DRAFT Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C

Transcription

1 DRAFT Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C In the Matter of Application of SBC Communications Inc., Pacific Bell, and Pacific Bell Communications, Inc., for Provision of In-Region, InterLATA Services in California CC Docket No. AFFIDAVIT OF CURTIS L. HOPFINGER ON BEHALF OF PACIFIC BELL STATE OF California ) ) CITY OF San Francisco )

2 TABLE OF CONTENTS Page PROFESSIONAL EXPERIENCE... 4 PURPOSE OF AFFIDAVIT... 5 IMPLEMENTATION OF THE 1996 ACT... 7 GENERAL PRICING PRINCIPLES... 8 RECIPROCAL COMPENSATION...12 RESALE...15 COLLOCATION...18 A. Physical Collocation...19 B. Virtual Collocation...26 C. Summary...27 ACCESS TO NETWORK ELEMENTS ON AN UNBUNDLED BASIS...28 WHITE PAGES LISTINGS...29 INTERIM NUMBER PORTABILITY...32 CONCLUSION...36

3 INDEX OF SCHEDULES Schedule 1 Schedule 2 Schedule 3 Pacific Bell Provisioning of Checklist Items to CLECs Pacific Bell s Arbitrated Interim Rates Resale Agreements by CLEC Schedule 4 California Collocation Tariff - Cal. P.U.C. No. 175-T, Section 16 Schedule 5 Schedule 6 Schedule 7 Schedule 8 Schedule 9 Physical Collocation Order/Application Form Collocation Service Request Process Status of Physical Collocation for California Physical Collocation Checklist - (Critical Dates and Assignments) Physical Collocation Space Survey Processes and Guidelines Schedule 10 California Virtual Collocation Tariff - FCC No. 128, Section 16.5 Schedule 11 Schedule 12 Schedule 13 Schedule 14 Schedule 15 Schedule 16 Virtual Collocation Order/Application Form Generic UNE Appendix to interconnection agreement Generic NCS Appendix to interconnection agreement San Gabriel Valley White Pages CLEC Customer Guide Pages INP conversion with Loop INP conversion without Loop - 3-

4 AFFIDAVIT OF CURTIS L. HOPFINGER ON BEHALF OF PACIFIC BELL STATE OF California ) ) CITY OF San Francisco ) I, CURTIS L. HOPFINGER, being first duly sworn upon oath, do hereby depose and state as follows: 1. My name is Curtis L. Hopfinger. My business address is Four Bell Plaza, Room 1340, Dallas, Texas My title is Director-Industry Markets for SBC Telecommunications, Inc. SBC Telecommunications Inc. is a first tier subsidiary of SBC, whose primary function is to provide management services and support to Pacific Bell, Southwestern Bell Telephone Co., and Nevada Bell. 2. As Director-Industry Markets, my current responsibilities include representing Pacific Bell wholesale marketing positions to regulatory bodies and other external stakeholders. The wholesale marketing group s primary responsibilities are to develop the wholesale marketing opportunities for Pacific Bell, to negotiate local interconnection agreements with Competitive Local Exchange Carriers (hereinafter CLECs ), to participate in state arbitration proceedings where agreements cannot be reached on all issues, to comply with the Telecommunications Act of 1996 (hereinafter the Act or FTA ) and federal and state laws concerning the implementation of increased local exchange service competition. PROFESSIONAL EXPERIENCE 3. I began my career with Southwestern Bell Telephone Company (SWBT) in From that time to 1978, I served mainly in positions and locations dealing with various aspects of business office line operations. My responsibilities included serving small and large business customers. From 1978 to 1979, I was responsible for coordination with Independent Telephone companies in the state of Missouri. In this capacity I supervised the ordering and provisioning of interconnection facilities and other jointly provided services between SWBT and the Independent Telephone companies in the state. In 1979, I was appointed Area Manager-Rate Administration - 4-

5 responsible for the tariffing and pricing of products and services provided by SWBT in Missouri. From 1986 through 1990 I held positions dealing with docket coordination with the Missouri Public Service Commission and analyzing legislative issues in the state of Missouri. In 1990 I was appointed District Manager-Rate Administration responsible for the development and implementation of regulatory policy as well as the development of pricing, terms and conditions for SWBT s five state area. From 1990 through 1993 I also worked in the company s cost study organization and additionally held a temporary position in the company s directory compliance organization. In 1993 I was appointed District Manager-Regulatory in Texas where I coordinated and worked with the Texas Public Utility Commission. I accepted my current position as Director-Industry Markets on August 1, PURPOSE OF AFFIDAVIT 4. The Act provides three methods by which telecommunications carriers may enter the local market. First, Section 251(c)(2) requires Incumbent Local Exchange Carriers (ILECs) to provide facilities-based competitors with nondiscriminatory interconnection to the ILEC s network "at any technically feasible point," and on terms that are "just and reasonable." Thus a CLEC that wishes to construct its own telecommunications network is assured its customers will be able to call and be called by users of the ILEC's network. 5. Second, Section 251(c)(4) enables new entrants to purchase finished telecommunications services from the ILEC and then resell those services to its customers in competition with the ILEC. And third, Section 251(c)(3) gives new entrants access to network elements on an "unbundled basis" and permits the new entrant to "combine such elements in order to provide telecommunications service." Thus, carriers are entitled to lease some or all of the individual elements of the ILEC s network, and combine them together or with other facilities which they lease or own, for the provision of service to end users. Such access to network elements allows the new entrant to compete with the ILEC on a facility basis without the requirement to build-out their own network. 6. My affidavit describes Pacific Bell s methodology for establishing prices for local interconnection, unbundled network elements, reciprocal compensation, resold local services, and other local products and services that are just, reasonable and in accordance with all requirements of the Act. These prices are included in Pacific Bell s - 5-

