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PA Bulletin, Doc. No. 05-2352



Interim Order

[35 Pa.B. 6857]

Public Meeting held
December 1, 2005

Commissioners Present:  Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Bill Shane; Kim Pizzingrilli; Terrance J. Fitzpatrick

Pennsylvania Public Utility Commission v. MCImetro Access Transmission Services, LLC Introducing Local Tariff Termination Service for Non-Access Minutes of Use; Doc. No. R-00050799

Interim Order

By the Commission:

   On August 1, 2005, MCImetro Access Transmission Services, LLC (''MCImetro'') or (''Company'') filed Supplement No. 5 to Access Tariff--Pa. PUC No. 2 proposing to introduce a new service charge, Local Traffic Termination Service (LTTS) for Terminating Non-Access Minutes of Use1 to become effective September 1, 2005. The effective date of the filing was extended by 30 days or until October 1, 2005, by Commission staff action through a Secretarial Letter, and a further voluntary postponement was issued by the Company until December 2, 2005. Further, the proposed rates, terms and conditions do not apply if the carrier and the Company have entered into an agreement that governs non-access minutes of use (MOU) including an interconnection agreement approved by the Commission pursuant to Section 252 of the Federal Telecommunication Act, and also Commercial Mobile Radio Service (CMRS) providers licensed by the FCC are exempt from this charge.

   The proposed state tariff, if approved, would establish local call terminating compensation rates between MCImetro and any Competitive Local Exchange Carrier (CLEC) that does not have an interconnection agreement with MCImetro.2 The proposed state tariff does not apply to Incumbent Local Exchange Carriers (ILECs) or Commercial Mobile Radio Service (CMRS) providers licensed by the FCC. CMRS providers are exempt from the proposedcompensation rate based on the T-Mobile Order. ILECs are exempt from the proposed compensation rate based on the FCC's 1996 Local Competition Order.3

   MCImetro provided an illustration of the pricing methodology calculation in response to staff inquiries. MCImetro intends to bill carriers that terminate traffic to MCImetro for all minutes that are at or below 3,000 minutes a month. Only those terminating minutes that are above 3,000 in a single month are not billed.4 In MCImetro's view, the charge is appropriate because the minutes fall below the 3:1 presumption for ISP MOUs established in the ISP Remand Order.


   MCImetro relies on three Federal Communications Commission (''FCC'') Orders in support of the proposed tariff. These are the ISP Remand Order at FCC 01-1315 (released April 27, 2001), the Core Order at FCC 04-2416 (released October 18, 2004), and the T-Mobile Order at FCC 05-427 (released February 24, 2005).

   The ISP Remand Order established interim federal reciprocal compensation rates for Internet Service Providers (ISPs) on a Minute-of-Use (MOU) basis. The ISP Remand Order also created a rebuttable presumption that traffic exceeding a 3:1 ratio of Originating Minutes to Terminating Minutes was ISP traffic subject to interim compensation rates and a growth cap.8 Traffic below this 3:1 threshold is not considered ISP traffic although the rate for this non-ISP traffic had to ''mirror'' the ISP rate.9

   The FCC's Core Order modified the ISP Remand Order. The Core Order abandoned the growth cap and mirroring rate requirement of the ISP Remand Order.10

   The T-Mobile Order expressly addressed the issue of whether a local exchange carrier could determine local call terminating compensation from a CMRS carrier using state-approved tariffs if the carriers have no interconnection agreement. The T-Mobile Order prohibits the use of state-approved tariff rates to determine local call terminating compensation from CMRS carriers. The prohibition applies on a going-forward basis following publication. The FCC takes this approach based on a legal conclusion that negotiations, as opposed to the state-approved compensation rates, are the legally required vehicle for determining wireless-to-wireline traffic compensation.11

   MCImetro suggests that its proposed state tariff language is consistent with these FCC Orders. MCImetro believes that the three orders collectively allow MCImetro to charge other CLEC carriers compensation rates at state-approved rates when terminating non-access minutes of use below a 3:1 ratio12 of Terminating to Originating Non-Access Minutes of Use if the carrier has no interconnection agreement with MCImetro and the traffic is neither wireless nor ILEC.

   MCImetro seems to reason that the ISP Remand Order established a lower interim compensation rate for ISP traffic but excluded traffic below the 3:1 ratio from this interim compensation rate. MCImetro concludes that CLEC-to-CLEC traffic below the 3:1 ratio can still be established by state-approved tariffs because CLEC-to-CLEC compensation was not directly addressed in the Core Order and the T-Mobile Order. MCImetro's interpretation limits the T-Mobile Order holding to state-approved tariffs for wireless-to-wireline compensation.

   Based upon this reasoning, MCImetro suggests that the negotiation and arbitration requirements of TA-96 cited in support of the T-Mobile Order are limited to ILEC-CLEC and LEC-CMRS compensation. MCImetro asks the Commission to approve a default compensation rate because the FCC's orders and the supporting negotiation and arbitration requirements of TA-96 do not apply to CLEC-to-CLEC traffic. MCImetro verbally clarified to staff that the proposed compensation rate applies only to CLEC-to-CLEC that is non-ISP (e.g., below the 3:1 ratio, and not wireless).

