STATE OF MICHIGAN MICHIGAN PUBLIC SERVICE COMMISSION

Transcription

1 STATE OF MICHIGAN MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the petition of ACD Telecom, Inc., ) Arialink Telecom, LLC, CynergyComm.Net, Inc., ) DayStarr LLC, Lucre, Inc., Michigan Access, Inc., ) Osirus Communications, Inc., Superior Spectrum ) Case No. U Telephone and Data, LLC, TC3 Telecom, Inc., and ) TelNet Worldwide, Inc. for Arbitration of Interconnection ) rates, terms, conditions, and related arrangements with ) Michigan Bell Telephone Company d/b/a AT&T Michigan ) DIRECT TESTIMONY OF CARL C. ALBRIGHT, JR. On Behalf of AT&T MICHIGAN Dated: November 18, 2011 ISSUES NIM 8a, 8b, 8c, 11, 12, 20, 25

2 TABLE OF CONTENTS I. INTRODUCTION...1 II. PURPOSE OF TESTIMONY...2 III. ENTRANCE FACILITIES NIM ISSUES 8(a), 8(b), 8(c)...3 IV. TRUNKING NIM ISSUE V. RELATIVE USE FACTOR (RUF) NIM ISSUE VI. HVCI TRUNKS NIM ISSUE VII. IP-TO-IP INTERCONNECTION NIM ISSUE

3 Page DIRECT TESTIMONY OF CARL C. ALBRIGHT, JR. ON BEHALF OF AT&T MICHIGAN I. INTRODUCTION Q. PLEASE STATE YOUR NAME, TITLE AND BUSINESS ADDRESS. A. My name is Carl C. Albright, Jr. I am an Associate Director Network Regulatory in AT&T s Network Planning and Engineering Department. My business address is 3413 Booth Calloway, Richland Hills, Texas Q. WHAT IS YOUR PROFESSIONAL EXPERIENCE AND EDUCATIONAL BACKGROUND? A. I have been employed by AT&T for 32 years. My entire career has been on the Network side of AT&T starting with Network Distribution in outside installation, repair, and maintenance, after which I spent time in Network Operations in the Central Office Special Services group. I also supported Network Operations as a technical instructor for AT&T for five years, developing and delivering broadband transport courses, from fundamental fiber optics to advanced SONET, as well as DCS and SS7. I also worked with our wireless affiliate for four years managing the development, implementation, measurement and evaluation of technical training for the Wireless Network Operation s organization. I have also served for five years providing technical Methods and Procedure support to the AT&T U-verse initiative. I have a Bachelors Degree in Management from Lamar University, Beaumont, Texas. Q. HAVE YOU TESTIFIED BEFORE ANY STATE COMMISSIONS BEFORE? A. Yes. I have filed testimony and/or appeared in regulatory proceedings on matters involving network design and network operations in numerous cases at state regulatory

4 Page commissions including the Arkansas Public Service Commission, California Public Utilities Commission, Illinois Commerce Commission, Oklahoma Corporation Commission, Michigan Public Service Commission and the Public Utility Commission of Texas II. PURPOSE OF TESTIMONY Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. My testimony will address issues related to disputes over the language of certain provisions of Appendix Network Interconnection Methods/Interconnection Trunking ( the NIM appendix ). Those issues are as follows: NIM Issue 8: (a) What types of interconnection methods may Entrance Facilities be used with? (b) What limitations should be placed on the CLECs use of Entrance Facilities? (c) Should the ICA refer to dark fiber entrance facilities? NIM Issue 11: What requirements should the ICA place on the use of two-way trunking versus one-way trunking? NIM Issue 12: Is it appropriate to apply a Relative Usage Factor to the cost of transmission facilities? NIM Issue 20: Is it necessary for the ICA to establish the number of HVCI (choke) trunk groups that CLECs must maintain? NIM Issue 25: Is it appropriate to include in the ICA a provision requiring the Parties to negotiate IP-to-IP interconnection terms in a Section 251/252 ICA when and if a legal determination is made that IP to IP interconnection falls within Section 251/252?

5 Page Throughout my testimony, I will refer either to the Joint CLECs, or to the CLECs in the singular form to the extent that a CLEC will have its own unique interconnection arrangement with AT&T Michigan apart from the other CLECs in this arbitration III. ENTRANCE FACILITIES NIM ISSUES 8(a), 8(b), 8(c) NIM Issue 8: (a) What types of interconnection methods may Entrance Facilities be used with? [NIM section 3.4.1] (b) What limitations should be placed on the CLECs use of Entrance Facilities? [NIM Section 3.4.3] (c) Should the ICA refer to dark fiber entrance facilities? [NIM Sections , 3.4.4] Q. PLEASE EXPLAIN WHAT IS MEANT BY THE TERM ENTRANCE FACILITIES? A. The term entrance facilities refers generally to transmission facilities that are owned by an incumbent local exchange carrier ( ILEC ) and that connect competitive LEC networks with the ILEC s network. In its Triennial Review Remand Order, the FCC ruled that ILECs have no obligation to provide Entrance Facilities as unbundled network elements ( UNEs ) at TELRIC prices under Section 251(c)(3) of the Telecommunications Act of 1996 (the 1996 Act ): As the court suggested, we now conduct an impairment analysis with respect to entrance facilities and find that the economic characteristics of entrance facilities that we discussed in the Triennial Review Order support a national finding of non-impairment. Specifically, entrance facilities are less costly to build, are more widely available from alternative providers, and have greater revenue potential

6 Page than dedicated transport between incumbent LEC central offices. As we noted in the Triennial Review Order, entrance facilities are used to transport traffic to a switch and often represent the point of greatest aggregation of traffic in a competitive LEC s network. Because of this aggregation potential, entrance facilities are more likely than dedicated transport between incumbent LEC offices to carry enough traffic to justify self-deployment by a competitive LEC. Moreover, competitive LECs have a unique degree of control over the cost of entrance facilities, in contrast to other types of dedicated transport, because they can choose the location of their own switches. For example, they can choose to locate their switches close to other competitors switches, maximizing the ability to share costs and aggregate traffic, or close to transmission facilities deployed by other competitors, increasing the possibility of finding an alternative wholesale supply. In addition, they often can locate their switches close to the incumbent LEC s central office, minimizing the length and cost of entrance facilities. 1 As a result, ILECs are not obligated to make Entrance Facilities available to CLECs for the purpose of backhauling traffic, i.e., transporting traffic between points on the CLECs own network for the benefit of its own customers. In a recent decision, however, the United States Supreme Court ruled that ILECs must, pursuant to Section 251(c)(2) of the 1996 Act, make Entrance Facilities available to CLECs at cost-based TELRIC rates if such facilities are used for interconnection: to link the incumbent provider s telephone network with the competitor s network for the mutual exchange of traffic. 2 Q. HAVE THE PARTIES NEGOTIATED TERMS AND CONDITIONS FOR THE PROVISION AND USE OF ENTRANCE FACILITIES? A. Yes. Those terms and conditions are included in section 3.4 of the Appendix NIM and consist of subsections through Q. HAVE THE PARTIES AGREED ON A DEFINITION OF ENTRANCE FACILITIES? 1 Triennial Review Remand Order paragraph Talk America v. Michigan Bell, 131 S. Ct. 2254, 2257 (2011).

7 Page A. Yes. The parties agreed on the following definition of Entrance Facilities, as set forth in the following language contained in NIM section 3.4.1: Entrance Facilities are the transmission facilities (typically wires or cables) that connect CLECs networks with ILECs networks for the mutual exchange of traffic. These Entrance Facilities connect CLEC s network from CLEC s Switch or POP within the LATA to the AT&T Michigan office within that LATA to establish a Point of Interconnection ( POI ) within the AT&T Michigan Serving Wire Center for CLEC s Switch or POP for the transmission of telephone exchange service and exchange access service. Q. HOW ARE ENTRANCE FACILITIES USED FOR INTERCONNECTION UNDER THE TERMS OF THE ICA? A. Appendix NIM identifies three methods interconnection: physical collocation (section 3.1.1), virtual collocation (section 3.2.1), and central office interconnection without collocation (section 3.3.1). Of these three methods of interconnection, Entrance Facilities can only be used to effectuate central office interconnection without collocation, as indicated in section 3.3.1: When CLEC does not wish to collocate transport terminating equipment at an AT&T Michigan Tandem or End Office, CLEC may self provision deploy third party interconnection facilities, or lease existing Entrance Facilities, as defined in Section of this Appendix, from AT&T Michigan. An Entrance Facility is existing if, at the time of the CLEC request, the facility is present in AT&T s network and available for use as an Entrance Facility and no special construction is required. The most common form of an interconnection arrangement in which the CLEC uses an existing Entrance Facilities leased from AT&T Michigan is a Fiber Meet Interconnection, for which terms and conditions are set forth in NIM Appendix Section 3.5.