6 interconnection agreements and in Pacific Bell s applicable tariffs. Pacific Bell is also participating in the California Public Utilities Commission (hereinafter CPUC ) pending OANAD cost and pricing docket. Additionally, I will describe how Pacific Bell has met the resale requirements of the Act. 7. My affidavit, together with the affidavits of other Pacific Bell witnesses, demonstrates that Pacific Bell s local exchange service markets are open to competition, and that all of the items specified in the "Competitive Checklist" of Section 271(c)(2)(B) are either currently being furnished or are available to any requesting carrier. As a result of our efforts, CLECs seeking to provide service to local exchange service customers have access to the Pacific Bell network and interconnection facilities necessary to make such service available in a timely, efficient and reasonable basis on nondiscriminatory terms and at just and reasonable rates. 8. My affidavit will demonstrate that CLECs seeking to interconnect with Pacific Bell's network may do so through physical or virtual collocation arrangements, and that Pacific Bell makes those arrangements available on rates, terms and conditions that are just, reasonable and non-discriminatory. My affidavit will also show that Pacific Bell provides for the inclusion of CLEC directory listings in the appropriate Pacific Bell White Pages directories. I will also discuss Pacific Bell 's provision of Interim Number Portability (INP) and the process by which Pacific Bell undertakes to comply with CLEC requests for conversion of customer telephone numbers from Pacific Bell to CLEC provided service. Finally, my affidavit will show that Pacific Bell has established reciprocal compensation arrangements for the transport and termination of CLEC calls on what are just and reasonable terms and conditions. IMPLEMENTATION OF THE 1996 ACT 9. From February 8, 1996 through year-end 1997, SBC s expenditures total almost $1 billion in its seven-state operating region on implementing the major provisions of the Act including, but not limited to the equipment, computer hardware and software, and manpower necessary to implement the significant projects as detailed below. Expenditures on long term number portability alone are approximately $345 million. By the end of 1998, SBC estimates that it will have spent $1.5 billion in making certain that it meets the requirements of the Act. - 6-

7 10. The extensive efforts undertaken by Pacific Bell to implement the requirements of the Act are discussed in detail in the various affidavits accompanying this application. Among other things, these affidavits demonstrate that the Act has required and will continue to require significant expenditures by Pacific Bell. From February 8, 1996 through year-end 1997, Pacific Bell spent approximately $551 million to provide interconnection for local competition and meet system and operational changes needed to comply with the Act. Listed below are some of the areas that Pacific Bell has incurred expense and capital dollars to comply with the Act: Tandem Trunking (Deere Affidavit): Significant changes to Pacific Bell s trunking network have been made in order to accommodate the change in traffic flows as CLECs enter the local marketplace. Development of OSS Capabilities (Viveros Affidavit): Significant resources have been devoted to development and implementation of multiple electronic interfaces for the purpose of enabling CLECs to obtain access to Pacific Bell s Operations Support Systems (OSS) for pre-ordering, ordering, provisioning, maintenance, repair and billing of interconnection facilities, unbundled network elements and resale. Long Term Number Portability (Swan Affidavit): Implementation of long term number portability is a matter of enormous scope and technical complexity involving development, modification and deployment of new software and/or hardware by multiple suppliers for every switching and signaling network component within Pacific Bell s network, in addition to the provision of several new network components. As of December 31, 1997, Pacific Bell has expended approximately $ 212 million on this item alone. Local Service Center (LSC)/Facilities Local Service Center(FLSC)/Local Operations Center (LOC) Operations: As outlined in the Affidavits of Lyndall W. Nipps, Gary Liberman and Sam Tenerelli, these centers have been established and staffed exclusively to handle the ordering and provisioning of CLEC service orders. 11. Attached, as Schedule 1 to my affidavit, is a table showing Pacific Bell s provision of checklist items to CLECs in California, in the SBC five midwestern-state region and in the total SBC seven state service area. Pacific Bell does not rely on the provision of checklist items in SBC s five mid-western states for purposes of this application, however, the total numbers are provided to demonstrate the extent to which competition has developed throughout - 7-

