NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Order
[36 Pa.B. 3621]
[Saturday, July 8, 2006]Public Meeting held
June 22, 2006Commissioners 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 d/b/a Verizon Access Transmission Service Introducing Local Tariff Termination Service for nonaccess minutes of use;
Doc. No. R-00050799
Order By the Commission:
By an Interim Order (Interim Order) entered on December 2, 2005, this Commission suspended MCImetro Access Transmission Services, LLC's (MCImetro herein after Verizon ATS1 ) Supplement No. 5 to Tariff-Telephone Pa. PUC No. 2, filed on August 2, 2005, to introduce Local Traffic Termination Service (LTTS) for non-access minutes of use, and invited comments from the industry. The proposed state tariff would have established local call terminating compensation rates between Verizon ATS and any Competitive Local Exchange Carrier (CLEC) that does not have an interconnection agreement with Verizon ATS. The Interim Order was published in the Pennsylvania Bulletin with comments due in 30 days following publication and reply comments due within 15 days after the comment due date.
In our Interim Order, we indicated our reluctance to approve the tariff based on the proposed interpretation of federal law2 and FCC practices in the absence of comments and replies from other interested parties. Our reluctance to approve the tariff was underscored by the absence of similar provisions in other CLEC tariffs.
In addition, the proposed tariff seemed to substantially alter existing CLEC-to-CLEC intercarrier compensation practices in Pennsylvania by replacing the use of bill-and-keep compensation with a reciprocal compensation regime. There was minimal discussion in the pleadings addressing whether the CLECs that would be subject to this substantial change in compensation were aware of the proposal or the legal theory cited in support of the proposal. Finally, the proposed tariff also shifts the burden of interconnection agreements to carriers completing local calls on its network and would have done so while the tariff proponent was in the process of being acquired by an ILEC pursuant to a then-pending merger agreement.
Our Interim Order sought comments from interested members of the public on the following issues:
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 Verizon ATS 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 [MCI] Verizon ATS.
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.
We note that Verizon ATS agreed to remove the confidentiality treatment it requested earlier to its responses to Staff's questions that was filed on September 14, 2005. This was indicated in a Secretarial letter on January 31, 2006, that made it possible for interested parties to review and copy that information at the Commission's offices during normal hours.
The Commission, by way of a Secretarial letter addressed to counsel for Verizon Communications, Inc. and Broadband Cable Association of Pennsylvania, extended the deadline for filing a Comment from January 17, 2006, to January 31, 2006. Likewise, the deadline for Reply Comment was extended until February 15, 2006.
Comments and Reply Comments
The Commission received comments in response to the Interim Order. The entities submitting comments were CLEC Group of Companies (CGC comprised of Armstrong Telecommunications, Inc. D & E Systems, Inc. & Penn Telecom, Inc.), US LEC of Pennsylvania (US LEC), Broadband Cable Association of Pennsylvania (BCAP), PAETEC Communications, Inc. (PAETEC), and Verizon Access Transmission Services f/k/a MCImetro Access Transmission Services LLC (Verizon ATS).
The comments filed by CGC state that the Verizon ATS proposed tariffed service offering is blatantly not a ''reciprocal compensation arrangement'' in accordance with the FCC's rules and regulations, but a unilateral compensation arrangement created for the sole benefit of Verizon ATS and thus be rejected. CGC cited the FCC's T-Mobile Order for the proposition that FCC is moving away from state-approved ''tariff-based'' compensation imposed on all carriers in favor of negotiated agreements between carriers. CGC emphasis in the FCC T-Mobil Order supports for negotiation-based rather than tariff-based compensation arrangement.
US LEC disagrees with Verizon ATS' charge for ''non access traffic'' in the absence of negotiations. US LEC believes that these traffic compensation arrangements cannot be determined without negotiating reciprocal arrangements and symmetrical rates through an agreement with the other LEC involved in the exchange of traffic. US LEC insists that Section 251(b)(5) of the Act imposes on all local exchange carriers a duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications traffic. US LEC further states that FCC rule Section 711 also requires state commissions to establish symmetrical rates whether they are between incumbents or non-incumbents.
US LEC concludes that one CLEC may not file a tariff to unilaterally establish terms, conditions and rates for the transport and termination of local traffic. US LEC requests that the Commission reject the Verizon ATS tariff revisions for implementation of LTTS.
