20050325Response to Covad Petition.pdf

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Mary S. Hobson (ISB No. 2142)
STOEL RIVES LLP
101 South Capitol Blvd., Suite 1900
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
mshobson~stoel. com
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UTILITIES COrlI1!SSlON
Adam L. Sherr
QWEST CORPORATION
1600 Seventh Avenue, Room 3206
Seattle, W A 98191
[phone]
[phone] (facsimile)
John M. Devaney
PERKINS COlE LLP
607 Fourteenth St. N., Suite 800
Washington, D.C. 20005
Telephone: [phone]
Facsimile: [phone]
devaney~perkinscoie. com
Attorneys for Qwest Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
DIECA COMMUNICATIONS , INC. d/b/a
COY AD COMMUNICATIONS COMPANY
FOR ARBITRATION OF AN
INTERCONNECTION AGREEMENT WITH
QWEST CORPORATION
Case No. CVD-05-
Response of Qwest Corporation to
Covad Communication Company
Petition for Arbitration
QWEST CORPORATION'S RESPONSE TO DIECA
COMMUNICATIONS, INC d/b/a COVAD COMMUNICATIONS
COMPANY'S PETITION FOR ARBITRATION
Pursuant to Section 252(b)(3) of the Telecommunications Act of 1996 47 V.C. 9 151 et
seq. ("Act"), Qwest Corporation ("Qwest") submits this Response to DIECA Communications
Boise-182433.10099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
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Inc. d/b/a Covad Communications Company s ("Covad") Petition for Arbitration of an
Interconnection Agreement With Qwest Corporation ("Petition
INTRODUCTION
Through extensive and lengthy negotiations, Qwest and Covad have resolved all disputed
issues regarding their proposed interconnection agreement except one. The single remaining
issue concerns Covad's improper and unlawful attempt to use the Section 251/252 negotiation
and arbitration process to force Qwest to provide access to unbundled network elements under
Section 271 and state law'! Despite losing this same issue in Qwest/Covad arbitrations in
Minnesota, Washington and Utah and voluntarily accepting Qwest's language for the parties
interconnection agreement in Colorado, Covad continues to attempt to demand that Qwest
through the parties' interconnection agreement, provide access to network elements it is not
required to unbundle under Section 251. As discussed more fully below, Covad's attempt to
invoke Section 271 in the Section 251/252 negotiation and arbitration process is improper, and
the terms Covad seeks under that section cannot be granted in this arbitration. Similarly, Covad'
reliance on Idaho law to support its attempt to obtain broader network unbundling than the FCC
allowed in the Triennial Review Order is improper.
Accordingly, the Idaho Public Utilities Commission ("Commission ) should resolve the
disputed issue in Qwest's favor.
BACKGROUND
As Covad accurately describes in its Petition, the parties have engaged in extensive good
faith negotiations regarding the terms and conditions of the proposed interconnection agreement.
1 Qwest disputes any suggestion by Covad that the parties have engaged in negotiations concerning access
to network elements under Section 271 of the Act or state law. The negotiations leading to Covad's Petition were
conducted pursuant to Sections 251 and 252 of the Act. The parties did not negotiate Covad's request for access to
network elements pursuant to Section 271 or state law. Qwest's discussion of this issue should not be construed in
any way as an acknowledgement that non-Section 251 obligations are a proper subject of this arbitration. Indeed, it
is clear in the Act that while state commissions may have a consulting role, they do not have authority to make
determinations under Section 271, and state commission authority in interconnection arbitrations is limited to issues
relating to an ILEC's obligations under Sections 251 (b) and (c).
Boise-182433.10099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
Covad initiated negotiations with Qwest by a letter dated January 31 2003. Pursuant to Covad'
request, Qwest has been voluntarily negotiating interconnection agreements with Covad in states
throughout Qwest's service territory, including Idaho. Beginning in approximately January 2003
Qwest and Covad met at least weekly, most often by telephone and sometimes in person, to
review proposed terms and conditions of the interconnection agreement. To address specific
substantive areas, subject matter experts from Qwest and Covad participated in the negotiations
and also met separately to discuss open issues. The parties engaged in more than 50 negotiating
sessions involving hundreds of hours. These substantial efforts have been productive. There are
no unresolved issues relating to Sections 251 and 252 of the Act, and the parties have resolved all
but one issue.
