20030131Qwest Post-Hearing Memorandum.pdf

,-/er'?','- "
H-
r\t.l...C \t r""L:J
101 S. Capitol Boulevard, Suite 1900
Boise, Idaho 83702
main 208.389.9000
STOEL
~~,
FILED
zn03 JM~ 31 Pf1 4: 58
fax [phone]
ATTORNEYS AT LAW
Li.
;' ~;
Uf;L,
UTILITiES COi'ijl'cHSSlfJN
ti':
www.stoel.com
January 31 , 2003
MARY S. HOBSON
Direct [phone]
mshobson(8)stoel.com
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, ill 83702-5983
RE:Docket No. QWE-O2-
Dear Ms. Jewell:
Enclosed for filing with this Commission is an original and eight (8) copies of QWEST
CORPORATION'S POST HEARING MEMORANDUM. If you have any questions, please
contact me. Thank you for your cooperation in this matter.
Very truly yours
!:~:;,
4----.
:blg
Enclosures
Oregon
Washington
California
U l a h
Boise-152613.10029164-00082 I d a h a
Mary S. Hobson (ISB #2142)
Stoel Rives LLP
101 South Capitol Boulevard - Suite 1900
Boise, ID 83702
Tele: [phone]Fax: [phone]
r ,:"'LC
;71FECE !VEO
20u3 J~H 3! Pi'l~: sa
, "
UT!LifjLS CUf'HdSSlm
Stephanie Boyett-Colgan
Qwest Service Corporation
1801 California Street - 4ih Floor
Denver, CO 80202
Tele: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IDAHO TELEPHONE ASSOCIATION
CITIZENS TELECOMMUNICA nONS
COMPANY OF IDAHO, CENTURYTEL
OF IDAHO, CENTURYTEL OF THE
GEM STATE, POTLATCH TELEPHONE
COMP ANY and ILLUMINET, INe.
CASE NO QWE- T -02-
Complainants
QWEST CORPORATION
Respondent.
QWEST CORPORATION'S POST HEARING MEMORANDUM
Qwest Corporation (Qwest) respectfully submits the following post hearing
memorandum in support of its positions in the above-referenced case.
I. INTRODUCTION.
What Is This Case About?
This case is about whether this Commission has the authority to regulate how Qwest
charges for the use of its SS7 network in connection with deregulated toll traffic2 and whether
The Complaint names Qwest Communications, Inc. as the Respondent, but the proper party is Qwest
Corporation.
BRIEF -
Boise-152126.20029164-00082
Page 1
assuming for purposes of argument that such Commission authority exists, Complainants have
met their burden of showing that the relief requested is legally justified.
There is no dispute among the parties about what the SS7 network is, or how it operates.
It is sufficient for the purposes of this Memorandum to state that it consists of dedicated circuits
and signaling apparatus that operate outside the traditional network that carries the voice and
data calls. All agree that the SS7 network provides "out-of-band signaling . Its purpose is to
facilitate the call set-up establishing and closing of voice and data calls and it enables telephone
corporations to provide other database-related features (such as Caller ID) to end users . For a
more detailed and technical explanation of exactly how the SS7 network is constituted and how
it operates, the Commission need only consult the record produced by the prefiled testimony.
The fact is, however, that there is no real dispute among the parties about technical issues.
Rather, the dispute here is about what Qwest will be permitted to charge others for their
use of Qwest's SS7 network. Complainants have done their best to confuse and obfuscate this
fundamental issue in the effort to persuade this Commission its only course is to step in and
order Qwest to rewrite a Title 62 Catalog service offering. To justify this extreme measure
Complainants make numerous allegations that Qwest's actions are "unlawful"What is
conspicuously missing from all of these allegations is a citation to a single statute, rule
Commission order, FCC order or other legal authority that suggests Qwest cannot charge those
who use Qwest's SS7 network for that use. However , Qwest has provided the Commission with
authority that finds that Qwest may charge others for their use of Qwest's SS7 network
Qwest agreed not to charge for SS7 signaling associated with local traffic (Tr. 460) and that change to the
Idaho Access Services Catalog is being implemented.
See generally, Qwest's Access Service Catalog, Section 15.
, "
General Description
" ("
Catalog4 See, e,g" Tr. 303-314; Ex. 501 (testimony ofJoseph Craig)
See In the Matter of U WEST's Petition to Establish Part 69 Rate Elements for SS7 Signaling, DA 99-
1474, Order (Dec. 23, 1999) ("FCC SS7 order ), Paras. 6-9 (FCC Order), wherein the FCC found that granting US
BRIEF -
Boise-lS2126.20029164-00082
Page 2
With Qwest's agreement not to levy SS7 message charges on signaling associated with
local traffic much of the sound and fury raised by Complainants is silenced. With this change to
the Access Service Catalog, Qwest will not be charging for signaling associated with local
calling. With this agreement, Qwest will not be charging for signaling associated with EAS
calling. With this agreement, Qwest will not be charging for signaling associated intraMT A
wireless calling. Indeed, with this change Qwest SS7 per message charges are imposed only
on signals associated with toll traffic.
Thus, what this case is about is whether the Complainants have met their burden
showing that Qwest has violated some applicable legal prohibition against charging for the use of
its SS7 signaling network in connection with set-up of intraLATA toll calls. Before examining
that question, it is useful to itemize some of the things this case is not about.
This Case is Not About Other Subjects that Were Discussed in or Alluded to in Testimony.
Reviewing the pre filed submissions and hearing the arguments presented by the
Complainants, it would be easy to gain the impression that this case is about local exchange
service and impacts to long-standing practices relating to switched access charges. In fact
however, that these would be misimpressions. This case is not about:
EAS, local, or intraMT A calling or the signaling associated with this
calling
bills rendered to any Idaho CLEC or independent telephone company
(there are none)
charges imposed by Qwest upon Syringa Networks, LLP (there are none)
WEST's petition to restructure SS7 was in the public interest because the recovery of SS7 costs from the users of the
SS7 network on a per message basis more accurately reflects how such costs are incurred. See also First Report and
Order In the Matter of Access Charge Reform; Price Cap Performance Review for Local Exchange Carriers;
Transport Rate Structure and Pricing End User Common Line Charges " CC Docket No. 96-262; CC Docket No.
94-1; CC Docket No. 91-213; CC Docket No. 95-, 12 FCC Rcd 15982 , (ReI. May 16, 1997).
The only outstanding issue relating to signaling associated with local traffic, is the billing rendered to one
Complainant, Illurninet, for its use of signaling associated with local calling in the past. This "back billing" issue is
discussed in section II.A.4.
BRIEF -
Boise-lS2126.20029164-00082
Page 3
whether other SS7 network owners can bill Qwest for use of their
networks (such issues must be decided on a record providing facts relevant
to any such charges)
which local exchange companies may render switched access charges to
carriers in connection with toll calls (apart from the voluntary reduction in
access charges made by Qwest when it unbundled SS7 from access, there
is no impact on any party s access charges)
how revenues received from interexchange carriers for switched access are
split between local exchange companies who are jointly providing access
II. ARGUMENT AND AUTHORITIES.
The Commission Lacks Jurisdiction to Provide the Relief Requested.
On June 1 2002, Qwest's revised its Southern Idaho Access Service Catalog unbundling
SS7 signaling charges from switched access became effective. The services provided under the
Access Service Catalog are price-deregulated pursuant to Idaho Code 9 62-605.
Complainants admit
, "
because Qwest has elected Title 62 regulation of services other than basic
local exchange service, changes to its Access Catalog do not require formal Commission
investigation and approvaL"7 Nor are Title 62 services subject to the Commission s jurisdiction
for purposes of after-the-fact rate regulation8 as contemplated by Complainants' actions in this
case.
With Qwest's agreement to limit its SS7 switching charges to signaling associated with
toll traffic, Qwest's Title 62 service Catalog offering for SS7 services is identical to its FCC-
approved tariff in the rates, terms, and application to call set up messages.9 Furthermore
, at
present, these Catalog provisions are being applied to only one of the Complainants, the self
described, third-party non-common provider of "competitive" SS7 services, Illuminet. (Tr. 203).
Complaint, May 20, 2002
, p.
Complainants have cited the re-regulation provision found in I. C. 9 62-605(5) in their complaint, but as
discussed below Complainants cannot rely upon this section for such extreme Commission intervention.
Compare Catalog Section 15.
, "
Call Set-; Section 15.
, "
Message Charge; and TariffF.c.c. No,
1; Section 20,2.1
, "
Call Set-; Section 20,1.G
, "
Message Charge
BRIEF -
Boise-l 52126.2 0029164-00082
Page 4
Illuminet did not object when Qwest restructured SS7 at the FCC lO (TR. 224) and Illuminet
supports the concept of unbundling charges for SS7. (Tr. 228). In fact, with the unbundling of
SS7 at the interstate level, Illuminet began paying Qwest's per-message charges for signaling
associated with toll traffic following the effective date of the FCC tariff in May 2000.
