20021101Comments.pdf

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-----LSprint Eric S. Heath 100 Spear Street, Suite 930Attorney San Francisco, CA 94105
Telephone: 4 I 5-37 l -7 I 79
Facsimile: 4 I 5-37 I -7 I 86Email: [e-mail]
October 31,2002
Jean Jewell, Secretary
Idaho Public Utilities Commission
472West Washington
Boise,lD 83702
RE: Case No. GNR-T-02-16
Dear Ms. Walters:
Enclosed for filing with the Idaho Public Utilities Commission you will find an original and
seven copies of the "Comments of Sprint Communications Company L.P." in the above-
referenced proceeding.
Thank you for your assistance in this matter. Feel free to contact me with any questions or
concerns you may have regarding these Comments.
Sincerely,Ew
Eric S. Heath
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SPRINT COMMUNICATIONS COMPANY L.P.
Eric S. Heath, Attorney
100 Spear Street, Suite 930
San Francisco, CA 94105
415-371-7179 - direct
415-371-7186 - fax
eric. s.heath@mail. sprint. com
IN THE MATTER OF THE
PETITION OF POTLATCH
TELEPHONE COMPANY;
CENTURYTEL OF IDAHO;
CENTURYTEL OF THE GEM
STATE; AND THE IDAHO
TELEPHONE ASSOCIATION FOR
A DECLARATORY ORDER
PROHIBITING THE USE OF*VIRTUAL'NXX CALLING.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISISON
CASE NO. GNR.T.O2.I6
COMMENTS OF SPRINT
COMMUNICATIONS
COMPANY L.P.
Pursuant to the Idaho Public Utilities Commission's ("Commission") Order No.
29125, issued October 4,2002, Sprint Communications Company L.P. submits the
following Comments for consideration in the above-captioned matter.
Potlatch Telephone Company, CenturyTel of Idaho and of the Gem State, and the
Idaho Telephone Association (collectively "the Petitioners") have requested the
Commission prohibit the use virtual NXXs. As the Commission is aware, in a virtual
NXX scenario, the CLEC assigns a block of numbers to a particular rate center so that,
for rating pu{poses, it looks as if the call terminates at that end office, while the traffrc is
physically routed and switched by the CLEC in a distant location. The Petitioners claim
that proliferation of this arrangement has caused them to lose access and toll revenues.
COMMENTS OF SPRINT
COMMUNICATIONS COMPANY L.P
Some ILECs also claim that the use of virtual NXXs drives up reciprocal compensation
payments, and that reciprocal compensation should not apply since the call does not even
physically originate and physically terminate within the local calling area. As explained
more fully below, the Commission should reject these claims and support virtual NXX
iurangements as they provide end-users an affordable means of accessing Intemet Service
Providers (ISPs).t
If the Commission grants the Petitioners' request and CLECs are no longer
permitted to utilize virtual NXXs, CLECs will be forced to establish a physical presence
in each exchange that would cause an increase in collocation costs and lead to space
exhaust in ILEC central offices. If CLECs cannot establish a physical presence in each
exchange, for financial or other reasons and the use of virtual NXXs are prohibited, ISP
end-users will incur toll charges to access ISP services. In either case, there will be an
increase in the rates for dial-up services. Neither scenario is acceptable. Given that the
telecommunications industry and the technology that drives the industry are continually
evolving, carriers should embrace innovative and cost effective ways to provide service
to end-users. In this regard, it would be unreasonable to expect CLECs to duplicate the
ILEC network and place switching equipment, even remotes, in every ILEC local calling
area. Virtual NXXs represent an innovative approach to this situation that promotes the
public interest.
I Historically, commissions have endorsed service arrangements such as FX (foreign exchange) or the
establishment of EAS routes as a means to maintain affordable service to end users. Today, virhral NXXs
play a similarly sigrrificant role in keeping end user dial-IP rates affordable. Unlike virtual NXXs, however,
EAS and FX arrangements remain largely undisputed because the purchaser of the service pays for the
costs of establishing the service arrangement and the switching point generally coincides with the
NPA/|IXX rating point.