Due to the progress made during the negotiations, Qwest and Covad agreed several times
to extend the effective date of Covad's negotiation request in order to continue their discussions
and resolve disputed issues where possible. Under the most recent extension agreement, Qwest
and Covad agreed that the final day for either party to seek arbitration would be February 28
2005. Accordingly, Qwest agrees that Covad timely filed its Petition.
ISSUES RESOLVED BY THE PARTIES
The contract language that Qwest and Covad have agreed upon is contained in the
agreement attached as Exhibit A to the Petition. The parties' competing language relating to the
one issue in dispute is also included in Exhibit A and is identified separately from the agreed
language. To the extent Covad raises other issues or attempts to dispute other provisions of the
interconnection agreement, Qwest reserves the right to present evidence and arguments regarding
those provisions.
UNRESOLVED ISSUES NOT SUBMITTED FOR ARBITRATION
There is only one unresolved issue, and it is being submitted for arbitration.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
POSITION OF THE PARTIES REGARDING UNRESOLVED ISSUE
While Covad included extensive arguments in its Petition, it did not include a complete
summary of Qwest's position. Qwest, therefore, has summarized its position below. Because
Covad detailed its position in its Petition, Qwest has not repeated Covad's arguments in this
response. Qwest respectfully submits that its proposed contract language relating to the disputed
issue meets the requirements of the Act and other applicable law, reflects sound public policy
and should be adopted in full.
ISSUE 1 - Section 4 Definition of "Unbundled Network Element" and Sections
1.1; 9.1.1.6; 9.1.1.7; 9.1.1.8; 9.1.5; 9.1.3; 9.1.4; 9.1.1; 9.1.2;
2; 9.1; 9.6; 9.1.5.1 (and related 9.1.5); 9.1.6.1 (and related
1.6); and 9.21.2
The dispute concerns whether the parties' proposed Section 251/252 interconnection
agreement should include provisions requiring Qwest to: (1) provide network elements and
services not just under Section 251(c)(3), but also under Section 271; (2) provide access to
network elements purportedly under state law, when Idaho law does not authorize the
Commission to independently impose unbundling obligations, or, if state law unbundling
authority can be inferred, conflicts with the access required by the FCC in the Triennial Review
Order and with the rulings of the United States Court of Appeals for the D.C. Circuit in United
States Telecom Association v. FCC ("USTA If'and (3) price network elements provided under
Section 271 at total element long run incremental cost ("TELRIC") rates despite rulings in the
Triennial Review Order and UST A II establishing that TELRIC pricing does not apply to those
elements.
2 Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, In the Matter of
Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers; Implementation of the
Local Competition Provisions of the Telecommunications Act of 1996; Deployment of Wireline Services Offering
Advanced Telecommunications Capability, CC Dkt. Nos. 01-338, 96-, 98-147, FCC 03-36 (FCC reI. Aug. 21
2003) Triennial Review Order ), vacated in part, remanded in part, u.S. Telecom Ass v. FCC 359 F.3d 554
(D.C. Cir. 2004).
3 359 F.3d 554 (D.C. Cir. 2004).
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
As an initial matter, it is puzzling that Covad's Petition raises this issue. In a recent
arbitration between Qwest and Covad in Colorado, Covad accepted Qwest's proposed
interconnection agreement language for virtually all of the sections listed above. Why Covad
would accept Qwest's proposal in Colorado but not in Idaho is entirely unclear. Furthermore
when Covad raised the same dispute in other states, the ALJ s and state commissions uniformly
rejected its arguments. For example, the Washington Utilities and Transportation Commission
recently held that it "has no authority under Section 251 or Section 271 of the Act to require
Qwest to include Section 271 elements in an interconnection agreement. . . (and) any unbundling
requirement based on state law would likely be preempted as inconsistent with federal law
regardless of the method the state used to require the element. "4 The Utah Public Service
Commission stated "Section 252 was clearly intended to provide mechanisms for the parties to
arrive at interconnection agreements governing access to network elements required under
Section 251. Neither Section 251 nor 252 refers in any way to Section 271 or state law
requirements, and certainly neither section anticipates the addition of new Section 251
obligations via incorporation by reference to access obligations under Section 271 or state law.