8 Page Q. HOW ARE ENTRANCE FACILITIES USED IN A FIBER MEET INTERCONNECTION ARRANGEMENT? A. When the CLEC chooses Central Office Interconnection without collocation and wishes to lease existing Entrance Facilities from AT&T Michigan, Fiber Meet Interconnection provides the method by which the Parties will establish that interconnection arrangement. In a Fiber Meet Interconnection arrangement, AT&T Michigan provides the fiber pair for the working side of the Fiber Meet and the CLEC is responsible for providing the 159 fiber pair for the protection side. 3 The CLEC can lease an existing Entrance Facility from 160 AT&T Michigan for this purpose. Each Party is responsible for providing the necessary 161 multiplexing and optronics on its side of the Fiber Meet arrangement. 4 These working side and protection side fibers are located between the CLEC s physical presence and the AT&T Michigan location where the CLEC seeks to establish a POI for the purpose of the mutual exchange of traffic between the Parties under 251(c)(2). This arrangement is described in detail in Section , as follows: CLEC and AT&T Michigan will each provide two fibers between their locations. AT&T Michigan will provide the fibers associated with the working side of the system to the CLEC s designated entrance point. CLEC will provide the fibers associated with the protection side of the system. The Parties will work cooperatively to terminate each other s fiber in order to provision this joint pointto-point linear chain SONET system with 1+1 protection. CLEC will provide fiber cable to the last entrance (or AT&T Michigan designated) manhole at the AT&T Michigan Tandem or End Office building. AT&T Michigan shall make all necessary preparations in the manhole to receive and to allow and enable CLEC to deliver fiber optic facilities into that manhole. CLEC will provide 3 Most optical systems use a 1:1 protection scheme for their fiber optics, commonly referred to as a working pair (transmit and receive fibers) and protection pair (transmit and receive fibers). While traffic is being transmitted and received simultaneously over both pairs of fibers, the signal from the working side is the one that the systems use with the protection side fibers in a standby mode in the event the working side has a degradation in signal strength or quality, or in the event of a loss of signal on the working side. 4 NIM sections 3.5.3, 3.5.4, ,

9 Page sufficient length of fiber cable for AT&T Michigan to pull through to the AT&T Michigan cable vault. Both Parties will work cooperatively to determine the appropriate technical handoff for purposes of demarcation and fault isolation. The POI will be defined as being at the AT&T Michigan designated manhole location. Q. WHAT ARE THE DISAGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE ENTRANCE FACILITY PROVISIONS OF THE NIM APPENDIX? A. There are three related issues. First, the Joint CLECs propose to include language in sections and which makes reference to so called dark fiber entrance facilities, despite the fact that, by definition, there can be no such thing as a dark fiber entrance facility (NIM Issue 8 (c)). Second, the Joint CLECs propose to add a sentence to the definition of Entrance Facilities in section which incorrectly states that Entrance Facilities can be used in connection with the interconnection methods described in sections ( physical collocation) and (virtual collocation), in addition to section (central office interconnection without collocation) (NIM Issue 8(a)). As I will explain, this proposed language would incorrectly redefine Entrance Facilities to include facilities that are a part of the CLEC s network between their switch and their equipment in a Collocation arrangement. Third, the Joint CLECs propose revisions to section that would provide them with the ability to utilize Entrance Facilities for the provision of ancillary services other than the exchange of traffic between the Parties (NIM Issue 8(b). Q. IS THERE BASELINE LANGUAGE IN THE JOINT CLECS CURRENT ICAS REGARDING ENTRANCE FACILITIES?

10 Page A. No. The Entrance Facilities provisions that are at issue in this case are being added as a result of the recent Supreme Court ruling that I have previously discussed. Q. WITH REFERENCE TO ISSUE 8(C), PLEASE EXPLAIN WHY THERE CAN BE NO SUCH THING AS DARK FIBER ENTRANCE FACILITIES. A. The Joint CLECs apparently have in mind dark fiber transport facilities used to connect a CLEC s switch to a collocation arrangement in an AT&T Michigan central office. Dark fiber is fiber optic cable that has been deployed by a carrier but has not yet been activated through connections to optronics that light it, and thereby render it capable of 212 carrying communications. 5 CLECs using dark fiber use their own facilities, including optronic equipment placed at both ends of the fiber, to light the fiber and make it useable. Dark fiber thus becomes part of a CLEC s network once it has been activated by the CLEC s own facilities, including the necessary optronics on either end of the dark fiber. Because dark fiber transport, once activated, is part of the CLEC s network it cannot be an Entrance Facility since, under the agreed definition in section 3.4.1, and consistent with the Supreme Court s decision, an Entrance Facility is a transport facility that connects the CLEC s network with the ILEC s network for the exchange of Section 251(b)(5) (Local/IntraLATA toll) traffic between the Parties. Entrance Facilities are between the ILEC s and CLEC s respective networks such that each carrier provides the necessary optronics on its side of the Entrance Facility in order to activate that 5 Triennial Review Remand Order, par. 133.

11 Page Entrance Facility so that it can be used for interconnection and the mutual exchange of traffic between the carriers. Furthermore, interconnection trunking requires a fiber cable that has functioning electronics at both ends. Then, and only then, can a facility be used for interconnection trunking. The Joint CLECs attempt to characterize dark fiber as an entrance facility used for the purpose of interconnection fails because dark fiber would be a part of the CLEC s network with the CLEC owning and providing the necessary optronics on both ends of the dark fiber. AT&T Michigan does not provide any functional electronics on either end of a dark fiber. Q. IN HIS TESTIMONY, MR. IANNUZZI REFERS TO DARK FIBER ENTRANCE FACILITIES THAT THE CLECS UTILIZE FOR COLLOCATION AND THAT SUCH FACILITIES ARE NECESSARY IN A COLLOCATION ARRANGEMENT TO CARRY THE TRAFFIC BETWEEN THE PARTIES NETWORKS. 6 IS HIS ASSERTION CORRECT? A. No. Once again, Mr. Iannuzzi is referring to dark fiber facilities that a CLEC may use to extend its network from its switch or POP to and into a collocation arrangement in an AT&T Michigan central office premise. The CLEC owns and controls the collocation space and installs and maintains any equipment or facilities that it wants to place within that collocation arrangement. As such, the collocation arrangement is an integral part of the CLEC s network. Thus, the dark fiber is not used to connect two networks. Rather, as Mr. Iannuzzi acknowledges, in this situation the dark fiber is being used for backhauling 7, a term that includes the provision of a final link in the dedicated 6 Iannuzzi Direct at page 12, lines Iannuzzi Direct at page 12, lines 3-4.

