III. The September 17, 2004 Hearing

On September 16, 2004, Verizon filed a notice regarding compliance with the ruling. In that notice, Verizon clearly informed the Commission for the first time that it was unable at this time to deploy the packet switches and continue to provide AT&T the access required by the ruling due to the lack of operational support system (OSS) capabilities currently in place. Verizon stated it could not comply with the September 15 Ruling Maintaining the Status Quo if the packet switches are put in operation and, therefore, would not deploy the packet switches in California while the ruling remained in place.

In light of this new information, the Assigned Commissioner and ALJ convened an emergency hearing on September 17, 2004, so that AT&T and Verizon could offer witnesses on the issue of the parties' respective harms, with a particular focus on the end-user customer. As stated by Commissioner Brown at the hearing:

"The reason we are here today as opposed to allowing this matter just to go for ratification to the Commission or further is because both the Administrative Law Judge and myself are concerned about the issue of harm in both directions. And we felt that this was a fairly momentous action that we undertook when we signed the temporary restraining order; however, we wanted to assure ourselves that we were doing the right thing, and we did not want to impose harm in either direction."²

The expert testimony in the five-hour hearing confirmed the harm to AT&T set forth in the attached ruling, which the ruling found to be a sufficient showing of irreparable injury. Mainly, this harm is AT&T's immediate inability to respond properly to mass market small business and residential customers' requests that AT&T make account changes so that these customers can obtain the services they have chosen. Such customer requests could include adding or removing features, and disconnecting or adding new services. Additionally, AT&T stated that billing problems would arise, such as a customer being billed after the customer requests that his or her service be discontinued.

Verizon testified that it has performed due diligence in making certain that none of its customers would suffer harm as a result of Verizon not deploying its packet switch on September 17. Thus, Verizon now states that the harms it previously alleged would occur to end-user customers if it did not deploy its packet switch on September 17 will not occur. Therefore, for purposes of this motion, the existing harm to Verizon and its customers is the harm to California consumers who would potentially lose the future efficiencies and service improvements that are the ultimate goal of any upgrade, as well as any lost value of the investments Verizon has made.

Thus, if the status quo is maintained, the current service to both AT&T and Verizon customers should not be disrupted. Verizon customers may not realize the potential for new options immediately. However, maintaining the status quo while we expeditiously process this case should eliminate (or is the best way to mitigate) immediate concrete harm to the end-user customers which would otherwise result.

At the September 17 emergency hearing, Verizon indicated that it cannot at this time comply with the September 15 ruling and deploy packet switches, but did not state that it could not do so under any circumstances. Because the emergency hearing focused on harm, this is an issue that can be more fully explored when the Commission considers the merits of the complaint. Under the existing record, we do not change our conclusion (on the issue of the likelihood of success on the merits) that Verizon's proposed network change does not require discontinuance of unbundled network elements.

We encourage the deployment of new technology in California. However, we recognize that existing interconnection agreements must also be honored. Maintaining the status quo while the Commission builds a record on these issues and carefully evaluates potential outcomes will further the public interest, and will provide certainty to these parties. On balance, the fairest outcome for all concerned is to maintain the status quo while we expeditiously resolve this case. With these clarifications, we confirm the attached September 15, 2004 Ruling Maintaining the Status Quo.

² Transcript of September 17, 2004 hearing at p. 12, lines 7-16.