8 SBC s territory. Pacific Bell s provisioning of individual checklist items is discussed in the various affidavits accompanying this application. It should be noted that quantities shown on Schedule 1 are current as of February 28, To the extent that quantities referred to by other affiants differ, they may represent different time periods. GENERAL PRICING PRINCIPLES 12. Standards for interconnection via voluntary negotiations are established in 47 U.S.C. 252(a)(1). That section of the Act specifies that upon receiving a request for interconnection, service, or network elements pursuant to 47 U.S.C. 251, Pacific Bell may enter into a binding agreement with the requesting CLEC without regard to the standards set forth in subsections (b) and (c) of 47 U.S.C The agreement is to include a detailed schedule of itemized charges for interconnection and each service or network element included in the agreement. Pacific Bell interconnection agreements comply with this provision. 13. Pricing standards for interconnection and unbundled network elements are established in 47 U.S.C. 252(d)(1). That section of the Act specifies that prices for interconnection and unbundled elements shall be determined by the State Commission based on the cost, determined without reference to rate-of-return or other rate-based proceeding, must be nondiscriminatory and may include a reasonable profit. Pacific Bell has received Arbitration Orders for the AT&T, MCI and Sprint interconnection agreements from the CPUC pursuant to 47 U.S.C. 252(c), including rates for interconnection and network elements, which the CPUC has determined to be in compliance with the requirements of 47 U.S.C. 252(d). The affidavit of Mr. Abercrombie discusses in greater detail the arbitration awards and the current OANAD process which will result in permanent rates for interconnection and network elements. 14. For the exchanging of calls, 47 U.S.C. 252(d)(2) requires that to be determined just and reasonable, reciprocal compensation prices must... provide for the mutual and reciprocal recovery by each carrier of costs associated with the transport and termination on each carrier s network facilities of calls that originate on the network facilities of the other carrier... Furthermore, 47 U.S.C. 252(d)(2) requires the costs for reciprocal compensation to be based on a... reasonable approximation of the additional costs of terminating such calls and indicates that - 8-

9 arrangements that waive mutual recovery (such as bill and keep) are not precluded. However, that section of the Act does preclude the FCC and state commissions from engaging in any rate regulation proceeding to establish with particularity the additional costs of transporting or terminating calls... The Arbitration Order from the CPUC, pursuant to 47 U.S.C. 252(c), adopted an interim bill and keep arrangement for reciprocal compensation of local traffic, except for out of balance situations, which the CPUC has determined to be in compliance with the requirements of 47 U.S.C. 252(d). However, as discussed below, the CPUC does not preclude parties from mutually agreeing to other compensation agreements. 15. In response to the provisions of 47 U.S.C. 251(d), the FCC, on August 8, 1996, released the FCC Order, establishing regulations to implement the requirements of 47 U.S.C On September 27, 1996, the FCC released its Order on Reconsideration. Among the numerous issues addressed in the FCC Order is its definition of the costing and pricing standards to be used in interconnection arbitration. The FCC Order established the pricing policy for unbundled elements, as well as, transport and termination pricing as being forward-looking economic cost which it defines as the sum of the Total Element Long Run Incremental Cost ("TELRIC") of the element plus a reasonable allocation of common costs. 16. On July 18, 1997, the Eighth Circuit Court vacated the FCC pricing rules, stating that the FCC does not have jurisdiction over matters in connection with intrastate service. It also states the Act s clear grant of rate making authority to the state commissions is entirely consistent with telecommunication regulation. (Eighth Circuit Court, No , July 18, 1997, Page 113) Additionally, the court vacated the pick and choose rule. The court ruling is unambiguous, holding that the FCC s pick and choose rule [is] an unreasonable construction of the Act. 17. As set out in the affidavit of Mr. Rick Scholl, Pacific Bell submitted TELRIC cost studies in the arbitration proceeding in California. However, the CPUC chose to use Total Service Long Run Incremental Cost (TSLRIC) multiplied by a joint and common cost allocation factor to determine the appropriate cost based interim prices for interconnection and unbundled network elements. See the affidavit of Mr. Richard Scholl for more discussion on the - 9-

10 cost methodology adopted by the CPUC. Pacific Bell reserves the right to seek modifications to the resulting prices based on future developments, including but not limited to the final outcome of the appeal of the FCC Order, the revision and/or completion of cost studies, and the FCC s handling of applications for interlata relief under 47 U.S.C The Eighth Circuit Court has clearly indicated that rate making authority for interconnection, unbundled elements, transport and termination of traffic and other local interconnection rates resides with the state commissions. 18. The Affidavit of Mr. Scholl addresses the forward-looking economic cost studies prepared for various unbundled network elements and for the transport and termination of traffic. Pacific Bell s CPUC approved interim prices for unbundled network elements and for the transport and termination of traffic in Pacific Bell s interconnection agreements have been set at levels equal to (subject to rounding) forward-looking economic cost plus an allocation of joint and common cost. Attached as Schedule 2, is a detailed matrix of prices which are contained in the arbitrated agreements. 19. The CPUC has adopted TELRIC cost as the basis for determining the permanent rates which will be established in the OANAD proceedings currently before the commission. Pacific Bell has filed TELRIC cost studies with the CPUC for use in determining permanent rates. 20. Pacific Bell s collocation tariffs contain the rates, terms, and conditions for collocation. The rates are contained in P.U.C. Tariff No. 175-T, Section 16 and FCC Tariff No. 128, Section 16. The rates contained in P.U.C. Tariff No. 175-T are subject to CPUC approval. 21. There are some elements for which a price has not been determined because there is not a demand for the element and Pacific Bell does not have cost studies, tariff rates or existing prices. If a CLEC requests these elements, Pacific must conduct cost studies on a case-by-case basis. Pacific Bell s arbitrated and CPUC approved interconnection agreements call for negotiation on other items for which a price currently does not exist. These elements are noted on Schedule 2 with a designation of To Be Determined (TBD). In the event that a price cannot be mutually agreed - 10-

