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IN THE MATTER OF QWEST CORPORATION’S SECTION 271 APPLICATION AND MOTION FOR ALTERNATIVE PROCEDURE TO MANAGE THE SECTION 271 PROCESS Utility Case No. 3269 Association of Communications Enterprises The Association of Communications Enterprises (“ASCENT” or the ”Association”), on behalf of its members and pursuant to the New Mexico Public Regulation Commission’s (Commission) November 22, 2000 Second Procedural Order in the above-captioned proceeding, comments on Qwest Corporation’s (Qwest) compliance with competitive Checklist items 1 (interconnection and collocation), 11 (number portability), 13 (reciprocal compensation), and 14 (resale) of section 271 of the Telecommunications Act of 1996 (the Act). ASCENT primarily comments on Qwest’s compliance with section 271 of the Act in general, as the Commission now joins the current multi-state collaborative 271 proceedings. I. Introduction ASCENT commends the Commission for its decision to formally join the multi-state collaborative 271 proceedings currently underway. The collaborative process offers an excellent opportunity to share information, minimize duplication of effort, and maximize the utility of scarce resources in evaluating Qwest’s section 271 compliance, on a regional basis. As a participant in the multi-state proceedings, ASCENT recognizes the clear benefit for participating parties and supports the Commission’s decision to become an additional participant in the multi-state proceedings. At the same time, the Commission should recognize the inherent limitations of the multi- state collaboratives. While ASCENT does not dispute the value of the multi-state collaborative process, the Association cautions the Commission to ensure that its ultimate determination of Qwest’s compliance with the competitive Checklist for New Mexico interLATA market entry is based on factual data conclusively demonstrating Qwest’s actual compliance with section 271 in New Mexico and not in the unproven and intested “availability” of interconnection, network elements, resale, and systems through a negotiated Statement of Generally Available Terms and Conditions (SGAT) or other promised compliance. The 271 collaborative process should be viewed as a tool to assist in reaching a state- specific recommendation, through the establishment of a baseline for state-specific compliance evaluations. The collaborative process should not simply become a forum for protracted negotiation of Qwest’s SGAT or the final word on Qwest 271 compliance. Already much of the emphasis in the six-state collaborative process has focused on negotiating mutually agreeable provisions to Qwest’s SGAT. These SGAT negotiations demand a significant commitment of time and resources. Even if this process could result in a perfect, mutually acceptable document for all parties, the SGAT does not by itself demonstrate Qwest’s 271 compliance in the absence of actual competition and a demonstrated working operational relationship between Qwest and its competitors. There is currently a dearth of hard evidence that conclusively demonstrates the existence of either. Whatever findings result from the collaborative process, such results should not be held as a de facto determinant regarding Qwest 271 compliance in each participating state. The Act requires, and the Federal Communications Commission has repeatedly stressed, that each state must ultimately make its own assessment of Qwest’s compliance, based on a factual record of compliance in its states. There can be no substitute. A record of Qwest compliance with the Act will indeed result from the multi-state collaboratives and Regional Oversight Committee operations support systems testing about to be initiated. This record will reveal how Qwest may be complying with section 271 to the extent that Qwest’s systems and processes are for the most part similar throughout its operating territory. What this record will not - and cannot - reveal, is the extent to which Qwest’s competitors will be able to effectively provide service to the public, consistent with the Act’s obligations in each participating state. For this to be accomplished, a thorough examination of the Qwest’s ability to provide and support fully functional interconnection, network elements, and services in New Mexico is imperative before this Commission may render any recommendation to the Federal Communications Commission (FCC) regarding Qwest’s compliance. Qwest’s meager record of compliance and negligible competitive inroads in New Mexico currently demonstrate that Qwest does not comply with the Act. II. Qwest Has Yet to Present A Factual Case Demonstrating Actual Compliance with Section 271. Qwest ostensibly asks this Commission to accept the current multi-state collaborative record of its compliance with Checklist items 1, 11, 13, and 14. From a procedural perspective, and given timing considerations, Qwest’s proposal appears reasonable in concept, but should not alter the Commission’s guarded approach to making an in-state evaluation of Qwest’s compliance with these and the remaining ten Checklist items based on a complete and factual record. As New Mexico’s factual record now stands, local competition remains in an embryonic state in no small measure due to Qwest’s failure to comply with section 271 of the Act. Qwest’s has represented to the Commission that progress has been made toward consensus on Checklist items 1, 11, 13, and 14. Presumably, Qwest speaks of the consensus regarding its SGAT provisions. Such consensus, however encouraging, does