20030220Qwest Reply Brief.pdf

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Mary S. Hobson (ISB #2142)
Stoel Rives LLP
101 South Capitol Boulevard - Suite 1900
Boise, ID 83702
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Stephanie Boyett-Colgan
Qwest Service Corporation
1801 California Street - 4ih Floor
Denver, CO 80202
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IDAHO TELEPHONE ASSOCIATION
CITIZENS TELECOMMUNICATIONS
COMPANY OF IDAHO, CENTURYTEL
OF IDAHO, CENTURY TEL OF THE
GEM STATE, POTLATCH TELEPHONE
COMPANY and ILLUMINET, INC.
CASE No.QWE-02-
Complainants
QWEST CORPORATION
Respondent.
QWEST CORPORATION'S REPLY BRIEF
INTRODUCTION
Throughout its Post Hearing Memorandum Qwest noted that the Complainants
had failed to offer any authority for the various legal theories under which they hope to
recover the extraordinary relief they are requesting in this proceeding. Complainants
Post Hearing Brief ("Complainants ' Brief') only serves to underscore this observation.
1 The Complaint names Qwest Communications, Inc. as the Respondent, but the proper
party is Qwest Corporation.2 See section VI of this brief for a discussion of the impact of Complainants' requested
relief.
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Complainants' contend that Qwest's SS7 charges
, "
cannot be reconciled with applicable
law, rational public policy and common sense " yet they fail to cite any laws that have
been violated or offer any proof that the policies of the Federal Communications
Commission (FCC) or of this Commission have been ignored. Nor do they offer proof
that their version of "common sense" is superior to the FCC's explicit approval of the
same rate structure in its tariff. Indeed, the only "authority" to which Complainants
appeal is four "rules" of their own making, which, as Qwest demonstrates below, are
either simply wrong or inapplicable.
Generally, the burden of proof is on the party asserting the affinnative issue in an
adjudicatory administrative proceeding. 3 Here Complainants seek to have the
Commission order Qwest to withdraw a Title 62 Catalog provision and eliminate charges
for the Complainants' use of Qwest's SS7 network, as well as refund/credit all charges
rendered to Illuminet under the Catalog since it was enacted. To grant this relief the
Commission must (at a minimum) conclude that it has the authority4 to regulate SS7
services under Title 61 , and that the evidence presented here justifies these extreme
measures. Qwest submits that the Complainants have totally failed to meet their burden
of providing evidence that justifies such a result and that the law does not authorize the
Commission to grant the relief requested.
Qwest recognizes that the subject matter of this proceeding is difficult and that it
is sometimes not obvious how the parties' respective discussions of the issues relate to
each other. In an effort to facilitate a clearer understanding, in this Reply Brief, Qwest
3 Reed v. Mountain States Tel. & T. Co. 5 P.D.C.l. 105 , P.UR. 1918D; see also 2 Am.
JUT. 2d 9 360; English v . Village of Northfield 172 Ill. App. 3d 344, 526 N. E. 2d 588 , 590
(1988); Norland v. Iowa Department of Job Service 412 N.W. 2d 904 909 (1987).4 Discussion ofthe scope ofthe Commission s jurisdiction is found in Qwest's Post
Hearing Memorandum in Section II A, pp. 4-12 and in this brief, immediately below.
QWEST CORPORATION'S REPLY BRIEF - Page 2
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will address the topics in the order they were presented in Complainants' Brief and
discuss each argument as Complainants raised it. In going through this process Qwest is
convinced the Commission will conclude that the record presented here and the legal
authorities do not support Complainants ' complaint.
COMMISSION JURISDICTION
Complainants' characterization of the Commission s jurisdiction offered in their
Brief is typical of the kind of overstatement and mischaracterization that penneate their
entire case. For example, at page five of their Brief, Complainants state that the
legislature granted the Commission authority to "resolve industry disputes and detennine
the tenus and conditions of traffic exchanged between companies , citing Idaho ~ 62-
614. In fact section 62-614 is, by its tenus limited to disputes between very specific
complainants. That statute provides:
(1) If a telephone corporation providing basic local exchange
service which has exercised the election provided in section 62-604(2)(a),
Idaho Code, and any other telephone corporation subject to title 61 , Idaho
Code, or any mutual, nonprofit or cooperative telephone corporation, are
unable to agree on any matter relating to telecommunication issues
between such companies, then either telephone corporation may apply to
the commission for detennination of the matter.
(2) Upon receipt of the application, the commission shall have
jurisdiction to conduct an investigation, and upon request of either party,
to conduct a hearing and, based upon evidence presented to the
commission, to issue its findings and order detennining such dispute in
accordance with applicable provisions of law and in a manner which shall
best serve the public interest.
While Qwest would qualify under the first phrase of this statutory language, only
certain of the Complainants, namely Idaho incumbent local exchange carriers (ILECs),
would qualify as the other disputants under this language. Section 62-614 would not
apply to most "industry disputes" including those between any ILEC and a CLEC and
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those between an ILEC and an interexchange carrier. This statute clearly does not apply
to a dispute between Qwest and a non-telecommunications corporation, such as Illuminet.