11 upon, a CPUC arbitrator will establish a price. (AT&T, Attachment 8, Para. 8) In it s arbitration award the CPUC stated the TBD process... provides for an alternative dispute resolution mechanism to establish quickly any missing price terms pending determination by the Commission With respect to resale pricing, 47 U.S.C. 252(d)(3) indicates wholesale prices should be set... on the basis of retail rates charged to subscribers for the telecommunications service requested, excluding the portion thereof attributable to any marketing, billing, collection, and other costs that will be avoided by the local exchange carrier. Pacific Bell calculated costs avoided following its view of the methodology contained in the FCC Order. The CPUC ordered an interim discount of 17% for all telecommunications services required for resale. 23. The CPUC has ruled that the interim rates, terms, and conditions contained in Pacific Bell s arbitrated interconnection agreements comply with Sections 251 and 252. In approving the Sprint interconnection agreement the CPUC ruled The arbitrated agreement complies with Sections 251 and 252 of the Act. 2 In approving the AT&T interconnection agreement the CPUC stated in its standards for review that The state commission cannot require an interconnection agreement through arbitration that does not meet the requirements of Section 251 of the Act and the standards set forth in Section 252(d) relating to pricing for interconnection, network elements, transport, termination and wholesale rates The rates, terms and conditions approved in the CPUC arbitrated agreements are available to any CLEC who desires the same rates, terms and conditions. Under Section 252(i) of the Act, any carrier can opt into approved interconnection agreements. 25. As set out above, Pacific Bell has complied with the pricing methodology and rules established by the CPUC. Pacific Bell will continue to comply with CPUC-approved pricing methodology and rules for any additional rates which the CPUC may establish in the future. The CPUC has arbitrated and approved Pacific Bell s interim prices 1 Decision , FF 5-11-

12 for interconnection, unbundled elements, and transport and termination of local traffic, based on costs which have been determined without reference to a rate-of-return or other rate-based proceeding. RECIPROCAL COMPENSATION 26. Reciprocal compensation refers to the billing and payment arrangement that recovers the costs incurred for the transport and termination of calls originating on one party s network and terminating on the other party s network. Pacific Bell and interconnecting telecommunications carriers have established various arrangements for reciprocal compensation. 27. Pacific Bell s arbitrated interconnection agreements with AT&T, MCI and Sprint provide for an interim bill and keep compensation for local traffic 3 until such time as the CPUC determines a permanent rate in its OANAD or Local Competition proceeding. See affidavit of Jerry Abercrombie regarding these proceedings. However, the arbitrated agreement does make provision for compensation payments should an imbalance occur in the traffic between Pacific Bell and the CLEC. [AT&T, Attachment 18, Sec. III(F)(1)(a-d)] The out of balance payments will be based on the net difference in traffic based on terminating minutes of use. Current interconnection agreement rates for local switching and tandem switching and common transport, if applicable, will be billed until permanent rates for transport and termination of traffic are established in the OANAD or Local Competition proceedings. 28. To accommodate the various needs of CLECs, Pacific Bell has entered into other reciprocal compensation arrangements. For example, interconnection agreements with MFS 4 and Pac West were reached to mutually compensate each other at negotiated rates, outside the requirements of Sections 251 and Three functions may be involved in the transport and termination of local traffic : tandem switching, end office switching, and common transport. 3 "Local Traffic," for purposes of intercompany compensation, include all 0-12 mile calls based on the rate centers of the originating and terminating NPA-Nxxs of the callers (these include ZUM Zone 1 and Zone 2 calls) and, where established in incumbent LEC tariffs, Zum Zone 3 and Extended Area Service (EAS) calls

13 30. If a CLEC chooses to interconnect at a Pacific Bell access tandem office switch 5, Pacific Bell charges a Tandem Switching compensation rate. As discussed previously Pacific Bell s arbitrated agreements currently call for bill and keep arrangements for local traffic. 31. If a CLEC chooses to interconnect at a Pacific Bell end office 6, Pacific Bell charges an end office compensation rate. This rate includes a charge for end office switching only, since that is the function performed by Pacific Bell to terminate the call. The End Office termination rate is divided into two components: one a per message charge and the other a per minute of use charge. With the exception of MFS and Pac West, as discussed above, these rate elements do not apply to local traffic, which is currently under a bill and keep arrangement. 32. Pacific Bell delivers monthly statements to CLECs as a part of the billing process for compensation for transport and termination of exchanged traffic. Using guidelines set forth in technical procedures provided by Pacific Bell to each CLEC 7, Pacific Bell records its originating usage, including the originating and terminating NXX for all intercompany calls. 33. More than 2.8 billion minutes of use were exchanged over interconnection trunks between Pacific Bell and CLECs in California in the year This volume of traffic exchanged does not include over 3.4 billion minutes of Internet traffic exchanged in The usage exchanged between Pacific Bell and the CLEC s is evidence that Pacific Bell s network is open to competition. 4 Advice Letter No , MFS Interconnection Agreement, Section VI 5 Tandem Office Switches are used to connect and switch trunk circuits between Central Office switches. 6 End Office Switches are where end user exchange services are directly connected and offered. 7 Technical Exhibit Settlement Procedures (TESP) contains the detailed technical descriptions and requirements for the recording, record exchange, and billing of local and intralata traffic

