20021101Comments.pdf

- fl,9fo1
iirerrvEo cl V-/f lL[0 n .rrra.-^Z
t$il: t{f}V - | AH Il: 2 I
iii r':, liii i: .,r:L iii
riTlLiT lts C0l'll{lSSlOH
Jean D. Jewell
Secretary
Idaho Public Utilities Commission
472West Washington
Boise, ID 83702-0074
Dear Ms. Jewell:
Re: CASE NO, GNR-T-02-16
Enclosed for filing is an original and seven copies of Verizon's comments in Case No.
GNR-T-o2-16.
If you have any questions concerning this matter, please contact Dean Randall at (503)
629-2285.
Sincerely,
Allan T. Thoms
Vice President - Public Policy and External Affairs
ATT:ckw
Enclosure
Service List
17933 N.W Evergreen Parkway
P.O. Box 1 100
Beaverlon, OR 97075
October 31,2002
CERTIFICATE OF SERVICE
I hereby certify that I have mailed a copy of Verizon Northwest Inc.'s comments in Idaho
PUC Docket No. GNR-T-02-16 to all parties of record at the addresses indicated on service
list by delivering a copy by U.S. mail postage paid.
DATED this 31st day of October,2002.
Gail Long
Manager, External Relations
P.O. box 1566
Oregon City, OR 97045-1566
Clay Sturgis
Senior Manager
MOSS ADAMS, LLP
601 Riverside, Suite 1800
Spokane, WA 99201-0663
C,rllrru+|. lr' ,
Colleen K. Williams
Morgan W. Richards
Moffatt, Thomas,Bartlett, Rock & Fields
101 S. Capitol Blvd, 10ft Floor
P.O. Box 829
Boise, Idaho 83701
Ted Hankins
Director, State Government Relations
P.O. Box 4065
Monroe, LA 712ll-4065
BEFORE THE IDAHO PUBLIC UTILITIES CO}fi1M$Y6fr
IN THE MATTER OF THE PETITION OF
POTLATCH TELEPHONE COMPAI\IY,
CENTURYTEL OF IDAHO, INC.,
CENTURYTEL OF THE GEM STATEO AI\D
THE IDAHO TELEPHONE ASSOCIATION
FOR A DECLARATORY ORDER
PROHIBITING THE USE OF (VIRTUAI,'
NXX CALLING.
intLID
?fi02 t{0Y - |
ill':
CAsIINO:
COMMENTS OF VERIZON NORTHWEST INC.
Verizon Northwest Inc. (Verizon) submits these comments pursuant to the
Commission's Notice of Modified Procedure dates October 4,2002.
Verizon agrees with the Petitioners. As they explain in their petition, "virtual"
NXX iurangements are unlawful and are contrary to public policy because they are
nothing more than a type of regulatory arbitrage that undermines local and intraLATA
toll competition. When a CLEC assigns a customer a telephone number that is not
associated with the customer's actual physical location, the CLEC prevents the
originating carier (usually an ILEC such as Verizon) from charging i/s own customer for
what would ordinarily be a toll call. In other words, through its telephone number
assignment practices, the CLEC deliberately redraws its competitors'local calling areas
to deprive those carriers of toll charges. The CLEC also evades paying the originating
carrier access charges. The CLECs offering \/NXX arrangements thus compete not on
the basis of the quality and efficiency of their services, but on their intentional
manipulation of the intercarrier compensation and billing systems to unfairly (and
unlawfully) shift costs to other carriers.
mtf
2l
VERIZON COMMENTS
The FCC explained the significant public policy concerns with such cost-shifting
schemes in its.l'SP Remand Order.l There, the FCC explained that CLEC attempts to
treat interstate ISP-bound calls as "local" calls distorted the market:
Thus carriers have every incentive to compete, not on basis
of quality and efficiency, but on the basis of their ability to
shift costs to other carriers, a troubling distortion that
prevents market forces from distributing limited investment
resources to their most efficient uses. . . .