Although Illuminet is the only entity that is subject to the Title 62 SS7 charges, the other
Complainants allege injury because, either they are customers of Illuminet, or they are concerned
about the eventual application of these charges to another third-party carrier, Syringa Networks
LLe. The Complainants allege that Illuminet's arrangements with its customers permit it to pass
along the increased costs it incurs as a result of the SS7 message charges to those customers.
Thus, bootstrapping the increased costs to Illuminet, the Complainant group alleges three
statutory bases for Commission jurisdiction in this case: Idaho Code g 62-614, g 62-605(5) and
g 62-609(2). In each case the Complainants' reliance on the statutory language is misplaced.
The Commission cannot grant the relief requested under I.c. ~ 62-614.
Idaho Code g62-614(1) states that if two telephone corporations "are unable to agree on
any matter relating to telecommunications issues between such companies" either company can
apply to the Commission "for determination of the matter Initially it must be noted that
Illuminet is not a "telephone corporation Under Idaho Code g 62-603(14) telephone
corporations provide "telecommunications services " a term defined in g 62-603(13) as inter
alia services that are offered to "the public, or some portion thereof, for compensation.
Illuminet admits that it does not offer services to the public, but only to other
telecommunications carriers.(Tr. 203).Furthermore, since Illuminet is the only SS7
Complainant that is purchasing services from the Title 62 Catalog, this dispute is not "between
telecommunications carriers, despite the protestations of Illuminet's customers that ultimately
See FCC SS7 Order Para, 1.
BRIEF -
Boise-152126.2 0029164-00082
Page 5
the price they pay for the SS7 services they receive from Illuminet is affected. It must be
remembered that Illuminet is not reselling Qwest SS7 services, it is providing its own services in
competition with Qwest-provided SS7 services. (Tr. 203). The Qwest per-message charges to
Illuminet for use of Qwest's network to provide services to Illuminet's customers is just one
element of Illuminet' s cost structure.
However, even if the Commission were to conclude that one or more of the Complainants
can properly bring the present issue before the Commission under Idaho Code ~ 62-614 (1), this
statute does not confer authority upon the Commission to grant the relief requested. Under ~ 62-
614(2) the Commission is granted jurisdiction to conduct an investigation and hearing
concerning inter-telephone corporation disputes and to enter its order "determining such dispute
in accordance with applicable provisions of law." The applicable provisions of law, however
prevent the Commission from regulating Qwest's provision of SS7 signaling associated with toll
traffic, i.e. a Title 62 service. In sum, ~ 62-614 does not confer jurisdiction on the Commission
to override the law and regulate the terms under which Qwest's provides Title 62 services to
other telephone corporations. The Commission lacks the authority under ~ 62-614 to grant the
Complainants' requested relief.
Section 62-609 has no application to this case.
Idaho Code ~ 62-609(2) does not confer jurisdiction on the Commission to address the
present controversy. The first sentence of that rather obtuse subsection 11 provides that toll shall
be made available for resale. The second sentence simply requires that switched and special
Subsection 62-609(2) provides in its entirety: "Telecommunication services which are subject to the
provisions of this chapter and which services utilize special or switched access, shall be made available by the
telephone corporation for resale. No telephone corporation shall, as to its prices or charges for or the provision of
such services, make provider of services exempted from regulation under section 62-603(13), Idaho Code, or subject
any telephone corporation or any provider of services exempted from regulation under section 62-603(13), Idaho
Code, to any prejudice or competitive disadvantage with respect to its prices or charges for providing access to its
local exchange network nor establish or maintain any unreasonable difference as to its prices or charges for access to
its local exchange network.
BRIEF -
Boise-152126.20029164-00082
Page 6
access services be provided to other telephone corporations on a nondiscriminatory basis. The
subsection states that a telephone corporation may not subject another telephone corporation "
any prejudice or competitive disadvantage with respect to its prices or charges for providing
access to its local exchange network", nor charge any "unreasonable difference. . . for access to
its exchange network.
The reasons that this statute is inapplicable are almost too numerous to be recounted here.
Not only is Illuminet not a telephone corporation, but SS7 charges are not switched or special
access charges 12. Indeed, the whole point of the revision to the state and federal access charge
provisions was to unbundle SS7 from switched access charges. Further, Illuminet is not gaining
access to Qwest's local exchange network, it is gaining access to and using Qwest's out-of-band
signaling network. Tr. 394-396.
But, perhaps the most important reason that this statute does not apply to the present
controversy, is that there is no evidence whatsoever that Qwest has charged "unreasonably
different" charges for its SS7 services under the Catalog. The Catalog provisions on their face
apply equally to every purchaser of the service, and there is no evidence that this is not the way
the Catalog is applied.
Illuminet attempts to argue that there is potential discrimination because "Qwest could
engage in undetected and unreasonable discrimination by marketing its services at a less costly
alternative to any other SS7 provider by simply failing to apply the SS7 Catalog Revisions
structure to its direct connect SS7 customers." (Tr. 217). Illuminet, however, offers no proof of
any disparate treatment among similarly situated SS7 customers. Furthermore, as discussed in
See generally, Catalog 15.1A "Call Set-up
BRIEF -
Boise-152126.20029164-00082
Page 7
B.2.b. below, the Federal Act specifically enVlSlons different options for differing
classifications of purchasers. These options include access Qwest's S77 network.
SS7 services are not subject to Idaho Code ~ 62-605(5).
The final section cited by Complainants is the only section of the Idaho Code that
arguably grants the Commission authority regulate the provision of a Title 62 service. That is
the so-called "claw back" provision found in Idaho Code 9 62-605 (5). That section provides
that Commission has the continuing authority to review the quality, general availability and
terms and conditions under which certain Title 62 services are offered. Section 62-605(5)
provides in full:
(5) For any telecommunication service which was subject, on the effective
date (July 1 , 1988) ofthis act, to title 61 , Idaho Code, and which at the election of
the telephone corporation became subject to this chapter, the commission shall
have continuing authority to review the quality of such service its general
availability, and terms and conditions under which it is offered. Upon complaint
to the commission and after notice to the telephone corporation providing such
service and hearing, the commission finds that the quality, general availability or
terms and conditions for such service are adverse to the public interest, the
commission shall have authority to negotiate or require changes in how such
telecommunication services are provided. In addition, if the commission finds
that such corrective action is inadequate, it shall have the authority to require that
such telecommunication services be subject to the requirements of title 61 , Idaho
Code, rather than the provisions of this chapter.
Once again, however, this section has no application to Qwest's prOVlSlon of SS7
signaling to Illuminet, or any of the Complainants. First and foremost, SS7 signaling does not
meet the definition of "telecommunications service" found in 9 62-603(13) because, at a
minimum, it is not offered to "the public, or some portion thereof, for compensation . Rather
than being a service offered to the public, SS7 signaling is a wholesale service offered to other
telephone corporations and to their vendors, such as Illuminet. Hence Complainants cannot rely
on 9 62-605 (5) for Commission authority to regulate SS7 signaling because it is not
telecommunications service
BRIEF -
Boise-152126.20029164-00082
Page 8
Nor was SS7 signaling offered as a service to any entity prior to July 1 , 1988. That is
because SS7 has only recently been "unbundled" from switched access services.13 Indeed, the
interstate tariff unbundling signaling only became effective in May, 2000 and the Idaho Catalog
revision June 1 , 2001. Prior to this recent development, SS7 was signaling not sold on a per
message basis, and cost recovery was borne by interexchange carriers and achieved through
inter- and intrastate access charges. (Tr. 393; FCC SS7 order, para.7).
These two distinctions between SS7 signaling and those telecommunications services that
are potentially subject to the Commission s "claw back" powers are far more than mere
technicalities; they go to the very heart of the structure of Title 62. In 1988, the legislature
decided that, with the exception of basic local exchange services all services offered by Idaho
regulated telephone corporations could, at the companies' option, be exempted from
Commission regulation. The potential limitation on that freedom built into the legislation was
the claw back provision, whose language was carefully crafted to protect the public from abuse
with regard to those services that had previously been subject to full regulation by the
Commission.
Subsection 62-605 (5) was not intended to address services offered for the first time after
the statute was enacted, nor was it intended to address the provision of services to other
telephone corporations or competitors. Indeed, when this regulatory scheme was enacted, the
Telecommunications Act of 1996 with its mandate to unbundle and make parts of the incumbent
companies' networks available to competitors was still years in the future. When Title 62 was
enacted, the only major services offered by incumbent local exchange carriers to other carriers
as opposed to directly to the public, were switched and special access and these services were not
The FCC SS7 order, which permitted Qwest to unbundled SS7 was entered December 23, 1999. The
effective date of the Idaho Catalog was June 1 2002.