14 34. Pacific Bell also offers to switch transit traffic, which allows CLECs to interconnect indirectly with other third party CLECs, LECs or Wireless Service Providers (hereinafter Third Party Network ). It allows one CLEC to send traffic to another Third Party Network through Pacific Bell s tandem, thus avoiding the cost of investing in facilities necessary to interconnect to all other Third Party Networks in a local calling area. Pacific Bell expects CLECs who transit its tandem for the purpose of interconnecting with other Third Party Networks to have agreements in place with those entities for reciprocal compensation for termination of each other s traffic. 35. A Transit Traffic rate element applies to all usage between Third Party Networks that transit Pacific Bell s tandem switch. The originating Third Party is responsible for the appropriate rates unless otherwise specified. The Transit Traffic rate element is only applicable when calls do not originate with (or terminate to) Pacific Bell s end users. 36. It is Pacific Bell s position that Internet traffic is not local in nature and, therefore, that the termination of Internet traffic is not eligible for reciprocal compensation. Because the great majority of Internet calls are interstate or at the very least interexchange in nature, resulting in communications which travel around the state, the country and the world, Internet traffic is not properly the subject of reciprocal compensation for local traffic. The FCC, which historically has allowed Internet Service Providers (ISPs) an exemption to the access charges imposed on interexchange traffic, is considering this issue in its C.C. Docket No Pending appeals, Pacific Bell will abide by the FCC final decisions on this reciprocal compensation issue. See Exhibit 23 to the Affidavit of Jerry Abercrombie for the status of a complaint concerning this matter currently pending at the CPUC. RESALE 37. The Checklist requires Pacific Bell to demonstrate that its retail telecommunications services are "available for resale in accordance with the requirements of sections 251(c)(4) and 252(d)(3)" 47 U.S.C. 271(c)(2)(B)(xiv). Whereas 47 U.S.C. 251(c)(4), in turn, requires incumbent LECs to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications - 14-

15 carriers, and not to prohibit such resale nor impose unreasonable or discriminatory conditions on resale of such services. Pacific Bell's agreements fully satisfy these requirements by making available to resellers the "Resale Services." These services include retail telecommunications services provided by Pacific Bell that are subject to the resale obligation under the FCC's Rules. In addition, Pacific Bell has made several other services available for resale, beyond the requirements of the Act and the Rules (e.g. Additional directory listings, Remote Call Forwarding, and Split Billing). The services provided for resale are equal in quality, provided within the same provisioning intervals (see Affidavit of Mr. Viveros) and subject to the same terms and conditions applicable to retail customers. 38. A CLEC may provide resold services without having an Interconnection Agreement by ordering from Pacific Bell s Tariff Cal. PUC No. 175-T, Section 18. Additionally, CLECs ordering resale services from the tariff can enter into a Data Exchange agreement with Pacific Bell for the recording and transferring of billing records to enable the reseller to bill it s end users. 39. Pacific Bell s policy with regard to resold intralata toll mirrors the obligations imposed by FTA 96. Pacific Bell s obligation is to offer, to CLECs, for resale those telecommunications services Pacific Bell offers to it s own retail customers. With regard to intralata toll, it is important to note that all of Pacific Bell s retail local exchange services include access to intralata toll. Pacific Bell does not offer a local exchange service that excludes access to intralata toll. In order to restrict access to intralata toll on retail local exchange services, an additional service - Toll Restriction - must be purchased. 40. With the exception of promotional offerings of less than 90 days, Pacific Bell permits the resale of all telecommunications services that Pacific Bell provides at retail to CLEC subscribers who are not telecommunications carriers, subject to the same terms and conditions as the retail service. In D , the CPUC held that the following terms and conditions on the resale or telecommunications services were reasonable: Services purchased under wholesale tariffs may only be offered for resale CLECs may not aggregate end-user traffic to qualify for volume discount plans - 15-

16 CLECs may not sell business optional calling plans to residential customers Centrex may be resold only to business customers 41. The CPUC has also found that Lifeline and certain non-telecommunications services, such as inside wire, are not subject to the resale requirement. Pursuant to D , the CPUC is currently considering whether the following non-telecommunications services should be resold: Residential Services: Deaf and Disabled Services Equipment and Manual Service, Labor/Network Rearrangements, visit charge (trouble identification), Inside Wire installation services, per month repair plans, and per visit repair services, Non Published Number Services, Calling Card, Prepaid Card, and Savings Card (VISA/MC) Business Services: Calling Card, Prepaid Card, Savings card (VISA/MC), Conduit Leasing, Emergency Customer Service, Late Payment, Pole Attachments, Special Billing Services, Labor/Network Rearrangements, Cable Services, Centrex Payment Plans, California 900 and 976 Billing and Collections, Billing and Collection Service, Local Plus Calling Card (Hotel/Motel Bill), Business List Rental Service, coordinated End User Service, Call Detail Recording, Microfiche Billing, BAGS, Joint User Arrangements, Public Telephone Service (equipment/paging), Statewide Mobile Telephone Service and Maritime Mobile Telephone Service. 42. In D , the CPUC required the resale of voic . This requirement was stayed pending CPUC resolution of Pacific Bell s application for rehearing. The CPUC has granted Pacific Bell a rehearing. Pacific Bell believes that voic services should not be subject to the resale requirement because they are not telecommunications services as defined by the Act. They are fully competitive services, and Pacific does not provide voic services (they are provided by its affiliate, Pacific Bell Information Services). 43. As of January 31, 1998 Pacific Bell is furnishing approximately 259,000 resale access lines. There are 42 CLECs certified or pending certification to resale in California. Pacific Bell has completed interconnection agreements with - 16-