12 Page transmission path between CLEC s customer and CLEC s switch. 8 The parties have agreed that Entrance Facilities may not be used for backhauling traffic. 9 Q. DOES IT MAKE ANY DIFFERENCE WHETHER DARK FIBER USED TO CONNECT A CLEC S SWITCH TO ITS COLLOCATION ARRANGEMENT IN AN AT&T END OFFICE IS CLASSIFIED AS AN ENTRANCE FACILITY? A. Yes. As the FCC ruled in the TRRO and as its rules make clear, an ILEC is not obligated to provide a requesting carrier with unbundled access to dedicated transport [including dark fiber] that does not connect a pair of incumbent LEC wire centers. 47 CFR Section (e)(2). Thus, as the Joint CLECs are aware, they cannot obtain dark fiber transport for connecting their switch to a collocation arrangement as a TELRICpriced UNE. This is confirmed by section 9.1 of Appendix UNE, which states that dark fiber dedicated transport is available as a UNE only when it connects two points within the incumbent LEC s network. Accordingly, it is apparent that the Joint CLECs are attempting to obtain dark fiber transport facilities at TELRIC rates by classifying them as Entrance Facilities used for interconnection, when in fact they cannot be used of that purpose. Q. WITH RESPECT TO NIM ISSUE 8(A), PLEASE EXPLAIN WHY ENTRANCE FACILITIES CANNOT BE USED IN CONNECTION WITH THE INTERCONNECTION METHODS DESCRIBED IN SECTIONS 3.1 (PHYSICAL COLLOCATION) AND 3.2 (VIRTUAL COLLOCATION), AS REFERENCED IN THE DISPUTED LANGUAGE THAT THE JOINT CLECS PROPOSE ADDING TO THE END OF SECTION A. This issue is related to the issue of dark fiber entrance facilities (NIM Issue 8(c)). As I have previously discussed, under the agreed definition contained in Section 3.4.1, 8 Appendix NIM Section Iannuzzi Direct at page 12, lines 3-4.

13 Page Entrance Facilities are transmission facilities that extend from the CLEC s switch or point of presence ( POP ) within the LATA and that connect CLECs networks with 275 ILECs networks for the mutual exchange of traffic. In a collocation arrangement, however, the CLEC provides its own network facilities, including transport termination and optronics equipment. As a result, the collocation arrangement is part of the CLECs network. Accordingly, the facilities (e.g., dark fiber) used by a CLEC to connect its switch or POP to the collocation arrangement do not connect the CLEC s network with the ILEC s network and, therefore, cannot, by definition, be Entrance Facilities. Q. ARE THERE ANY OTHER AGREED UPON CONTRACTUAL PROVISIONS THAT CONFIRM YOUR UNDERSTANDING OF WHAT CONSTITUTES INTERCONNECTION IN THE CONTEXT OF A COLLOCATION ARRANGEMENT? A. Yes. The agreed language for sections and of Appendix NIM indicate that, in the context of either a physical or virtual collocation arrangement, interconnection with AT&T Michigan s network is to be obtained not through the use of the Entrance Facilities provisions of Appendix NIM but, rather, through provisions set forth in Appendix Collocation. For physical collocation, this is a reference to the agreed language for Section of Appendix Collocation, which provides collocators with three interconnection arrangement options, none of which refer to Entrance Facilities. Rather, the optional interconnection arrangements are described as arrangements of either (i) 28 DS1 connections, (ii) one DS3 connection or (iii) 100 copper connections, between the collocator s optional [point of termination ( POT )] frame or equipment bay [located within the CLEC s collocation space] and the AT&T Michigan network. This confirms that the collocation arrangement is part of the CLEC s network and that

14 Page interconnection in this context occurs between the CLEC s collocation arrangement (not its switch or its POP) and the AT&T Michigan network. Q. PLEASE DESCRIBE THE DISPUTE ON NIM ISSUE 8 (B). A. The Joint CLECs propose language for Section that would allow them to use Entrance Facilities priced at TELRIC rates for 911, OS/DA, HVCI, Third Party and Meet Point Trunk Groups. Thus, the Joint CLECs propose that the facilities used for the trunk groups that carry these ancillary services be treated no differently than facilities used to carry interconnection trunk groups for purposes of determining which party is responsible to provide them, and where the point of interconnection shall be. Q. WHY DOES AT&T MICHIGAN TAKE ISSUE WITH THE JOINT CLECS PROPOSAL? A. Once again, as is the case with NIM issues 8(a) and 8(c), the Joint CLECs position is inconsistent with the definition and purpose of Entrance Facilities, which is to interconnect each CLEC and AT&T Michigan for the mutual exchange of local and intralata toll traffic between the CLEC and AT&T Michigan. As I will explain in more detail below, 911, OS/DA and HVCI (i.e., Mass Calling) trunks are used by a CLEC for the sole purpose of making OS/DA, 911 and Mass Calling services available to the CLEC s own customers. Those trunks carry no traffic to or from AT&T Michigan s customers and have nothing to do with any service provided by AT&T Michigan. Third party trunks are used solely for the exchange of traffic between a CLEC and third parties other than AT&T Michigan. Meet-point trunks are used to bring the CLEC s interlata interexchange traffic to AT&T Michigan s access tandem to be delivered to interexchange carriers ( IXCs ) and to bring the IXCs traffic from the

15 Page tandem to the CLEC for CLEC to terminate to its end users. Thus, as with OS/DA, 911, Mass Calling and Third Party trunks, Meet Point trunks are not used to carry traffic between the CLEC s local exchange customers and AT&T Michigan s local exchange customers. In sum, the facilities over which 911, OS/DA, HVCI, Third Party and Meet Point Trunk groups ride are not being used for interconnection under Section 251(c)(2) of the 1996 Act and do not constitute a proper use of Entrance Facilities as defined in Section of the ICA. Furthermore, as indicated by the agreed language in section 3.4.3, use of a facility to carry traffic to and from [a CLEC s] own end user customers constitutes a form of backhauling for which AT&T Michigan is not required to provide Entrance Facilities priced at TELRIC rates. The Joint CLECs proposal also runs counter to agreed-to language in section 2.1 of Appendix NIM which makes it clear that the CLEC is solely responsible for these facilities since they exclusively serve the CLEC s end users: CLEC is solely responsible, including financially, for the facilities that carry 911, HVCI, OS/DA, Third Party and Meet Point Trunk Groups. By including the provision of these ancillary services within the permissible use of Entrance Facilities, the CLECs would inappropriately shift its responsibility for the cost of these facilities to AT&T Michigan since AT&T Michigan not only shares in the cost of the Entrance Facilities, it also provides the necessary optronics and multiplexing functions on its end of the Entrance Facilities. 344

16 Page Q. PLEASE DESCRIBE IN MORE DETAIL THE SERVICES THAT ARE PROVISIONED AND TRANSPORTED OVER THESE FACILITIES. A. The following are ancillary services that are provisioned and transported over facilities specifically designed to serve only the CLEC s end users and are not used for the mutual exchange of traffic with AT&T Michigan s end users: Operator Services and Directory Assistance is provided by the CLEC strictly for the benefit of its end users. The CLEC is legally obligated to provide 911 capabilities for its own end users. Mass Calling trunks ensure network reliability and 911 capabilities. Mass Calling events such as radio contests or ticket sales can jeopardize network security and reliability. Meet-point trunk groups and facilities are strictly for origination and termination of IXC delivered long distance traffic between the CLEC s end users and the specific IXC that the CLEC end user has selected. Third Party trunks are the direct connections between the CLEC and third party carriers other than AT&T Michigan, including CLECs, CMRS, RLECs and other such carriers solely for the purpose of the exchange of traffic between the CLEC and that carrier Q. MR. IANNUZZI STATES IN HIS TESTIMONY THAT THERE IS A COMPREHENSIVE SET OF FUNCTIONS THAT AT&T REQUIRES THE CLECS TO PERFORM IN ORDER TO PROVIDE SERVICES TO THEIR CUSTOMERS, WHICH INCLUDES ESTABLISHING 911, OS/DA, HVCI, THIRD PARTY AND MEET POINT TRUNK GROUPS. 10 IS THIS AN ACCURATE STATEMENT? A. No. There are a number of flaws in Mr. Iannuzzi s testimony regarding these ancillary services. 10 Iannuzzi Direct at page 13, lines 1-4.

