II. Background
The Commission opened the OANAD rulemaking in 1993 with the intent of setting rates for the "basic network functions," or BNFs, now more commonly known as UNEs, that make up the network of SBC and Verizon. In D.99-11-050, the Commission set prices for UNEs offered by SBC (then Pacific) based on costs developed using the Total Element Long Run Incremental Cost (TELRIC) methodology, as set forth by the Federal Communications Commission (FCC) in 1996.7 Thus, the Commission achieved its intent to set TELRIC-based UNE prices for SBC, but has encountered numerous obstacles in its efforts to set rates for Verizon.
In the interest of brevity, we will not recount the full history of this case because it is described at length in D.03-03-033, where the Commission set interim UNE rates for Verizon. (See D.03-03-033, mimeo. at 4-9.)
Following adoption of interim UNE prices for Verizon, the parties and Commission turned their efforts toward setting permanent UNE rates for Verizon. After repeated delay requests by the parties, Verizon and JC each filed cost studies and supporting materials on November 3, 2003.8 Opening comments were also filed by the United States Department of Defense and Federal Executive Agencies (DOD/FEA) and Covad Communications Company (Covad).
In January 2004, the Administrative Law Judge (ALJ) and Telecommunications Division staff held three days of technical workshops where parties described their cost models and answered questions about them. Following numerous amendments and supplements in the spring of 2004, as well as several delay requests, the following parties filed reply comments on August 8, 2004: DOD/FEA, JCs, the Commission's Office of Ratepayer Advocates (ORA),9 The Utility Reform Network (TURN), Verizon and XO California, Inc. (XO).10 The same parties filed rebuttal comments on November 9, 2004.11
On December 3, 2004, Verizon filed a motion requesting leave to file limited surrebuttal testimony to address revisions to the HM 5.3 cost model in JC's November 9 rebuttal filing. The ALJ granted Verizon's request in part and on January 28, 2005, Verizon filed limited surrebuttal on three factual issues. The ALJ also required JCs to subsequently file a summary table identifying all changes to the HM 5.3 model in the rebuttal filing. This summary table was filed January 21, 2005. Verizon provided comments on the summary table on March 15, 2005.
As part of this phase of OANAD, the Commission must set price floors for Verizon. In February 2004, the ALJ directed Verizon to supplement its filing with detailed price floor proposals and workpapers since this had not been included in earlier filings. (Prehearing Conference Transcript (Tr.), 2/2/04, at 16486.) Reply comments on Verizon's price floor proposals were filed by MCI, ORA, and TURN on January 28, 2005, and rebuttal comments were filed on April 1, 2005 by AT&T, ORA, TURN and Verizon.
On April 29 and May 5, 2005, Verizon and MCI, respectively, filed motions requesting hearings. These motions were denied in a ruling of November 8, 2005.
On May 5, 2005, AT&T filed a notice of withdrawal from the Verizon UNE phase of the OANAD proceeding. On December 8, 2005, MCI filed a notice of withdrawal as well.12
On November 22, 2005, the California Association of Competitive Telephone Companies (CALTEL) filed a motion requesting clarification of the date when Verizon may modify UNE rates adopted in this proceeding, and requesting consideration of a process for future UNE rate modifications. The substance of CALTEL's motion is discussed in Section X of this order. CALTEL's motion also requests that it be allowed to make an appearance as a party to this proceeding. On December 15, 2005, Cbeyond Communications LLC (Cbeyond) filed a petition to intervene in this proceeding in order to comment on the draft decision.
The petitions to intervene by CALTEL and Cbeyond are unopposed. CALTEL and Cbeyond have an interest in the outcome of the proceeding and their participation will not broaden the issues or delay the process. The petitions to intervene are granted.
7 In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 (CC Docket No. 96-98); First Report and Order, FCC No. 96-325, 11 FCC Rcd 15499, (rel. Aug. 8, 1996) ("First Report and Order").
8 Verizon filed amendments, errata and supplements to opening comments on 12/30/03, 2/17/04, 2/20/04, 4/2/04, and 5/4/04. JCs filed amendments, errata and supplements to their opening comments on 2/6/04 and 6/2/04.
9 On January 1, 2006, ORA changed its name to the Division of Ratepayer Advocates (DRA). To avoid confusion, this decision will continue to refer to ORA because that was the name it used on all filings in this proceeding.
10 Amendments and errata to reply comments were filed as follows: Verizon on 9/30/04; JCs on 9/17/04 and 10/12/04; TURN on 8/10/04, 8/16/04 and 9/2/04; XO on 10/6/04; ORA on 10/7/04.
11 JCs filed an amendment to their rebuttal on 3/25/05.
12 Despite the withdrawal of both AT&T and MCI from the proceeding, this order will continue to refer to filings by Joint Commentors because AT&T and MCI were active in the case at the time the filings were made.