not result in Qwest’s compliance. Even if perfect consensus is achievable, industry consensus will not replace demonstrable evidence of realized compliance, but will only set forth the promise of compliance. Such promises are insufficient. The FCC has emphasized the regional Bell operating companies’ obligation to prove their case. In its June 2000 approval of SBC Communications, Inc.’s (Southwestern Bell Telephone “SWBT”) application for in-region interLATA market entry, the FCC, citing to previous 271 decisions again stressed the need for a demonstration of present compliance by applicants, finding that. … a BOC’s promises of future performance to address particular concerns raised by commenters have no probative value in demonstrating its present compliance with the requirements of section 271. In order to gain in-region, interLATA entry, a BOC must support its application with actual evidence demonstrating its present compliance with the statutory conditions for entry, instead of prospective evidence that is contingent on future behavior. Thus, we must be able to make a determination based on the evidence in the record that a BOC has actually demonstrated compliance with the requirements of section 271. No such demonstration currently exits in the instant proceeding or in the multi-state collaboratives, particularly when viewed before a backdrop of the evaluation standards set forth in the FCC’s Texas 271 Order, addressed further below. As the Commission proceeds in joining the multi-state collaboratives, it should continue to hold Qwest to the incumbent’s mandated obligation to support an in-region interLATA market bid with a factual in-state compliance record. III. Qwest Does Not Comply With Checklist Items 1, 11, 13, and 14. A. Checklist Item 1, Interconnection and Collocation According to the FCC, Section 251 of the Act contains three requirements for the provision of interconnection. The incumbent LEC must first provide interconnection “at any technically feasible point within the carrier’s network.” The incumbent LEC must next provide interconnection that is “at least equal in quality to that provided by the local exchange carrier to itself.” Finally, the incumbent LEC must provide interconnection “on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, in accordance with the terms of the agreement and the requirements of [section 251] and section 252.” In Texas, the FCC found that SWBT did offer interconnection through is standard Texas 271 Agreement (T2A), an agreement roughly analogous to Qwest’s SGAT. The availability of interconnection through Qwest’s SGAT is likely to be argued by Qwest to be sufficient demonstration of meeting Checklist item 1. It should become obvious, however, in considering the other compliance tests for Checklist item 1 set forth in the FCC Texas 271 Order and elsewhere, that there are missing pieces without which compliance cannot be determined. Specifically, there are no performance measures available to demonstrate interconnection with competitors at parity with the level of interconnection Qwest provides to itself. Nor have “permanent” rates been established for interconnection, enabling only speculation as to whether Qwest interconnection rates are indeed fair, just, reasonable, and non-discriminatory. In finding that SWBT had met its interconnection obligations, the FCC noted that its decision was based on a determination that trunk group blockage rates for competitors passed the state benchmark, that SWBT’s rate of missed due dates for trunk installations is lower for service to competitors than for service to itself, and its average time to install interconnection trunks passed the state benchmark. There is insufficient evidence to lead to a similar conclusion in New Mexico – or the multi-state collaborative - with regard to Qwest’s compliance with Checklist item 1. B. Checklist Item 11, Number Portability The 1996 Act obligates a regional Bell operating company to comply with the number portability regulations adopted by the FCC pursuant to section 251(b)(2) which requires all local exchange carriers “to provide, to the extent technically feasible, number portability in accordance with requirements prescribed by the Commission.” In finding that SWBT complied with the Act’s number portability obligations, the FCC pointed to SWBT evidence showing the steps being taken by the company to implement permanent number portability. Such evidence went beyond the provisions contained in SWBT’s T2A. ASCENT is aware of no similar evidence provided by Qwest at this juncture that would lead to a similar conclusion for New Mexico. C. Checklist Item 13, Reciprocal Compensation Section 271(c)(2)(B)(xiii) of the Act requires a regional Bell operating company to enter into "[r]eciprocal compensation arrangements in accordance with the requirements of section 252(d)(2).” Section 252(d)(2)(A) states that "a state commission shall not consider the terms and conditions for reciprocal compensation to be just and reasonable unless (i) such terms and conditions 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; and (ii) such terms and conditions determine such costs on the basis of a reasonable approximation of the additional costs of terminating such calls.” In the FCC Texas 271 Order, the FCC based its compliance finding on two key tests: 1) that SWBT had reciprocal compensation arrangements in place pursuant to section 252(d)(2) of the Act, and 2) that SWBT was making all required payments “in a timely fashion.” Qwest asserts that it has reciprocal compensation