BRIEF -
Boise-152126.20029164-00082
Page 9
under the claw back provision. Instead, the continuing protections to purchasers of access
services were written into a separate statute: Idaho Code 9 62-609. Section 62-609 did not
protect through the specter of regulation, but through a market-based provision requiring
imputation of access rates in the deregulated company s retail toll rates. In addition, as we have
already noted, 9 62-609(2) contains language prohibiting discrimination among telephone
corporations who purchase access services.
The only conclusion to be drawn from the statutory scheme in Title 62 as a whole is this:
re-regulation or "claw back" of a new service offered only to telephone corporations and their
vendors was never intended and is not authorized. Section 62-609 is limited to the provision of
access services to telephone corporations and requires competitive pricing through imputation
and nondiscrimination provisions, none of which are applicable here. While 9 62-614 provides
that the Commission can investigate inter-telephone company disputes, it does not authorize re-
regulation of a service that is offered under Title 62.
Granting a refund or credit to Illuminet regarding the back balance violates
the filed rate doctrine and constitutes unlawful retroactive ratemaking.
While Qwest's SS7 product is deregulated and Commission approval was not required
under Title 62, Complainants have alleged in their Complaint that the Commission has
jurisdiction to order a refund or credit concerning the back balance of SS7 charges Qwest
assessed to Illuminet in accordance with the Idaho Access Service Catalog. As the Commission
considers this issue, it is important to note that Qwest provides SS7 pursuant to its Access
Service Catalog to several other customers in Idaho and these customers have, in fact, paid their
bills (which includes SS7 call set up charges associated with local and toll traffic).
Consistent with federal law and the law of almost all other states, the Idaho Commission
has recognized the common law rule of the filed rate doctrine as established by the United States
BRIEF -
Boise-152126,20029164-00082
Page 10
Supreme COurt.14 Pursuant to the "century-old filed rate doctrine
, "
the rate of the carrier duly
filed is the only lawful charge. Deviation from it is not permitted upon any pretext." American
Telephone Telegraph Co. v. Central Office Telephone, Inc.524 u.S. 214, 222 , 118 S.Ct.
1956, 1962, 141 LEd. 2d 222 (1998). See also Emerick Case NO. IPC-00-, Order No.
28329 (2000).The filed rate or "tariff' constitutes "the law , binding both carrier and
customer. 15 See Arkansas Louisiana Gas Co. v. Hall 453 U.S. 571 577, 101 S.Ct. 2925 , 2930
69 LEd. 2d 856 (1981). See also In re Illinois Bell Switching Station Litigation 161 Ill.2d 233
204 Ill. Dec. 216, 641 N.E.2d 440, 444 (1994); Waters v. Pacific Telephone Co.12 Cal.3d 1
114 Cal. Rptr. 753, 523 P.2d 1161 (1975).
A necessary corollary of the filed rate doctrine is that, just as the filed rate is binding on
carriers and customers, so to is it binding on the regulatory agency that approved the filed rate.
See Arkansas Louisiana Gas Co. v. Hall 453 u.S. at 578, 101 S.Ct. at 2930 ("Not only do the
courts lack authority to impose a different rate than the one approved by the Commission, but the
Commission itself had no power to alter a rate retroactively ). The Idaho Commission stated in
Hayden Pines that in order to prevent utilities from circumventing the filed rate doctrine
, "
the
rule further prohibits the refunding or remitting of any rates, tolls, rentals, or charges specified in
the rates on file with the Commission.Thus, the filed rate doctrine, with its companion
prohibition against rebates, is designed to ensure that utility customers pay uniform and non-
discriminatory charges.In the Matter of the Investigation of Certain Property and HPN-89-
The filed rate doctrine is also codified in Idaho Code 9 61-313. Nevertheless, the Commission found the
common law filed rate doctrine as a separate legal authority for its holding. The Commission stated
, "
we are
compelled by the filed rate doctrine and Idaho Code 9 61-313 to find that Mr. Emerick was billed the appropriate
tariff charges. . ..Emerick v, Idaho Power Company, Idaho Public Utilities Case No. IPC-00-, Order No. 28329
(2000) (quoting AT&T v, Central Office Telephone 524 US, 214, 118 S,Ct. 1956 (1998)),15 Further, Qwest notes that the Idaho Commission favorably cited the Supreme Court's definition of the filed
rate doctrine as "an obligation on the part of the utility to only collect the rates set out in its tariffs and schedules
'" ,
Emerick v. Idaho Power Company, Idaho Public Utilities Case No, IPC-00-, Order No. 28329 (2000) (quoting
AT&Tv. Central Office Telephone 524 u.S. 214, 118 S.Ct. 1956 (1998)) (emphasis added),
BRIEF -
Boise-152126.20029164-00082
Page II
Contributions of Hayden Pines Water Company, Idaho Public Utilities Commission, Case NO.
PHN-89-, Order No. 23362 (1990).See also Matanuska Electric Association, Inc.
Chugach Electric Association, Inc.53 P.3d 578 , 583 (Alaska 2002) ("A fundamental rule of
ratemaking is that rates are exclusively prospective in nature
. .
If commissions could
retroactively change rates willy-nilly. . . serious questions would arise concerning the legitimacy
of the ratemaking process
);
Farmers Union Livestock Commission v. Union Pac, R. Co.283
W. 498, 505 (1939) ("(The practice of retroactively altering a filed rate) would be odious to
the generally established notions of justice, and would, moreover, be utterly subversive of the
policy and utility of any system of rate regulation; for no rate could be relied upon as stable, and
neither carrier nor shipper could ever be certain of the basis upon which the business was being
conducted. "
While Qwest recognizes that its Access Service Catalog does not undergo the same level
of scrutiny as a regulated tariff prior to becoming effective, there is no dispute here that the
subject Catalog revisions were made in conformance with the appropriate legal standard for
deregulated services. Nor is there any evidence that Qwest has failed to impose the charges
according to the Catalog terms to all customers of the service. Considering that the other
customers have paid those charges, Illuminet's request for retroactive relief from valid Catalog
charges is a request to be granted special treatment. Thus, if the Commission should determine
that it somehow has ratemaking jurisdiction, it must consider the ramifications on other
customers and on Title 62 services generally. Granting Illuminet a refund or credit would violate
the principles of the filed rate doctrine and would constitute retroactive ratemaking in the context
of Title 62 services.
BRIEF -
Boise-152126.20029164-00082
Page 12
B. Qwest's SS7 Catalog Charges Do Not, as Complainants Allege , Violate Tariff Provisions
Contractual Obligations or Policy and Precedent of the Idaho Public Utilities Commission.
Complainants Claim that Illuminet Is the "Agent" of its ILEC and CLEC
Customers Fails to Reposition Complainants to Successfully Argue Qwest'
Catalog is Unlawful.
All of the arguments upon which Complainants rely for the claim that Qwest's Access
Catalog provisions violate some existing policy, practice or arrangement- i.e. "bill and keep
agreements, interconnection agreements, meet-point billing arrangements-are predicated on a
direct agreement between Qwest and the complaining ILEC or CLEC , and all of the arguments
pertain to telecommunications traffic itself (the voice or data call), not to signaling and not to any
agreement or arrangement with the third party provider. To get around the obvious problem that
the third party providers of SS7 services are just that, i.e. third parties to all of the contracts and
relationships they seek to rely on, the Complainants have developed the fiction that Illuminet17 is
the "agent" of the various ILECs and CLECs to which it provides SS7 services.
This fiction is used to support the notion that Illuminet, as a result of this alleged
agency , stands in the same relation to Qwest as those ILECs and CLECs with regard to the
contractual obligations Qwest is alleged to owe those companies. As Illuminet's witness, Paul
Florack, characterized the claim, Illuminet's rights are "derivative" of the rights of its carrier/
customers. (Tr. 226). Qwest submits that this claim, and the argument it attempts to support, are
fatally flawed on both factual and legal grounds.
Qwest has no contracts with Illuminet's customers that pertain to the
provision of SS7 services.
The initial point on which Qwest takes issue with the agency argument is the premise that
Qwest has contractual duties to Illuminet's customers that prohibit Qwest from charging for use
Complaint, p, 2,
Presumably the Complainants would also argue that Syringa Networks LLC acts as the agent of the ILECs
and CLECs to whom it provides SS7 services.
BRIEF -
Boise-152126.20029164-00082
Page 13
of Qwest's SS7 network. All of the arrangements to which Complainants refer, e.
g. "
bill and
keep" arrangements, refer to the exchange of the underlying voice or data traffic itself and not to
the signaling used to set up and tear down those calls.