17 23 CLECs. Additionally, Pacific Bell has entered into 16 Data Exchange agreements with CLECs. See Schedule 3 for a detailed list of CLECs with whom Pacific Bell has agreements. COLLOCATION 44. Pacific Bell offers both physical and virtual collocation to CLECs as one means of connecting the facilities and equipment of the two companies, as well as a means of providing access to network elements on an unbundled basis. Mr. Deere s affidavit addresses the technical aspects of these interconnection arrangements in greater detail. 45. This section of my affidavit will discuss Pacific Bell's processes and procedures for provisioning physical and virtual collocation to CLECs on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, under subsection 251(c)(6) of the Act. Physical collocation is provided under the rates, terms and conditions contained in Pacific Bell s Physical Collocation tariffs and interconnection agreements as detailed herein. Virtual collocation is provided pursuant to Pacific Bell s state and federal tariffs as discussed below. In the following sections I will discuss the current status of collocation in California, the efforts undertaken by Pacific Bell to provide collocation in California, and the pricing policies of collocation in the state. 46. Pacific Bell has a significant embedded base of collocators in California which it believes numbers far more than any other state in the USA. As of February 1998, Pacific Bell has constructed and turned over 280 collocation cages to CLECs. An additional 143 cages are under construction. In the past twelve months Pacific Bell has completed 120 augments for additions to power or transmission facilities in existing physical collocation arrangements. Pacific Bell's average build-out interval in California is 120 days. There are 20 different CLECs collocated in Pacific Bell s wire centers. Increasing demand for collocation space has led to an exhaust of physical collocation space in many Pacific Bell end offices. To date Pacific Bell has identified 59 end offices which it believes to be currently out of space for physical collocation. Pacific Bell offers virtual collocation to CLECs in offices which physical allocation space has been exhausted. Additionally, as discussed later in this affidavit, Pacific Bell is actively pursuing various alternatives to address the exhaust of physical collocation space

18 A. PHYSICAL COLLOCATION 47. Pacific Bell provides physical collocation to requesting CLECs on a first-come, first-served basis, under the same terms and conditions available to similarly situated CLECs at the time of such request. 48. Pacific Bell offers Physical Collocation pursuant to approved tariffs. The California PUC Tariff 175-T contains the terms, conditions and prices for provisioning collocation in central offices throughout California. A copy of CPUC Tariff 175-T, Section 16, Expanded Interconnection Services is attached as Schedule 4. The tariff contains physical collocation rates for all central offices for which collocation has currently been requested. These rates were calculated, and approved by the CPUC, using costing methods determined by the California PUC. Should a CLEC request collocation in a central office not currently listed in the tariff, the CLEC may obtain collocation using the Bona Fide Request process, which is explained in greater detail later in this affidavit 49. All requesting collocators are provided a copy of Pacific Bell 's Collocation Order/Application Form, Expanded Interconnection Service Customer Handbook and Installation and Job Acceptance Handbook (IJAH) 8. Additionally, collocators may obtain publicly available copies of state, CPUC Tariff 175-T, and federal, FCC Tariff 128. These documents provide the collocator with a wide range of information on physical collocation, including such details as insurance requirements, equipment standards, billing details and liability issues, quotes and other intervals for the various activities throughout the application process and other information necessary to complete the construction of a collocation arrangement. Copies of the Collocation Order/Application Form for physical collocation are attached to my affidavit as Schedule 5. As set out in these documents, CLECs may locate equipment used for interconnection or access to network elements on an unbundled basis in their secured collocation space, and may install, operate, and maintain their own equipment within that space. Physical collocators may arrange with Pacific Bell for the installation of cross-connections between their equipment and Pacific Bell 's unbundled network element facilities, and for trunking to other Pacific Bell offices. In addition, physical collocators can place facilities allowing them to interconnect with other physically collocating carriers in the same central office. (47 U.S.C. 251(c)(6) and (a),(h),(i)). 8 The IJAH includes instructions for writing a Method of Procedure(MOP). The MOP instructions provide the collocator a standard for describing the installation work to be performed