BCAP submits that the Telecommunications Act of 1996 (TA-96) requires all local exchange carriers to enter into reciprocal compensation arrangements for the transport and termination of telecommunications. BCAP stresses that a tariff is not a negotiated reciprocal compensation arrangement. BCAP concludes that the FCC's rules stand for the proposition that negotiation, as opposed to state-approved tariffs, are preferred for these kinds of compensation arrangements. BCAP urges the Commission to reject this attempt to establish compensation by unilateral state-level tariff filings.
PAETEC is concerned that the Verizon ATS LTTS tariff will eliminate any incentive for Verizon ATS to negotiate interconnection and or tariff exchange agreements in the future. PAETEC notes that negotiations for almost a year with Verizon ATS for multi-state interconnection agreements have yet to result in any favorable resolution. PAETEC recommends that the Commission impose a condition in which Verizon ATS is precluded from applying the default compensation rates set forth in the tariff until Verizon ATS notifies all carriers of its intent to bill for such services and requests negotiations for interconnection agreements under Section 252 of the Communications Act, and follows statutory timelines for negotiation and arbitration. PAETEC urges the Commission to allow Verizon ATS to impose the default compensation rates set forth in the tariff only if a local exchange carrier refuses to negotiate or fails to respond to the notice. Finally, PAETEC urges the Commission to allow a local exchange carrier to seek negotiation under Section 252, even after the tariff goes into effect for a local exchange carrier.
PAETEC also has concerns regarding the Verizon ATS broad definition of ''non-access minutes of use'' that appears to capture the universe of all traffic that is not subject to access charge. However, as seen in the explanation and justification for the charge in the Interim Order, the LTTS tariff would only apply to local traffic. PAETEC wants the Commission to require Verizon ATS to clarify that this charge is limited to local traffic alone. PAETEC notes that if the Commission authorizes these tariff changes to go into effect, other carriers will be encouraged to file similar language that will result in more unilateral rates that ultimately undermine the current bill-and-keep regime.
PAETEC also points out that the Verizon ATS position in this pleading is directly opposite to the position advocated in other federal proceedings. The parent company of Verizon ATS advocates bill-and-keep arrangements in several federal proceedings. Finally, PAETEC states that the LTTS tariff also fails to acknowledge that the FCC's 3:1 ratio is a rebuttable presumption that allows carriers to avail themselves of the ''converse rebuttal'' that the FCC anticipated in the ISP Remand Order. PAETEC contends that in such situations, the traffic delivered to Verizon ATS should be subject to the ISP-bound rate of $0.0007, which is less than half of the proposed LTTS rate of $0.01501. As such, the Commission should allow affected carriers to demonstrate which traffic is ISP-bound and not subject to LTTS rates, even when it falls below the 3:1 ratio.
Verizon ATS maintains that this tariff is necessary and appropriate because there are hundreds of local exchange carriers, particularly CLECs, in Pennsylvania. Verizon ATS contends that an obligation to negotiate compensation arrangements for each and every carrier, as will happen if this tariff is not approved, will create unnecessary waste and delay. Verizon ATS is also concerned that negotiating and finalizing interconnection agreements is a lengthy process that does not always lead to mutual agreement. Delay, in this instance, also delays compensation.
Verizon ATS reiterates its legal conclusion that the FCC's interconnection, arbitration and negotiation rules set forth in the T-Mobile Order and its progeny do not extend to CLEC-to-CLEC compensation arrangements. Verizon ATS concludes that the FCC's decisions are limited to wire line ILEC-CLEC and ILEC-to-wireless compensation agreements. Verizon ATS relies on the absence of any express language in the FCC's orders specifically discussing CLEC-to-CLEC arrangements as considerations that support its legal theory.
In addition, the proponent maintains that the absence of any change in Verizon ATS' legal status as a result of the subsequent merger supports its conclusion that this is still a tariff proposed by a CLEC to govern CLEC-to-CLEC compensation arrangements.
Verizon ATS rejects the view that the subsequent merger makes this an ILEC tariff proposed for CLEC arrangements.
Verizon ATS maintains that it used the term ''non-access minutes of use'' in the tariff to convey that the traffic at issue is local traffic and not switched access minutes or ISP-bound. Verizon ATS states that its tariff does not violate Section 251(b)(5), since it does not establish a reciprocal compensation arrangement through an interconnection agreement. Verizon ATS further states that Section 251(b)(5) only imposes a duty on ILECs to establish reciprocal compensation arrangements for the transport and termination of telecommunications as opposed to any obligation to negotiate such arrangements. Moreover, Verizon ATS contends that its status as a CLEC following the merger does not require Verizon ATS to engage in interconnection agreement negotiations with other CLECs, since that obligation is an obligation imposed on ILECs, as opposed to CLECs.