In a decision adopted by the Minnesota Commission last week, the Minnesota ALJ found that
there is no legal authority in the Act, the TRO, or in state law that would require the inclusion of
Section 271 terms in the interconnection agreement, over Qwest's objection.
Although Covad has agreed to Qwest's language in Colorado and has had its proposed
language rej ected by all three state commissions that have considered the issue, here in Idaho
4 Final Order Affmning, In Part, Arbitrator s Report and Decision, Order No. 06 In the Matter of the
Petition for Arbitration of Covad Communications Company With Qwest Corporation Pursuant to 47 US. C. Section
252(b) and the Triennial Review Order Docket No. UT-043045 ~ 37 (Wash. UTC Feb. 9, 2005).
5 Arbitration Report and Order In the Matter of the Petition of DIECA Communications, Inc. d/b/a Covad
Communications Company, for Arbitration to Resolve Issues Relating to an Interconnection Agreement with Qwest
Corporation Docket No. 04-2277-02 at 19-20 (Utah PSC Feb. 8, 2005).
6 Arbitrator s Report In the Matter of the Petition of DIECA Communications, Inc. d/b/a Covad
Communications Company, for Arbitration to Resolve Issues Relating to an Interconnection Agreement With Qwest
Corporation MPUC Docket No. P-5692,421/IC-04-549, OAR Docket No. 3-2500-15908-4 ~ 46 (Minn. PUC Dec.
2004). The Minnesota Commission has voted to adopt this ruling and is expected to soon issue a written order
reflecting its adoption.
Boise-182433.10099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
Covad asserts that the interconnection agreement should contain language requiring Qwest to
provide access to network elements pursuant to Section 271 and state law. For the reasons set
forth below, the Commission should reject Covad's position and resolve the issue by approving
Qwest's language.
Qwest's Proposed Language Complies With The Act, USTA II, And The
Triennial Review Order.
In contrast to Covad's unbundling demands, Qwest's proposed language ensures that
Covad will have access to the network elements that ILECs must unbundle under Section 251
while also establishing that Qwest is not required to provide elements for which there is no
Section 251 obligation. In Section 4.0 of the proposed interconnection agreement, Qwest defines
the UNEs available under the agreement as:
A J Network Element that has been defined by the FCC or the Commission as a
Network Element to which Qwest is obligated under Section 251(c)(3) of the Act
to provide unbundled access or for which unbundled access is provided under this
Agreement. Unbundled Network Elements do not include those Network
Elements Qwest is obligated to provide only pursuant to Section 271 of the Act.
Qwest's language also incorporates the unbundling limitations established by the Act, the
courts, and the FCC by listing specific network elements that, per court and FCC rulings, ILECs
are not required to unbundle under Section 251. For example, Qwest's proposed Section 9.1.1.6
lists 18 network elements that the FCC specifically found in the Triennial Review Order do not
meet the "impairment" standard and do not have to be unbundled under Section 251.
While Qwest's proposed language properly recognizes the limitations on unbundling, its
exclusion of certain network elements does not mean that those elements are unavailable to
Covad and other CLECs. As the Commission is aware, Qwest is offering access to non-251
elements through commercial agreements. Because Qwest's proposed language complies with
the Act as interpreted by the courts and the FCC and accurately describes Qwest's obligations
under Section 251 , the Commission should approve Qwest's proposed language.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
II.Covad's Proposed Language Is Inconsistent With the Act, USTA II And The
Triennial Review Order.
In the Triennial Review Order the FCC required ILECs to provide CLECs with access
under Section 251 to certain unbundled network elements. At the same time, the FCC declined
to require access to other network elements under Section 251 , ruling that CLECs are not
impaired " as that term is defined in Section 251(d)(2)(B), without access to those elements.