19 50. Although not required by the Act and, indeed, specifically not required by the FCC s rules (47 C.F.R (c)), where space exists Pacific Bell also permits CLECs, pursuant to the terms of the Remote Switch Module (RSM) portion of the CLECs interconnection agreement, to locate RSMs within their physical collocation spaces in Pacific Bell central offices for use with access to its UNEs. That placement is subject to the same terms and conditions as any physically collocated telecommunications equipment and other mutually agreeable terms and conditions that address the unique technical and operational requirements of RSMs (e.g., grounding, power, trunking to CLEC host). See schedule 5, pages for additional details. 51. To accommodate CLECs concerns raised during negotiations and/or arbitration, Pacific Bell issues revisions to the Collocation Order/Application Form Expanded Interconnection Service Customer Handbook and the IJAH. The most recent version of the Expanded Interconnection Service Customer Handbook is scheduled for release in May 1998 and a copy will be made available for CPUC and FCC review. 52. As set out in the collocation service intervals contained in FCC Tariff 128 and CPUC Tariff 175-T, Pacific Bell offers to accommodate requests for physical collocation, based on its knowledge of the time it takes to provision physical collocation. Pacific Bell s average build-out interval in California is 120 days. However, as discussed below, Pacific Bell is taking measures to minimize CLEC impacts and delays in cage construction which may result in construction delays because of the increasing demand for collocation. 53. Pacific Bell has a dedicated group of account managers who are responsible for handling all collocation requests. These managers are in place to ensure that Pacific Bell efficiently and accurately processes the CLEC s requests. Although Pacific Bell has sized its collocation support organization to readily handle expected demand for physical collocation, and can adjust its staffing levels to meet changes in demand levels, the timing and size of CLEC requests can impact Pacific Bell s ability to meet demands for physical collocation. To make sure that all CLECs are aware of the potential for delay created by submission of multiple requests on a single day or in a very short - 19-

20 period of time, Pacific Bell has amended its Collocation Application to advise CLECs that intervals may need to be staggered under such circumstances Where a Central Office previously has been tariffed, the collocator contacts the Account Manager and requests a quote for a collocation cage. If a prospective collocator requests collocation in 9 or fewer offices and the requested central offices have available space for collocation cages, a quote is provided to the collocator within 2 to 5 business days of receipt of the request, unless a longer interval has been requested. If space is not available in the requested central office, the collocator is notified within the 2 to 5 business day period and offered Virtual Collocation. 55. The approved collocation tariff provides Pacific Bell 30 days to provide quotes to prospective collocators. However, in an effort to accommodate the needs of CLECs, Pacific has undertaken to provide quotes within a 2 to 5 business day time frame as set out in the Expanded Interconnection Service Customer Handbook and as discussed above. Due to increases in demand for collocation, Pacific is in the process of updating its handbook to provide a more realistic time frame for furnishing quotes. Pacific anticipates the new intervals will be from 15 to 20 days, but in no event will the interval exceed the 30 days authorized by tariff. 56. For any collocation request, where the requested Central Office has not been previously tariffed, the collocator must provide a Bona Fide Request. This is done by completing and forwarding a Collocation application to the CLEC s Account Manager. Upon receipt of the application, Pacific Bell will initiate development of a quote, and respond to the collocator with the quote within 30 days of receiving a complete application for Bona Fide Request, unless there are unusual circumstances, such as the submission of a large number of requests within a compressed time frame. 57. The provisioning of a collocation cage is a time-intensive process, which involves several items. Attached as Schedule 6 to my affidavit is a brief synopsis of the activities required to process a CLEC s request for 9 Expanded Interconnection Service-Customer Collocation Order/Application Form, Page

21 collocation space. Initially, going through the steps discussed above, the time to process a Bona Fide Request, including regulatory approval, would take up to three months to complete before the requesting CLEC could initiate the provisioning of collocation in a new office. To improve service and become more responsive to CLEC requests, the process for handling Bona Fide Request applications has been improved to minimize the processing time for collocation applications in non-tariffed end offices. For instance, Pacific Bell currently will accept from a collocator prepayment and an application for collocation, once a quote has been developed, concurrent with the filing of the tariff. Additionally, Pacific will initiate construction prior to tariff approval as a means of expediting service to a requesting CLEC. With improvements made to the ordering process Pacific Bell has shortened by 52 days the amount of time required to provide collocation, in previously non-tariffed Central Offices, from ordering to walk through and turnover of a collocation cage. 58. Attached as Schedule 7 is a chart showing the status of completed physical collocation jobs, by wire center, as of February 28, 1998 in California. The number of cages shown on the schedule are the number of cages built and do not necessarily represent the number of CLECs collocating in the end office. 59. Pacific Bell has continued to evolve and improve its policies, procedures and methods for implementing physical collocation. Improvements and modifications to Pacific Bell's collocation process include the following: Access to Facilities: In response to the request of several carriers, when feasible and safe, Pacific Bell allows requesting carriers early access to their collocation space in order to begin their equipment installation before Pacific Bell has completed its initial work. This allows collocating carriers to speed up the collocation process by working in parallel with Pacific Bell on the installation process. Pre-Installation Meetings: To minimize last minute revisions, Pacific Bell has implemented the practice of meetings with physically collocating carriers and their installation vendors, prior to providing access to the collocation cage. The purpose of these meetings is to ensure that the physically collocating carrier has all the information necessary to perform its installation work within Pacific Bell's central offices, and to explain particular details of the access to the central office area, such - 21-