[I]t is conceivable that a carrier could serve an ISP free of
charge and recover all ofits costs from originating carriers.
This result distorts competition^by subsidizing one type of
service at the expense of others.'
The FCC's analysis of ISP traffic applies with equal force to \,rNXX
there, CLECs' attempt to eam windfall profits by manipulating rules
calls as local calls.
traffic. Here, as
and treating toll
Verizon will not repeat the Petitioners' arguments here; instead, Verizon will
supplement the petition on two points. First, the FCC's "end to end" approach to
intercarrier compensation, which the petition discusses on page 2,began long before the
FCC's Order on Remand in 2001. In fact, for many years, the FCC has ruled that
geography (not telephone number assignment) determines intercarrier compensation.3
Second, many state commissions that have considered the nature of VNXX traffic have
concluded that such traffic is not "local" in nature. For example, the Florida Public
' Order on Remand and Report and Order, Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996; Intercarrier Compensation for ISP-Bound Traffic, FCC 0l-131, 16 FCC
Rcd 9151 (2001) ("ISP Remand Order").
'td.g+-s.' Federal law is clear that it is the actual geographic location of the calling and called party that determines
intercarrier compensation. E.9., AT&T Corp. v. Bell Atlantic-Pennsylvania, 14 FCC Rcd 556 (1998),
recon. denied,15 FCC Rcd1467 (2000) (rejecting use of assigned NPA-NXX in place of actual geographic
end points of a call for purposes of determining the appropriate intercarrier compensation); Mountain
Communications, Inc. v. Qwest Communications Int'|, Inc.,File No. EB-00-MD-017, FCC 02-220,2002
WL 1677642, !f 6 (rel. Iuly 25, 2002) ("Mountain Communications), aff'g Memorandum Opinion and
Order, Mountain Communications, Inc. v. Qwest Communications Int'|, Inc.,17 FCC Rcd 2091 (2002).
VERIZON COMMENTS
Service Commission recently held that "calls terminated to end users outside the local
calling area in which their MA/\IXXs are homed are not local calls for purposes of
intercarrier compensation."4 The Florida PSC additionally concluded that "intercarrier
compensation for fVirtual FX] calls shall be based upon the end points of the particular
calls" - that is, where the call physically originates and physically terminates - and not
on the NPAAiXXs assigned to the calling and called parties.s
In addition to the Florida PSC, the overwhelming majority of state commissions
to consider whether reciprocal compensation is due on \-/NXX traffic have correctly
concluded that it is not, because that traffic does not physically terminate in the same
local calling arcain which it originates. These state commissions include Connecticut,6
Illinois,T Texas,8 South Carolina,e Tennessee,l0 Georgia," Maine,l2 Missouri,l3 and
o Order on Reciprocal Compensation, Investigation into appropriate methods to compensate carriers for
exchange of trffic subject to Section 251(b)(5) of the Telecommunications Act of 1996, Docket No. 00075-
TP, Order No. PSC-02-1248-FOF-TP (Sept. 10, 2002 Fla. PSC).
5 Id.
6 Draft Decision, Investigation of the Payment of Mutual Compensation for Local Calls Carried Over
Foreign Exchange Service Facilities, Docket No. 0l-01-29, at un-numbered p. 21 (Conn. D.P.U.C. Mar.
19, 2001) ("The purpose of mutual compensation is to compensate the carrier for the cost of terminating a
local call und since these calls are not local, they will not be eligible for mutual compensation.") (emphasis
added).
7 Arbitration Decision, TDS Metrocom, Inc., Petitionfor Arbitration of Interconnection Rates, Terms, and
Conditions and Related Arrangements with lllinois Bell Telephone Co. d/b/a Ameritech-Illinois Pursuant to
Section 252(b) of the Telecommunications Act of 1996, Docket No. 0l-0338, at 48 (Ill. Comm. Comm'n
Aug. 8, 2001) ("illinois VFX Ordef'); Arbitration Decision, Level 3 Communications, Inc. Petition for
Arbitration Pursuant to Section 252(b) of the Telecommunications Act of 1996 to Establish an
Interconnection Agreement with lllinois Bell Telephone Company d/b/a Ameritech lllinois, Docket No. 00-
0332 (m. Comm. Comm'n Aug. 30, 2001).
