reports of slamming. The Settlement commits SBC-CA to a comprehensive review of its winback materials that will result in removal of any suggestions that the former customer may have been slammed or misled, and commits SBC-CA to training its winback personnel not to make such suggestions. These steps, when implemented, will substantially reduce the possibility of inaccurate slamming allegations without inhibiting the former customer from volunteering information that he or she had been slammed. The Settlement should therefore be approved. In addition, we will order SBC-CA to carry out its representation at the evidentiary hearing that the third-party verification process will be applied to local voice service, to ensure an independent verification of slamming allegations consistent with that used for other services.

Although it is clear that SBC-CA's winback program is aggressive and well-organized, the record does not support Telscape's allegation that SBC-CA is improperly jumping the gun in its winback efforts by using confidential information from the LSR process (customer proprietary network information) before the change of local voice service has occurred. There is also insufficient evidence to support Telscape's claim that SBC-CA's special winback offers are predatory and anticompetitive. While Telscape's concerns about SBC-CA's winback offers are plausible in view of the differential in resources between Telscape and SBC-CA, there is no evidence in this record that SBC-CA's offers in fact are effective in retrieving former customers or that they do not comply with established tariffs or other relevant regulatory requirements. Nor is this proceeding the proper forum for considering Telscape's suggestion that we should impose a four-month moratorium on SBC-CA's winback efforts. This is a policy preference, not a remedy for a demonstrated violation of a provision of law or of one of our orders, as required by Sec. 1702.

We have long considered access to OSS functions to be an essential element of a competitive local telephone market. See, e.g., D.96-02-072, 65 CPUC2d 65, 83 (1996); D.98-12-079, 84 C.P.U.C.2d 272 (1998). In this complaint, Telscape makes a broad critique of SBC-CA's OSS performance. Telscape asserts that, viewed as a whole, the OSS structure and the way SBC-CA employs it create anticompetitive barriers that are so severe as to violate both our UNE pricing orders and Sec. 451. The record shows that some aspects of SBC-CA's OSS implementation are not in compliance with SBC-CA's legal obligations, but it does not show that the problems are so pervasive or intractable that we ought to accept Telscape's implicit invitation to become the day-to-day supervisor of SBC-CA's OSS.

The specific exceptions to flow through that Telscape challenges are a heterogeneous lot, but Telscape has demonstrated that, as to some of them, SBC-CA's OSS processes result in charges to CLECs that are not just and reasonable, in violation of Sec. 451. The source of the illegality is not the charges themselves, which are in accord with the various pricing orders issued in our OANAD proceeding. Rather, the problems arise in SBC-CA's practices leading to the assessment of charges that are correct for what is billed-but the choice of what to bill is not justifiable.

In the circumstance in which one of the SBC-CA customer's lines is being changed to a CLEC, the evidence shows that the order falls out of flow-through so that SBC-CA can reorganize its own billing for the remaining line. This results in a semi-mechanized charge to the CLEC for the benefit of SBC-CA's retail operations. In support of its practice, SBC-CA asserts that this issue was never raised in either the Change Management Process or the CLEC User Forum, and SBC-CA therefore had no reason to believe that this exception mattered to any CLEC's business and had no reason to take steps to change it. Raising an issue in such voluntary forums is not, however, a condition precedent to bringing a complaint under Sec. 1702.

SBC-CA's implicit argument that the continued existence of the exception is essentially harmless because CLECs have not previously complained about it is not supportable in this circumstance. Although SBC-CA has some discretion in making improvements to flow-through, its options must be exercised within legal bounds. The record shows that the semi-mechanized charge here is the result of SBC-CA's retail operational requirements. Pursuant to 47 C.F.R. § 51.505(d)(2) , SBC-CA is simply not authorized to impose a charge based on its own retail costs. SBC-CA's billing of this charge is therefore not just and reasonable, in violation of Sec. 451. SBC-CA must refund to Telscape the difference between the semi-mechanized and fully mechanized rate for any semi-mechanized order charges billed to Telscape that are attributable to this "partial migration" exception.

SBC-CA agreed in 2002 to change its policy on the rate for ULTS migrations, from semi-mechanized to fully mechanized. SBC-CA has not, however, changed the OSS system, so bills continue to be generated at semi-mechanized rates. Telscape pays these bills and then seeks a refund. SBC-CA asserts that, because Telscape ultimately gets its money back, this issue is resolved. Nothing in our UNE pricing decisions, however, authorizes SBC-CA to impose charges, even subject to refund, to which it has agreed it is not entitled. Such charges cannot be just and reasonable.31 SBC-CA should therefore take whatever steps are necessary to ensure that bills for ULTS migrations are generated at the proper rate in the first instance.32

A different problem is presented by the WSOP exception. The record shows that a UNE-P order will fall out under this exception if the CLEC's order leaves a particular field blank. The instructions given in SBC-CA's Local Service Ordering Requirements, however, identify that field as "conditional," meaning that it may not need to be filled in. The instructions allow, if not encourage, a CLEC to fill out the order in a way that causes the order to fall out of flow-through, even though there may be no reason for the WSOP exception to be applied. This defeats the CLEC's right to nondiscriminatory access to OSS and results in higher semi-mechanized charges that are a windfall to SBC-CA. These charges are not just and reasonable. SBC-CA should revise the instructions for the WSOP field to eliminate the misleading implication of the current instructions. Because the record shows that clarifying the instructions is likely to prevent UNE-P orders from falling out of flow-through, we need not reach Telscape's contention that the WSOP exception is itself unjustified.