Reply Comments were filed by CGC, BCAP, PAETEC, Choice One Communications of Pennsylvania Inc. (Choice One), and Verizon ATS.
CGC's Reply Comments state that the FCC's T-Mobile Order supports movement away from ''tariff-based'' compensation arrangements in favor of negotiation for compensation for all carriers. CGS claims the T-Mobile Order stands for the proposition that negotiated agreements for compensation are more consistent with the pro-competitive provisions and policies of the TA-96 than state-approved, and unilaterally determined, compensation rates by tariff. CGC disagrees with Verizon ATS' claim that TA-96 is limited to interconnection requirements for ILECs and that CLECs are not ''legally required'' to enter into interconnection agreement negotiations or arbitrations with other CLECs. CGS notes that Verizon ATS fails to cite to any specific provision of TA-96 in support of that interpretation.
CGC maintains that Verizon ATS' reliance on FCC's T-Mobile Order is inconsistent and legally unsound. The T-Mobile Order essentially closed a loophole where tariffs filed by an ILEC for terminating CMRS traffic were found to be unlawful under the existing rules. CGC contends that the FCC in its T-Mobile Order prospectively revised those rules for non-access CMRS traffic and required CMRS traffic arrangements be conducted through negotiated interconnections. CGC states the references in the T-Mobile Order that ''it would have been permissible to bill for call termination pursuant to state tariff'' means that compensation arrangements are generally determined by negotiation, including CLEC-to-CLEC arrangements, consistent with the prospective change in compensation arrangements for CMRS traffic determined in the T-Mobile Order.
CGC states that the novel introduction of a rate relative to ''non access'' minutes in an Access Tariff is inappropriate because the service is not related to access. CGC also contends that Verizon ATS failed to address the appropriateness of including such a charge in its Access Tariff. CGC urges the Commission to reject the tariff because it is simply a unilateral, one-sided creation for the sole benefit of Verizon ATS and, as such, is not a reciprocal compensation arrangement arrived at through negotiation as required by the T-Mobile Order and TA-96.
BCAP challenges Verizon ATS' basic premise that a uniform tariff is preferable to negotiating contracts notwithstanding TA-96 and the T-Mobile Order. BCAP views Verizon ATS' claim as one not supported by any facts or evidence.
BCAP rejects Verizon ATS' complaint that other entities will continue to terminate traffic on its network for free because, in BCAP's view, the FCC's preference for bill-and-keep compensation allows Verizon ATS to terminate without charge on the network of other CLECs as well. BCAP agrees with US LEC that the FCC's intercarrier compensation rules expressly contemplate CLEC-to-CLEC agreement in 47 CFR § 51.711(a)(2) when neither party is an ILEC and that Section 211(a) of the Communications Act of 1934 has for decades contemplated contracts with other carriers regarding traffic exchange.
BCAP disagrees with Verizon ATS' claim that the fact that it is now owned by Verizon Communications is of no importance in assessing its proposed traffic termination tariff. BCAP quotes D.C. Circuit Court observation that ''to allow an ILEC to sideslip § 251(c)'s requirements by simply offering telecommunications services through a wholly owned affiliate seems to us a circumvention of the statutory scheme'' Association of Communications Enterprise v. FCC, 235 F.3d 662 (D.C. Cir. 2001). BCAP opines that it would be troubling indeed for this Commission to countenance a regime in which an affiliate of an ILEC can avoid, with impunity, the ILECs' obligations under TA-96.
BCAP also supports the US LEC view that the proposed Verizon ATS tariff supplement is little more than a blatant attempt to extract compensation for termination of traffic that is neither reciprocal nor symmetrical. This approach defies sound policy and direction in federal law. That, Verizon ATS's filed tariff purported to govern terminating ''non-access'' minutes from CLECs lacks a negotiated traffic exchange or interconnection agreement. Accordingly, BCAP urges the Commission to reject Verizon ATS LTTS tariff.
Finally, BCAP urges that if the Commission is inclined to approve this tariff in some form, it should make two major modifications to the proposed tariff. First, since the overwhelming majority of the traffic Verizon ATS would receive will arrive by means of Verizon's tandem switch, it should not include tandem functionality in its rate. As such, if the tariff is to take effect in any form, the rate must be reduced by eliminating the portion of the charge related to tandem functionality. Second, since Verizon ATS will not be providing the switching functionality and will be obtaining that functionality from an ILEC, presumably Verizon, it would cause severe risk of double-counting for the same minutes. In order to avoid such double counting, it must be modified to eliminate any charge from Verizon ATS for traffic sent via wholesale switching obtained from an ILEC.