Furthenuore, the statute says nothing whatever about detenuining "the tenus and
conditions of traffic exchanged between the companies." Instead, the statute grants
authority to the Commission to conduct investigations and hearings, to issue findings, and
to issue orders detenuining the disputes in accordance with applicable provisions of law.
Where, as here, the "tenus and conditions" of the exchange of SS7 messages is a matter
that has been deregulated under Idaho law, section 62-614 plainly does not confer
jurisdiction on the Commission to reverse the de-regulated status of Title 62 services and
bring their tenus and conditions under the Commission s control.
The Commission has no authority other than that given to it by the legislature.
That jurisdiction is limited and nothing is presumed in favor of its jurisdiction.6 As the
Idaho Supreme Court has stated:
As a general rule, administrative authorities are tribunals of limited
jurisdiction and their jurisdiction is dependent entirely upon the statutes
reposing power in them and they cannot confer it upon themselves
although they may detenuine whether they have it. If the provisions of the
statutes are not met and compliance is not had with the statutes, no
jurisdiction exists.
Hence, because the provisions of Idaho Code ~ 62-614 are not met, that statute
does not confer jurisdiction on the Commission.
Similarly, the provisions of Idaho Code ~ 62-605(5), the other statute upon which
Complainants rely, are not met here. That section allows the Commission, under the very
limited circumstances spelled out there, to require that certain deregulated services be
Washington Water Power Co. v. Kootenai Environmental Alliance 99 Idaho 875, 879
591 P2d 122 (1979)6 Id.
7 Id. (emphasis added)
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subject to the requirements of Title 61 , i.e. to come under the Commission s full
regulatory control for such matters as tenus and conditions of offering, including price.
However, as Qwest pointed out in its Post-Hearing Memorandum s this dispute fails to
meet the provisions of that statute for a variety of reasons. To remind the Commission of
only one critical provision that is not met here, section 62-605(5) is limited to
telecommunications services" which are defined in Idaho Code ~62-603(13) as services
offered to or for the public. By no stretch of the imagination can the SS7 signaling
services offered by Qwest in its Catalog to interexchange carriers and third party SS7
providers like Illuminet be construed as services offered to "the public.
In detenuining the scope of its jurisdiction over Title 62 offerings, the
Commission should carefully consider the language of the statutes and follow the
guidance offered by the Idaho Supreme Court. Such analysis can yield but one result:
this Commission lacks jurisdiction to grant the relief requested in by Complainants in this
case.
ARGUMENT
I. Complainants
' "
Rules" do not prove Qwest's Catalog Changes are
unlawful or contrary to policy
Complainants' so-called "rules" for "intercarrier compensation" do not support
the contention that Qwest's charges for use of its SS7 network are unlawful.
Complainants contend that the "fundamental defect" in Qwest's position is that it
is allowed to charge for the use of its SS7 network is that it "attempts to separate the
inseparable.,,9 By this Complainants mean that SS7 message charges must be part and
parcel of the charges for the underlying traffic that the messages facilitate and cannot
8 See, Qwest's Post Hearing Memorandum , pp. 8-10.9 Complainants' Brief, p. 7.
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stand alone. This claim, though fundamental to Complainants' position, is not supported
by any authority but is rather contradicted by the orders of the FCC, including the Access
Charge Reform Order 1O which penuitted the unbundling of SS7 message charges. In
that order the FCC noted that:
SS7 networks are separate from but interconnected with, the
telecommunications networks used to carry voice and data
communications between end users.
Complainants ' claim is also contradicted by the FCC's order on a U S WEST
petition, which specifically authorized the same unbundled SS7 charges that are at issue
here in the interstate jurisdiction. 12 In that order the FCC stated:
The U S WEST proposed restructure is in the public interest because it
will penuit U S WEST to recover its SS7 costs in a way that reflects more
accurately the manner in which those costs are incurred.
Complainants ' reliance on the Elkhart case14 for contrary authority is, at best
curious. Being decided in 1995 Elkhart predates both the Telecommunications Act of
1996 and the Access Charge Reform Order. Obviously, to the extent that it provides any
authority contrary to that provided by Congress in the 1996 Act or given by the FCC in
implementing the 1996 Act, it has been overruled.
JO 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 First Report and Order, CC Docket No. 96-262; CC Docket
No. 94-1; CC Docket No. 91-213; CC Docket No. 95-, 11 FCC Rcd.3839, May
, 1997 Access Charge Reform Order11 Id. para. 2. ( emphasis added)
12
In the Matter of U WEST Petition to Establish Part 69 Rate Elements for SS7
Signaling, Order, DA 99-1474 (December 23, 1999) ("USWEST Order
13 Id. para. 7.
14
Elkhart Telephone Co. v. Southwestern Bell Co.11 FCCRed 1051 , DA 95-2342 (ReI.
Nov. 13 , 1995).