17 Page All carriers must provide 911 on behalf of their end users. This is a legal obligation, not part of some comprehensive set of functions that AT&T requires the CLEC s to perform. The CLEC is responsible for service offerings such as operator services / directory assistance (OS/DA) that it seeks to provide to its end users. If the CLEC seeks to provide such OS/DA to its end users through AT&T Michigan, then that ancillary service offering is outside of the purpose of a 251(c)(2) interconnection and not for the mutual exchange of local and intralata toll traffic with AT&T Michigan. Third party trunks are direct interconnection arrangements that CLECs may seek to establish between their networks and the network(s) of other carriers and AT&T Michigan is not responsible for these arrangements between other carriers. Meet point trunks are provided by the CLEC on behalf of its end users to gain access to interexchange carriers (IXCs) for long distance services and not for the mutual exchange of local and intralata toll traffic with AT&T Michigan. A CLEC s legal obligation to provide 911 and its business decision to provide the other ancillary services to its end users is solely within the control of the CLEC. If it does not wish to provide OS/DA to its end users, that is its choice. If it does not seek to provide long distance calling capability to its end users, that is its choice. These are not obligations that AT&T Michigan imposes on the CLEC. Q. WHY SHOULD THE CLEC BE RESPONSIBLE FOR THE FACILITIES USED TO CARRY ITS OS/DA, 911, MASS-CALLING, THIRD PARTY AND MEET- POINT TRUNK GROUPS? A. As I have indicated, OS/DA, 911, mass-calling, third party and meet-point trunk groups and their underlying facilities are provided by the CLEC in support of the telecommunications services it provides to its End Users. Interconnection between the CLEC and AT&T Michigan is for the mutual exchange of traffic between the CLEC s local exchange service customers and AT&T Michigan s local exchange service

18 Page customers. The services provided through OS/DA, 911, mass-calling, third party and meet-point trunk groups neither originate nor terminate to AT&T Michigan end users and, therefore, the facilities used to carry such traffic do not fall within the agreed definition of an Entrance Facility, which is a transmission facility used to connect the CLEC and ILEC networks for the mutual exchange of traffic. (Appendix NIM, Section 3.4.1). Accordingly, the CLEC should not be allowed to shift its costs to AT&T Michigan or to force AT&T Michigan end users to subsidize these services on behalf of the CLEC s end users. Q. IS THERE ANY BENEFIT OF THE ANCILLARY TRUNK GROUPS TO AT&T MICHIGAN S END USERS? A. No. Neither AT&T Michigan nor its end users benefit from the CLEC s ancillary OS/DA, 911, mass calling, third party or Meet Point trunks. As discussed above, these are trunk groups that are a part of the CLEC s network established by the CLEC specifically in support and for the benefit of the CLEC s end users. The CLEC is responsible for providing its end users with 911 and OS/DA services. Additionally, where a CLEC end user requires access to an IXC for an IXC-carried call, the CLEC is responsible to provide that service to its end user. Further, all carriers, including the Joint CLECs, have a responsibility to maintain the integrity and reliability of the PSTN and 911 services through the use of mass calling trunks in order to avoid network failure as a result of a mass calling event. Lastly, interconnection under Section 251(c)(2) is for the mutual exchange of traffic. The CLEC s ancillary trunks do not provide for the mutual exchange of traffic as set forth under Section 251(c)(2) of the Act. Therefore the CLEC should be financially

19 Page responsible for these ancillary trunks and facilities and the point of interconnection for these ancillary trunk groups should be at the appropriate switching location where those services are provided, e.g., at the 911 selective router for 911 trunks. Q. CAN THE CLEC PROVIDE THESE SERVICES THROUGH ITS COLLOCATION ARRANGEMENT? A. Absolutely. A CLEC s collocation arrangement is part of the CLEC s network. Because the CLEC provides the necessary facilities and equipment within the collocation arrangement and controls that equipment, it is an integral part of the CLEC s network available to the CLEC for whatever services it seeks to provide. But this does not utilize the Entrance Facilities that are in question here. Q. HOW SHOULD THE COMMISSION RULE FOR NIM ISSUE 8 A, 8 B AND 8 C? A. The Commission should rule as follows: The language proposed by AT&T Michigan provides that existing Entrance Facilities will be made available to the CLECs at TELRIC-based rates when (and only when) such Entrance Facilities are to be used for interconnection. This language is consistent with the Supreme Court s ruling in Talk America v. AT&T Michigan. Entrance Facilities as defined in section of Appendix NIM cannot be used to provide interconnection through physical and virtual collocation because the dark fiber used by a CLEC to connect its switch or POP to a collocation arrangement, as well as the collocation arrangement itself, is part of the CLEC s network and, therefore, is not a facility used for interconnection as described in Section 251(c)(2) of the 1996 Act. The Joint CLECs proposed language referring to dark fiber entrance facilities should be rejected because dark fiber transport facilities cannot be used for interconnection and, therefore, cannot be Entrance Facilities as that term is defined in the agreed language for Section of Appendix NIM. The CLEC is solely financially and physically responsible for its facilities that carry ancillary services such as 911, HVCI, OS/DA, Third Party and Meet Point Trunk Groups as those services are solely for the benefit of the CLEC s end users

20 Page and AT&T Michigan s end users do not have access to, nor do they benefit from, the CLEC s ancillary services. These services neither originate nor terminate with AT&T Michigan end users and, therefore, the facilities used by the CLECs to carry such traffic do not fall within the definition of an Entrance Facility, which is a transmission facility used to connect the CLEC and ILEC networks for the mutual exchange of traffic. The CLECs proposed language inappropriately seeks to shift the CLEC s financial responsibility for its ancillary services provided solely for the benefit of the CLEC s end users onto AT&T Michigan. Consistent with this ruling, the Commission should adopt AT&T Michigan s proposed language for sections 3.4.1, , and of the NIM Appendix and reject the Joint CLECs proposed language for those sections IV. TRUNKING NIM ISSUE 11 NIM Issue 11: What requirements should the ICA place on the use of twoway trunking versus the use of one-way trunking? [Appendix NIM section 8.2] Q. PLEASE DECRIBE NIM ISSUE 11. A. This issue involves a dispute over the language for section 8.2 of Appendix NIM. As indicated by the language of that section, which is quoted below, the Joint CLECs propose language (shown in bold italic font) that would give each CLEC sole discretion to elect whether to utilize one-way or two way trunking for a given trunk group. AT&T Michigan s proposed language (shown in bold underlined font), on the other hand, provides that two-way trunking will be used whenever it is possible and appropriate. For the reasons I will discuss, AT&T Michigan s proposed language should be adopted because two-way trunking results in a much more efficient and cost effective utilization of limited trunking resources.

21 Page CLEC may elect to utilize either One-Way or Two-way trunking shall be established when possible and appropriate for a given trunk group. The Parties agree to exchange traffic data on two-way trunks and to implement such an exchange within three (3) months of the date that two-way trunking is established and the trunk groups begin passing live traffic, or another date as agreed to by the Parties. Exchange of traffic data will permit each company to have knowledge of the offered and overflow load at each end of the two-way trunk group, and thereby enable accurate and independent determination of performance levels and trunk requirements. The Parties agree to the electronic exchange of data as described in the Trunk Data Exchange section below. Q. WHAT IS THE BASELINE LANGUAGE REGARDING TWO-WAY TRUNKING IN THE ICAS CURRENTLY IN PLACE BETWEEN THE PARTIES TODAY? A. The current baseline language for two-way trunking is exactly the same as the language proposed by AT&T Michigan for Section 8.2 in this arbitration. Q. HAVE THE JOINT CLECS IDENTIFIED ANY LEGITIMATE REASON FOR DEVIATING FROM THE BASELINE LANGUAGE FOR THIS ISSUE? A. Not in my opinion. Two-way trunks are a more efficient utilization of the PSTN and limited trunk resources of both the AT&T Michigan tandem and the CLEC switches. It would seem that the CLEC should prefer two-way trunks as that would be more efficient and cost effective for them as well as for AT&T Michigan. Q. HAVE THE JOINT CLECS PROVIDED ANY EVIDENCE SUPPORTING THEIR POSITION ON THIS ISSUE? A. No. The Joint CLEC witnesses did not provide any testimony regarding this issue. The Joint CLECs only discussion of this issue is found in the Issues Showing Baseline Language Changes and CLEC Discussion (the CLEC Discussion ), attached to the petition for arbitration. The Joint CLECs argue that the FCC s Rule permits the CLEC to choose one-way trunking at its sole discretion. (CLEC Discussion at 24). I believe that the Joint CLECs have misconstrued that rule and its purpose. The provision

22 Page of the rule relied on by the Joint CLECs says nothing about one-way trunking. Rather, the rule provides that [if] technically feasible, an incumbent LEC shall provide two-way 532 trunking upon request. 11 At the time that rule was adopted, older switching technology only allowed for one-way trunking. As new switching technology came on line, CLECs began requesting two-way trunking. Accordingly, the FCC intervened with the requirement that CLECs be provided two-way trunking, if technically feasible, at their request. Thus, the rule was adopted for the benefit of CLECs which desired to use twoway trunking. It does not give the CLEC a unilateral right to demand the use of one-way trunking, over the ILEC s objections, where two-way trunking is technically feasible. Furthermore, I would note that this rule was in effect at the time that the baseline language for this issue, which the Joint CLECs now wish to change, was approved by the Michigan Commission. Accordingly, the rule does not constitute a change in circumstances justifying a change to the baseline language. The Joint CLECs also argue that: In addition, two-way trunking can create problems as to who should bear the cost of a facility used for the mutual benefit of both parties. The existence of a right for the CLECs to use one-way trunking helps to ensure that AT&T agrees to a reasonable allocation of costs when two-way trunking is being discussed. (CLEC Discussion at 24). The costs of one-way trunking have nothing to do with the reasonable allocation of costs when two-way trunking is being discussed, or the CLEC s obligation to interconnect on the ILEC s network under 251(c)(2) CFR (f).