To attempt to gloss over this critical distinction, Complainants repeatedly contend that
charges, terms and conditions for each type of traffic are determined pursuant to the rules
applicable to that type of end user traffic . (Tr. 226). Not only does this confuse the concepts of
traffic" on the one hand and signaling on the other, but Complainants cite no statute, rule, order
or contract provision that supports that claim. In other words, even though it is central to their
case, Complainants offer no authority for the claim that "when and how SS7 signaling will be
charged is determined by the type of voice or data traffic it is facilitating.This precept is
simply Complainants' view of how the world should be; it is not supported by authority.
Furthermore, even if the Commission were inclined to agree with Illuminet's argument
that charging for signaling follows the charges for voice traffic, the argument is largely moot.
Nearly all18 of the contracts and other arrangements to which Illuminet points in the attempt to
show Qwest cannot charge for signaling associated with certain traffic -- bill and keep, EAS
arrangements and interconnection agreements -- pertain to local traffic.Since Qwest has
eliminated charges on local traffic, this issue as it relates to local traffic is now completely
irrelevant.
The sole exception is the so-call "meet-point-billing" arrangements that occur when two LECs provide
terminating access to an interexchange carrier. For the reasons stated in II.B.3. the argument pertaining to meet-
point-billing fails for other reasons.
BRIEF -
Boise-152126.20029164-00082
Page 14
Even if there were relevant contractual relationships with Illuminet'
customers that pertained SS7, Illuminet cannot take advantage of
those provisions.
The second problem with regard to Illuminet's agency argument is that, as a factual
matter, all of the evidence weighs against Illuminet's being its customers ' agent for purposes of
use of Qwest's SS7 network. To put the issue another way, Illuminet cannot be treated as an
ILEC or a CLEC with regard to use of Qwest's SS7 network simply because it has customers
who are ILECs and CLECs.
The Idaho Supreme Court has defined "agency" as "a relationship resulting from 'the
manifestation of consent by one person to another that the other shall act on his behalf and
subject to his control, and consent by the other so to act.'" Herbst v. Bathol Dairies, Inc.110
Idaho 971 , 973 , 719 P.2d 1231 , 1233 (Idaho Ct. App. 1986) (quoting Restatement (Second)
Agency 9 1 , at 7 (1958)); see also Hilt 122 Idaho at 616 836 P.2d at 562 ("Agency is a fiduciary
relationship in which the principal confers authority upon the agent to act for the principaL"
The burden of proving the existence or extent of an agency rests on the party alleging it. Gissel
v. State 111 Idaho 725 , 729, 727 P.2d 1153, 1157 (1986). Applying these legal precepts, the
question here is whether Illuminet has borne the burden of proving that it is acting in an agency
capacity as it uses Qwest's network to provide SS7 services to its customers.
Illuminet's agency argument is predicated on the Letter of Agency (LOA) required by
Qwest to prove Illuminet is authorized to use the "point codes" associated with the switches of
its carrier customers. (Ex. 201). There is no dispute that Illuminet acts as an agent for its
customers on this limited point.19 However, this explicit grant of authority to "issue orders
Nor is there dispute about whether Illuminet acted as the agent of its customers for purposes of negotiating
other contract relationships with Qwest, because Illuminet admits that it did not negotiate any of the Qwest/ LEC
agreements its is relying upon. See e.
g"
Tr., p. 128. (Illuminet did not negotiate the ELI interconnection agreement
or meet-point-billing agreements upon which it attempts to rely,
BRIEF -
Boise-152126.20029164-00082
Page 15
affecting the "point codes" of its customers does not support Illuminet in the argument that this
agency" extends to giving Illuminet rights in contracts its customers may have with Qwest. See
Hieb v. Minnesota Farmers Union 105 Idaho 694, 698, 672 P.2d 572 576 (Idaho Ct. App. 1983)
( A In agent with actual authority for one purpose does not thereby become an apparent agent
for all other types of transactions.
);
New York Life Ins. Co. v. Horton 9 F.2d 320 323 (5th Cir.
1925) ("Where the power of an agent is special and limited, it must be strictly construed, with
the result that neither the agent nor a third person dealing with him as such can claim that the
agent had a power which they had not a right to understand was conferred by the language
authorizing the agent to act."
Not only is Illuminet's grant of agency limited in scope , when it comes to providing SS7
services to its customers, Illuminet is not acting as an agent at all. Instead, Illuminet is providing
its own SS7 services to its customers in direct competition with Qwest. (Tr. 217). This is not a
case, for example, where Illuminet is acting as its customers' agent for purposes of obtaining
SS7 services from Qwest. This became very clear in the hearing during the cross examination of
Mr. Lafferty who was testifying on behalf of ELI. At that time he admitted that, although the
interconnection agreement between Qwest and ELI permitted the latter to purchase SS7 services
directly from Qwest as an unbundled network element, ELI did not choose that option. (Tr. 121).
ELI had instead decided to purchase SS7 from Illuminet.(Tr. 125). Mr. Lafferty stated
Illuminet is independent of all of its carrier customers or certainly the vast majority of them as
an independent company that's in business to sell SS7 services.(Tr. 132). Hence, when
Illuminet uses Qwest's network in providing services to its customers, it is pursuing its own
business interest of supplying a competitive service.
BRIEF -
Boise-152126.20029164-00082
Page 16
Because Illuminet is business independent of its customers and competitive with Qwest
there is no legal basis to conclude that Illuminet somehow accedes to the rights of its customers
under separate contracts with Qwest.
Illuminet's argument that it can enforce rights in contracts to which it
is not a party is not supported in law by agency or any other theory.
In the final analysis Illuminet is not really arguing that it is an "agent" of its customers, it
is arguing that it has the same rights as its customers under their separate contracts with Qwest.
As we have seen, Idaho law defines "agency" in terms of the authority granted by a principal to
act on its behalf. However, the issue here is not how Illuminet is authorized to act, it is what
Illuminet is entitled to receive in terms of benefits under agreements to which it is not a party. To
establish rights in contracts to which it is not a party, Illuminet must go beyond agency and prove
that it is either an assignee or a third party beneficiary to the Qwest/LEC contracts on which it
hopes to rely.
In Idaho
, "
if a party can demonstrate that a contract was made expressly for his benefit
he may enforce that contract, at any time prior to rescission, as a third party beneficiary.
Baldwin v, Leach 115 Idaho 713 , 715, 769 P.2d 590, 592 (Idaho Ct. App. 1989). The test for
determining a party s status as a third party beneficiary is whether the transaction reflects an
intent to benefit the party. See id.; Stewart v. Arrington Construction Co.92 Idaho 526, 532
446 P.2d 895, 901 (1968). The third-party must show that the contract was made for his direct
benefit and that he is not merely an incidental beneficiary. Baldwin 115 Idaho at 715 , 769 P.2d
at 592; Adkison Corp. v. American Bldg., Co.107 Idaho 406, 409, 690 P.2d 341 344 (1984). In
this case the record is devoid of evidence that the Qwest meet-point-billing, bill and keep or
other Qwest/LEC agreements affecting local and toll traffic were formed with an intent to benefit
BRIEF -
Boise-1521262 0029164-00082
Page 17
Illuminet. Indeed, in the case of the interconnection agreements, provisions were included in the
written contracts that specifically exclude the possibility of any third party beneficiary.
Complainants may attempt to argue that regardless of Qwest's intent , it was Illuminet's
customers' intent to assign their rights under these various agreements to Illuminet. If such an
argument were advanced, however, it would fail because there is no evidence that Illuminet's
customers intended to trade away their own contract rights. The Restatement (Second) of
Contracts g 317 (1979) (cited with approval in Lockhart Co. v. F.K., Ltd.107 Idaho 633 , 635
691 P.2d 1248, 1250 (Idaho Ct. App. 1984) provides a legal definition of assignment:
(1) An assignment of a right is a manifestation of the assignor s intention to
transfer it by virtue of which the assignor s right to performance by the obligor is
extinguished in whole or in part and the assignee acquires a right to such
performance.
While the ILEC and CLEC Complainants in this case may have wished to share their
contract rights with Illuminet, there is no evidence that they intended to forgo those rights for
themselves and assign them to Illuminet. Obviously ELI does not intend to start paying Qwest
for termination of is local traffic because it assigned its "bill and keep" agreement to Illuminet.
Nor is it likely that Project Mutual expects to forgo receiving access revenue in the "meet-point-
billing" context because it assigned those rights to Syringa. However, without the intent that the
assignor s rights to performance is extinguished with the transfer, there can be no valid
assignment under Idaho law.
Conclusion regarding Complainant's agency argument.