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Read in context, however Elkhart does not provide support for Complainants
position. Although the FCC did note that "telephone calls handled by Elkhart and SWB
and passed to IXCs, consist of two components 15 (signaling and the actual
communication), this comment merely provides background for the unique controversy
between Elkhart Telephone Company and Southwestern Bell (SWB). That controversy
was over how the actual physical "links" between Elkhart's lone switch and SWB'
signaling network were to be paid fOr.Contrary to the impression created by
Complainants ' the FCC does not suggest that the communications network and the
signaling network are "inseparable " nor does the FCC analyze the issue of charges for
the signaling network being congruent with the underlying "end user" traffic. Indeed, the
FCC specifically recognizes that with SS7 the actual communications and the signaling
that facilitates them, are separate:
Until recent technological advances, most signalling was "in-band " meaning that
the actual communication and its associated network control signals were
transmitted over the same circuit and, therefore, delivered to the IXC at the
carrier s point of presence ("POP"). An alternative signalling technology, "out of
band" or common channel signalling, allows signalling to be transmitted over an
additional system of switches and circuits.
Thus even in Elkhart the FCC recognized that the signaling network ("an additional
system of switches and circuits ) and the communications network are separate. Finally,
the FCC limited any precedential value of Elkhart by stating that "our conclusion is
limited to the specific facts before US.18 The
Elkhart case, is therefore, inapplicable to
the current controversy.
15 Id. at 1051
16 Id.
17 Id.
18 Id. at 1055.
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A. Complainants
' "
Rule 1" is not a rule at all.
Qwest stated in its Post Hearing Memorandum that Complainants' position is
unsupported by any legal authority. In obvious anticipation of this defect in their case
Complainants have manufactured four so-called "rules " based on nothing more than their
own witnesses ' conclusory testimony in the apparent hope that these propositions will be
viewed as authority if labeled "rules.The first of these appears on page eight of
Complainants Brief and states: "A telecommunications carrier is never allowed to charge
other companies for the costs associated with the origination or tennination of that
carrier s own intrastate end user traffic.
Attempting to apply this "rule" to ordinary intrastate telecommunications traffic
quickly reveals that this proposition is not the rule.For example, if Qwest is the
telecommunications carrier" in the scenario covered by the so-called rule, and its end
user dials an intraLA T A toll call that tenninates to another Qwest customer, which call is
carried by an interexchange carrier (IXC), Qwest may charge another company, namely
the IXC, for the costs of originating and terminating that traffic.19 This is pennitted, of
course, because the IXC uses Qwest's network in order to gain access to the end user
customer who places the call and access to the network a second time to tenninate the
call.
Indeed, this common type of call-an intraLA T A toll call carried by an IXC-
presents a good analogy to the billing of SS7 messages that pass over Qwest's SS7
network. Illuminet uses Qwest's SS7 network to provide SS7 connectivity to its carrier
customers just as an IXC uses the local networks of the LECs for its toll traffic. If
19 Qwest asks that the Commission take administrative notice of its Access Service
Catalog, Section 6 Switched Access Service
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Illuminet did not have access to Qwest's signaling network, its customers' signaling
messages would not go through. Just as the IXC obtains toll revenue from toll customers
Illuminet obtains revenue from its SS7 customers based on the premise it will provide
connectivity. For Illuminet to claim that it is being charged under the Catalog for
Qwest's SS7 costs 20 is just as off base as it would be for an IXC to claim that when a
Qwest end user places a toll call, it is Qwest's access costs and not its own that are being
paid by the IXC.
Complainants inaccurately characterize the application of SS7 message charges to
all access traffic as a "perverse disregard of 'cost causation' principles.21 Indeed it is
interesting that Complainants ' only source of authority for what it characterizes as a "rule
in Idaho governing inter-company compensation" and "one of most important principles
is the conclusory comments contained in Mr. Lafferty s direct testimony. Furthennore
Mr. Lafferty s unsupported statement that "where intrastate inter-company charges are
authorized, it is always the originating carrier that pays the tenninating carrier and the
originating carrier is never allowed to charge other transporters of the call,,22 is simply
not accurate. In the intraLA T A toll context, the "originating carrier" is the LEC whose
end user customer places the toll call. That LEC does not pay the tenninating carrier, the
IXC pays the tenninating carrier. In the case where the originating LEC is also the IXC
that combined company pays the tenninating LEC for access not because it is the
originating carrier" but because it is the IXc. Far from it being the case that originating
carriers "never" charge "other transporters of the call " they routinely do so because they
are providing access to their local networks to other companies who "transport" toll calls.
20 Complainants' Brief, p. 9.21 Complainants' Brief, p. 9.22 Id. at 9 (citing Tr. 39 , L. 12 through 43, L. 5).
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As these simple examples show, Complainants ' descriptions of how "intercarrier
compensation" operates in the intraLA T A toll market are simply mistaken. The "rule
pertaining to exchange of traffic on the public switched network, is not a rule at all. Just
as Complainants refuse to recognize the role of third party SS7 providers in the world of
SS7 connectivity, they have overlooked the familiar role of third party IXCs in the world
of interexchange traffic. What follows from this is that there is no support, or even
credible argument that, Qwest is prohibited from charging for SS7 messages that pass
over its network between Qwest and a third party SS7 provider to facilitate call set-up for
an intrastate toll call originated by a Qwest local customer.