   MCImetro concludes that the Commission can establish state-approved compensation rates for call termination services so long as the traffic does not come within the purview of the ISP Remand Order, the Core Order, and the T-Mobile Order, and the parties do not have an effective interconnection agreement covering the traffic in question. MCImetro recognizes that the T-Mobile Order adopted a rule prospectively prohibiting charges for wireless traffic but concludes that there is no rule against such charges for other kinds of local traffic (e.g., non-wireless traffic that is not ISP traffic).

   The Commission is unwilling to immediately approve this tariff based on this narrow interpretation of Federal law and FCC practice without comments and replies from other interested persons. This refusal is underscored by the fact that CLECs other than MCImetro have not submitted a similar tariff relying on this narrow legal interpretation. Other CLECs seem to be unaware of MCImetro's proposed tariff and the supporting legal interpretation, even though those CLECs are impacted by the tariff.

   The Commission also recognizes that this narrow legal interpretation and the resulting tariff will substantially alter existing CLEC-to-CLEC intercarrier compensation practices in Pennsylvania. CLECs largely utilize Bill-and-Keep for CLEC intercarrier compensation. The reciprocal compensation proposal reflected in this tariff constitutes a significant departure from that practice. There is no evidence that the CLECs impacted by this departure are aware of this substantial change in compensation practice or the underlying legal theory.

   The proposed tariff could also shift the burden of interconnection agreements to carriers completing local calls on its network. This shifting could be particularly acute in any post-merger environment wherein the CLEC proposing this tariff could become an affiliate of an ILEC enforcing a carrier compensation right under state tariff. This could lead to a conclusion that unless the proposed tariff benefits carriers by enabling carriers to account for all completed calls, the Commission should not approve the tariff as proposed.

   Finally, in this filing we are dealing with rates governing the termination of what essentially is ''local'' traffic, but identified as ''non-access'' traffic, we need to explore whether it falls within certain statutory constrains. Termination of local traffic may be bound by intrastate carrier access charges in carriers' access tariff and may also be governed by Section 3017 of Chapter 30. Section 3017(c) prohibits a CLEC from charging access rates higher than those charged by an ILEC in the same service territory absent a demonstration that costs justify a higher access rate. 66 Pa.C.S. § 3017(c).

   The Commission identifies some concerns about this proposed tariff. The Commission's concerns include the following:

   1.  Whether the FCC's overall approach favoring interconnection arbitration and negotiation reflected in the Core Order and the T-Mobile Order is limited to ILEC-CLEC and ILEC-Wireless and/or agreements.

   2.  What, if any, role Commission ratification of this proposed tariff could have if, as proposed, where MCI Communications, Inc. may potentially become an affiliate of Verizon Pennsylvania, Inc. given that this tariff may become a property right of an ILEC as opposed to a tariff proposal of a CLEC.

   3.  Whether a Commission approved default compensation rate by tariff for a CLEC in CLEC-to-CLEC compensation matters continues where MCI may potentially become an affiliate of Verizon Pennsylvania Inc.

   4.  Whether MCImetro usage of the term ''non-access minutes of use'' is consistent with or contrasts with the general usage of the term in the industry. Typically, ''non-access traffic'' means telecommunications traffic that is not subject to access charges. It appears there might be a conflict in using such a term as ''non-access traffic'' for the proposed charge in an Access Tariff. Moreover, the use of the term ''non-access'' minutes varies even in the FCC Orders cited by MCImetro.

   5.  Whether the proposed charge for local traffic transmitted between LECs in the form of ''non-access charge'' in just one carrier's tariff is in violation of Section 251(b)(5) of the 1996 Telecommunications Act which obligates LECs to establish reciprocal compensation arrangements through an interconnection agreement for the transport and termination of local telecommunication traffic and also specifies that LECs and interconnecting local exchange carriers compensate each other for termination of local traffic on a reciprocal basis.

   6.  Whether the proposed charge is within the constrains of Section 3017 of Chapter 30 (66 Pa.C.S § 3017), which prohibits a CLEC from charging access rates higher than those charged by an ILEC in the same service territory, absent a demonstration that costs justify a higher access rate.

   The Commission concludes that suspension and investigation of this proposed tariff is necessary given these concerns and the Commission's refusal to accept MCImetro's interpretation without further comment or replies.

   The Commission takes this action to solicit comments and replies from other interested persons. Following review of the comments and replies, the Commission will determine the next course of action.

   With that in mind, the Commission will adopt an Interim Order suspending MCImetro's tariff filing to introduce a charge for non-access minutes of use for a period not to exceed six months. During the suspension, the Commission will solicit comments and replies on the issues identified in this Interim Order, as well as other issues of concern to others involving this proposed tariff. To that end, the Commission will publish this Interim Order in the Pennsylvania Bulletin with comments due in 30 days following publication and reply comments due within 15 days after the comment due date. The Commission will then determine the next appropriate action in response to those comments and replies; Therefore,

It Is Ordered That:

   1.  Supplement No. 5 to MCImetro Access Transmission Services, LLC Tariff-Telephone Pa. PUC No. 2, filed August 2, 2005, the effective date has been postponed until December 2, 2005, to introduce Local Traffic Termination Service for non-access minutes of use, is suspended for a period not to exceed six months, or until June 2, 2006, pending a review of comments from the industry.