COMMENTS OF SPRINT
COMMUNICATIONS COMPANY L.P.
Notwithstanding its support for the continued use of virtual NXXs, Sprint notes
that the question of who should pay for the incremental cost of increased use of the
ILEC's network that calls to dial-up Internet Service Providers ("ISPs") generate remains
unanswered. While the ILEC's end users that subscribe to ISPs served by CLECs benefit
from virtual NXX arrangements (as do the CLECs who carry the ISP's traffic), ILECs
generally cannot increase local rates to recover these costs. This is due in part to the fact
that the actual customer service arrangement for ISP service exists between the tSP and
the end user. ILECs should not be required to absorb all the incremental costs of
increased network usage. Therefore, Sprint proposes that a limitation be placed on the
distance the ILEC must transport the traffic outside its local calling area. Sprint also
proposes that the CLEC compensate the LEC at TELRIC rates for the incremental
transport costs beyond this point. This compromise provides a reasonable limitation on
the ILEC's provision of transport over long distances, while allowing CLECs an efficient
market entry alternative without incurring burdensome, uneconomic costs.
As demonstrated above, the impact to the customer of eliminating virtual NXXs
outweighs the concerns enumerated by the Petitioners; particularly if the Commission
limits the distance the ILEC must transport the traffic outside its local calling area.
Petitioners argue that the proliferation of virtual NXX arrangernents has caused them to
lose access and toll revenues. However, if the Idaho PUC prohibited the use of virtual
NXXs, CLECs serving ISPs would be forced to either establish an actual presence in the
exchange where the virtual NXX had existed or allow the dial-up calls to become toll
calls. If dial-up calls placed from that exchange to the ISP become toll calls, the higher
COMMENTS OF SPRINT
COMMUNICATIONS COMPAI.IY L.P.
toll costs incurred by the end users would sharply reduce dernand for those dial-up
services. Therefore, because overall demand will be reduced, Sprint believes the extent
of the Petitioners' "lost revenues" argument is overstated.
A corollary argument to the lost toll and access revenue claim states that the use
of virtual NXXs drives up reciprocal compensation payments, and that reciprocal
compensation should not apply since the call does not physically originate and physically
terminate within the local calling area. As stated above, if CLECs serving the ISPs are
forced to establish a physical presence within the exchange where their virtual NXX was
located, to avoid their calls becoming toll calls, the ILEC would still be required to pay
those CLECs terminating reciprocal compensation for the traffic that the ILEC originates.
Therefore, any concern with paying reciprocal compensation in a virhral NXX
environment is minimized. Furthennore, it is important to note that the FCC's ISP
Remand Order2 has already had a significant effect on reducing ILECs' reciprocal
compensation payments to CLECs for ISP-bound traffic.
The Petitioners' reference to the FCC's "end-to-end" analysis to support their
argument that virtual NXXs should be declared unlawful since such calls allegedly avoid
toll charges, directly relates to the reciprocal compensation point above. While Sprint
appreciates this concern, it is important to note that because customer locations have
historically coincided with the NPAAIXXs assigned to thern (FX service is an exception),
rating the calls based on the numbers dialed has never presented a problem. However, as
'Orde. on Remand and Report and Order, In the Matter of Implementation of the Local Competition
Provisions in the Telecommunications Acl of 1996; Intercarrier Compensationfor ISP-Bound Trffic, CC
Docket No. 96-98; CC Docket No. 99-68 (Rel.April 27,2001).