Of course, Complainants' may counter that their "rule" nevertheless applies in the
context of the exchange of local traffic. As Qwest has already pointed out in its Post
Hearing Memorandum, local traffic is not an issue in this case going forward since Qwest
has agreed not to charge for SS7 messages associated with local traffic. But, because
there remains the issue of Illuminet's unpaid SS7 charges under the Catalog prior to this
revision, the question still merits some discussion.
In the context of the exchange of local calls between ILECs or between ILECs
and CLECs, it is true that there is no third party carrier that facilitates the transport of the
call itself as in the case of a toll call.However, for the SS7 network this is not
necessarily the case. Where the tenninating LEC in the exchange of local traffic uses a
third party SS7 provider, that third party SS7 provider gains access to Qwest's SS7
network to provide the signaling connectivity to its customer that pennits that message to
go through. It is that use of its SS7 network by companies like Illuminet that Qwest is
entitled to recover for in an SS7 message charge.
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The only legal authority Complainants attempt to utilize to support their argument
is 47 CFR ~ 51.703(b). However, Complainants ' reliance upon 47 CFR 51.703(b) which
precludes LECs from assessing "charges on any other telecommunications carrier for
local communications traffic that originates on the LEe's network" is misplaced and
taken out of context for several reasons. First, this provision, on its face, applies only to
local communications traffic. Hence it lends no support to Complainants' arguments on
Qwest-originated toll or meet-point billed toll. The FCC stated that its Local Competition
Order23 did not address access services:
The rules that we adopt to implement the local competition provisions of
the 1996 Act represent only one part of a trilogy. In this Report and
Order, we adopt initial rules designed to (open the local exchange and
exchange access markets to competitive entry by enabling) ... the states
and the Commission to begin to implement sections 251 and 252. (This
appears in a later paragraph) The third part of the trilogy is access charge
refonn.
It is, of course, under access reform that the unbundling of SS7 usage charges came
about.
Furthennore, section 51.703 (b) pertains to the exchange of local voice/data
traffic pursuant to the FCC's interconnection order.25 Specifically, section 51.703 is
contained in the "reciprocal compensation for transport and tennination" of loeal
voice/data traffic portion ofthe FCC's rules discussing the section 251(b) interconnection
obligations of the 1996 Telecommunications Act imposed upon local exchange carriers.
Thus, this section governs local traffic compensated under interconnection agreements; it
23 Implementation of the Local Competition Provisions in the Telecommunications Act of
1996 First Report and Order CC Docket No. 96-, 11 FCC Rcd 15499 (Rel. Aug. 8
1996)("Local Competition Order
24
Local Competition Order at Paras. 6; 8.
25 See generally Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, CC Docket No. 96-, 61 FR 45476 (Rel. August 29
1996)(Implementation of "Rules and Regulations
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does not govern access services. In fact, Complainants' Brief conveniently omits the
critical fact that the FCC defined telecommunications traffic for purposes of application
of section 51.703 as specifically excluding intrastate and interstate exchange access.
Nor does section 51.703 govern any other exchange of local traffic such as between
incumbent LECs in EAS "bill and keep" arrangements.
Section 51. 703(b) has nothing to do with SS 7 or any other access service. FCC
rules governing SS7 and other access services are found in Part 69 of the FCC's rules.
The FCC has distinguished between SS7 and voice/data traffic.27 Thus section 51.703
does not apply to prevent Qwest from charging third party SS7 providers for use of its
network for call set up of local calls between carriers who have a reciprocal
compensation agreement for the exchange of local traffic.
This point is obvious from the provisions of the Electric Lightwave, Inc. (ELI)
interconnection agreement that were discussed at the hearing of this case. Under cross
examination Mr. Lafferty admitted that ELI's interconnection agreement provides for
separate pricing for SS7 (Tr. 124) but dismissed this as "an option that ELI feels is not
required" because ELI is purchasing SS7 service from Illuminet. (Tr. 125) That SS7
interconnection agreement provision, section (E) 15, treats Qwest's SS7 network as a
UNE and provides the tenus and conditions for ELI's use of that SS7 network. 28 Those
tenus and conditions include per-message charges for messages traveling over Qwest'
network.29 Thus, had ELI chosen to use Qwest's network directly, instead of using a third
party SS7 provider, ELI would directly incur per-message charges on SS7 signaling
26 47 CFR 51.701(b)(1)
27 See, Access Charge Reform Order para. 2.28 (Tr. 448); Exhibit 509
29 Id.
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messages associated with call set-up of local traffic. Complainant's case , therefore, rests
on the absurd notion that if ELI connected directly with Qwest for purposes of SS7
signaling it would pay per-message charges but that since it is using Illuminet, Illuminet
can use Qwest's network without charge. This absurdity is compounded by Illuminet'
insistence that this result is mandated by the interconnection agreement itself.
Accordingly, neither 47 CFR 51.703(b) nor the Commission-approved
interconnection agreements, upon which Complainants rely, constitute legal authority for
their manufactured "Rule 1". Contrary to allegations and mischaracterizations made by
the Complainants
, "
Rule 1" is not the rule for signaling on either intrastate toll traffic or
on local traffic.