23 Page Q. AS A PRELIMINARY MATTER, PLEASE EXPLAIN WHAT IS MEANT BY A TRUNK? A. Trunks are ports on a switch used to create a dedicated talk path from one switch to another. Between switches there is typically a need for more than one talk path so multiple trunks can be grouped together in software in what is referred to as a trunk group. Each trunk group is dedicated for calls between the two switches. When an end user served by one switch wants to call an end user served by another switch, the originating switch routes the call (based on the NPA-NXX of the End User being called) to a particular trunk group. Within the trunk group, an idle trunk is identified and is then dedicated to that call for the duration of the call. Consequently, no other call can use that trunk until the current call is completed. Q. ARE TRUNKS THE SAME AS FACILITIES? A. No. A facility is a physical medium used to connect two points on a network. Usually this physical facility is fiber or copper cable. In the interconnection environment, a facility links two networks and creates an end-to-end facility path that will allow each company to establish the trunking network between their switches. It is common to see facilities referred to in terms such as DS1, DS3, OC3, OC12, etc. Q. IS IT POSSIBLE TO ESTABLISH TRUNKS BETWEEN SWITCHES WITHOUT A FACILITY? A. No. Trunks ride over facilities. Without a facility to ride, a path (trunk) for calls between switches cannot be established. Similarly, simply having a facility between two points is not enough to complete a call. A trunk must ride the facility for a call to be completed. Trunks and facilities work hand-in-hand so calls can be completed.

24 Page The distinction between a trunk and a facility is best described in the illustration below. Thin Lines Represent Trunks SWITCH SWITCH 579 Central Office A Dark Lines Represent The Facility Central Office B In this illustration one can see that a physical facility (e.g., DS1, DS3) exists between Central Office A and Central Office B (the dark lines). Trunks (the thin lines) are then provisioned over the facility to establish the talking path between the two switches. Q. CAN YOU DESCRIBE HOW A CALL IS MADE BETWEEN TWO SWITCHES THAT DO NOT HAVE DIRECT FACILITIES OR TRUNKS? A. Yes. To understand how that type of call is made let me provide an illustration. 588

25 Page In this illustration, the two end offices utilize a tandem switch to set up calls between their respective End Users. There is a facility and a trunk group established between end office A and the tandem office B. There is also a facility and a trunk group between end office C and the tandem office B. Both facilities terminate at the tandem location and trunks are established between the tandem switch and the respective end offices to complete calls between the two offices. With no facility directly connecting end offices A and C, calls between these two offices require the use of two separate facilities. Also, with no trunk group directly connecting end offices A and C, calls between these two offices require the use of two separate trunk groups and additional switching at the tandem. The illustration shows that trunk paths can (and usually will) require the use of multiple facilities Q. PLEASE EXPLAIN WHAT IS MEANT BY TWO-WAY AND ONE-WAY TRUNKING? A. As discussed above, trunking is established between switches. While trunks provide twoway talk paths, trunks can be provisioned as either one-way or two-way. The manner in which the trunk groups are provisioned establishes the parameters by which the switch will utilize those trunk groups. An analogy would be the phone in your house. It has a dial pad as well as a ringer. The dial pad allows you to pick up the receiver and dial a number to call someone, while the ringer notifies you in the event someone is calling you, at which point you pick up the receiver and the talk path completes for conversation. This represents two-way trunking. However, if your phone were set up as one-way, you would have two

26 Page phones, one with a dial pad and no ringer for placing calls, and another phone with a ringer, but no dial pad for receiving calls. Both phones would provide a two-way talk path, but you would have to use one to place calls and the other to receive calls. This represents one-way trunking. The following diagram demonstrates the difference in how switches utilize oneway as compared to two-way trunk groups In the one-way trunking scenario shown above, traffic originating from the switch in Central Office A must utilize the one-way trunk group at the top to place the call. Once the terminating party at Central Office B answers, the talk path is established over the trunk group. Traffic originating from the switch in Central Office B must utilize the oneway trunk group at the bottom to place calls back to Central Office A. Again, once the terminating party at Central Office A answers, the talk path is established over that trunk group.

27 Page With a two-way trunk group, as shown above, the switches in both offices may originate or terminate calls over the same trunk group. In effect, the trunk group has a dial pad and ringer capability, much like the phone analogy mentioned earlier. Q. PREVIOUSLY, YOU DISCUSSED THE DISTINCTION BETWEEN TRUNKS AND FACILITIES. EXPLAIN WHY THAT DISTINCTION IS IMPORTANT TO AT&T MICHIGAN S PROPOSED LANGUAGE REGARDING TWO-WAY TRUNKING. A. It is important because a requirement that a CLEC establish two-way trunks to each AT&T Michigan Local or Local/Access tandem does not mean that the CLEC would have to provide physical facilities to each tandem. In fact, trunking to each tandem in a LATA would not require the CLEC to deploy any additional physical facilities. It only means that the CLEC would have to set up call paths in its switch software so that traffic exchanged with a certain AT&T Michigan End Office is directed to the correct AT&T Michigan Local or Local/Access tandem as identified in the LERG that serves that end office. While the traffic would generally be routed through the building that houses the initial tandem switch, it would bypass that switch and go straight to the tandem that serves the end office to which the call is destined, thus conserving the initial tandem switch s capacity.

28 Page Q. PLEASE EXPLAIN WHY TWO-WAY TRUNKING REPRESENTS A MORE EFFICIENT USE OF NETWORK RESOURCES THAN ONE-WAY TRUNKING. A. As demonstrated in the drawings above, two-way trunking conserves switch ports as well as transmission bandwidth over transport facilities. In a one-way environment, separate trunk ports would be required for the one-way trunks from AT&T Michigan to the CLEC and for the one-way trunks from the CLEC to AT&T Michigan. If applied across all requesting carriers, trunk port exhaust would become a serious concern for AT&T Michigan s tandem switches and larger end office switches. The same is true for transmission facilities. As an example, one DS1 trunk group utilizing two-way trunking would take half the transport bandwidth as two separate DS1 trunk groups necessary for one-way trunking in both directions. This ties directly back to the First Report and Order, 203, which states that Each carrier must be able to retain responsibility for the management, control, and performance of its own network. Further, the FCC recognized that: In recognition of the incumbent s right to use and manage its own property, we find that each incumbent should maintain ultimate responsibility for assigning collocation space within its premises. An incumbent is far more familiar with the design and layout of its premises than are its competitors, who neither own nor manage those premises. The incumbent is also the only party with direct knowledge of all competitive LEC collocation requests, as well as all other tenant requirements. In addition, unlike the incumbent LEC, an individual requesting carrier has no duty to consider the impact of its collocation space choices on the incumbent and other collocators. 12 Though this section of the Fourth Report and Order deals with space within an ILEC premises, the concept can be equally applied to one-way versus two-way trunking 12 FCC , Fourth Report and Order, August 8,