USTA II the D.C. Circuit vacated substantial portions of the affirmative unbundling
requirements the FCC established in the Triennial Review Order. In response, the FCC recently
issued its Triennial Review Remand Order in which it adopted a more limiting unbundling
standard than it had adopted in the Triennial Review Order.As described by the FCC, the new
more targeted" standard "imposes unbundling obligations only in those situations where we find
that carriers genuinely are impaired without access to particular network elements and where
unbundling does not frustrate sustainable, facilities-based competition. "8
Here, Covad seeks to have the Commission impose many of the same unbundling
requirements that the FCC rejected in the Triennial Review Order and that the D.C. Circuit
vacated in USTA II. Thus, while the FCC has narrowed the scope of permissible unbundling as
required under USTA II Covad is attempting to go in precisely the opposite direction by asking
this Commission to impose virtually limitless unbundling. This attempt to circumvent the still
valid unbundling rulings in the Triennial Review Order the effect of UST A II and the Triennial
Review Remand Order is improper for the following reasons.
7 Order on Remand In the Matter of Review of Unbundled Access to Network Elements, Review of the
Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers CC Dkt. Nos. 01-338, WC Docket No.
04-313 (FCC reI. Feb. 4 2005)("Triennial Review Remand Order
Id. at~ 2.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
The Act Does Not Permit The Commission To Create Under State
Law Unbundling Requirements That The FCC Rejected In The
Triennial Review Order And The Triennial Review Remand Order
That The D.C. Circuit Vacated In UST A II.
Contrary to Covad's assertion, Idaho law does not provide the Commission with
independent authority to order the unbundling of network elements. Covad cites Idaho Code 99
61-513 and 61-514, asserting that "the Idaho Code contains specific requirements that public
utilities provide for the joint use of their plant and equipment, and allow physical connections
with other telephone corporations. "9 The sections cited by Covad, however, do not bestow on the
Commission plenary power to order unbundling.
Sections 61-513 and 61-514 were enacted long before the passage of the Act. Section 61-
513 allows the Commission to order telephone companies to make physical connections between
their "lines" such that they can "be made to form a continuous line of communication by the
construction and maintenance of suitable connections for the transfer of messages or
conversations." This provision only addresses the issue of physical "connection" between the
lines of telephone corporations. It does not authorize the Commission to order one telephone
corporation to unbundle its network into elements for lease to another telephone company.
Similarly, section 61-514, enacted in 1913 , requires public utilities, upon a finding of
public convenience and necessity, to allow other public utilities10 to use their "conduits, subways
tracks, wires, poles, pipes or other equipment, or any part thereof, on, over or under any street or
highway." Once again, there is no language in the statute that delegates broad authority to the
Commission to order the unbundling of network elements.
Furthermore, Covad's reliance on Idaho Code 9 62-602(4) and (5), which merely express
the Idaho legislature s intent to encourage the development of open competition in the
9 Petition at 10.
10 Idaho Code 9 61-129 defines "public utility" in relevant part as every "telephone corporation" that is
subject to the jurisdiction, control and regulation of the commission and the provisions of this act." The Compiler
notes for this section indicate the "act" referenced here is Title 61 , Idaho Code. See Idaho Code 9 61-101. Under
this defInition Covad would not be a "public utility" because it is not subject to the provisions of Title 61.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
telecommunications industry, is misplaced. These sections do not authorize any particular action
on the part of the Commission, much less suggest the Commission is granted powers beyond
those possessed by the FCC to order unbundling. The jurisdiction of the Commission is strictly
construed and is entirely dependent on the statutes reposing power in the Commission. 11 Covad
cannot simply assume that broad language expressing a legislative intent to encourage
competition implicitly confers broad powers to issue rulings that conflict with federal law.
Furthermore, the Idaho legislature s explicit intent with regard to the scope of the
Commission s authority to unbundle can be found in Idaho Code 9 62-615(1), which provides:
the commission shall have full power and authority to implement the federal
telecommunications act of 1996, including, but not limited to, the power to establish unbundled
network element charges in accordance with the act." The fact that the Commission s authority
in matters of unbundling is limited by the Idaho legislature to the scope of the Act is further
reinforced by subsection (3) of section 62-615 , which provides: "the commission may
promulgate rules and/or procedures necessary to carry out the duties authorized or required by the
federal telecommunications act of 1996." Accordingly, Idaho law does not authorize the
Commission, independent of the federal Act, to order the unbundling of network elements.