The agency argument is a key piece of the Complainants' advocacy. It is used in the
attempt to mask a fatal flaw in the Complainants case, i.e. that despite their claim to the contrary
See e,
g,
Exhibit No. 501 Sec. (A) 3.23 "this Agreement does not provide and shall not be construed to
provide third parties with any remedy, claim, liability, reimbursement, cause of action, or other privilege." (ELI
interconnection agreement.)
BRIEF -
Boise-152126.20029164-00082
Page 18
there is no law, rule, Commission order, policy or contract obligation that prevents Qwest from
billing third party SS7 providers like Illuminet per-message charges for the use of its SS7
network. Complainants have tried to deal with this flaw by attempting to ascribe the alleged
rights of Illuminet's customers to Illuminet itself. However, as we have shown, for factual and
legal reasons, Illuminet is not the agent of its customers, nor would such a relationship entitle
Illuminet to accede to its customers' rights.
Complainants are Governed by Their Choices.
Complainant Illuminet seeks to rely on third-party providers to purchase SS7 services out
of Qwest's Access Services Catalog and yet have the terms and conditions of its carrier
customers' interconnection agreements, rather than the terms of the Catalog, govern that
purchase.Complainant carriers admit they have not purchased SS7 services out of their
interconnection agreements and have no desire to do so. (Tr. 121 and 125). Complainants are
trying to mix apples and oranges.
Complainants have various options available for purchasing SS7 depending upon the
classification of the purchaser. Qwest submits that Complainants must pick their option and be
governed by the terms and conditions of that option.
Complainants have choices regarding their purchase of SS7 services.
The Complainants that are Idaho ILECs and CLECs protest that the imposition of charges
on their third-party SS7 providers impacts them directly and, in some cases, violates
longstanding arrangements between Qwest and these companies.This is a complete
misimpression. Whether fLECs or CLECs face the economic impact of signaling charges passed
through from a third-party SS7 provider is entirely a matter of their choice. As the record
BRIEF -
Boise-152126.20029164-00082
Page 19
demonstrates 21 CLECs and wireless providers who choose to purchase SS7 as an unbundled
network element from Qwest under the terms of their interconnection agreements may do so at
the rates to which they have agreed and which have been approved by this Commission. (Tr.
400). CLECs and wireless providers may also purchase SS7 from Qwest as a finished service
from Qwest's FCC tariff or the Idaho Access Services Catalog, or they may purchase SS7 from a
third party provider. (!d.As Mr. Lafferty made clear, ELI has chosen to purchase SS7 from
Illuminet, rather than as an unbundled network element (UNE) out of its interconnection
agreement from Qwest or the Idaho Access Services Catalog. (Tr. 121 and 125).
Similarly ILECs have the opportunity to enter interconnection agreements with Qwest to
obtain UNEs or purchase SS7 services from the Idaho Access Services Catalog. (Tr. 401).
Further, under the Telecommunications Act of 1996 , ILECs also have the unique opportunity
to purchase SS7 services from Qwest under the infrastructure sharing agreements (IS As) that
enable them to avoid paying signaling charges altogether. (Tr. 433).
The Complainant ILECs and CLECs that here complain about the Catalog charges
imposed on third party SS7 carriers have obviously made the choice that the economic and
business advantages of purchasing from a company like Illuminet outweigh the Qwest-provided
options that avoid the very problems they have brought before this Commission.As Mr.
Lafferty testified
, "
Illuminet's carrier customers have already made arrangements for SS7
network servIces.Therefore, they have no use for Qwest's tariffed service (sic), UNE
arrangements, or infrastructure sharing arrangements." (Tr. 91). Certainly the record reflects
reasons why customers might wish to choose a company like Illuminet or Syringa. These range
from the variety of other beneficial services offered by Illuminet (Tr. 203), to its ability to serve
See e,
g"
Tr., p. 122,
47 US.c. 9 259.
BRIEF -
Boise-152126.2 0029164-00082
Page 20
customers with broad geographic needs (Tr. 146), to allegations that Qwest may not provision or
operate to the satisfaction of some customers. (Tr. 197). Nevertheless, in each case the original
decision to go with Illuminet or another third-party provider was made before Qwest's
unbundling of the SS7 and imposition of message charges on users of its network.
The fact is, rather than take advantage of opportunities to avoid the charges of which they
complain, the Complainants in this case have made the economic and business decision that their
needs are better served, not by buying these services from Qwest but buying them from third
party providers under other undisclosed terms and then bringing this regulatory litigation to
preserve their providers ' ability to use Qwest's SS7 network without charge.They are
essentially seeking to have the best of both choices by seizing the advantages of using a third
party provider (or creating one of their own, in the case of Syringa) yet retaining (or improving)
the pricing advantages they would have if they purchased SS7 services directly from Qwest.
doing so they distort the structure of the telecommunications market created by the federal
Telecommunications Act of 1996 that provided different regulatory requirements on how ILECs
CLECs, and others would be permitted to use Qwest's facilities.
The 1996 Telecommunications Act specifically envisions that different
SS7 options are available depending upon the classification of the
purchaser.
While the Complainants have implied that they are at a competitive disadvantage by the
availability of SS7 options, the fact that different SS7 options are available to CLECs and
wireless providers, ILECs, and third party providers is in complete accord with the
Telecommunications Act of 1996 ("the Act"). In fact the Act specifically carves out exceptions
for ILECs that are not available to CLECs, and exceptions that are available to
telecommunications carriers that are not available to non-telecommunications carriers.
Compare e.g. 47 u.S.c. 9 251 (c) with 47 u.s,c. 9 259.
BRIEF -
Boise-152126.2 0029164-00082
Page 21
For example, Section 259 of the Act creates an exception for ILECs to share an
incumbent local exchange carrier s infrastructure, such as Qwest's SS7 network.24 An ILEC
may qualify for an Infrastructure Sharing Agreement (ISA) if it is eligible to receive federal
universal service support and lacks economies of scope and scale.25 ISAs, however, are not
available to all telecommunications carriers, specifically CLECs. The FCC stated in its Report
and Order that Section 259 "limits the telecommunications carriers that may obtain access to an
incumbent LEC's network. . .." Promulgating rules for Section 259, the FCC stated
, "
In contrast
to sections 251 and 252, which grant rights to requesting carriers irrespective of whether the
requesting carrier intends to compete with the incumbent LEC, section 259 does not permit
qualifying carriers' to use an incumbent LEC's public switched network infrastructure
technology, information, and telecommunications facilities and functions obtained pursuant to
section 259 to offer services or access to the incumbent LEe's customers in competition26 with
the incumbent LEe.,,27 Thus, the Act envisioned that an ISA option for SS7 services would
apply to ILECs but not to CLECs. Clearly the Act, whose sole purpose was to promote and
create competition within the telecommunications industry, contemplated that CLECs would
have other options and that excluding such carriers from ISAs would not competitively
disadvantage CLECs such as Complainant ELI.
Complainant Citizens qualifies for an ISA pursuant to Section 259 of the Act, as do the
majority of Complainant ITA's members. Qwest has initially offered ISAs to all ILECs that are
currently SS7 customers of Qwest. Citizens and the qualifying IT A members that are not current
47 US.C. 1) 259(a). See also, 47 CFR 1) 59.
47 u.S.c. 1) 259(d). See also 47 CFR 1) 59.4.
47 u.S.c. 1) 259(B)(6) provides that an incumbent LEC is not required to enter into an ISA "for any
services or access which are to be provided or offered to consumers by the qualifying carrier in such local exchange
carrier s telephone exchange area." See also, 47 CFR 1) 59.2(e),27 "Implementation of Infrastructure Sharing Provisions in the Telecommunications Act of 1996", 63 FR
9704 (March 4, 1997), Para. 1,
BRIEF -
Boise-152126.20029164-00082
Page 22
SS7 customers of Qwest may chose to pursue an ISA with Qwest, which would allow them to
take advantage of Qwest's economies of scope and scale regarding its SS7 network by not
imposing SS7 call set up message charges. Complainant ILECs, however, have chosen instead
to purchase SS7 either from third party SS7 provider Illuminet (or Syringa in the case of the ITA
members). (Tr. 91 , 121 , 125).
Pursuant to the Act, the last option that is available to some purchasers but not others is
the purchase of SS 7 services on an unbundled network element (UNE) basis. Section 251 of the
Act obligates incumbent LECs to interconnect with any requesting telecommunications carrier
and offer that requesting telecommunications carrier network elements on an unbundled basis.
The Act defines telecommunications carrier as "any provider of telecommunications services
except that such term does not include telephone operator services; telecommunications carrier is
treated as a common carrier.29 Telecommunications services is defined as "the offering of
telecommunications for a fee directly to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities used.,,30 Thus, the Act strictly limits
this obligation to telecommunications carriers, which term would include CLECs, ILECs, and
wireless providers.The obligations to interconnect and to offer UNEs, however, are not
extended to non-telecommunications carriers such as third party SS7 providers.By Mr.