Telscape has not shown a violation of law in SBC-CA's practice of applying semi-mechanized charges to an entire order that falls out of flow-through because one of its elements requires LSC intervention. There is no evidence that this treatment occurs because of SBC-CA's retail needs or that it is based on any other impermissible criterion. It may make orders more expensive for CLECs, and it might be possible for SBC-CA to change the way such orders are treated, but that does not mean that SBC-CA's current practice is unlawful.

In its brief, Telscape acknowledges that evaluating its complaints about the pace at which SBC-CA is implementing flow-through improvements and the choices SBC-CA has made about priorities for flow-through is largely a matter of judgment, requiring us to decide how fast is fast enough, and how helpful to CLECs is helpful enough. It is true that SBC-CA's control over the OSS process gives it the ability to influence CLECs' business by making some activities more expensive than others, or by keeping some activities more expensive than they perhaps could be. It is also true that the OSS process is complex; it is not reasonable at this time to expect that process to meet all needs of all CLECs all the time. While the existence of forums such as the Change Management Process and the CLEC User Forum does not insulate SBC-CA from complying with its legal obligations, it is significant that there is no evidence in the record that other CLECs share Telscape's view of SBC-CA's progress, or lack of it, on flow-through improvements. Telscape's evaluation alone is not enough to persuade us that we ought to interfere in SBC-CA's development and implementation of flow-through improvements.

With the implementation of tech-to-tech testing, SBC-CA has made available a direct method of checking possible EISCC trouble. Telscape acknowledges that tech-to-tech testing will improve its ability to deal with EISCC problems at lower cost, but adheres to its position that SBC-CA's billing of $84.85 for CFA changes, when they are ordered, is too high. Telscape locates the pricing problem in SBC-CA's choice of what UNEs to put together to make up the CFA charge. Telscape asserts that the CFA change work is more accurately captured by a loop channel change charge ($15.50) and a mechanized service order charge ($1.10).

In the absence of a charge specified in the interconnection agreement, we are unable to resolve this dispute. Telscape may be making a sensible pricing proposal. SBC-CA's very different pricing, combining a number of UNEs, may be justifiable. The correct pricing may lie in some other combination of charges, or a new, separate charge. Whatever the answer, this complaint proceeding is not the appropriate forum in which to try to find, or create, a price for a UNE.

SBC-CA's systems for billing CLECs are complex, as are its methods of resolving billing disputes. SBC-CA notes that its billing meets high standards of formal correctness and that many employees deal with CLEC billing issues. Telscape does not dispute these points; rather, Telscape asserts, the problems lie in substantively erroneous charges presented in a formally correct manner and in inordinately long periods of time needed to resolve billing disputes.

Some of the billing issues Telscape describes as substantive are simply the reflection in its bills of the issues about non-recurring charges we have addressed in Sec. 4.3.1, and need not reexamine here. Some of the issues, such as how SBC-CA presents usage information in its bills, are not appropriate for resolution in a complaint proceeding.

The record shows that a small CLEC, like Telscape, must be very alert and very persistent to make effective use of the structure and policies SBC-CA has developed to handle billing disputes. Telscape has shown that, having successfully negotiated a resolution to a billing dispute, it often has to wait for more than one billing interval to receive the agreed credit, and sometimes the initially credited amount is inaccurate. By failing to return proper credits to Telscape (or any other CLEC) promptly, SBC-CA is imposing an unjustified, if temporary, charge.33 This violation of Sec. 451's requirement that all charges must be just and reasonable would be remedied if CLECs were promptly credited in the correct amount after disputes are resolved. SBC-CA should review its policies and systems for posting credits to CLECs and make any changes that are needed to ensure that CLECs are correctly credited on their next bill after a dispute is resolved.

Telscape urges that SBC-CA not be allowed to conclude settlements of disputed billings with CLECs that include waivers of performance remedies. Telscape notes that such settlements deprive other CLECs and the Commission of information about SBC-CA's performance, and argues that they could allow SBC-CA to discriminate in fact among CLECs by settling with some CLECs on terms of which others are unaware and therefore cannot use.