Second, even if independent unbundling authority can be inferred from Idaho law, the
Commission cannot impose unbundling requirements that are contrary to the Triennial Review
Order, the Triennial Review Remand Order and UST A II. Under Section 251 of Act, there is no
unbundling obligation absent an FCC requirement to unbundle and a lawful FCC impairment
finding. As the Supreme Court made clear in the Iowa Utilities Board case, the Act does not
authorize "blanket access to incumbents' networks."12 Rather, Section 251(c)(3) authorizes
unbundling only "in accordance with. . . the requirements of this section (251)."13 Section
11 Washington Water Power Co. v. Kootenai Environmental Alliance, 99 Idaho 875 , 879 591 P.2d 122, 126
(1979).
12 AT&T Corp. v. Iowa Utilities Board 525 U.S. 366, 390 (1998) Iowa Utilities Board"
13 47 U.C. 9251(c)(3).
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration
251(d)(2) in turn provides that unbundling maybe required only if the FCC determines (A) that
access to such network elements as are proprietary in nature is necessary" and (B) that the
failure to provide access to network elements "would impair the ability of the
telecommunications carrier seeking access to provide the services that it seeks to offer. "14
Congress explicitly assigned the task of applying the Section 251 (d)(2) impairment test
and "determining what network elements should be made available for purposes of subsection
(251)(c)(3)" to the FCC.1S The Supreme Court confirmed that as a precondition to unbundling,
Section 251(d)(2) "requires the (Federal Communications) Commission to determine on a
rational basis which network elements must be made available, taking into account the objectives
of the Act and giving some substance to the 'necessary' and 'impair' requirements."16 And the
C. Circuit has confirmed in USTA II that Congress did not allow the FCC to have state
commissions perform this work on its behalf.17 UST A IF s clear holding is that the FCC, not state
commissions, must make the impairment determination called for by Section 251(d)(3)(B) of the
Act.
Iowa Utilities Board makes clear that the essential prerequisite for unbundling any given
element under Section 251 is a formal finding by the FCC that the Section 251 (d) (2)
impairment" test is satisfied for that element. If there has been no such FCC finding, the Act
does not permit any regulator, federal or state, to require unbundling under Section 251. In the
Triennial Review Order the FCC reaffirmed this:
Based on the plain language of the statute, we conclude that the
state authority preserved by section 251 (d)(3) is limited to state
unbundling actions that are consistent with the requirements of
section 251 and do not "substantially prevent" the implementation
of the federal regulatory regime.
1447 V.C. ~ 251(d)(2).
1547 C. ~ 251(d)(2).
16 Iowa Utilities Board 525 V.S. at 391-92.
17 See USTA II 359 F.3d at 568.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -10
***
If a decision pursuant to state law were to require unbundling of a
network element for which the Commission has either found no
impairment-and thus has found that unbundling that element
would conflict with the limits of section 251 (d)(2)-or otherwise
declined to require unbundling on a national basis, we believe it
unlikely that such a decision would fail to conflict with and
substantially prevent" implementation of the federal regime, in
violation of section 251(d)(3)(c).
Federal courts interpreting the Act have reached the same conclusion.19 Indeed, in a
recent decision, the United States District Court of Michigan observed that in USTA II the D.
Circuit "rejected the argument that the 1996 Act does not give the FCC the exclusive authority to
make unbundling determinations. "20 The court emphasized that while the Act permits states to
adopt some "procompetition requirements " they cannot adopt any requirements that are
inconsistent with the statute and FCC regulations. Specifically, the court held, a state
commission "cannot act in a manner inconsistent with federal law and then claim its conduct is
authorized under state law. "21
Covad's broad proposals for unbundling under state law reflect its erroneous view that the
Commission has plenary authority under state law to order whatever unbundling it chooses.
support this argument, Covad references the state law savings clauses contained in the Act. What
Covad ignores is that these savings clauses preserve independent state authority only to the extent
it is consistent with the Act including Section 251 (d)(2)'s substantive limitations on the level of
18 Triennial Review Order at ~~ 193, 195.
19 See Indiana Bell Tel. Co. v. McCarty, 362 F.3d 378 395 (7th Cir. 2004) (citing the above-quoted
discussion in the TRO and stating that "we cannot now imagine" how a state could require unbundling of an element
consistently with the Act where the FCC has not found the statutory impairment test to be satisfied).
