ALJ/TRP/avs DRAFT CA-10

6/28/2001

Decision DRAFT DECISION OF ALJ PULSIFER (Mailed 5/29/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Own Motion Into Competition for Local Exchange Service.	Rulemaking 95-04-043 (Filed April 26, 1995)
Order Instituting Investigation on the Commission's Own Motion Into Competition for Local Exchange Service.	Investigation 95-04-044 (Filed April 26, 1995)

OPINION

1. Introduction

On July 24, 2000, Citizens Telecommunications Company of California (Citizens), filed a motion in this proceeding. On September 29, 2000, Roseville Telephone Company (Roseville) filed a similar motion. Each movant seeks an order that requires competitive local exchange carriers (CLECs) to establish and maintain memorandum accounts to track the amount of Internet service provider (ISP) traffic terminated on their networks by Citizens and Roseville, respectively, and related reciprocal compensation received from Roseville and Citizens, respectively.

By this decision, we deny the motions. The issue of whether any prospective changes in compensation for ISP traffic are warranted, and any related accounting requirements resulting therefrom shall be separately addressed in Rulemaking (R.) 00-02-005.

In Decision (D.) 00-05-024 (May 24, 2000), the Commission ordered the establishment accounts by Pacific Bell (Pacific), GTE California (now GTEC Verizon California) and the CLECs which interconnect with them to record ISP-bound traffic and reciprocal compensation payments in order to track data that could be needed in a future proceeding. Movants argue that the authorization of a memorandum account, in no way prejudges the reasonableness of the amounts recorded or whether the amounts recorded may be recovered at a later time. The purpose of a memorandum account is only to ensure that the specified amounts are tracked for potential regulatory purposes in future proceedings.

Movants argue that CLECs which interconnect with Citizens or Roseville should establish memorandum accounts in connection with reciprocal compensation payments made for the termination of ISP-traffic, because the issue of the propriety of reciprocal compensation payments for ISP-bound traffic is not finally resolved in California or elsewhere. Movants note that the Commission has opened an investigation into the payment of reciprocal compensation for the ISP-bound traffic. (R.00-02-005.) At the time that movants filed their motions, the Federal Communications Commission (FCC) was reviewing the question of reciprocal compensation payments for ISP-bound traffic. The FCC has now released its order, effective April 27, 2001, addressing intercarrier compensation for ISP-bound traffic.¹ The impact of the FCC Order on the pending motions before us is addressed in the Discussion Section of this decision. Movants also note federal legislation that has been introduced which would amend the Telecommunications Act to prohibit the payment of reciprocal compensation for ISP-bound traffic. (H.R. 4445.)

Despite the movants dispute as to the authority of the Commission to require them to pay reciprocal compensation for ISP-bound traffic, they are each making reciprocal compensation payments for ISP-bound traffic to Pac-West Telecomm, Inc. pursuant to the arbitrated interconnection agreement adopted by the Commission (in D.99-12-021 for Citizens and D.00-09-032 for Roseville). Movants argue that because other CLECs may opt-in to the reciprocal compensation provisions of either of these agreements, pursuant to the terms of Telecommunications Act as implemented by the FCC, (47 U.S.C. § 251(1)) the order adopted pursuant to this motion address all CLECs who may in the future claim reciprocal compensations from Roseville.

Movants claim that while they can only estimate what portion of the traffic they deliver to Pac-West or other CLECs is ISP-bound, only the CLEC itself can truly account for its ISP-bound traffic. Thus, movants request that each CLEC identify at its switches the volume of traffic being delivered to its ISP customers, and maintain an account of the reciprocal compensation payments associated with this ISP-bound traffic.

In a ruling in the arbitration proceeding initiated by Pac-West against Pacific Bell (Pacific) (Application (A.) 98-11-024), the arbitrator agreed that the ultimate resolution of the dispute over the payment of reciprocal compensation for termination of ISP-bound traffic would become more complex and litigious absent the identification and maintenance of records by the CLEC of all ISP-bound traffic and reciprocal compensation revenues received. Accordingly, movants argue that the Commission has already determined that there is good cause to order the establishment of memorandum accounts in connection with the on-going disputes over the payment of reciprocal compensation for ISP-bound traffic.

On May 4, 2000, D.00-05-024 granted that portion of Pacific's motion for a Commission order for CLECs to establish and maintain memorandum accounts for all disputed payments made by Pacific pursuant to the arbitrated interconnection agreements. The order was also applied to the CLECs' interconnection agreements with Verizon. Accordingly, movants argue that the order should now also be applied to the CLECs' interconnection agreements with each of them.

As a condition of establishing this memorandum account, Pacific and GTEC were ordered to track traffic they terminate to ISPs and establish and maintain a memorandum account for the associated reciprocal compensation payments they receive from CLECs. (D.00-05-024, O.P. 3.) Citizens and Roseville each agree to comply with this condition.

No party filed a response to Citizen's motion. Pac-West, the only party to file a response to Roseville's motion, objected to the requested relief on October 16, 2000.

Pac-West opposes Roseville's motion, arguing that it fails to prove any of the facts necessary to support the requested relief and that it ignores the record developed in R.00-02-005 regarding the impossibility of accurately identifying ISP-bound minutes. Furthermore, Roseville fails to propose any methodology by which such ISP-bound traffic is to be identified. Roseville's statement that it would also establish such a memorandum account is completely undermined by its testimony under oath in R.00-02-005 that it does not have the capability to do so. Pac-West argues that a grant of Roseville's Motion without granting Pac-West and other potentially affected parties a hearing on the factual matters set forth in this Response would constitute prejudgment, without any evidentiary record, of one of the central factual issues currently before the Commission in R.00-02-005; i.e., whether ISP-bound traffic can be specifically identified and, if it can, the proper methodology for doing so.

Since Roseville is proposing to impose on Pac-West and other interconnecting carriers a new requirement to track ISP-bound traffic, Pac-West argues that Roseville must demonstrate, at a minimum, the feasibility of complying with such requirement. Yet, Roseville offers no evidence that any ILEC or CLEC currently has any mechanism in place to track ISP-bound traffic, and, Roseville fails to make any specific proposal as to how to identify ISP-bound calls or account for reciprocal compensation payments for such calls.

Pac-West argues that to support Roseville's requested relief, the motion should have proposed a methodology for identifying ISP-bound traffic, which, at a minimum, set forth:

· a criteria for determining which entities qualify as ISPs;

· a criteria for determining what types of local calls should be considered ISP-bound calls;²

· a methodology for identifying ISP telephone numbers;

· a methodology for segregating ISP-bound calls from other local calls; and

· a description of any call detail billing or other recordkeeping mechanism that could feasibly be implemented to identify ISP-bound traffic.

Roseville made no attempt to provide these details as a basis for a Commission finding that imposition of the memorandum accounting requirement sought by Roseville is feasible, as well as fair, necessary, and appropriate.

On October 26, 2000, Roseville filed a third-round pleading arguing that the Commission should disregard Pac-West's contentions regarding the impossibility of separately measuring Internet traffic. Roseville claims that the real issue is not one of impossibility but rather simply objections to the cost involved in setting up necessary tracking mechanisms. Roseville states that the burden should be on the CLECs--not on Roseville -- to develop tracking mechanisms for ISP traffic since they are most familiar with their own networks.