B. Complainants
' "
Rule 2" is not relevant to the present case.
Unlike their Rule Complainants
' "
Rule 2", i.e. that "pursuant to longstanding
Commission policies, EAS traffic is exchanged between LECs on a 'bill and keep
basis , is at least mostly accurate. It just does not have any application to the current
controversy.
First, not only has Qwest agreed not to charge SS7 signaling charges on local
traffic, but it has not charged any LEC (either ILEC or CLEC) any SS7 message charges
under its Catalog in the past.The only Complainant that has been billed for SS7
messaging is Illuminet and Illuminet admits that it is not a telecommunications carrier, let
alone a LEC. Thus, although "long standing Commission policies" may have addressed
the exchange of EAS traffic between LECs, this Commission, as it is probably all too
aware, has never addressed the role of third party signaling providers like Illuminet in the
provision of signaling connectivity. This is important because the record shows that
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historically, where ILECs connected directly with Qwest for signaling, as well as for the
exchange of traffic, Qwest had agreements with these ILECs that specifically pennitted
that use without per-message charges. (Tr. 355) Furthennore, it is Qwest's express intent
to offer infrastructure sharing agreements (IS As) to all qualifying ILECs (Tr. 401-402).
These agreements will preserve this status quo going forward for SS7 signaling,
including that associated with EAS , because these arguments are predicated on the notion
of incumbent LECs "sharing" infrastructure, which is the apparent assumption underlying
the Commission s EAS bill and keep policies. The ISA's are not, however, intended to
benefit third party competitors, like Illuminet whose use of the network for its own profit
is the subject of the present case. (Tr. 403)
It should also be noted that the Commission s "long standing policies" applied to
the exchange of EAS traffic between incumbent LECs, not the incumbent and a CLEC
like ELI. In the case of a CLEC, the tenus under which it exchanges local traffic
(including EAS) and gain access to the incumbent's signaling network are provided in the
interconnection agreements approved by the Commission. As discussed in Section I A of
this brief, the interconnection agreement of ELI, the only CLEC participating in this case
provides that ELI's use of the SS7 network is a separate , chargeable activity, regardless
of the fact that Qwest and ELI negotiated to exchange local traffic on a reciprocal
compensation basis (a basis that is, as a matter of fact, distinguishable from the "bill and
keep" basis provided for under so-called "Rule 2"
Thus Complainants ' suggestion that the Commission s "long standing policies
relating to EAS prohibit Qwest's assessment of SS7 signaling charges to third party SS7
providers is not well founded. Complainants fail to point to a single Commission order or
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other written expreSSIOn of these policies that suggests that the Commission ever
addressed the question of third party SS7 providers ' use of Qwest's SS7 network for the
provision of signaling for EAS calls, or in any other context. But even if this "rule" were
extended to the third party EAS provider, its application must be limited to messages
associated with call set-up for EAS traffic exchanged between incumbent LECs served by
Illuminet and Qwest.
C. Complainants
' "
Rule 3" is incomprehensible.
Complainants allege that inter-carrier compensation for "interchanged" local
traffic is governed by interconnection agreements and attempt (unsuccessfully) to stretch
that allegation into relevant authority in this SS7 proceeding. Qwest initially brings to
the Commission s attention a few fundamental flaws inherent in this alleged "rule
application to this proceeding before responding to the argument itself.
The first fundamental flaw is that, just as for the previously alleged "rules
Complainants baldly assert "Rule 3" but fail to cite any legitimate state or federal statute
case law, order, or commission rule as authority for "Rule 3." In fact, the only authority
that Complainants have cited is the reciprocal compensation rule, 47 CFR 703(b), which
Qwest has shown is inapplicable to this proceeding in response to Complainants ' alleged
Rule 1." Without any legal authority or precedent, Qwest submits that the alleged "Rule
3" is not a "rule of law" but in reality is nothing more than an unsupported "allegation
containing the Complainants' view of the world.
The second fundamental flaw with the application of "Rule 3" is the phrase
inter-carrier compensation for local traffic." As presented
, "
Rule 3" does not even apply
to Illuminet, the purchaser of the SS7 services out of Qwest's Access Service Catalog.
Mr. Florack admitted at hearing that Illuminet is not a telecommunications carrier, and
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further, that it does not have end user customers that generate local voice/data traffic.
(Tr. 358-259) Illuminet and Qwest do not exchange local voice/data traffic with one
another and no compensation is exchanged between carriers. In that exchange, only
Qwest is a telecommunications carrier. Thus
, "
Rule 3" in and of itself is inapplicable.
The third fundamental flaw is Complainants ' contention that the reciprocal
compensation provisions contained in the interconnection agreements of Illuminet'
carrier/customers that govern the exchange oflocal traffic between Qwest and Illuminet's
carrier/customers also govern the SS7 services that Illuminet has purchased out of
Qwest's Idaho Access Service Catalog. Complainants state the following:
The ELI-Qwest ICA provides a typical example of the rule governing SS7
signaling for local traffic. The agreement mandates that, where possible
trunks used for transport and tennination by both parties will be equipped
with SS7. See Section (C) 2.2.5 of the ELI-Qwest ICA, Exhibit 205.