arrangements in place as required by the Act. Evidence that reciprocal compensation payments are being timely made to interconnecting entities is apparently lacking. In the absence of evidence that Qwest meets both tests, no determination of Qwest’s compliance with Checklist item 13 can be made. D. Checklist Item 14, Resale In order to meet the resale obligations of the Act pursuant to section 271(c)(2)(B)(xiv), telecommunications services must be available for resale in accordance with sections 251(c) (4) – which requires incumbents "to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications carriers," and section 252(d)(3) which requires state commissions to “determine wholesale rates 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.” Unreasonable or discriminatory limitations on resold services are prohibited pursuant to section 251(c)(4)(B). The FCC’s SWBT Texas decision also hinged on two important aspects of SWBT compliance in Texas: 1) the availability of resold services through interconnection agreements and the T2A, and 2) the Texas Commission’s adoption of an avoided-cost calculation to be used in establishing resold service wholesale discounts. Implicit in the FCC’s decision, however, was the acknowledgment that resold services were being provided a non- discriminatory manner, as demonstrated through measured performance and delivery of OSS. No such data currently exits for Qwest leaving open a question as to whether Qwest is capable of meeting its resale obligations. IV. OSS Testing and Performance Measurements Remain Integral Components in the Body of Evidence Needed to Demonstrate Compliance. The FCC’s evaluation criteria underscore the need for hard statistical evidence of state- specific compliance as a prerequisite for any favorable compliance finding. As is evident in the FCC Texas 271 Order, the FCC did not rely exclusively on the existence of SWBT’s T2A, nor SWBT promises of compliance as dispositive of SWBT compliance. The keys to SWBT’s – and now Qwest’s – compliance with section 271 remain in the availability of hard, statistical data; data which is clearly absent from this proceeding. Suggestions by Qwest that these Checklist items should be considered “closed” following this phase of the Commission’s 271 proceeding are entirely misplaced. Significant effort has been expended by the Regional Oversight Committee to develop a meaningful third party operations support system test process and related test measures. Until OSS test results and performance measures reveal sustained compliance, any expression of “compliance” remains purely speculative. V. New Mexico Specific Measures Must be Evaluated. A recent disturbing trend in the 271 process has been witnessed in the States of Oklahoma, Kansas whose 271 findings ostensibly rely on the similarity between SWBT’s Texas T2A and like standard agreements in those states, as well as the purported similarity in SWBT’s systems and procedures, in supporting SWBT’s 271 bids. Despite the existence of cursory state-specific OSS test results and performance measures, SWBT was found to have met its compliance burden in those states by state commissions. These states’ actions offer a dangerous approach to 271 compliance, which should be rejected by the Commission. Qwest appears desirous of adopting a similar strategy in New Mexico and elsewhere. Through the similarity between its regional operations and SGAT, Qwest seeks to persuade regulators that it has met its compliance burden. Yet a “cookie cutter” approach to 271 compliance is unworkable. Not only does such an approach undermine the Act’s and FCC’s reliance on state-specific evaluations, it leads to a potentially unsustainable conclusion regarding compliance. Already, the Department of Justice has raised concerns over SWBT pricing and non- discriminatory access to OSS in Kansas and Oklahoma following Justice’s evaluation of SWBT compliance in those states. While the impact of Justice’s evaluation on the final outcome of the FCC’s evaluation is currently unclear, there is no certainty that the Oklahoma and Kansas recommendations will ultimately support the weight of the FCC’s independent evaluation, seemingly because of an over reliance on purported similarity between jurisdictions. The Commission should not allow itself to fall into such a trap by Qwest. VI. Conclusion Qwest has yet to open its local markets to meaningful and irreversible competition as required by the Act. The meager factual record in this case to date makes it clear that Qwest has not yet demonstrated actual performance relative the services provided to CLECs in New Mexico. This factual, state-specific demonstration is necessary if Qwest is to be found in compliance with section 271 of the Act. The Commission’s participation in the multi-state collaborative is commendable and will contribute to the Commission’s final analysis of Qwest’s compliance with the Act. As the Commission begins to participate in the multi-state collaboratives, it should not, however, be lulled into accepting Qwest’s negotiated SGAT as unilateral evidence of Qwest compliance, nor in relying on the multi-state OSS tests and performance measures without further conducting its own independent final review of Qwest’s market opening efforts and New Mexico-specific performance date before rendering its final recommendation to the FCC. Respectfully submitted, Association of Communications Enterprises By: Andrew O. Isar Director – State Affairs 3220 Uddenberg Lane, Suite 4 Gig Harbor, WA 98335 Tel. 253.851.6700 aisar@millerisar.com December 7, 2000 |