29 Page architectures. A CLEC would feel minimal impact from its choices for one-way versus two-way trunking to AT&T Michigan. AT&T Michigan, on the other hand, must consider the impact of trunking architectures for itself and all other requesting carriers. Two-way trunking best allows AT&T Michigan to manage its network in such a way as to minimize the potential impacts for all carriers. Q. HOW IS IT MORE EFFICIENT AND COST EFFECTIVE FOR THE CLEC TO UTILIZE TWO-WAY TRUNKS? A. Suppose a CLEC s engineering requirements indicated call volumes required eight trunks for originating 251(b)(5) traffic and eleven trunks for terminating 251(b)(5) traffic to a specific Local Calling Area where the CLEC had homed its codes. Using one-way trunks, the CLEC would need to establish a DS1 trunk group for its originating 251(b)(5) traffic and the Parties would require a separate DS1 trunk group for terminating 251(b)(5) traffic even though each trunk group would use less than half of the DS1 s 24-trunk capacity. By establishing a two-way Local Interconnection Trunk Group, the CLEC could establish a single DS1 trunk group that would have additional capacity for growth as well as cut the CLEC s trunking costs in half. This would also save on trunking resources for both the CLEC and the AT&T Michigan tandem switch as only one DS1 trunk group would be required for each switch. Q. HOW SHOULD THE COMMISSION RULE ON ISSUE 11? A. The Commission should rule as follows: That two-way trunks are more efficient and cost effective than one-way trunks and, absent agreement of the parties in a particular instance, should be used whenever possible.

30 Page 28 The Joint CLECs have not shown that there is a change in circumstances justifying a change to the baseline language Consistent with these rulings, the Commission should adopt AT&T Michigan s proposed language for section 8.2 of the NIM Appendix and reject the Joint CLEC s proposed language for that section V. RELATIVE USE FACTOR (RUF) NIM ISSUE 12 NIM Issue 12: Is it appropriate to apply a Relative Usage Factor to the cost of transmission facilities? [Appendix NIM Sections ] Q. PLEASE SUMMARIZE THE DISPUTED CONTRACT LANGUAGE THAT IS THE SUBJECT OF NIM ISSUE 12. A. The issue here is whether to adopt the Joint CLECs proposed language for subsections 8.2.1, and of Appendix NIM. In these provisions, the Joint CLECs purport to establish a methodology for allowing a Party that provides transmission facilities between [the] two carriers networks to recover from the other Party the costs of the proportion of that trunk capacity that the other Party uses to send traffic that is terminated on the providing Party s network (Section 8.2.1). To effectuate such cost recovery, the Joint CLECs proposed section would allow the provider of a two-way trunk 47 CFR 709(b) transmission facility to share the cost of such trunk transmission facility with the other Party by charging the other Party an amount calculated by applying a relative use factor ( RUF ). Under proposed section 8.2.2, the RUF would initially be set at 50% and would remain at that percentage unless and until it is adjusted in accordance

31 Page with the provisions of proposed section The RUF charge allowed under these provisions would be above and beyond the reciprocal compensation charges that each Party is allowed to charge the other Party for the transport and termination of local traffic exchanged between the Parties. The use of the neutral terms Party and other Party in the above-quoted language is extremely misleading in that those terms incorrectly suggest that the right to charge the proposed RUF provisions are reciprocal and that each Party has the right to recover a share of the cost of its own 47 CFR 709(b) transmission facilities from the other Party through application of the RUF factor. In fact, the Joint CLECs have actually made the provision extremely one-sided by including language in section that incorrectly defines a 47 CFR 709(b) transmission facility as one that runs between i) the CLEC s network and ii) the [point of interconnection ( POI )] on AT&T s network. The Joint CLECs also include language in section that would exclude Direct End Office Trunks ( DEOTS ) from the definition of a 47 CFR 709(b) transmission facility. Thus, the Joint CLECs proposal would allow only the CLEC to recover from AT&T Michigan costs associated with transmission facilities on its side of the POI, in addition to reciprocal compensation charges; it would preclude AT&T Michigan from recovering any portion of the costs of the transmission facilities on its side of the POI from the CLECs through application of the RUF. Q. DOES AT&T MICHIGAN PROPOSE ANY ALTERNATIVE LANGUAGE FOR SECTIONS ? A. No. For a number of reasons, AT&T Michigan believes that each party to the ICA should be responsible for the costs of the transmission facilities on its respective side of

32 Page the POI and that it is unnecessary and inappropriate to include any RUF provision. However, even if there were a good reason to include a provision, it would need to be even-handed. It would be completely inappropriate and unfair for the Commission to adopt the Joint CLECs one-side proposal. Q. IS THERE RUF LANGUAGE IN THE BASELINE ICA CURRENTLY IN FORCE TODAY BETWEEN THE PARTIES? A. Yes. However, unlike the language proposed by the Joint CLECs in this case, the baseline RUF language truly is even-handed, in that it provides each Party the ability to charge the other Party a RUF charge for the recovery of costs on their respective sides of the POI. To the best of my knowledge, none of the Parties have attempted to take advantage of the current RUF language to collect a RUF charge for the transmission facilities on their respective sides of the POI in addition to reciprocal compensation charges. The fact that none of the Parties seek to enforce the RUF language as it exists today is one of the several reasons that AT&T Michigan proposes not to include RUF language in the new ICAs, since all Parties to the ICAs currently in effect today accept financial responsibility for the facilities on their respective side of the POI to the first point of switching, which is where reciprocal compensation begins. AT&T Michigan believes that each Party should be financially responsible for the facilities on its respective side of the POI and that the Joint CLECs proposal in this case represents another attempt by the Joint CLECs to shift their responsibility onto AT&T Michigan. Q. ARE TRANSPORT AND TERMINATION FACTORED INTO RECIPROCAL COMPENSATION?

33 Page A. Yes. In Michigan, however, the facilities that each carrier provides from the POI to the first point of switching are currently not factored into Reciprocal Compensation. Much like a bill and keep arrangement, carriers have historically not recovered the costs for these facilities from other carriers, but only recover Reciprocal Compensation from the first point of switching. AT&T Michigan believes that maintaining status quo is equally beneficial to CLECs and AT&T Michigan in the long run and especially for the benefit of the PSTN. Q. WHY DOES AT&T MICHIGAN OPPOSE THE APPLICATION OF A RUF TO SHARE THE COST OF FACILITIES THAT ARE NOT RECOVERED THROUGH THE RECIPROCAL COMPENSATION CHARGES? A. First, as I have pointed out, neither the CLECs nor AT&T Michigan have used the RUF provisions of the currently effective ICAs, relying instead on bill and keep for the recovery of the costs of those facilities. Accordingly, it does not make sense to continue to include a RUF provision in the ICA, especially in light of the FCC s recent adoption of a national policy to move toward the eventual implementation of a complete bill and keep framework to replace all forms of intercarrier compensation. 13 Second, as I will explain in more detail below, AT&T Michigan believes that it is ultimately more beneficial to CLECs in the long run and especially for the benefit of the PSTN if there is no RUF requirement. 13 See Connect American Fund and Intercarrier Compensation Reform Order and FNPRM, Executive Summary, paras. 18, 19 (announcing the adoption of a uniform national bill-and-keep framework as the ultimate end state for all telecommunications traffic exchanged with a LEC to be implemented over a multi-year transition period), attached to FCC New Release, FCC Creates Connect America Fund To Help Extend High Speed Internet To 18 Million Unserved Americans; Creating Jobs and Increased Benefits, Oct. 27, 2011.