The ICA further indicates that SS7 will be provided as part ofthe standard
tenus of the interconnection arrangement for the transport and tennination
facilities. Therefore, SS7 is clearly considered an inseparable part of the
traffic on the interconnection trunks, (Tr. 69, L.9-23), and it is only
reasonable to assume that the ICA's reciprocal compensation rate covers
each party s cost for SS7 signaling, without which the end-user call could
not be completed. (Tr. 43, L.11-17).
Complainants have taken Section (C) 2.5 of the ELI-Qwest interconnection
agreement ("Agreement') completely out of context, trying to use it as authority for their
alleged "Rule 3." Section (C) 2.2.5 does not state that SS7 is "provided as part of the
standard tenus of the interconnection agreement", contrary to Complainants' allegation.
SS7 cannot be part of the "standard tenus of the interconnection agreement" if Section
(C) 2.5 provides that parties will equip their trunks with SS7 "where possible.
Furthennore, if the parties had intended SS7 to be part of "standard tenus of the
30 See also (Tr. 203)31 Complainants' Brief, pp. 11-12.
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interconnection agreement Section (C) 2.2.5 or some other prOVlSlon in the
Agreement would "mandate " or at the very least indicate how the parties will equip their
trunks with SS7. Neither Section (C) 2., nor any other provision in the Agreement
does that. Section (C) 2.5 states that "(tJhe Parties will provide Common Channel
Signaling (CCS) to one another.. ..,,32 Accordingly, Section (C) 2.2.5 does nothing
more than express the intent of ELI and Qwest to use SS7. Nowhere in that Section or in
any other section of the Agreement does it indicate how the parties will obtain SS7
services, nor does the Agreement "mandate" that SS7 is part of the "standard tenus of the
interconnection arrangement."It is incomprehensible to Qwest that Complainants
attempt to base their "Rule 3" upon language that is not present in the Agreement.
Rather than reading the Agreement as it is, Complainants take the language of
Section (C) 2.5 expressing the parties' intent to use SS7 and twist it into something it
does not say, i., that SS7 is "an inseparable part of the traffic on the interconnection
trunks Based on that mischaracterization, Complainants conclude
, "
it is only
reasonable to assume that the ICA's reciprocal compensation rate covers each party
cost for SS7 signaling, without which the end-user call could not be completed.
Complainants do not, and cannot, point to any provision in the Agreement that states
each party s cost for SS7 signaling" is covered under the "reciprocal compensation
rate." Complainants just "assume" it is. Under Idaho law, the Complainants cannot just
32 Exhibit 205, Local Interconnection Agreement between US WEST Communications
Inc. and Electric Lightwave, Inc. for Idaho (effective Oct. 11 2000) at Section (C) 2.85.33 Complainants' Brief at P. 12.
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Boise-153421.1 0029164-00082
assume" contract provisions into existence that do not appear there. When construing
contracts, the plain language controls.
Contrary to Complainants ' allegations it is not reasonable to assume that
reciprocal compensation rates of interconnection agreements cover each party s SS7
usage costs. Reciprocal compensation provIsIOns contained in interconnection
agreements cover the exchange oflocal traffic.35 SS7 is an access service. In its Access
Charge Reform Order the FCC did not conclude that carriers were recovering their SS7
usage costs through reciprocal compensation provisions; the FCC recognized that SS7
usage costs were recovered through access "per-minute-of-use charges.36 Just as the
FCC recognized, Qwest was recovering its SS7 usage costs through its switched access
minutes of use. The whole point of Qwest's Catalog restructure was to take SS7 usage
cost recovery out its per-minute switched access charges and recover such costs directly
from the cost causers.
The fact that "Rule 3" is incomprehensible becomes even more clear when
examining footnote 5 of Complainants' Brief. In that footnote Complainants dismiss the
fact that ELI's bargained for Agreement with Qwest provides that ELI will incur per-
message charges when ELI uses Qwest's SS7 network saying, "common sense dictates
that no carrier offers a rate that does not recover all components of the service being
provided.38 Thus, Complainants' argument boils down to this: Complainants insist that
34
Taylor v. Browning, 129 Idaho 483, 489, 927 P 2d 873 , 879 (1996) ( "If a contract'
terms are "clear and unambiguous, the determination of the contract's meaning and legal effect
are questions oflaw, (citation omitted), and the meaning of the contract and intent of the parties
must be determined from the plain meaning ofthe contract's own words
35
See generally, Local Competition Order; 47 CFR. 703.
36 Access Charge Reform Order para. 247.
37 See (Tr. 396-398)38 Complainants ' Brief, p. 12.
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Boise-15342L1 0029164-00082
SS7 message charges are "inseparable" from the charges for the traffic they facilitate
because that is what the "inter-carrier agreements" provide; then complainants tell us that
is what inter-carrier agreements provide (even though these agreements don t contain any
such language) because "common sense" sense dictates that the charges are inseparable.
This is nothing more than sophistry.