Florack's own admission, Illuminet is not a telecommunications carrier or common carrier. (Tr.
258 and 259).Accordingly, Illuminet is not entitled to negotiate and enter into an
interconnection agreement with Qwest nor may Illuminet purchase SS7 services as an UNE
Further, since Illuminet is not an agent or entitled to the rights under the Complainant CLEC or
47 US,c. ~ 251(c),
47 US.C. ~ 153(44).
47 US.c. ~ 153(46),
47 US.c. ~ 251.
BRIEF -
Boise-152126.20029164-00082
Page 23
ILEC carners, Illuminet cannot purchase SS7 out of its carner customers ' interconnection
agreements. 32
Clearly, Complainants are not disadvantaged by the variety of options available for the
purchase of SS7 services. All entities regardless of their classification may purchase SS7 from
Qwest's Access Services Catalog.Further, as the Act specifically allows some entities to
purchase SS7 out of an ISA and/or as an UNE out of an interconnection agreement.
Complainants' SS7 purchases are governed by the terms and
conditions of Qwest's Access Services Catalog.
Qwest is not aware of any authority from the FCC interpreting the Act that allows a party
to combine the terms and conditions of a Catalog with those of an interconnection agreement.
Nor is Qwest aware of any precedent of the Idaho Commission that would allow a party to pick
and choose provisions of a deregulated Catalog on the one hand, and an interconnection
agreement on the other, to tailor its own unique product offering.Yet, merely because
Complainants do not like certain terms and conditions contained in either the Catalog or their
interconnection agreements, they attempt to do just that.
Generally, when a party purchases a tariff or Catalog product, the terms and conditions of
that tariff control the total relationship.33 The FCC has held that interconnection agreements may
not implicate any fundamental aspect of the tariff s interpretation.34 In Global NAPs I Global
NAPs filed a tariff that referenced its customers ' interconnection agreements. The FCC found
that a tariff must be complete in and of itself and that it was improper for the terms and
See Section ILB.l. above.
See generally, First Report and Order In the Matter of Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996; Interconnection between Local Exchange Carriers and
Commercial Mobile Radio Service Providers " CC Docket No. 96-98; CC Docket No, 95-185, 11 FCC Rcd 15499
(ReI. Aug. 8, 1996).
34 In the Matter of Bell Atlantic-Delaware, Inc, v. Global NAPs, Inc"15 FCC Rcd 5997 (2000),
BRIEF -
Boise-152126.20029164-00082
Page 24
provIsIons of the interconnection agreements of Global NAPs ' customers to control the
interpretation of the tariff. The FCC stated
(IJf we are to reconcile the Tariff language with Global NAPs' statements about
deferring to the state negotiation/arbitration processes, then to detennine whether
Global NAPs ' Tariff applies, Bell Atlantic must consult the terms of its
interconnection agreement to ascertain whether compensation for the delivery of
ISP-bound traffic is required. Consequently, the Tariffs cross-reference to the
interconnection agreement constitutes far more than a technical defect; it
constitutes a fundamental flaw in the Tariff clarity.
Accordingly, even assuming, arguendo that a tariffs reference to an exogenous
document is improper only if the exogenous document contains information
necessary to understand the tariff, the tariffs bare cross-reference to
interconnection agreement" violates section 61.7 4( a) of our rules and renders the
tariff unlawful.
While this Commission does not have a rule similar to FCC rule 61.74(a)36 that forbids
cross-reference to extraneous documents and requires that the tariff be complete in and of itself
the practice does exist in Idaho that tariffs (and Catalogs) must be self-contained and not
reference extraneous documents.
Even through Qwest's Access Service Catalog does not reference any other extraneous
document or instrument, the FCC rule and Idaho s similar practice is relevant because
Complainants seek to impose an impermissible cross-reference between Qwest's Access
Services Catalog and their interconnection agreements.Complainants would have this
Commission find that even though Illuminet has purchased SS7 services out of the Access
Services Catalog, the terms and conditions of its customers' interconnection agreements - rather
than the terms and conditions of the Catalog - govern the SS7 purchase.
FCC rule 61.74(a) states
, "
Except as otherwise provided in this and other sections of this part, no tariff
publication filed with the Commission may make reference to any other tariff publication or to any other document
or instrument."
!d.
Qwest further notes that Complainants seek to stretch the impermissible cross reference between the
Catalog and interconnection agreements even further than that in Global NAPs I. In Global NAPs I Global NAPs
BRIEF -
Boise-152126,20029164-00082
Page 25
The Ninth Circuit Court of Appeals also addressed this issue in Brown v. MCI WorldCom
Network Services, Inc.277 F.3d 1166 (9th Cir 2002). In Brown the plaintiff alleged that MCI
violated its tariff by seeking to enforce extraneous agreements. The court found that the filed
rate doctrine forbids both the carrier and the customer from deviating from the tariff . The court
stated:
In addition to barring suits challenging filed rates and suits seeking to enforce
rates that differ from the filed rates, the filed rate doctrine also bars suits
challenging services, billing, or other practices when such challenges, if
successful, would have the effect of changing the filed tariff39
The Brown court further found that the filed rate doctrine prevents suits seeking to
enforce agreements outside the tarifto. The Ninth Circuit noted in its opinion that the Supreme
Court addressed this issue in AT&T Corp. v. Central Office Tel, Inc.524 U.S. 214, 141 L. Ed.
222, 118 S.Ct. 1956 (1998). In Central Office the plaintiff alleged that the filed doctrine did not
apply because it was not challenging the rates but rather sought to enforce contracts for services
and billing. The Supreme Court held that "rates. . . do not exist in isolation. They have
meaning only when one knows the services to which they are attached. Any claim for excessive
rates can be couched as claim for inadequate services and vice versa" and that "all pertain to
subjects that are specifically addressed by the filed tariff.,,
Here, Complainant ILEC and CLEC carriers seek to enforce interconnection agreement
outside Qwest's Catalog, which was properly filed with the Commission. While Complainants
was attempting to cross reference the interconnection agreements of its Catalog customers. Here, Complainants
seek to have the purchase of Complainant Illurninet out of the Catalog cross reference interconnection agreements of
its Complainant customers, of which it is not even a party or a third-party beneficiary. Complainants seek to
accomplish this impermissible cross reference through a flawed allegation of agency, See Section ILB.1 above
wherein Qwest shows the fallacies of Complainants alleged agency argument.
38
Brown v. MCI WorldCom Network Services, Inc" 277 F ,3d 1166, 1170 (9th Cir 2002) (quoting from Evanns
v, AT&T Corp.229 F.3d 837, 840 (9th Cir 2000) "a carrier is forbidden from changing rates other than as set out in
its filed tariff, (and) customers are also charged with notice of the terms and rates set out in that filed tariff).
39
Id. (emphasis added).
40
Id. at 1171.
41
!d. (quoting AT&T Corp, v Central Office Tel, Inc" 524 u.S. 214, 223-225 (1998)).
BRIEF -
Boise-152126.2 0029164-00082
Page 26
claim they are challenging the application of the Catalog rather than the rates, such claim is in
reality a claim regarding the SS7 message rate to certain types of call set up messages, as well as
a claim that certain call set up messages that Illuminet sends Qwest are exempt from Catalog
rates because of their interconnection agreements.Such claims violate the Ninth Circuit'
holding in Brown.
Thus, Complainant Illuminet's purchase of SS7 services out of Qwest's Access Service
Catalog is governed by the terms and conditions of the Catalog, not the terms and conditions of
its carrier customers ' interconnection agreements. Since Global NAPs I and the rule and practice
referencing extraneous documents definitively provide that the Qwest's Catalog may not
reference outside documents, such as Illuminet's carrier customers ' interconnection agreements
it follows that the SS7 services offered in Qwest's Catalog are only governed by the terms and
conditions of the Catalog.Further, the Ninth Circuit decision in Brown is clear that the
Complainant's claims are merely cloaked allegations attacking the Catalog rates through
impermissible references to interconnection agreements, and that the filed rate doctrine precludes
suits that seek to enforce agreements outside the Catalog.
With the development of competition in the local and switched access markets, it was
necessary for SS7 billing to evolve and more closely reflect the actual costs of the SS7 network.