PAETEC takes issue with Verizon ATS' legal view that, in the absence of this tariff, Verizon ATS must enter into negotiations and sign contracts with every single CLEC doing business in Pennsylvania, that such negotiations are a needless waste of resources, and that the delay denies Verizon ATS compensation for a number of years. PAETEC finds it ''astonishing, self serving and tone deaf'' that Verizon ATS, which is part of a multi-billion dollar enterprise with a pre-merger contingent of over 350 in-house lawyers, complains of ''drain of resource'' while expressing no consideration or sympathy for CLECs that would be required to negotiate with Verizon ATS. PAETEC again asks the Commission to condition approval of the Verizon ATS LTTS tariff with the provision that Verizon ATS may not apply the tariff to any carrier until it has notified the carrier that it intends to bill for service and requests negotiations for an interconnection agreement under Section 252 of the Communications Act.
Choice One states that the Verizon ATS tariff filing must be rejected because it is contrary to the requirements of federal law imposing on all local exchange carriers the duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications. Choice One contends that FCC rules contemplate reciprocal compensation arrangements upon request from another carrier. Choice One also claims that in the T-Mobile Order, the FCC intended for compensation arrangements to be negotiated agreements and that negotiated agreement between carriers are more consistent with the pro-competitive process and policies reflected in the 1996 Act.
Choice One also challenges Verizon ATS' contention that the ISP Remand Order allows Verizon ATS to assess termination charges on other LECs when there is no interconnection or reciprocal compensation arrangement. Choice One claims that the U.S. Court of Appeal for the D.C. Circuit found that the FCC provided no basis for determining that Section 251(g)(5) ''carves out'' ISP bound traffic from residential compensation. Choice One claims that the court invalidated the FCC's use of Section 251(g) and remanded the case to the FCC for further consideration. Moreover, the FCC's recent decision in its Core Forbearance Order3 wherein the FCC forbears from enforcing certain aspects of its interim ISP-bound traffic compensation regime provides no basis for the imposition of unilateral termination charges by state-approved tariff.
Choice One agrees with CGC comments that the practical impact of allowing Verizon ATS to establish a LTTS charge will change the existing system of bill-and-keep. This would create a chaotic environment where the Commission would have to make numerous decisions on whether such tariffed rates were reasonable and the resulting confusion would be bad for competition in Pennsylvania.
Verizon ATS avers that the other CLEC arguments that the tariff violates federal law are because the carriers misinterpret the law and fail to acknowledge the FCC's findings in the T-Mobile Order. Verizon ATS raises the legal conclusion that the Section 252 process is simply inapplicable to CLEC-to-CLEC agreements. Verizon ATS raises the point that the carriers could refuse to negotiate with Verizon ATS and it would have no recourse, since mandatory arbitration process in section 252 applies to ILECs.
Verizon ATS claims that it is always open to negotiation with any carrier who is willing to discuss reasonable terms and conditions associated with reciprocal compensation. Verizon ATS notes that some CLECs loosened their views on cost issues only after Verizon ATS submitted the proposed tariff for Commission approval. Verizon ATS urges the Commission to recognize that this proposed tariff had the unintended effect of creating an incentive for other carriers to negotiate with Verizon ATS in the absence of any prior legal obligation to do so.
Verizon ATS claims that the FCC has rejected identical arguments made by CMRS providers that a tariff is not a permissible way to implement reciprocal compensation and conditions because a tariff is not reciprocal or symmetrical as required under Section 251(b)(5) of the Act. In Verizon ATS' view, the FCC requires CMRS providers and ILECs to negotiate reciprocal compensation arrangements, although that obligation was never expressly extended to require CLECs to negotiate and submit to arbitration pursuant to Section 252. Given this legal structure, Verizon ATS contends that without the ability to propose compensation rates by state-approved tariffs that operate in the absence of an interconnection agreement, CLECs like Verizon ATS have no means to recover the cost associated with terminating the local calls of other CLECs.
Verizon ATS counters the argument of BCAP by claiming that there is no longer a difference between ISP-bound traffic and non-ISP bound traffic and that FCC's 3:1 presumption is no longer used. Verizon ATS recognizes that the FCC's Core Forbearance Order removed two aspects of the FCC's determination regarding the treatment of ISP-bound traffic but goes on to note that neither of these provisions have any impact on the proposed Verizon ATS LTTS tariff. Verizon ATS contends that BCAP misinterpreted the mirroring rule for ISP-bound traffic. Verizon ATS claims mirroring is only intended to apply to ILECs, while Verizon ATS is a CLEC.