Thus, Complainants make the illogical leap from the ELI-Qwest agreement
referencing the parties' intent to utilize SS7 in Section (C) 2.2., to the conclusion that
the reciprocal compensation provisions governing the exchange of local traffic must also
govern SS7.Complainants then take the even further leap that the reciprocal
compensation provisions govern IZZuminet s purchase of SS7 services rather than Qwest's
Access Services Catalog. In their attempts to "shoe horn" the interconnection agreements
into a governing role, Complainants, however, conveniently forget to bring to the
Commission s attention that none of the purchased SS7 services were purchased out of
and pursuant to any interconnection agreement. Thus, it is irrelevant that Illuminet's
carrier/customers have interconnection agreements ("contracts ) in place with Qwest.
These facts are undisputed: (1) Illuminet did not purchase SS7 services out of any of its
carrier/customers ' interconnection agreements (Tr. Pp. 128-129 and p. 262); (2) Illuminet
does have an interconnection agreement of its own with Qwest because Illuminet is not a
telecommunications carrier subject to Section 251/252 options/9 (3) Complainant
Illuminet is a SS7 competitor of Qwest that purchased SS7 services out of Qwest'
Access Service Catalog (Tr. p. 262); (4) Qwest is imposing SS7 message usage charges
upon Illuminet are pursuant to a purchase out of the Access Service Catalog (Tr. pp. 128-
39 (Tr. 203). 47 U.c. 99251 and 252; 47 U.c. 9 153(44); Local Competition Order
paras. 33, 26, and 985-998.
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Boise-15342Ll 0029164-00082
129); (5) Complainants Citizens and ELI have options and chose not to purchase SS7 out
of or pursuant to their interconnection agreements (Tr. pp.124-125); and (6) Citizens and
ELI chose to purchase SS7 services from Qwest's SS7 competitor , Complainant Illuminet
(Tr. pp. 124-125).
The bottom line is that Complainants have not presented any argument or cited to
any authority40 that supports "Rule 3'" application to this case. All of the Complainants
have options.41 Because Illuminet purchased SS7 services out of Qwest's Access Service
Catalog, the tenus and conditions of the Catalog govern Illuminet's SS7 purchase , not the
reciprocal compensation provisions of ELI's interconnection agreement or any other
carrier/customer s interconnection agreement. 42
Complainants
' "
Rule 4" is inapplicable.
As with the previous alleged "rules" Complainants have failed to present to the
Commission any legal authority for its view of the world, citing only to their own
testimony presented at hearing. Complainants incorrectly allege that compensation for
Illuminet's Catalog purchase of SS7 services for messages associated with meet-point
billed traffic is governed by "inter-company agreements" rather than the tenus and
40 Qwest notes that Complainants' Brief does cite to 47 CRF 9 51.703(b) as authority,
Qwest has already addressed this FCC rule and explained why it is inapplicable in its discussion
concerning Complainants' Rule 1. Qwest will not repeat those arguments here.
41 See Qwest Post Hearing Memorandum, Section II.B.2., pps. 19-21.42 For a more detailed discussion, see Qwest is Post Hearing Memorandum, Section II.B
, pp. 24-29. Qwest notes that the filed rate doctrine prevents complaints that seek to enforce
agreements outside the tariff and that the FCC has held that interconnection agreements may not
implicate any fundamental aspect of the tariffs interpretation. Certainly Complainants' are
seeking to enforce agreements (interconnection agreements in this case) that are outside the
Catalog. Furthermore, Complainants ' allegation that the reciprocal compensation provisions of
the interconnection agreements control the assessment of SS7 charges to Illuminet implicates a
fundamental aspect of the Catalog s interpretation, specifically who Qwest may charge and what
Qwest may charge.
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Boise-15342L1 0029164-00082
conditions of the Idaho Catalog.Complainants suggest that these "inter-company
agreements" could be interconnection agreements or meet point billed agreements.
Again, because Complainants inaccurately quote the agreements and ignore the law, the
alleged "Rule 4" is not a "rule of law" at all but rather a mere unsupported statement of
what Complainants would like to be a "rule" of law.
Initially, Qwest brings to the Commission s attention that meet-point traffic is
access traffic, not local traffic. Meet-point traffic also is traffic that is originated by some
carrier other than Qwest. In a meet-point billing situation, the independent LEC or CLEC
and Qwest have agreed to meet at a designated location and jointly hand off the access
traffic to, or receive traffic from, an IXc. This type of intrastate traffic is identical to
meet-point traffic in the interstate world. In both scenarios, Qwest charges the IXC the
appropriate switched access rate. For the SS7 usage, however, Qwest charges Illuminet
pursuant to its FCC Access Tariff for every message associated with meet-point interstate
traffic, which Illuminet has not disputed.Assessment of meet-point access traffic
pursuant to Qwest's Idaho Access Service Catalog is no different, and it should not be
any different. Illuminet witness Mr. Florack admitted at hearing that in a meet-point
access intrastate situation, Illuminet uses Qwest's SS7.(Tr. 269)However
Complainants
' "
Rule 4" seeks to shift all costs to the IXC so that Qwest charges the IXC
not only an appropriate switched access charge but also for the SS7 costs that Qwest
incurs from Complainants' use of Qwest's SS7 network.