20 Michigan Bell Tel. Co. v. Lark Case no. 04-60128, slip op. at 13 (E.D. Mich. Jan. 6 2005).
21 Id.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -11
unbundling that may be authorized. Thus, these savings clauses do not preserve the authority of
state commissions to adopt or enforce under state law unbundling requirements that have been
rej ected by the FCC or vacated in UST A II.
Accordingly, the relevant question is not, as Covad presumes, whether sweeping
unbundling obligations can be cobbled together out of state law, but rather whether any such
obligations would be consistent with Congress substantive limitations on the permissible level
of unbundling, as authoritatively construed by the Supreme Court, the D.C. Circuit, and the FCC.
Covad's proposals for unbundling under state law ignore these limitations and the permissible
authority of state commissions to require unbundling.
The Commission Does Not Have Authority To Require Unbundling
Under Section 271.
Covad's Petition and interconnection agreement proposal assumes incorrectly that state
commissions have authority to impose binding unbundling obligations under Section 271.
Section 271 confers no such authority. Section 271 (d)(3) expressly confers upon the FCC, not
state commissions, the authority to determine whether Bell Operating Companies ("BOCs ) have
complied with the substantive provisions of Section 271, including the "checklist" provisions
upon which Covad purports to base its requests.22 State commissions have only a non-
substantive "consulting" role in that determination.
Sections 201 and 202, which govern the rates, terms and conditions applicable to the
unbundling requirements imposed by Section 271 24 likewise provide no role for state
2247 v.C. ~ 271(d)(3).
2347 v.C. ~ 271(d)(2)(B). See also Indiana Bell Tel. Co. v. Indiana Utility Regulatory Commission
2003 WL 1903363 at 13 ("Section 271 clearly contemplates an advisory role for the (state commission), not a
substantive role
24 Triennial Review Order at ~~ 656 662.
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -12
commISSIons. That authority has been conferred by Congress upon the FCC and federal courtS.
The FCC has thus confirmed that "(wJhether a particular (Section 271J checklist element's rate
satisfies the just and reasonable pricing standard is a fact specific inquiry that the Commission
(i.the FCCJ will undertake in the context of a BOC's application for Section 271 authority or
in an enforcement proceeding brought pursuant to Section 271 (d)(6)."26
Additionally, the process mandated by Section 252, the provision pursuant to which
Covad filed its petition for arbitration, is concerned with implementation of an ILEC'
obligations under Section 251, not Section 271. In an arbitration conducted under Section 252
therefore, state commissions only have authority to impose terms and conditions relating to
Section 251 obligations, as demonstrated by the following provisions of the Act.
(a)By its terms, the "duty" of an ILEC "to negotiate in good faith in accordance
with section 252 the particular terms and conditions of (interconnectionJ
agreements" is limited to implementation of "the duties described in paragraphs
(1) through (5) of (section 251(b)J and (section 251(c)J."27
(b)Section 252(a) likewise makes clear that the negotiations it requires are limited
to "request ( s J for interconnection, services or network elements pursuant to
section 251. "28
(c)Section 252(b), which provides for state commission arbitration of unresolved
issues, incorporates those same limitations through its reference to the
negotiations under this section (252(a)J."29
25 See id; 47 V.C. ~ 20 1 (b) (authorizing the FCC to prescribe rules and regulations to carry out the Act'
provisions); ~ 205 (authorizing FCC investigation of rates for services, etc. required by the Act); ~ 207 (authorizing
FCC and federal courts to adjudicate complaints seeking damages for violations of the Act); ~ 208(a) (authorizing
FCC to adjudicate complaints alleging violations of the Act).
26 Triennial Review Order at ~ 664. The process mandated by Section 252 -- the provision pursuant to
which Covad filed its Petition -- is concerned with implementation of an ILEC's obligations under Section 251 , not
Section 271. Accordingly, state commissions do not have authority to consider non-251 issues, including issues
relating to Section 271, in Section 252 arbitrations.
27 47 V.C. ~ 251(c)(1).