8 Revised Arbitration Award, Proceeding to Examine Reciprocal Compensation Pursuant to Section 252 of
the Federal Telecommunications Act of 1996, Docket No. 21982, at l8 (Tex. Pub. Util. Comm'n Aug. 31,
2000) (finding FX-type traffic 'hot eligible for reciprocal compensation" to the extent it does not terminate
within a mandatory local calling scope).
' Order on Arbitration, Petition of Adelphia Business Solutions of South Carolina, Inc. for Arbitration of an
Interconnection Agreement with BellSouth Telecommunications, Inc. Pursuant to Section 252(b) of the
Communications Act of 1934, as Amended by the Telecommunications Act of 1996, Docket No. 2000-516-
C, at7 (S.C. Pub. Serv. Comm'n Jan. 16,2001) ('Applying the FCC's rules to the factual situation in the
record before this Commission regarding this issue of virtual NXX, this Commission concludes that
reciprocal compensation is not due to calls placed to virtual NXX numbers as the calls do not terminate
within the same local calling area in which the call originated."). See also Order on Arbitatiot, Petition of
US LEC of South Carolina for Arbitration of an Interconnection Agreement with Verizon South Inc.,
Docket No. 2002- I 8 1 -C, at I 8- I 9 (Pub. Serv. Comm'n Aug. 20, 2002).
VERIZON COMMENTS
Ohio.la And as the Illinois Commerce Commission recently explained, the issue is not
even a close one because, by definition, VNXX traffic'odoes not originate and terminate
in the same local rate center and therefore, as a matter of law, cannot be subject to
reciprocal compensation. " 1 5
In sum, Verizon supports the petition, and urges the Commission to either prohibit
VNXX arangements or require'\INXX calls to be treated as interexchange calls.
Respectfully submitted,q*-ru
Allan T. Thoms
Vice President - Public Policy & External Affairs
DATED: October 31,2002
r0 Order, Petition for Arbitration of the Interconnection Agreement Between Bellsouth
Telecommunications, Inc. and Intermedia Communications, Inc. Pursuant to Section 252(b) of the
Telecommunications Act of 1996, Docket No. 99-00948, at 42-44 (Tenn. Pub. Serv. Comm'n June 25,
200r).
" Final Order, Generic Proceeding of Point of Interconnection and Virtual FX Issues, Docket No. 13542-
U, at 10-12 (G.A. Pub. Serv. Comm'n July 23,2001) ("The Commission finds that reciprocal compensation
is not due for Virtual FX traffic.").
'' Order Requiring Reclamation of NXX Codes and Special ISP Rates by ILECs, and Order Disapproving
Proposed Service, Public Utility Commission Investigation into Use of Central Offices Codes (NXXs) by
New England Fiber Communications, LLC d/b/a/ Brool<s Fiber, Docket No. 98-758 (Me. Pub. Serv.
Comm'n June 30, 2000) (finding VFX an interexchange service, not a local exchange service).
13 Arbitration Order, Application of AT&T Communications of the Southwest, Inc., TCG St. Louis, Inc., and
TCG Kansas City, Inc., for Compulsory Arbitration of Unresolved Issues llith Southwestern Bell
Telephone Company Pursuant to Section 2520) of the Telecommunications Act of 1996, Case No. TO-
2001-455, at 3l (Mo. Pub. Serv. Comm'n. June 7,2001) (finding VFX traffic "not classified as a local
call").
ra Arbitration Award, Petition of Global NAPs for Arbitration Pursuant to Section 252(b) of the
Telecommunications Act of 1996 to Establish an Interconnection Agreement with Verizon North Inc., Case
No. 02-876-TP-ARB (Ohio PUC September 5,2002).
ts lilinois VFX Order at 48.
VEzuZON COMMENTS 4