We adhere to our strong policy in favor of settlements. See, e.g., Re Pacific Bell, D.92-07-076, 45 C.P.U.C.2d 158, 169 (1992). In this case, however, the nature of the settlements negotiated by SBC-CA is inconsistent with our order in D.02-06-006, which clarified details of the implementation of SBC-CA's Performance Incentive Plan. In that decision, we expressed our intention " to preserve the incentive nature of the PIP by maintaining the relationship between overall performance and incentive amounts." (mimeo., p. 2) The record in this case shows that at least one settlement between Telscape and SBC-CA resulted in the effective disappearance of any performance measure remedy. Although Telscape could agree to waive payment of remedies to itself, that waiver could not authorize SBC-CA either to omit payment of remedies for the benefit of ratepayers or to omit reporting the performance failure. SBC-CA must now pay the remedies for the benefit of ratepayers and make the reports for all performance problems for which Telscape agreed to waive performance remedies.

21 The fact that the rejection of the request is automatically accomplished by a computer program does not make the rejection, which is invariant, something other than a "rule." 22 The parties expended some effort on this issue, both in the evidentiary hearing and in their briefs. In view of our analysis of its significance, we do not address it in a similar level of detail. 23 An example is "SBC Yahoo! DSL Special Offer," on the SBC "California Residential Phone Service" web site, http://www.sbc.com/gen/landing-pages?pid=3308 (April 13, 2004). At the evidentiary hearing, the parties offered a number of exhibits consisting of excerpts from various web sites. Because the contents of the web sites are not reasonably subject to dispute (though their significance may be disputed), we take official notice of the contents of the web sites of the parties to this proceeding. 24 The FCC defines line splitting as "the scenario where one competitive LEC provides narrowband voice service over the low frequency portion of a loop and a second competitive LEC provides xDSL service over the high frequency portion of that same loop." Triennial Review Order, ¶ 251. 25 Triennial Review Order, ¶¶ 251, 252. 26 See, e.g., Petition by Florida Digital Network, Inc. for arbitration of certain terms and conditions of proposed interconnection and resale agreement with BellSouth Telecommunications, Inc. under the Telecommunications Act of 1996, Florida Public Service Commission Docket No. 010098-TP, Order No. PSC-02-0765-FOF-TP, 2002 Fla. PUC LEXIS 401 (June 2, 2002) (arbitration); In re BellSouth's provision of ADSL Service to end-users over CLEC loops, Louisiana Public Service Commission, Docket R-26173, Order R-26173, 2002 La. PUC LEXIS 20 (Dec. 18, 2002) (rulemaking); Petition of MCImetro Access Transmission Services, LLC and MCI WorldCom Communications, Inc. for Arbitration of Certain Terms and Conditions of Proposed Agreement with BellSouth Telecommunications, Inc. Concerning Interconnection and Resale under the Telecommunications Act of 1996, Georgia Public Utilities Commission, Docket No. 11901-U, 2003 Ga. PUC LEXIS 38 (Oct. 21, 2003) (arbitration); Petition of Cinergy Communications Company for Arbitration of an Interconnection Agreement with BellSouth Telecommunications, Inc. pursuant to 47 U.S.C. Section 252, Kentucky Public Service Commission Case 2001-00432, 2002 Ky. PUC LEXIS 722 (Oct. 15, 2002), aff'd sub nom. BellSouth Telecommunications, Inc. v. Cinergy Communications Co., 297 F.Supp.2d 946 (E.D.Ky.2003) (arbitration). 27 Triennial Review Order, ¶270. 28 Uncertainty about how we should treat the various SBC entities involved runs through the presentations of all the parties, including SBC-CA. Complainants urge that we treat all SBC affiliates as "one SBC," without regard to their formal corporate status or separate functions as ILEC (SBC-CA), DSL transport provider (ASI ), or ISP (SBC IS). SBC-CA at times insists on the separation, (e.g., in arguing that we cannot provide any relief if ASI and SBC IS are not parties), while at other times it relies on lack of separation (e.g., in arguing that it cannot be forced to provide DSL to a CLEC's voice customer). Since, as explained below, we grant relief based on SBC-CA's behavior alone, it is not necessary for us to examine in any detail the relationship among these affiliated entities beyond their collaboration in the SBC Yahoo! DSL retail product. 29 Sec. 453(a) provides that "[n]o public utility shall, as to rates, charges, service, facilities, or in any other respect, make or grant any preference or advantage to any corporation or person or subject an corporation or person to any prejudice or disadvantage." 30 We do not authorize SBC-CA to provide an access loop to ASI where there is no purchase of the loop by a local customer, ASI, or the CLEC. 31 Cf. Hidden Valley West v. San Diego Gas & Electric Co., D.87305, 81 C.P.U.C. 627, 636 (1977) (utility violates sec. 451 if it fails to return balance to customers who made payments based on estimated costs that were higher than actual costs). 32 Telscape presented testimony on an analogous claim about SBC-CA's billing of end-user returns, the migration of a UNE-P customer from a CLEC to SBC-CA. In its brief, however, Telscape conceded that this claim was no longer alive, so we do not address it here. 33 Cf. Hidden Valley West v. SDG&E, 81 C.P.U.C. at 636.

Previous PageTop Of PageNext PageGo To First Page