34 Page Third, AT&T Michigan will be required to share in the cost of the transmission facilities on the CLEC s side of the POI even without the application of a RUF. Applying the RUF to such facilities amounts to a double sharing of the costs by AT&T Michigan of the transmission facilities on the CLEC side of the POI. In this regard, to the extent that the RUF provisions were intended to allow CLECs to recover from AT&T Michigan a share of the costs of Entrance Facilities that they either construct, purchase from AT&T Michigan as special access, or obtain from third parties, to connect their networks to the POI for the exchange of traffic, that rationale no longer applies in light of the decision of the U.S. Supreme Court on Entrance facilities that I discussed in connection with NIM issue 8. Under that decision, AT&T Michigan is now required to provide CLECs with access to existing Entrance Facilities at TELRIC costs based rates. As a result, AT&T Michigan is already required to share with CLECs facilities that AT&T Michigan has constructed at its expense and is to charge CLECs for the use of those facilities at below-market price rates that do not cover the actual cost incurred to construct such existing. Q. YOU INDICATED THAT AT&T MICHIGAN WILL SHARE IN THE COSTS OF TRANSMISSION FACILITIES USED ON THE CLECS SIDE OF THE POI EVEN WITHOUT THE APPLICATION OF A RUF. PLEASE EXPLAIN. A. As discussed above, AT&T Michigan shares in the costs of those facilities to the extent that is required to provide the CLECs with access to TELRIC-based Entrance Facilities. Additionally, unlike the transmission facilities which are 100% provided by AT&T Michigan on its side of the POI, the Parties have agreed to share equally in the deployment of transmission facilities on the CLEC side of the POI where interconnection

35 Page between the parties is established through a fiber meet point as described in NIM section : CLEC and AT&T Michigan will each provide two fibers between their locations. AT&T Michigan will provide the fibers associated with the working side of the system to the CLEC s designated entrance point. CLEC will provide the fibers associated with the protection side of the system. The Parties will work cooperatively to terminate each other s fiber in order to provision this joint point-to-point linear chain SONET system with 1+1 protection. CLEC will provide fiber cable to the last entrance (or AT&T Michigan designated) manhole at the AT&T Michigan Tandem or End Office building. AT&T Michigan shall make all necessary preparations in the manhole to receive and to allow and enable CLEC to deliver fiber optic facilities into that manhole. CLEC will provide sufficient length of fiber cable for AT&T Michigan to pull through to the AT&T Michigan cable vault. Both Parties will work cooperatively to determine the appropriate technical handoff for purposes of demarcation and fault isolation. The POI will be defined as being at the AT&T Michigan designated manhole location. 14 (Emphasis added). Under this arrangement, AT&T Michigan would provide the working side fibers and the CLEC would provide the protection side fibers as shown in the drawing below: 14 Emphasis added.

36 Page Under this arrangement, AT&T Michigan shares in the costs of the transmission facilities on the CLECs side of the POI by providing half of the fibers (the working side fibers). AT&T Michigan further shares in such costs to the extent that the CLEC leases TELRICpriced Entrance Facilities from AT&T Michigan to meet the CLEC s obligation to provide the protection-side fibers. Under the Joint CLECs proposal, AT&T Michigan would be required to further share the costs through a RUF charge applied to these very same facilities (i.e., the CLEC s Entrance Facilities utilized for the protection side fibers). As a result, AT&T Michigan would effectively be required to contribute more than its fair share of the cost of establishing interconnection facilities on the CLEC side of the POI.

37 Page The Joint CLEC s attempt to apply a RUF in this situation runs counter to the ruling in the Verizon v Telnet order which the Joint CLECs rely on in support of their proposal (CLEC Discussion at 28). In that case, the court stated as follows: If that dedicated connection link is built and maintained by only one carrier rather than by way of a meet point interconnection arrangement, it should be compensated in proportionate share by the carrier using but not providing the dedicated trunk. As a result, the regulations, when read as a whole, strongly support the conclusion of the MPSC that [t]he interconnection facilities built between the two networks do not comprise a part of either network, although they may be owned by one party or the other, or both. 15 As discussed above, a Fiber Meet Point arrangement, as agreed to by the Parties in NIM section , does not involve the construction and maintenance of dedicated connection links built and maintained by only one carrier [i.e., the CLEC] (emphasis added). To the contrary, AT&T Michigan and the CLEC both have responsibility for providing dedicated connection links. Accordingly, the ruling in Verizon v. Telnet provides no support for the Joint CLECs RUF proposal in this case. At some point, the subsidies need to stop and the Joint CLECs have to assume some financial accountability for the facilities on their side of the POI as provided by the FCC. This responsibility was reaffirmed by the FCC in the TRO and TRRO. Competing carriers have control over where to locate their network facilities to minimize self-deployment costs, or the costs of using third-party alternatives for transport from the incumbent LEC s network. For instance, a competing carrier can choose to locate its switch very close to an incumbent LEC wire center to minimize costs associated with deploying fiber over longer distances... Moreover, we find that our more limited definition of transport is consistent 15 Telnet Worldwide, Inc. et al., 440 F.Supp.2d 700, 710 (W.D. Mich. 2006).

38 Page with the Act because it encourages competing carriers to incorporate those costs within their control into their network deployment strategies rather than to rely exclusively on the incumbent LEC s network. 16 Moreover, competitive LECs have a unique degree of control over the cost of entrance facilities, in contrast to other types of dedicated transport, because they can choose the location of their own switches. For example, they can choose to locate their switches close to other competitors switches, maximizing the ability to share costs and aggregate traffic, or close to transmission facilities deployed by other competitors, increasing the possibility of finding an alternative wholesale supply. In addition, they often can locate their switches close to the incumbent LEC s central office, minimizing the length and cost of entrance facilities. 17 Notice, the FCC did not say that CLECs could shift their costs for these facilities to the incumbent LEC; rather CLECs have control over where to locate their switches in order to minimize their own costs. Q. WITH THE SHARED FACILITIES JUST DESCRIBED, IS THAT SOMEWHAT OF A PHYSICAL RUF THAT THE CLECS ENJOY IN THEIR ICA? A. Yes. As I previously stated this somewhat resembles a bill and keep scenario in which each carrier shares in the costs of the facilities between the two networks. This is also similar to an ILEC-ILEC interconnection where there is a joint meet point at the exchange area boundary. Q. YOU STATED EARLIER THAT THE JOINT CLECS RUF PROPOSAL IS LESS EVENHANDED THAN THE RUF PROVISIONS OF THE CURRENTLY EFFECTIVE ICAS. PLEASE EXPLAIN WHY THIS IS THE CASE. A. On its surface, it would appear that both Parties should be able to apply the RUF for facilities on their respective side of the POI for the other Party s originated traffic. As I have previously mentioned, however, under the RUF language proposed by the Joint 16 Federal Communications Commission Triennial Review Order paragraph 367(emphasis added.). 17 Federal Communications Commission Triennial Review Remand Order paragraph 138.

39 Page CLECs, the CLECs would charge AT&T Michigan for the transport facilities on their side of the POI, yet deny AT&T Michigan the ability to recover from the CLECs costs based on the CLECs relative use of facilities on AT&T Michigan s side of the POI for all of the CLECs originating traffic destined for AT&T Michigan as well as for all transited traffic destined to/from the CLEC and third party carriers which would also be a relative use of the facilities solely for the benefit of the CLEC and its End Users. In support of their position, the Joint CLECs purport to rely on 47 CFR 709(b). However, that rule does not support the CLECs one-sided proposal. Q. YOU STATE THAT THE JOINT CLECS SEEK TO CARVE OUT FINANCIAL RESPONSIBILITY FOR TRANSPORT FACILITIES BASED ON AN INCORRECT INTEPRETATION OF 47 C.F.R (b). PLEASE EXPLAIN. A. The Joint CLECs propose the following language in NIM section 8.2.1, 8.2.2: Consistent with 47 CFR 709(b), a Party providing transmission facilities between two carriers network may recover from the other Party the costs of the proportion of that trunk capacity that the other Party uses to send traffic that is terminated on the providing Party s network. Such proportions will be measured during peak periods. A 47 CFR 709(b) transmission facility runs between i) the CLEC s network and ii) the POI on AT&T s network. A Direct End Office Trunk ( DEOT ), as described in Section 8.3 below, is not a 47 CFR 709(b) transmission facility. The establishment of a DEOT shall not change the location of a POI or change the Party s financial responsibility on its respective side of the POI under Section 2.5. In this proposed language, the Joint CLECs incorrectly assert that 47 CFR 709(b) only applies to facilities between the CLEC s network and the POI. That is not the case. 47 C.F.R (b) states as follows: (a) In state proceedings, a state commission shall establish rates for the transport and termination of telecommunications traffic that are structured consistently with the manner that carriers incur those costs, and consistently with the principles of and