Verizon ATS responds to PAETEC's criticism that its LTTS tariff fails to acknowledge the FCC's 3:1 ratio as a rebuttable presumption. Verizon ATS states that if PAETEC or any other carrier believes that traffic exchanged with Verizon ATS is not local traffic, the carrier can bring the matter to Verizon ATS' attention, and that it does not preclude a carrier from seeking such relief.
Verizon ATS suggests that BCAP reliance on the Global NAPs decision as support for rejecting the Verizon ATS LTTS tariff is a misinterpretation of law. In Verizon ATS' view, the Global NAPS tariff sought to recover reciprocal compensation for ISP-bound traffic for which it received no compensation under the existing interconnection agreement. The Massachusetts State Commission was in the process of interpreting the parties' interconnection agreement to determine if intercarrier compensation applied to ISP-bound traffic and therefore the FCC deemed the tariff unclear and unlawful. However, Verizon ATS tariff does not present any of the same issues as the Global NAPs tariff and only applies when there is no interconnection agreement. In Verizon ATS' view, the Global NAPs decision addressed an interpretation of an existing interconnection agreement, whereas the proposed tariff governs in the absence of an interconnection agreement.
Verizon ATS disagrees with BCAP and CGC claims that the interconnection arbitration and negotiation process in Section 252 applied to CLEC-CLEC agreements with the counter argument that they did not provide citation for this presumption. Verizon ATS also claims that CGC misinterprets the FCC's T-Mobile Order when it states that the FCC confirmed its direction away from tariff-based compensation arrangement for all carriers. Verizon ATS states that the FCC only recognized that reciprocal compensation was appropriate for ILEC-CMRS negotiation and interconnection agreements.
ANALYSIS AND DISPOSITION
This matter involves a proposed tariff of Verizon ATS that establishes default compensation rates under state law for CLEC-to-CLEC arrangements if the parties have not negotiated a binding interconnection agreement.
The proposed tariff raises questions about whether federal law allows the Commission to reject or accept default compensation rates in state tariffs. The Comments and Reply Comments present significant differences on our legal authority.
The FCC currently preempts the states from establishing compensation rates in state-approved tariffs for ILEC-to-CLEC and ILEC-to-wireless arrangements under the Telecommunications Act of 1996 (TA-96). The FCC takes this action based on their legal conclusion that Section 251(c) of TA-96 requires the preemption of any state tariff that establishes compensation rates because TA-96 requires negotiations on compensation as opposed to establishing compensation rates by state tariff.
Upon consideration, we reject the proposed tariff as discussed in more detail below. The FCC decisions cited in support of, or in opposition to, our authority to approve default compensation rates by tariff are ambiguous and uncertain. Given this ambiguity and uncertainty, we conclude that denial without prejudice is warranted until there is further clarity from the FCC.
Three major FCC decisions illustrate the ambiguity that warrants rejection of the proposed tariff. These cases, discussed in considerable length in the Comments and Reply Comments, are the ISP Remand Order, the Core Order, and the T-Mobile Order.4
The first is the ISP Remand Order. That Order established interim federal reciprocal compensation rates for dial-up access to the Internet for Internet Service Providers (ISPs) on a Minute-of-Use (MOU) basis. The ISP Remand Order established these rates as part of an overall policy of moving Internet access compensation from a MOU basis to a Bill-and-Keep system. 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 these interim compensation rates as well as the growth cap imposed in the ISP Remand Order.5 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.6
The second is the FCC's Core Forbearance-Order. The Core Forbearance-Order modified the ISP Remand Order by abandoning the growth cap and mirroring rate requirements of the ISP Remand Order.7
The third is the T-Mobile Order. In the T-Mobile Order, the FCC expressly addressed the issue of whether a local exchange carrier could obtain local call terminating compensation from a CMRS carrier using state-approved tariffs in the absence of any interconnection agreement. The T-Mobile Order preempts the states from establishing default compensation arrangements for ILEC-to-Wireless arrangements because those arrangements, like the ILEC-to-CLEC arrangements in TA-96, are to be established by negotiation and arbitration. The FCC reached this result after concluding that TA-96 requires negotiations, as opposed to state-approved compensation rates under tariff, as the legally acceptable means of determining wireless-to-wireline traffic compensation.8
The main issue here is whether the reasoning set forth in these three decisions includes CLEC-to-CLEC compensation arrangements addressed in the proposed tariff. The Commission could have authority to approve a default compensation rate for CLEC-to-CLEC arrangements, notwithstanding the preemption of that state authority for ILEC-to-CLEC and ILEC-to-wireless compensation in the T-Mobile Order, if those arrangements fall outside the general prohibition. This question arises because neither the T-Mobile Order nor the other orders contain express language addressing state commission authority to approve default compensation rates for CLEC-to-CLEC arrangements in the absence of a CLEC-to-CLEC interconnection agreement.