2847 D.C. ~ 252(a)(emphasis added).
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -13
(d)The grounds upon which a state commission may approve or reject an arbitrated
interconnection agreement are limited to non-compliance with Section 251 and
section 252( d).3o
(e)The final step of the Section 252 process, federal judicial review of decisions by
state commissions approving or rejecting interconnection agreements (including
the arbitration decisions they incorporate), is likewise limited to "whether the
agreement. . . meets the requirements of section 251 and this section (252). "31
It is thus clear that state commission arbitration of disputes over the duties imposed by
federal law is limited to those imposed by Section 251 and excludes the conditions imposed by
Section 271. Accordingly, the Commission does not have the authority to require the Section
271 unbundling that Covad seeks or to establish prices for those elements.
Covad's Proposal To Use TELRIC Rates for Section 271 Elements Is
Unlawful.
Under Covad's proposed language, existing TELRIC rates would apply to network
elements that Qwest provides pursuant to Section 271 until new rates are established in
accordance with "Sections 201 and 202 of the Act or applicable state law." In addition, it is clear
from Covad's filings in other states that Covad seeks permanent TELRIC-based prices for
Section 271 elements.
29 See 47 U.C. g 252(b)(1). The Fifth Circuit has ruled that state commissions may arbitrate disputes
regarding matters other than the duties imposed by Section 251 if both parties mutually agree to include those
matters in their section 252(a) negotiations. CoServ Limited Liability Corp. v. Southwestern Bell Tel. Co.350 F.3d
482 (5th Cir. 2003). Even if correct, that ruling is not relevant here, for Qwest has not included in its Section 252(a)
negotiations with Covad its duties under section 271. See id. at 488 ("an ILEC is clearly free to refuse to negotiate
any issues other than those it has a duty to negotiate under the Act when a CLEC requests negotiation pursuant to
sections 251 and 252"). In the QwestiCovad Minnesota and Utah arbitrations, the administrative law judges ruled
that Qwest and Covad did negotiate Covad's request for unbundling under Section 271. In those cases, however
Qwest established that its negotiators consistently refused to negotiate those issues and expressly told Covad'
representatives that the issues were not properly part of the section 251/252 process. The rulings incorrectly fmd
that Qwest opened the door to Covad's insertion of section 271 issues into the negotiations by proposing ICA
language to implement the section 251 unbundling obligations established by the TRO. Qwest itself, however, never
proposed any language relating to section 271 unbundling obligations, and Qwest and Covad never discussed
Covad's proposed language. There was not, therefore mutual agreement to address those issues in the negotiations
as is required under Coserv.
30 See 47 U.C. g 252(e)(2)(b).
31 47 U.C. g 252(e)(6).
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Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -14
The absence of state decision-making authority under Sections 201 , 202, and 271
establishes that state commissions are without authority to determine the prices that apply to
network elements provided under Section 271. Significantly, the FCC recently rejected the
argument that the pricing authority granted to state commissions by Section 252(c)(2) to set rates
for UNEs provided under Section 251 gives commissions authority to set rates for Section 271
elements. In its opposition to the petitions for a writ of certiorari filed with the Supreme Court
in connection with UST A II the FCC addressed the contention that Section 252 gives state
commissions exclusive authority to set rates for network elements. It stated that the contention
rests on a flawed legal premise "32 explaining that Section 252 limits the pricing authority of
state commissions to network elements provided under Section 251 (c )(3):
Section 252(c)(2) directs state commissions to "establish any rates for. . . network
elements according to subsection (d).47 U.C. 252(c)(2) (emphasis added).
Section 252( d) specifies that States set "the just and reasonable rate for network
elements only for purposes of(47 U.C. 251(c)(3))." 47 U.C. 252(d)(1).
Accordingly, the FCC emphasized
, "
(t)he statute makes no mention of a state role in setting rates
for facilities or services that are provided by Bell companies to comply with Section 271 and are
not governed by Section 251 (c )(3). "34
In requesting that the Commission adopt its rate proposal, Covad is therefore asking the
Commission to exercise authority it does not have and that rests exclusively with the FCC.
addition, Covad's demand for even the temporary application of TELRIC pricing to Section 271
elements violates the FCC's ruling in the Triennial Review Order that TELRIC pricing does not
apply to these elements. The FCC ruled unequivocally that any elements an ILEC unbundles
pursuant to Section 271 are to be priced based on the Section 201-02 standard that rates must not
32 Brief for the Federal Respondents in Opposition to Petitions for a Writ of Certiorari National
Association of Regulatory Utility Commissioners v. United States Telecom Association Supreme Court Nos. 04-
04-, and 04-, at 23 (filed September 2004).