   2.  MCImetro Access Transmission Services, LLC shall file the appropriate tariff suspension supplements.

   3.  The Commission hereby solicits comments on MCImetro Access Transmission Service, LLC's proposed tariff for Local Traffic Termination Services.

   4.  The Secretary shall duly certify this Order and deposit it with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin, for the purpose of collecting more public information through the solicitation of comments concerning the issues of intercarrier compensation involved in this case.

   5.  Within 30 days of this order's publication in the Pennsylvania Bulletin, any concerned party may file comments by submitting an original and 10 copies to the Pennsylvania Pubic Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265. A separate copy of any comments should be served upon each Commissioner's Office, the Bureau of Fixed Utility Services, the Office of Special Assistants, and the Law Bureau.

   6.  Reply comments shall be due 15 days after the comment due date and filed in accordance with Ordering Paragraph 5.

   7.  Alternate formats of this document are available to persons with disabilities and may be obtained by contacting Sherri DelBiondo, Regulatory Coordinator, Law Bureau, (717) 772-4597.

   8.  A copy of this Interim Order shall be served upon the Pennsylvania Telephone Association, COMPTEL, all jurisdictional local exchange carriers, all competitive local exchange carriers, Office of Consumer Advocate, Office of Small Business Advocate, and the Office of Trial Staff.

   9.  The Bureau of Fixed Utility Services and Law Bureau prepare a Report and Order after review of the parties' comments.

   10.  The contact persons are Joseph Witmer, Law Bureau (717) 787-3663,, and Mohan Samuel, Bureau of Fixed Utility Services, (717) 783-0697,

   11.  If it becomes clear that a final Commission order disposing of the proposed tariff revision will not be entered by the end of the 6-month suspension period established in ordering paragraph 1 above, the Bureau Fixed Utility Services shall issue a further Interim Order suspending this filing for an additional three months or until September 2, 2006.


1 Terminating Non-Access Minutes of Use is described by MCImetro as non-Access minutes of use delivered by the Carrier to the Company for termination to customers of the Company, including all minutes of use for which the calling and called party number are assigned in the Local Exchange Routing Guide to the same Mandatory Local Calling area and excludes wireless traffic.

2 The proposed tariff does not address the tariff's operation if MCI Communications Inc., (MCI), the parent company of MCImetro, ultimately merges with Verizon and becomes an ILEC as opposed to a CLEC. MCImetro's clarification of the CLEC terminating charges' operation was limited to a verbal discussion with staff.

3 Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket Nos. 96-98, Released August 8, 1996.

4 The FCC's ISP Remand Order contains a rebuttable presumption that traffic above a ratio of 3:1 is ISP traffic subject to a federal compensation rate. Traffic below a 3:1 ratio is not ISP traffic. The FCC expected the interim rates established in the ISP Remand Order to limit or end the opportunity for regulatory arbitrage and to be replaced by a final order in its Intercarrier Compensation Order proceeding at CC 01-92 (the ICC Order). ISP Remand Order, paragraph 8. That did not happen. State commissions are responsible for adjudicating any challenges to the presumption.

5 Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Intercarrier Compensation for ISP-Bound Traffic, CC Docket Nos. 96-98 and 99-68, Released April 27, 2001 (the ISP Remand Order).

6 Petition of Core Communications, Inc. for Forebearance under 47 U.S.C. § 160(c) from Application of the ISP Remand Order, WC Docket No. 03-171, Released October 18, 2004 (the Core Order).

7 T-Mobile et al. Petition for Declaratory Ruling Regarding Incumbent LEC Wireless Termination Tariffs, Declaratory Ruling and Report and Order (FCC Rel. February 24, 2005) CC Docket No. 01-92, FCC 05-42. (T-Mobile Order).

8 ISP Remand Order, paragraph 8.

9 ISP Remand Order, paragraphs 3 through 8, 66-95.

10 Core Order, paragraph 24, last sentence. The growth cap and mirroring rules were part of a ruling aimed at developing a unified compensation regime premised on Bill-and-Keep. ISP Remand Order, paragraphs 4, 6, 8 and 66-67. The Core Order grants limited forebearance. The FCC abandoned these requirements based on a view that the underlying compensation premise reflected in the ISP Remand Order e.g., that no cost differences between voice and ISP warrant are sufficient to justify different rates , is less important than unified intercarrier compensation.

11 T-Mobile Order, paragraphs 9 and 14.

12 ISP Remand Order, paragraph 8. State commissions adjudicate any challenge to the presumption.

[Pa.B. Doc. No. 05-2352. Filed for public inspection December 16, 2005, 9:00 a.m.]

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