Verizon ATS interprets the FCC's silence to mean that states retain authority to establish compensation rates for CLEC-to-CLEC arrangements whenever CLEC-to-CLEC traffic falls outside the 3:1 ratio established in the ISP Remand Order. Verizon ATS apparently interprets the FCC's silence on CLEC-to-CLEC compensation in the Core Forbearance Order and the T-Mobile Order to allow the Commission to establish a default compensation rate for CLEC-to-CLEC arrangements. Verizon ATS limits the preemption holdings in the T-Mobile and Core orders to state-approved tariffs for ILEC-to-CLEC and ILEC-to-wireless compensation. Verizon ATS verbally clarified to staff that the proposed compensation rate applies only to CLEC-to-CLEC; that is, non-ISP (i.e., below the 3:1 ratio, and not wireless).
The opponents take an opposite view. In their opinion, the FCC's preemption of state authority to approve default compensation rates set forth in the T-Mobile and Core orders extends to CLEC-to-CLEC compensation arrangements. The opponents reason that the general language in the T-Mobile Order requires LECs to negotiate compensation under TA-96, and not rely on state-approved tariffs. The word ''LECS'' includes CLECs in their view.
The Commission concludes that these and other related issues should be examined in more detail only after state commissions have the benefit of clarity from the FCC. The ambiguity about the federal law set out in the comments warrant caution.
A cautious approach would avoid precipitous action on federal law and any other matters related to Verizon ATS' proposed tariff at this time. A cautious approach requires rejection of the proposed tariff without prejudice until the FCC provides greater clarity on the scope and intent of federal law; Therefore,
It Is Ordered That:
1. The proposed tariff Supplement No. 5 to Verizon Access Transmission Services, LLC Tariff-Telephone Pa. PUC No. 2, filed August 2, 2005, to introduce Local Traffic Termination Service for non-access minutes of use, suspended until September 2, 2006, is rejected without prejudice.
2. A copy of this Order shall be served on the Pennsylvania Telephone Association, COMPTEL, in addition to all parties in this case.
3. A copy of this Order shall be published in the Pennsylvania Bulletin and posted on the Commission's website.
4. The file be marked closed.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 06-1299. Filed for public inspection July 7, 2006, 9:00 a.m.] _______
1 Upon Commission's approval of an Agreement and Merger of MCImetro Access Transmission Services, LLC's parent company, MCI with Verizon Communications Inc. by Order entered on January 11, 2006, at Docket No. A-310580F0009 et. al., MCImetro filed for a name change to Verizon Access Transmission Services.
2 Verizon ATS quoted three Federal Communications Commission Orders 1) ISP Remand Order at FCC 01-1312 (released April 27, 2001); 2) the Core Order at FCC 04-2412 (released October 18, 2004), and the T-Mobile Order at FCC 05-422 (released February 24, 2005) in support of the proposed tariff. Verizon ATS avers that the three orders collectively allow Verizon ATS to charge other CLEC carriers compensation rates at state-approved rates when terminating non-access minutes of use below a 3:1 ratio of Terminating to Originating Non-Access Minutes of Use if the carrier has no interconnection agreement with Verizon ATS and the traffic is neither wireless nor ILEC.
3 Petition of Core Communications, Inc. for Forbearance Under 47 U.S.C. § 160(c) from application of the ISP Remand Order, 19FCC Rcd 20179(2004).
4 CC Docket No. 01-92, Ex Parte Presentation of Global COM, Inc., January 27, 2006. The Ex Parte presentation, discussed in more detail below, further illustrates the considerable uncertainty and ambiguity about the scope and intent of the T-Mobile Order.
5 ISP Remand Order, paragraph 8.
6 ISP Remand Order, paragraphs 3 through 8, 66-95.
7 Core Forbearance-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 Forbearance-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.
8 T-Mobile Order, paragraphs 9 and 14.
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