COMMENTS OF SPRINT
COMMUNICATIONS COMPANTY L.P.
mentioned above, the telecommunications industry has evolved dramatically in recent
times and carriers have starting assigning numbers to customers who are not located
where the call is actually rated. Indeed, evaluating a call based on the numbers dialed as
opposed to the physical endpoints has now become a very contentious issue within the
industry. The FCC Wireline Competition Bureau addressed this issue in their July 17,
2002Yirginia Arbitration Order. In this Order, the FCC ruled that there is no current,
viable alternative to the current system of utilizing the NPA-NXX codes exists,
concluding that, "rating calls by their geographical endpoints raises billing and technical
issues that have no concrete, workable solutions at this time."3
A final reason the Petitioners put forth as support for discontinuing the use of
virtual NXXs is that they have a negative impact on numbering resources and number
portability. With respect to numbering resources, CLECs' use of virtual NXXs should
not impact a state's numbering resources any more than another NXX used within the
rate center. However, some concern exists that CLECs operating and serving only ISPs
use NXX resources inefficiently. Sprint notes that one potential solution to this concem
would involve the CLEC requesting numbers from the ILEC and porting them to itself,
since a CLEC serving ISPs needs only one NXX for its Location Routing Number (LRN)
within the LATA. If an ILEC is not LNP capable, the CLEC would request interim LNP
using remote call forwarding, DID, or remote indexing to serve the ISPs. Each request
3 Memorandum Opinion and Order, In the Matter of Petition of WorldCom, Inc. Pursuant to Section
252(e)(5) of the Communications Actfor Preemption of theJuisdiction of the Virginia State Corporation
Commission Regarding Interconnection Disputes with Verizon Virginia Inc., andfor Expedited Arbitration,
CC Docket No. 00-2 I 8, DA 02-1731 (Rel. July l7 , 2002) at fl 301 .
COMMENTS OF SPRINT
COMMUNICATIONS COMPANY L.P.
for LNP and INP to the respective ILEC as described above should be at no cost because
this plan supports number conservation that benefits all service providers.
With respect to the Petitioners' number portability concerns, Sprint notes that
local number portability is currently limited to the incumbent LEC's existing rate center
boundaries. Virtual NXXs are required to operate within the boundaries of number
portability and should therefore not impact number portability. Specifically, Section
52.26(a) of the FCC's rules require that local number portability administration "comply
with the recommendations of the North American Numbering Council (NANC) as set
forth in the report to the Commission prepared by the NANC's Local Number Portability
Administration Selection Working Group, dated April25, 1997 (Working Group Report)
and its appendices..."4 Further, Section 7.3 of this North American Numbering
Council's LNP Architecture & Administrative Plan dated April25, 1997 states that
"location portability is technically limited to rate center/rate district boundaries of the
incumbent LEC due to rating/routing concerns." These rules ensure that both carriers are
able to both port numbers and receive ported numbers in a competitively neutral manner.
Therefore, assigning NXX codes outside of the ILEC rate center boundaries is clearly not
within the current FCC rules for number portability.
While Sprint appreciates some of the ILEC's concerns regarding CLECs'use of
virtual NXXs, Sprint also believes that this Commission must evaluate the impact to the
end user of eliminating their existence entirely. If the Idaho Commission enters an order,
it should favor the use of virtual NXXs, so long as a limitation is placed on the distance
n 47 c.F.R. g 52.26(a)
COMMENTS OF SPRINT
COMMUNICATIONS COMPANY L.P.
the ILEC must transport the traffic outside its local calling area and the CLEC
compensates the ILEC at TELRIC-based rates for the incremental transport costs beyond
this point. This position ensures that the ILEC and the CLEC interests are adequately
balanced while the end user continues to enjoy local dial-IP service.5
Respectfully submitted, this 3l't day of October 2002.
SPRINT COMMTINICATIONS COMPANY L.P.
