II. Requirements of the TRO Relating to Hot Cuts: Standards for Approval
The migration of a customer's loop from a UNE-P to a UNE-L serving arrangement is referred to as a "hot cut." As described in the TRO, a "hot cut" defines the process whereby the "incumbent LEC technicians . . . manually disconnect the customer's loop, which was hardwired to the incumbent LEC switch, and physically re-wire it to the competitive LEC switch, while simultaneously reassigning (i.e., porting) the customer's original telephone number from the incumbent LEC switch to the competitive LEC switch." (TRO ¶ 465 n.1409.) Generally, the new connection would be cut over while the customer's loop is "hot" - i.e., in active service, hence, the term "hot cut." The schematic diagrams included in Appendix 1 of this order illustrate the before-and-after hot cut process for a typical SBC central office.
The FCC promulgated 47 C.F.R. § 51.319(d)(2)(ii), defining a "batch cut process" as one by which the ILEC simultaneously migrates two or more loops from one carrier's switch to another carrier's switch, "giving rise to operational and economic efficiencies" not available when loops are migrated on a line-by-line basis. In this manner, the batch hot cut (BHC) process would be used to cut over the existing embedded base of CLEC customer lines from the ILEC switch (utilizing UNE-P) to the CLEC switch (utilizing UNE-L).
Concerning the hot cut process, the FCC orders that:
"In each of the markets that the state commission defines pursuant to paragraph (d)(2)(i) of this section, the state commission shall either establish an incumbent LEC batch cut process . . . or issue detailed findings explaining why such a batch process is unnecessary . . . ." (47 C.F.R. § 51.319(d)(2)(ii))
The FCC further states that:
"Specifically, we ask the state commissions, within nine months of the effective date of this Order, to approve and implement a batch cut migration process - a seamless, low-cost process for transferring large volumes of mass market customers . . ." (TRO ¶ 423)
The FCC concluded in the TRO that on a national basis, competing carriers left without access to unbundled local circuit switching for mass market customers would be impaired due to economic and operational barriers resulting from the ILECs' current cut over or "hot cut" processes. (§ 459 ) The FCC found that competing carriers are impaired without access to UNE switching for mass market customers based on "the combined effect of all aspects of the hot cut process on competitors' ability to serve mass market voice customers."5 The FCC, in paragraph 470 of the TRO, said that: "Although hot cut costs vary among incumbent LECs, we find that on a national level that these costs contribute to a significant barrier to entry."
Although this national finding of impairment was vacated by USTA II, the factual evidence in our record supports our independent findings (consistent with the provisions of the TRO left unchanged by USTA II) that CLECs do require an efficient, reliable, and low cost hot cut process wherever UNE-P is eliminated. For this reason, we find that whenever UNE-P is eliminated in California, a batch cut process is necessary.
In establishing the batch cut process, the TRO specifically requires that we:
1. determine the appropriate volume of loops that should be included in the batch (47 C.F.R. § 51.319(d)(2)(ii)(A)(1));
2. adopt specific batch cut processes, taking into account the ILEC's network design and cut-over practices (47 C.F.R. § 51.319(d)(2)(ii)(A)(2)); and
3. evaluate whether the ILEC is capable of timely migrating multiple lines served using unbundled switching to switches operated by other carriers (47 C.F.R. § 51.319(d)(2)(ii)(A)(3)).
4. adopt rates for the batch cut activities it approves in accordance with the Commission's pricing rules for unbundled network elements. These rates shall reflect the efficiencies associated with batched migration of loops to a requesting telecommunications carrier's switch, either through a reduced per-line rate or through volume discounts as appropriate. (47 C.F.R. § 51.319(d)(2)(ii)(A)(4)).
We address each of these requirements in the order below.
In particular, we adopt the minimum volume of loops to be included in the batch size for SBC in Section VI.C.1 and in Section VIIIC.1 for Verizon. The batch sizes are adopted on an interim basis contingent on subsequent testing and evaluation of performance metrics, as discussed below, to ensure that the resulting processes are being performed in a "seamless" manner.6
We adopt, on an interim basis, specific batch hot cut processes separately proposed by each ILEC (as summarized in Section IV for SBC, and Section VII for Verizon), taking into account network design and cutover practices utilized by each company. We adopt these processes only on an interim basis in view of the additional development needed to provide adequate assurances that the requisite hot cut volumes can be processed in a "seamless" manner.
