3. Comments on Draft Decision
The draft decision of the Administrative Law Judge in this matter was mailed to the parties in accordance with Pub. Util. Code § 311 (g)(1) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on the draft decision on ___________, and reply comments were filed on ___________. We have taken parties comments into account, as appropriate, in finalizing this order.
1. D.98-10-57 as modified by D.99-07-047, requires reciprocal compensation payments made pursuant to interconnection agreements apply to ISP-bound traffic in the same manner as they apply to other local traffic.
2. The obligation of ILECs to pay reciprocal compensation to CLCs for ISP-bound traffic remains a disputed issue since Pacific and Verizon have filed complaints in U.S. District Court regarding the relevant Commission decisions.
3. Theoretically, the pending U.S. federal court cases filed by Pacific and Verizon challenging past reciprocal compensation payments could have some impact on Citizens and Roseville. Nonetheless, the issuance of the FCC's recent order regarding intercarrier compensation for ISP-bound traffic provides decisive policy guidance regarding the treatment of both past and prospective reciprocal compensation payments.
4. The FCC Order makes no provision for any retroactive adjustments to reciprocal compensation billings that were made prior to the effective date of the Order, but it does not alter existing contractual obligations, except to the extent that parties are entitled to invoke contractual change-of-law provisions.
5. The FCC makes no provision for segregating ISP-bound traffic from other forms of traffic for billing purposes on a forward-looking basis, nor provides any guidelines or criteria as to how such traffic could be accurately segregated and tracked.
6. The FCC found no evidence in its own record to establish any inherent differences between the costs on any one network of delivering a voice call to a local end user and a data call to an ISP.
7. In D.00-05-024, the Commission concluded that in view of uncertainty regarding the outcome of pending legal challenges to prior Commission decision regarding reciprocal compensation, the identification of disputed amounts would be less contentious if carriers kept track of disputed payments in memorandum accounts as transactions occurred.
8. In D.00-05-024, the Commission presumed benefits could be gained by keeping track of disputed payments as they are being made as opposed to attempting to reconstruct the amounts at issue after the fact, even though such memorandum accounting, presupposes that the appropriate accounting entries are readily quantifiable and can be properly segregated from other costs.
1. The fact that the Commission required memorandum accounting in D.00-05-024 is not dispositive of the motions of Roseville and Citizens.
2. In view of the unanswered questions regarding measuring ISP traffic under currently developed accounting and billing systems as presented in R.00-02-005, the Commission's original presumption in D.00-05-024 regarding the ease of setting up memorandum accounts segregating ISP traffic has been called into question.
3. The premises that the Commission relied upon in adopting the memorandum accounting requirements in D. 00-05-024 have been materially modified by the subsequent development of the record in the Commission's ISP proceeding, R. 00-02-005, and by the issuance of the FCC Order regarding Intercarrier Compensation for ISP-bound Traffic.
4. In view of the policy established by the FCC Order adopting changes in intercarrier compensation on a forward-looking basis only, there is significantly reduced likelihood that reciprocal compensation payments made prior to the effective date of the FCC Order will be subject to any retroactive adjustment.
5. Roseville and Citizens have failed to justify the burden involved in requiring memoradum accounting for all past reciprocal compensation payments separately attributable to ISP-bound traffic.
6. At the time the Commission adopted D.00-05-024, it did not have the evidentiary record subsequently developed in R.00-02-005 concerning the extent of claimed difficulties in accurately identifying and tracking qualifying minutes of traffic terminated to an ISP to access Internet web sites.
7. The motion of Citizens and Roseville to require CLECs that enter into interconnection agreements with either of those ILECs to establish a memorandum account for reciprocal compensation received for ISP traffic on the same basis as was previously required in D.00-05-024 should be denied.
IT IS ORDERED that the motions of Citizens Telecommunications Company of California, Inc. and Roseville Telephone Company for an order requiring competitive local carriers to establish and maintain memorandum accounts for disputed payments pursuant to the arbitrated interconnection agreements consistent with Decision 00-05-024 are denied.
This order is effective today.
Dated , at San Francisco, California.