(Tr. 394-395). Prior to meaningful signaling competition in the access services market, the
majority of out-of-band network signaling was generated by interexchange carriers (IXCs). The
costs of SS7 were recovered in the switched access rate. As competition increased, however
more signaling costs were generated by CLECs, wireless providers, and third party SS7
Qwest would also like to bring to the Commission s attention that in other proceedings before the FCC, the
FCC has held that interconnection agreement provisions (specifically unbundled network elements) may not be
commingled or combined with tariffed access services. See generally, Memorandum Opinion and Order In the
Matter of Net2000 Communications, Inc. v, Verizon , 17 FCC Rcd 1150 (ReI. lan, 9, 2002).
BRIEF -
Boise-152126.20029164-00082
Page 27
providers whose traffic was entering Qwest's network. There was no existing mechanism to bill
the corresponding increases in SS7 call set message costs to the CLECs, wireless providers, or
third party providers. Qwest was unable to recover the costs associated with those call set up
messages because the CLECs, wireless providers, and third party SS7 providers were generally
not paying switched access rates. As a result, those carriers paying the access charges (i.
IXCs) bore a disporportionate and arguable unfair amount of the signaling costs. Accordingly,
Qwest made a substantial investment to restructure SS7 rates so that the signaling cost to
Qwest customer was based on the actual usage of the SS7 network, which included both flat-rate
and message usage sensitive rate components. (Jd.
Qwest first established these message sensitive rates for SS7 in the access rate tariff at the
federal level for interstate traffic. In order to do this, Qwest developed message usage rate
elements that captured the costs for the actual SS7 messages and petitioned the FCC for
permission to restructure its federal Access Tariff,43 The FCC approved the usage sensitive
message rate and specifically found it was in the public interest to assign costs to the providers
that use the separate signaling network.44 Qwest subsequently implemented this same revised
SS7 rate structure at the state level, including Idaho. (Tr. 393-395).
While the net result is that entities like Illuminet pay more under the revised rate structure
because such entities never before paid for usage of the SS7 network and IXCs now pay less
each user of the SS7 network pays equally. In granting the petition filed by US WEST (Qwest's
In re US WEST Petition to Establish Part 69 Rate Elements for SS7 Signaling, Order, DA 99-1474 (ReI.
Dec. 23 , 1999).
44
!d. at Para. 7 (We also find that the U S WEST proposed restructure is in the public interest because it will
permit U S WEST to recover its SS7 costs in a way that reflects more accurately the manner in which those costs are
incurred, )
BRIEF -
Boise-152126.20029164-00082
Page 28
predecessor), the FCC approved this shift of costS.45 It should be noted, however, that shifting
the SS7 call set up costs from the IXCs does not disproportionately burden ILECs. Further, on
any given toll call, the cost of the associated call set up message changes assessed to the ILEC
(or CLEC, wireless provider, or third party provider) is significantly smaller than the access
charges that Qwest must pay the Idaho ILECs for terminating access. Qwest pays the ILEC
terminating access on a per minute basis whereas the ILEC only pays SS7 on a per call set up
basis.
Qwest's Assessment of SS7 Charges Under the Terms and Conditions
Offered by Qwest in its Catalog is Appropriate.
Despite the fact that the revised SS7 rate structure more accurately reflects how SS7 costs
are incurred, Complainants are asking the Commission to find that a portion of the SS7 services
should be provided to it for free. For example, Complainants allege that "Qwest has effectively
assessed SS7 message charges on incumbent local exchange carriers ('ILECs ) and competitive
local exchange carriers ('CLECs for the origination and termination of non-toll
telecommunications traffic.46 This statement is inaccurate and misleading in a number of
respects. First, Qwest has not assessed SS7 charges directly against any ILEC or CLEC. (Tr.
430). The only Complainant against whom charges have been levied is Illuminet, a third party
non-common carrier provider of SS7 services47 who apparently provides SS7 services to three
(3) Idaho ILECs, Citizens Telecommunications Company of Idaho (Citizens), Fremont Telcom
and Farmers Mutual and one Idaho CLEC, Electric Lightwave, Inc. (ELI). (Tr. 423). Neither
the remaining Idaho ILECs nor their SS7 provider, Syringa Networks, LLe., have been charged
for SS7 call set up services. Furthermore, while it is true that Illuminet has been charged SS7
!d. See also FCC Access Reform Order Paras, 252-255 (wherein the FCC encourages incumbent LECs to
unbundled SS7),46 Complaint, May 20, 2002
, p.
47 Complaint, p, 6,
BRIEF -
Boise-152126.20029164-00082
Page 29
signaling charges for local messages, in the prefiled supplemental testimony of Scott A.
McIntyre, filed December 6 2002, Qwest offered to modify the current SS7 Catalog to eliminate
charges for messages associated with local traffic. (Tr. 460). That change to the Catalog is now
being implemented.Hence the issue of charging for signaling pertaining to "non-toll
telecommunications traffic" is limited to the issue of collecting the lawful Catalog rate for such
signaling levied prior to the change. Again this issue does not impact the ILECs represented by
the Idaho Telephone Association or CLECs other than the indirect impact on ELI as a customer
of Illuminet.
With Qwest's offer not to assess SS7 charges on messages associated with local, EAS,
and intra-MTA traffic, the revised SS7 offering would only assess SS7 charges to messages
associated with toll traffic, i., Qwest originated toll traffic, ILEC/CLEC/wireless provider
originated toll traffic, and meet-point-billing. It should be noted that "Complainants do not take
issue with Qwest's decision to recover its set up costs for the termination of intrastate toll calls
through separate access charge rate elements. Nor do Complainants challenge the Access
Catalog price for these elements or the decision to structure them as a per-call charge 48 In other
words, the Complainants do not dispute the assessment on messages associated with toll traffic
initiated by their end user customers. (Tr. 225).
Accordingly, the question before the Commission is how Qwest charges for the use of
Qwest's own SS7 network in connection with toll traffic. Call set up charges are imposed only
when a signal passes over a Qwest facility, i., a Common Channel Signaling (CCS) link
purchased out of the Idaho Access Service Catalog.49 Messages pass over the third party
providers' CCS link into Qwest's SS7 network when traffic passes between Qwest and the ILEC
Complaint, p, 8.
Idaho Access Service Catalog, ~~ 15.2.1.A
, "
CCS Link"; 15.
, "
Call Set-Up;" and 15.
, "
Message
Charge,
BRIEF -
Boise-1521262 0029164-00082
Page 30
or CLEC customer of the third party SS7 provider. Further, because of the structure of the
public switched telephone network (PSTN), signals also pass over the third party provider s CCS
link when traffic originates outside both the Qwest and ILEC or CLEC network but transgresses
Qwest's network to terminate at the called number.
The Idaho Access Services Catalog clearly states that the CCS link purchased to access
Qwest's SS7 network is bi-directionallink.5o As a bi-directionallink, the CCS link provides
service for SS7 messages associated with originating and terminating toll traffic. Thus, because
the CCS link is bi-directional, messages associated with toll traffic - whether originating or
terminating - travel along the SS7 link and port. Qwest notes that, the bi-directionallink service
offered in Qwest Idaho Catalog mirrors the link service offered in Qwest's FCC Access Tariff.
At hearing Complainant Illuminet stated that it did not dispute the fact that it purchased link and
port SS7 services from Qwest. (Tr. 262). Nor does Illuminet dispute the fact that SS7 messages
travel along the link and port and access Qwest's SS7 network. (Tr. 255 and 260). Illuminet
wants to be able to access Qwest's SS7 network via the link and port but not pay for its use
Qwest's network. In granting Qwest's restructure application, the FCC specifically found that
entities that use the SS7 network should pay for that use.
As with SS7 messages associated with originating and terminating toll traffic, Qwest
charges Complainant Illuminet for SS7 messages associated with meet-point-billing traffic.
Complainants contend that they should not be assessed SS7 messages for meet-point-billing
traffic because under their interconnection agreements the parties do not charge one another for
such traffic. (Tr. 139-140). However, the meet-point-billing provisions in the interconnection
agreements have nothing to do with signaling; such agreements contain provisions addressing
Idaho Access Service Catalog ~ 15.1.A
, "
CCS Link.
FCC SS7 Order, Paras. 6-
BRIEF -
Boise-152126.20029164-00082
Page 31
how the parties will handle traffic but do not discuss SS7 messages associated with meet-point-
billing traffic. (Tr. 504-505). Further, not only does the meet-point-billing agreement between
Qwest and Citizens not provide for the purchase of SS7 services, but it does not even discuss
SS7 services, and would not govern SS7 relationship between Qwest and Citizens.52 (Tr. 534-
535). Complainants have failed to cite one reference in the interconnection agreements, to any
meet-point-billing arrangement or to any term or condition in the Catalog that states that SS7 call
set up charges will not be assessed on messages associated with meet-point-billing traffic.