We also address whether, or to what extent, the hot cut proposals of the incumbents are sufficiently scalable to meet the potential increase in demand resulting from the elimination of UNE-P. In succeeding sections, we address the need for the hot process to be augmented to accommodate more complex migration scenarios, including seamless migration of customers taking both voice and data services over a single line.
In Sections VI and VII, respectively, we evaluate the extent to which each of the ILECs is capable of timely migrating multiple lines served from UNE-P to UNE-L. We then address in Section XIII the question of pricing for the hot cut processes to conform to applicable pricing rules and to recognize batching efficiencies. Rule 319(d)(2)(ii)(A)(4) addresses the rates that the Commission is to adopt for the batch cut process it approves.
While the vast majority of migration orders under current UNE-P arrangements can be processed by the ILEC electronically without the need for manual intervention, UNE-L migration requires a hot cut involving manual provisioning and testing activities that are prone to error and take significant time to accomplish. Hot cut capacity is limited by a number of factors, such as the labor-intensive nature of the process and the practical limitations on how many hot cuts the LECs can perform without interference or disruption in service. In the TRO, the FCC held that the ILEC's existing hot cut processes examined in the various Section 271 proceedings are unreliable as an indicator of performance at the very high volumes at issue in this proceeding.7 We note that without UNE-P, customer loop migrations will increase in number and will require a streamlined process capable of handling a complex variety of transition scenarios.
The hot cut process raises potential service reliability issues because it entails interruption of the customer's service. First, from the time the customer's loop is disconnected from the ILEC's switch until it is reconnected to the CLEC's switch, the customer has no dial tone and is without telephone service. Second, even after the customer's loop is connected to the CLEC's switch, the customer cannot receive incoming calls until the customer's number is successfully ported to the CLEC's switch. To the extent that carriers are subsequently required to replace UNE-P with UNE-L serving arrangements, therefore, provisions need to be made for an efficient and economical process for cutting over the CLEC customer's loop to avoid creating disparities between CLEC and ILEC service reliability. Accordingly, to the extent that an ILEC is no longer required to provide UNE switching to serve mass market customers in particular markets, the TRO requires that a BHC be approved and implemented. Because we make no findings in this order concerning whether the mass market triggers are met in any of the markets where CLECs compete, UNE-P will not be eliminated as a result of this order. Consequently, no specific timeline is activated by this order for the starting or end date for wholesale cutover of the embedded base of UNE-P lines to UNE-L through a BHC process. Nonetheless, to the extent that a BHC may be necessary at a future point where UNE-P lines are to be migrated to UNE-L status, and in the interests of a complete record, we set forth our findings concerning whether the proposed hot cut processes would result in a "seamless" transition at TELRIC-based pricing.
As discussed below, we conclude that the proposed hot cut processes proposed by SBC and Verizon are not yet sufficiently developed to provide a "seamless" transition to UNE-L in the event that UNE-P were to be eliminated. We set forth the additional requirements that need to be addressed by SBC and Verizon in order for their proposed hot cut processes to be deemed adequate to provide a "seamless" transition from UNE-P to UNE-L.
Regarding the BHC process, the FCC stated:
Generally, however, we expect these processes to result in efficiencies associated with performing tasks once for multiple lines that would otherwise have been performed on a line-by-line basis. For example, pursuant to the processes in place in at least some states, the incumbent LEC currently will pre-wire circuits on the central office frame, verify the presence of dial tone, and communicate with competitive LECs regarding problems encountered on a line-by-line basis. [footnote omitted] Under a batch cut process, these activities might be undertaken simultaneously for all lines affected by a given batch order. In addition to developing a cost-effective hot cut process, state commissions should evaluate whether the incumbent LEC is capable of migrating batch cutovers of unbundled loops combined with unbundled local circuit switching to unbundled stand-alone loops for any requesting carrier in a timely manner. Specifically, state commissions may require that incumbent LECs comply with an average completion interval metric, including any further disaggregation of existing loop performance metrics (i.e., quality or maintenance and repair metrics), for provisioning high volumes of loops. Finally, if they have not done so already, state commissions should adopt TELRIC rates for the batch cut activities they approve. These rates should reflect the efficiencies associated with batched migration of loops to a competitive LEC's switch, either through a reduced per-line rate or through volume discounts. (TRO § 489).
5 TRO at ¶473.
6 The Commission "may require that incumbent LECs comply with an average completion interval metric for provision of high volumes of loops." 47 C.F.R. § 51.319(d)(2)(ii)(A)(3). Such metrics would measure the ILEC's performance of the batch cut process.
7 TRO at ¶469.