ERIC S. HEATH
100 Spear Street, Suite 930
San Francisco, CA 94105
415-371-7t79
4rs-371-7186 (fax)
e-mail eric. s.heath@mail. sprint.com
5 Sprint believes it is critical to corrunent that any order issued in this matter should not apply to CMRS
providers. It is important that the Commission be aware of the differences between a CLEC's use of virhral
NXX codes and a CMRS carrier's use of NXX codes. Although CMRS carriers rate and route their traffic
differently, CMRS carriers do not use "virtual NXXS" as defined by the FCC. Specifically, the FCC has
defined virtual codes as those that correspond with a particular geographic area that are assigned to a
customer located in a different geographic area. See, Developing a Unified Intercarrier Compensation
Regime, Docket No. 0l-92, FCC 0l-132,16 FCC Rcd 9619, 962 par. I 15 (2001). In other words, a CLEC
will not always have facilities and customers in the proximity of the ILEC rate center where the virtual
NXX resides, whereas a CMRS provider does. The CMRS and CLEC practices also differ in that CMRS
providers do not use virtual NXX codes to aggrcgate traflic to avoid toll for their customers. Moreover, the
MTA serves as the defrnition of local service for calls to or from a CMRS network for purposes of
intercarrier compensation, under $ 25 I (b)(5) of the Telecommunications Act of 1996. Because CMRS
calls within an MTA are local, the issue of which intercarrier compensation regime applies becomes a non-
issue - access charges would not apply anyway. Therefore, the difference between CLEC and CMRS
applications of NXX codes would allow the PUC, should it decide to enter an order, to address the CLEC
use of virtual NXXs without prohibiting the way in which CMRS providers assign numbers.
COMMENTS OF SPRINT
COMMUNICATIONS COMPAI.ry L.P.
CERTIFICATE OF SERVICE
I certify that an original and seven copies of the "Comments of Sprint
Communications Company L.P." in Case No. GNR-T-02-16 by were sent by ovemight
courier on October 31,20021o
Jean Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington
Boise, lD 83702
And a true and corect copy was sent by U.S. Mail, postage prepaid on October 31, 2002 to
allparties shown on the attached list.
fur,*(Yt' iltcnt*uru
Katherine M. McMahon, LegalAnalyst ll
Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise,ID 83720-0074
Morgan W. Richards
Moffatt Thomas Barrett, et al.
101 S. Capitol Boulevard, 10'h Floor
Boise,ID 83702
Donald L. Howell, II
Idaho Public Utilities Commission
P.O. Box 83720
Boise,ID 83720-0074
Susan Travis
WorldCom,Inc.
707 nth Street, 36th Floor
Denver, CO 80202
Brian Thomas
Time Warner Telecom
223Taylor Avenue North
Seattle, WA 98109
Kenneth C. Howell
Hawley Troxell Ennis & Hawley
877 W. Main Street, Suite 1000
Boise,ID 83702
Cathy L. Brightwell
AT&T Comm. of the Mtn. States, Inc.
2120 Caton Way, Suite B
Olympia, WA 98502-l106
Idaho
Service List
Case No. GNR-T-02-16
Conley Ward
Givens Parsley, LLP
277 N.6th Street
Boise,ID 83701
Gail Long
Potlatch Telephone Company
P.O. Box 1566
Oregon City, OR 97045-1566
Doug Cooley
Idaho Public Utilities Commission
P.O. Box 83720
Boise,ID 83720-0074
Mary S. Hobson
Stoel Rives, LLP
l0l S. Capitol Boulevard, Suite 1900
Boise,ID 83702-5958
Dean Randall
Verizon Northwest, Inc.
P.O. Box I100
Beaverton, OR 97075-1100
Gene DeJordy
Westem Wireless Corporation
3650 l3l't Avenue, SE, Suite 400
Bellevue, WA 98006
Date: l0l3ll0z
Clay Sturgis
Moss Adams, LLP
601 Riverside, Suite 1800
Spokane, WA 99201-0063
Ted Hankins
Centurytel of Idaho
P.O. Box 4065
Monroe, LA 712ll-4065
Dean J. Miller
McDevitt & Miller, LLP
P.O. Box 2564
Boise,ID 83701
Peter Blisard
Level 3 Communications, LLC
1025 Eldorado Boulevard
Broomfield, CO 80021
Terry Haynes
Verizon Northwest, Inc.
P.O. Box 152092
Irving, TX 75015
Mary B. Tribby/Rebecca B. DeCook
AT&T Comm. of the Mtn. States, Inc.
1875 Lawerence Street, Suite l40l
Denver, CO 80202