The fact is that meet-point-billing arrangements are nothing more than agreements about
how to share the access revenues received from an IXe. 53 The "Meet Point" is a point of
interconnection between two networks, designated by the network owners at which one Carrier
responsibility for traffic begins and the other Carrier s responsibility ends. The SS7 charge
assessed under the Catalog does not affect arrangement pertaining to sharing access revenues.
Rather the use of Qwest's SS7 network by the third-party SS7 provider enables the ILEC or
CLEC to receive the access revenue, in that, as all parties agree, today s network would not
function without SS7 signaling.
Accordingly, it is proper for Qwest to assess SS7 message charges associated with meet-
point-billing traffic for Complainant Illuminet's use of the SS7 network. Mr. Florack admitted
that SS7 messages associated with meet-point-billing pass through the SS7 link that Illuminet
purchased from Qwest. (Tr. 269) Despite admitting Qwest's SS7 network is utilized and , thus
incurs cost associated with meet-point-billed traffic, Complainant Illuminet seeks to avoid
See also Exhibit 203,
See Qwest's Idaho approved Statement of Generally Available Terms , Section 4.0 Defmitions: "Meet-Point
Billing" or "MPB" or "Jointly Provided Switched Access" refers to an arrangement whereby two LECs (including a
LEC and CLEC) jointly provide Switched Access Service to an Interexchange Carrier, with each LEC (or CLEC)
receiving an appropriate share of the revenues from the IXC as derIDed by their effective access Tariffs.
BRIEF -
Boise-152126.20029164-00082
Page 32
payment of such costs. Illuminet should be required to pay for that use. 54 Qwest does not
recover its costs associated with meet-point-billing messages from the interconnection
agreements and the meet-point-billing agreement. The terms ofthe Catalog, however, explicitly
provide for the recovery of such costs. Illuminet is bound by the terms and conditions of the
Catalog, not the interconnection agreements or the meet-point-billing agreement, because it
purchased SS7 services out of the Catalog.
Finally, Qwest submits that the mechanism it proposes to implement to identify messages
associated with toll traffic is in complete compliance with the FCC's Access Reform Order.
The FCC does not require that Qwest institute specific metering equipment that identifies the
jurisdiction of each and every SS7 message. 57 Rather, the FCC decided to "permit incumbent
LECs to adopt unbundled signaling rate structures at their discretion and acquire the appropriate
measure equipment as needed to implement such a plan.58 The FCC stated that an incumbent
LEC may choose to implement an unbundled signaling rate structure and not install metering
equipment by "filing a petition demonstrating that the establishment of new rate elements
implementing such a service is consistent with the public interest."59 In accordance with the
FCC's Order, Qwest decided to unbundle SS7 services but chose percentage methodology rather
than install specific metering equipment. The FCC found that Qwest's petition was in the public
interest. 60 This is the same methodology Qwest implemented in Idaho.
FCC SS7 Order, Para. 7, See generally, FCC Access Reform Order Paras. 247-252.
See Section ILB.
FCC Access Reform Order Paras. 244-255.
Id, at Para. 252 ("We will not require incumbent LECs to implement such an approach and incur the
associated equipment costs of doing so, The record indicates that, as a general matter, the costs of mandating the
installation of metering equipment may well exceed the benefits of doing so.
58
!d. at Para. 253.
!d,
See FCC SS7 Order, Paras. 7 and 9.
BRIEF -
Boise-152126.20029164-00082
Page 33
III. CONCLUSION.
The Complainants ' case hinges on their ability to demonstrate that Qwest has violated some
applicable legal standard by unbundling SS7 signaling services and imposing charges for messages that
traverse Qwest's SS7 network. The record demonstrates their complete failure to surmount this hurdle.
In fact, all that Complainants have succeeded in showing is that purchasers of SS7 services from Qwest's
Catalog, are being billed for use of Qwest's SS7 network and that they pass those charges along to their
customers.There is no showing that Qwest's Catalog violates any statute , rule order, contract or
precedent. Without such a showing, it is difficult to understand how Complainants ' could expect to
receive any relief from this Commission. The Complainants ' problem is compounded by the fact that
SS7 services are offered under Title 62 and are not subject to Commission regulation. All attempts by the
Complainants to try to establish Commission jurisdiction over this cause fail as a matter of law61 .
Initially it may appear to be harsh that Complainants do not have remedy in this Commission. On
closer analysis, however, it is apparent that this a reasonable result in the modem competitive market in
which all of these companies operate. Illuminet is a self-proclaimed competitor of Qwest who sells SS7
services, among other services, to its customers. Until the service was unbundled, Illuminet did not pay
for use of Qwest's SS7 network although Illuminet used it to provide SS7. At the same time, CLECs who
purchased SS7 under their interconnection agreements did pay for such use. Now Illuminet's price
structure is changing but it admits -- indeed proclaims -- that it will pass increased costs along to its
customers. Meanwhile, Illuminet's customers have choices. If they no longer find that the benefits of
purchasing services from Illuminet outweigh the costs, they can either negotiate interconnection
agreements to purchase SS7 as a UNE or, in the case of ll.,ECs who qualify, can enter into infrastructure
sharing agreements directly with Qwest.
Finally it should be noted that Qwest has not been unresponsIve to Complainants
concerns. Even a cursory review of the Complaint and the Complainants ' prefiled testimony
See Section II.A. above.
BRIEF -
Boise-152126.20029164-00082
Page 34
reveals that their primary concern was with the application of SS7 message charges to signals
associated with local traffic, including intraMT A and EAS traffic. Qwest has agreed to eliminate
those charges in an effort to respond to these concerns. While it may be true that Qwest has not
offered perfect solutions to every customer, it has offered the end users choices and the third-
party providers a major concession. Nonetheless, Complainants would have the Commission
direct Qwest to rewrite its Title 62 Catalog to precisely match their view of how Qwest should
offer a deregulated service. Given that the Commission lacks jurisdiction to regulate in this area
and given that Qwest has offered commercially reasonable terms to all Complainants, granting
the relief requested is neither appropriate nor necessary.
RESPECTFULLY SUBMITTED this 31 st day of January, 2003.
/Utv
z'?;
(-f~
Mary S. H son
Stephanie Boyett-Colgan
Attorneys for Qwest Corporation
BRIEF -
Boise-152126.20029164-00082
Page 35
CERTIFICATE OF SERVICE
I hereby certify that on this 31st day of January, 2003, I served QWEST
CORPORATION'S POST HEARING MEMORANDUM as follows:
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83720-0074
LXJ Hand DeliveryL~ u. S. Mail
(~
Overnight Delivery
Facsimile
Conley Ward
Givens Pursley
277 North 6th Street - Suite 200
O. Box 2720
Boise, ID 83701
LXJ Hand Delivery
(~
U. S. Mail
(~
Overnight Delivery
(~
Facsimile
Morgan W. Richards
Moffatt Thomas
101 South Capitol Boulevard - 10th Floor
Boise, ID 83701
LXJ Hand Delivery
(~
U. S. Mail
Overnight Delivery
(~
Facsimile
Thomas J. Moorman
Kraskin, Lesse & Cosson LLP
2120 L Street NW - Suite 520
Washington DC 20037
Phone: [phone]
Fax: [phone]
tmoorman(t;VJd cte 1 e. com
(~
Hand Delivery
LXJ U. S. Mail
(~
Overnight Delivery
(~
Facsimile
J Email
Clay Sturgis
Moss Adams LLP
601 West Riverside - Suite 1800
Spokane, W A 99201-0663
J Hand Delivery
LXJ U. S. Mail
(~
Overnight Delivery
(~
Facsimile
Ted Hankins, Director
State Government Relations
O. Box 4065
Monroe, LA 71211-4065
(~
Hand Delivery
LXJ U. S. Mail
Overnight Delivery
Facsimile
Gail Long, Manager
External Relations
O. Box 1566
Oregon City, OR 97045-1566
(~
Hand Delivery
LXJ U. S. Mail
Overnight Delivery
(~
Facsimile
BRIEF -
Boise-152126.20029164-00082
Page 36
Richard Wolf
Illuminet, Inc.
4501 Inte1co Loop SE
O. Box 2909
Olympia, W A 98507
J Hand Delivery(lJ u. S. Mail
(~
Overnight Delivery
(~
Facsimile
Lance Tade
Citizens Telecommunications
4 Triad Center - Suite 200
Salt Lake City, UT 84180
J Hand Delivery(lJ U. S. Mail
Overnight Delivery
(~
Facsimile
F. Wayne Lafferty
LKAM Services, Inc.
2940 Cedar Ridge Drive
McKinney, TX 75070
(~
Hand Delivery(lJ u. S. Mail
(~
Overnight Delivery
(~
Facsimile
Brandi L. Gearhart, PLS
Legal Secretary to Mary S. Hobson
Stoel Rives LLP
BRIEF -
Boise-152126.2 0029164-00082
Page 37