22 as the loading dock. These meetings have reduced the need for last minute changes and revisions and have improved communication between the companies. Collocation Point of Contact (CPOC): Pacific Bell has assigned five CPOCs in California. The CPOCs have responsibility for physical collocation implementation. Since April of 1997, the CPOCs have held monthly internal meetings to discuss the collocation process and procedural issues that have arisen in their areas. As a result of these meetings, issues have been resolved and practices modified to make physical collocation faster and more efficient for the physically collocating carriers. For example, as a result of these meetings, a physical collocation "checklist" was developed which is being used to ensure that all Pacific Bell employees involved in the process fully understand and uniformly implement their respective collocation responsibilities. A copy of this checklist is attached as Schedule Pacific Bell continues to be flexible and accommodating to specific requests for assistance from physically collocating carriers. Some CLECs have voiced concerns regarding availability of collocation space. Pacific has taken several actions in response to these concerns: Pacific has offered to allow unaffiliated third party inspection of central offices to verify exhausted space. In addition to virtual collocation Pacific Bell has offered to connect its network to a CLEC point of presence which is not physically within the same building as the interconnecting wire center. Where existing space has been exhausted but additional space can be made available in the same building through special construction, Pacific Bell is making the space available to CLECs who wish to cover the additional expense for Central Office modifications. Pacific Bell recently received approval of modifications to its Tariff FCC No. 128 to reflect this policy. Similar language is scheduled to be filed in Pacific Bell s intrastate tariff for approval by the CPUC. PACIFIC has agreed to offer space to collocators who require a smaller collocation space than the standard 100 square foot collocation cage. This permits the building of a collocation cage in a central office which has no space for the standard 100 square foot cage

23 Pacific is currently constructing cages which are not the standard 10 X10 square cage yet still provide the standard 100 square feet of cage space. For example an L-shaped cage was recently proposed for a CLEC. Collocation business processes are being actively reviewed and updated, and staffing levels of field collocation personnel are being reviewed to improve the collocation process. Attached as Schedule 9 to my affidavit is a summary of the processes and standards used to survey a central office for collocation. On January 30, 1998 a letter was published to all CLECs listing central offices currently with no space available and central offices that will have space available by May 1, Pursuant to Pacific s FCC 128 Tariff, paragraph , a lottery will be held to determine which requesting CLECs will be provided the space if multiple CLECs make application on the same day for available central office space and there is not sufficient space to physically collocate all requesting CLECs. Pacific Bell is in the process of updating the floor plans for those offices where Pacific Bell has determined there is insufficient space to provide physical collocation. These plans are scheduled to be filed with the CPUC by approximately April 15, All of the above actions taken are voluntary on the part of Pacific, and reflect a desire to not only resolve problems in a timely manner but additionally to provide the best possible collocation services to CLECs. 62. Some concerns regarding collocation space availability seem to result from the first come first served policy 10. There have been cases where a CLEC calls their Pacific account manager to ascertain space availability at a particular central office. Upon response from the account manager that space is available, that CLEC proceeded to request a quote, then to fill out an application and cut a prepayment check. In the meantime, another CLEC had sent in an application and prepayment which allocated the available collocation cage. Because the first CLEC to submit an application with prepayment met the terms of first come first served, there was no longer space available in the requested office. In these situations Pacific Bell has followed the procedures outlined in the State and Federal approved tariffs. 10 CPUC Tariff No. 175-T, Para

24 63. Pacific Bell offers physical collocation on a non-discriminatory basis and at just and reasonable cost based rates. In California, Pacific Bell prices physical collocation in accordance with the terms and conditions stated in its interconnection agreements and CPUC and FCC approved tariffs for collocation. 64. Pacific Bell also allows physically collocating carriers the option to elect to install their own equipment or have a qualified third party within the collocation cage. Thus, carriers are able to purchase the required material and install it themselves or have it installed by a third party. B. VIRTUAL COLLOCATION 65. Pacific Bell provides CLECs virtual collocation for the purpose of interconnecting with Pacific Bell s facilities and equipment and for access to network elements on an unbundled basis. The Act requires that virtual collocation be made available by Pacific Bell where physical collocation is not practical for technical reasons or because of space limitations, Section 251(c)(6). Pacific Bell makes virtual collocation available to CLECs as an option under more liberal terms than that required either by the Act or the FCC rules. A CLEC may choose virtual collocation even when physical collocation is available. A CLEC may utilize the same virtual collocation arrangement for purposes defined in the FCC s expanded interconnection dockets, and for interconnection with Pacific Bell s network and access to network elements on an unbundled basis. CLECs may purchase virtual collocation from Pacific Bell s FCC approved tariff. A copy of Pacific Bell s TARIFF FCC No. 128, Section 16.5 is attached as Schedule 10 to this affidavit. If a CLEC elects not to order from the interstate tariff Pacific Bell provides intrastate virtual collocation to CLECs using an Individual Cases Basis (ICB) process at rates, terms and conditions designed to meet each CLEC s virtual collocation arrangement specifications. Pacific Bell has expanded on its virtual collocation offering in three ways. First, Pacific Bell allows virtual collocation to be used as a means of interconnection with Pacific Bell s network as well as a means of access to unbundled network elements in addition to the purposes determined in the FCC s expanded interconnection dockets. Second, Pacific Bell does not require a CLEC to bring its own transmission facility to Pacific Bell s central office in order to collocate on a virtual basis. Third, a CLEC may connect its virtual - 24-