33 Id. (emphasis in original).
34 Id. (emphasis in original). In the same brief, the FCC commented that the TRO does not express an
opinion as to the precise role of states in connection with section 271 pricing. Id.
Boise-182433.10099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -15
be unjust, unreasonable, or unreasonably discriminatory.35 In so ruling, the FCC confirmed
consistent with its prior rulings in Section 271 orders, that TELRIC pricing does not apply to
these network elements.36 In USTA II the D.C. Circuit reached the same conclusion, rejecting
the CLECs' claim that it was "unreasonable for the Commission to apply a different pricing
standard under Section 271" and instead stating that "we see nothing unreasonable in the
Commission s decision to confine TELRIC pricing to instances where it has found
impairment. "37
PROPOSED SCHEDULE FOR IMPLEMENTING THE TERMS AND
CONDITIONS IMPOSED IN THE ARBITRATION
Qwest recommends that upon resolution of the dispute set forth in the Petition and this
response, the Commission direct Covad and Qwest to finalize the Proposed Interconnection
Agreement to conform to the Commission s order and file it within 30 days of issuance of the
order.
RECOMMENDATION AS TO INFORMATION THAT SHOULD BE
PROVIDED BY OTHER PARTIES TO THE NEGOTIATIONS
Qwest does not anticipate the need for discovery, but reserves its right to seek discovery
and other information as may become necessary.
CONCLUSION AND REQUEST FOR RELIEF
Qwest urges the Commission to enter an order adopting Qwest's proposed language on
the disputed issue for the interconnection agreement between Qwest and Covad.
DATED: March 24 2005
35 Triennial Review Order at,-r,-r 656-64.
36 Id.
37 USTA II 359 F.3d at 589; see generally id. at 588-90.
Boise-182433.10099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -16
Respectfully submitted
f-kL--z
Mary S. H son (ISB No. 2142)
STOEL RIVES LLP
101 South Capitol Blvd., Suite 1900
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
Adam L. Sherr
QWEST CORPORATION
1600 Seventh Avenue, Room 3206
Seattle, W A 98191
[phone]
[phone] (facsimile)
John M. Devaney
PERKINS COlE LLP
607 Fourteenth St. N., Suite 800
Washington, D.C. 20005
Telephone: [phone]
Facsimile: [phone]
Attorneys for Qwest Corporation
Boise-182433.1 0099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -17
CERTIFICATE OF SERVICE
I hereby certify that on this 24th day of March, 2005, I served the foregoing Response of
Qwest Corporation to Covad Communication Company s Petition for Arbitration upon all
parties of record in this matter as follows:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, Idaho 83720-0074
j i ewell~puc.state.id. us
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
John Devaney
Mary Rose Hughes
Perkins Coie LLP
607 Fourteenth Street NW - Suite 800
Washington, DC 20005-2011
Telephone: [phone]
Facsimile: [phone]
Co-Counsel for Qwest
Hand Delivery
u. S. Mail
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Email
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Gregory Diamond
Covad Communications Company
7901 Lowry Boulevard
Denver, CO 80230
Telephone: [phone]
Facsimile: [phone]
Counsel for Covad
Dean J. (Joe) Miller
McDevitt & Miller LLP
420 West Bannock Street
Boise, ill 83702
Telephone: [phone]
Facsimile: [phone]
ioe~mcdevitt-miller.com
Counsel for Covad
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Boise-182433.1 0099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -16
Andrew R. Newell (CSB #31121)
Krys Boyle P.
600 Seventeenth Street - Suite 2700
Denver, CO 80202
Telephone: [phone]
Facsimile: [phone]
anewell~krysboyle.com
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Stacy L. S mmers
Legal Secretary to Mary S. Hobson
Stoel Rives LLP
Boise-182433.10099999-00001
Response of Qwest Corporation to Covad Communication Company s Petition for Arbitration -19