40 Page (b) The rate of a carrier providing transmission facilities dedicated to the transmission of traffic between two carriers networks shall recover only the costs of the proportion of that trunk capacity used by an interconnecting carrier to send traffic that will terminate on the providing carrier s network. Such proportions may be measured during peak periods C.F.R (b) provides state commissions with guidelines for establishing Reciprocal Compensation between originating and terminating carriers. It does not require payment of a RUF factor in addition to reciprocal compensation. Moreover, even if it could be interpreted to do so, 47 C.F.R (b) does not apply only on the CLEC side of the POI, nor does it say anything to that effect. It discusses the transmission facilities dedicated to the transmission of traffic between the two carriers networks. Furthermore, the decision in Verizon v. Telnet, on which the Joint CLECs also rely, found that each party must compensate the other for the dedicated transmission facilities between the networks. It did not specify that this only applies to the CLEC s transmission facilities: The Commission finds that 47 C.F.R (b) requires that interconnecting parties compensate each other for dedicated transmission facilities between networks, in addition to reciprocal compensation for transport and termination of the traffic once it is delivered to the other party s network. The interconnection facilities built between the two networks do not comprise a part of either network, although they may be owned by one party or the other, or both. Reciprocal compensation rates, therefore, apply to traffic once it has been delivered to the other carrier s network. The cost to deliver the traffic to the network of the other party is to be paid by the originating carrier, in addition to the transport and termination charges known as reciprocal compensation. Once the traffic is delivered to the other party s network, the only appropriate charge is the reciprocal compensation charge Verizon v. Telnet, 440 F.Supp.2d 700, 704(W.D. Mich., 2006). 19 Id.

41 Page As I have previously discussed, reciprocal compensation rates start from the first point of switching and may include tandem switching, transport and termination. The transport facilities from the POI to each carrier s respective first point of switching have never been included in Reciprocal Compensation. Q. WHAT ARE THE DEOTS THAT THE JOINT CLECS REFER TO IN THEIR PROPOSED LANGUAGE FOR NIM SECTION 8.2.1? A. Direct End Office Trunk groups (DEOTs) are trunk groups that link the CLEC switch directly with an AT&T Michigan End Office, bypassing the AT&T tandem. This is done when traffic volumes between the Parties is sufficient enough to warrant direct trunks, thus providing relief to tandem resources. The Parties have agreed to DEOT language in NIM 8.3. While AT&T Michigan currently provides for the facilities on its side of the POI for DEOTs, the Joint CLECs proposed language for Section would eliminate AT&T Michigan s ability to apply a RUF to those facilities, thereby holding AT&T fully responsible for the cost of those facilities regardless of the usage of the DEOT by either Party. To make matters worse, the Joint CLECs proposed language does not indicate that the CLEC would retain the cost responsibility for any DEOT facilities established on its side of the POI. So this language intentionally seeks to eliminate AT&T Michigan s ability to apply a RUF charge for DEOTS on its side of the POI while allowing the Joint CLECS to freely apply RUF for DEOTs on their side of the POI. Q. DOES THE TESTIMONY OF MR. IANNUZZI SUPPORT THE POSITION THAT IF THERE IS TO BE A RUF PROVISION IT SHOULD ALLOW EACH

42 Page CARRIER, INCLUDING AT&T MICHIGAN TO RECOVER THE COSTS FOR THE TRANSPORT FACILITIES ON ITS SIDE OF THE POI? A. Yes. In fact Mr. Iannuzzi provides simple drawings in his testimony that verifies that under an even handedly applied RUF provision, each carrier, including AT&T Michigan, should be compensated for the transport facilities on their respective side of the POI for traffic originated by the other Party. The only difference is his drawings leave out the POI in the equation. Q. CAN YOU REFER TO MR. IANNUZZI S DRAWINGS AND DEMONSTRATE WHERE THE POI APPEARS, HOW THAT AFFECTS THE RUF AS IT STANDS TODAY, AND HOW THE JOINT CLEC LANGUAGE SEEKS TO UNDERMINE THE BASELINE RUF, 47 C.F.R (b) AS INTERPRETED BY THIS COMMISSION AND AFFIRMED BY THE UNITED STATES DISTRICT COURT? A. Yes. In Mr. Iannuzzi s testimony, page 10, he provides a simplistic diagram with the Party bearing cost responsibility for each respective piece listed below the arrow What Mr. Iannuzzi s diagram fails to show is the POI at which point the Parties networks link. The diagram below shows the POI that is missing in Mr. Iannuzzi s diagram and also shows where Reciprocal Compensation starts as well as what portion of 20 Iannuzzi Direct at page 10, lines

43 Page the transport facilities each carrier would compensate the other carrier for their originated traffic under the currently existing baseline provisions of RUF Under the existing baseline RUF language in the ICAs currently in place, the CLEC would be responsible for RUF in the top half of the drawing and AT&T Michigan would be responsible for RUF in the bottom half of the drawing. Under the Joint CLECs one-sided RUF proposal, however, AT&T Michigan would still be responsible for RUF in the bottom half of the drawing, while the CLEC would have no responsibility for RUF in the top half or the drawing. As I mentioned earlier, Reciprocal Compensation as applied in Michigan has traditionally started from the first point of switching. Mr. Iannuzzi s diagram depicted a simplified end office to end office arrangement found in the DEOT arrangements mentioned earlier. The following drawing provides another view of transport facilities between the POI and each Party s respective networks and includes the tandem switching

44 Page component most commonly utilized between the Parties for interconnection for the mutual exchange of traffic as provided in 251(c)(2) of the Act Reciprocal compensation in the drawing above includes the tandem switching, transport from the tandem to the end office and end office termination. Both Parties provide transport facilities from the POI to the first point of switching on their side of the POI that is not currently recovered in reciprocal compensation. The Joint CLEC proposed RUF language would allow the CLEC to recover for the transport facilities on their side of the POI, yet deny AT&T Michigan the ability to recover the cost of the transport facilities on its side of the POI. Q. YOU STATED EARLIER IN YOUR TESTIMONY THAT DROPPING THE BASELINE RUF LANGUAGE THAT IS IN THE CURRENT ICA WOULD BE MORE BENEFICIAL TO CLECS AND THE PSTN. PLEASE EXPLAIN. A. All carriers route according to the LERG. This requires carriers to trunk to each local tandem in a LATA where they home codes and seek to exchange Section 251(b)(5) traffic with other carriers, whether it be AT&T Michigan, or transited through AT&T Michigan to other third party carriers. Currently, AT&T Michigan provides for the facilities on its side of the POI to the first point of switching and the CLECs provide the

45 Page transport from the POI to their switch. This is true regardless of whether the Section 251(b)(5) traffic is destined for an AT&T Michigan end user or transiting the AT&T Michigan network to reach the end user of a third party carrier. If a fair and even-handed RUF provision were adopted and enforced, CLECs would be required to compensate AT&T Michigan for a share of the costs of facilities installed by AT&T Michigan between the POI and the first point of switching, something that AT&T Michigan does not currently require them to do. These facilities would include the facilities used for two-way trunks from the POI to each local tandem as well as for each two-way DEOT established between the Parties for the exchange of 251(b)(5) traffic. As an example, with reference to the map in the drawing shown below, suppose a CLEC elects to establish a single POI in LATA 348 at the Traverse City TRCYMIMN20T tandem utilizing Entrance Facilities as provided in this ICA. The Parties would then establish tandem trunks to TRCYMIMN67T, GDRPMIBL10T, GDRPMIBL21T, GDRPMIBL68T, HLLDMIMN68T, KLMZMIFA67T and BTCKMIBC68T. The transmission facilities on the AT&T Michigan side of the POI to each of the tandems in LATA 348 are 100% provided by AT&T Michigan and thus, under a properly applied RUF the CLEC would be liable to pay for its relative usage of those facilities, as demonstrated in the following drawing:

46 Page As shown, the mileage from the CLEC s designated POI at the Traverse City TRCYMIMN20T tandem to each of the other tandems in the LATA would be: Traverse City, Michigan TRCYMIMN67T 0 rated miles Grand Rapids, Michigan GDRPMIBL10T 125 miles Grand Rapids, Michigan GDRPMIBL21T 125 miles