As an example of an "inter-company" agreement, Complainants put forth the ELI-
Qwest Agreement. Complainants cite to Sections (C) 2.1.1 , (C) 2., (C) 2., (C) 3.
43 Qwest submits that, similar to "Rule 3 " Complainants
' "
Rule 4" is contrary to the
filed rate doctrine, which prevents complaints that seek to enforce agreements outside the tariff.
See the preceding footnote.
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and (C) 3.3 as precluding the assessment of SS7 charges for messages associated with the
tenuination of third party IXC traffic. A careful review of these sections, however
indicates that the cited sections have nothing to do with SS7 services, let alone SS7
services Illuminet has purchased pursuant to the Access Service Catalog.Again
Complainants have taken interconnection agreement provisions out of context and
attempted to twist their language into something it does not say.The referenced
provisions express the intent of Qwest and ELI to each bill the IXC for switched access
rates. Qwest has billed and is billing all IXCs for the appropriate switched access rates in
accordance with the meet-point billing arrangement the parties established in the
Agreement.
Complainants also inaccurately contend that meet-point billing contracts between
Qwest and various ITA member LECs apply here. The only agreement presented at
hearing by Complainants is Exhibit 203
, "
Agreement to Implement Meet Point Billing of
Jointly Provided Feature Group B Switched Access Service" executed between Qwest
and Citizens on June 1989. None of the language used by the parties to evidence their
intent indicates that the agreement covers SS7 services; SS7 is not mentioned at all. This
agreement merely indicates that Qwest and Citizens desire to "meet-point-bill jointly
provided Feature Group B Switched Access Service.. ..44 Furthenuore, Qwest notes that
this agreement was executed in 1989, several years before Qwest even installed STPs in
its network. The parties obviously could not have intended this agreement to cover SS7
services when Qwest had not even implemented its SS7 network. Qwest also notes that
this agreement was never amended, and Complainants have not presented further
44 Exhibit 203, Agreement to Implement Meet Point Billing of Jointly Provided Feature
Group B Switched Access Service (June 1 , 1989).
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evidence indicating any subsequent change in the parties' intent or the scope of the
agreement to cover SS7 services.
In addition, the Commission must assume that any other meet-point billing
contracts and arrangements that IT A members have are also of the same caliber as
Exhibit 203. The burden of proof rests with the Complainants to produce any meet point
billing agreement which states that the IT A member and Qwest intend for the agreement
to also govern any purchases of SS7 services. Complainants have failed to produce any
such agreements.
Qwest is not billing and cannot bill IXCs for the Complainants' usage of Qwest's
SS7 network. To do so is counter to the SS7 restructure and would violate the FCC'
Access Charge Reform Order. The whole point of the FCC'Access Charge Reform
Order was to eliminate subsidies in the access rate structures and ensure that "charges
more accurately reflect the manner in which the costs are incurred" so that each cost
causer pays for its own costS.45 Yet, Complainants seek to have Qwest bill IXCs for the
costs resulting from their usage. Regardless whether the LEC is ELI with an
interconnection agreement or Citizens with a meet point billing contract, both are bound
by Illuminet's admission at hearing that it utilizes Qwest's SS7 network for SS7
messages associated with meet-point access traffic.Accordingly, even where an
interconnection agreement contains meet-point billing provisions or a meet-point billing
contract exists, Qwest would bill the IXC for the switched access charges but cannot bill
the IXC for Illuminet's use. Qwest notes that the only authority Complainants cite for
Rule 4" is Elkhart case 46 discussed under "Rule 1" above. This case was adopted not
45 Access Charge Reform Order paras. 13 , and 35.46 Complainants
Brief, pp. 13-l4.
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only prior to the FCC issuing is Access Charge Reform Order but also well before the
enactment of the 1996 Telecommunications Act.
II. Complainant's alleged rules governing inter-carrier compensation
do not govern Illuminet's SS7 purchase out of the Access Service Catalog.
Complainants ' contention that Qwest does not seriously dispute their claim that
the alleged "general rules pertaining to "intercarrier compensation" govern SS7
signaling charges47 is entirely erroneous, as the discussion of Complainants' four alleged
rules in the preceding section demonstrates. In part II of Complainants' Brief, they
attempt to bolster the nonexistent authority contained in part I with a series of arguments
filled with mischaracterization. Qwest will respond to each of Complainants' arguments
in turn.
A. Qwest's Title 62 SS7 charges are consistent with its approved interstate
tariff.
Qwest's restructure of its Idaho Access Service Catalog mirrors the restructure of
Qwest FCC Access Service Tariff. First, the restructure in both the FCC Tariff and the
Idaho Catalog unbundled the SS7 usage charges out of switched access to create stand
alone SS7 charges, simultaneously reducing switched access rates. Second, both the FCC
Tariff and the Idaho Catalog assess SS7 message usage costs directly on the parties that
use Qwest's SS7 network. Third , both the FCC Tariff and the Idaho Catalog assess SS7
usage charges on a per-message basis for all messages that utilize Qwest's SS7 network.
Complainants do not dispute this. Rather, their allegation that Qwest's Idaho SS7
restructure fails to mirror the federal restructure is premised upon their characterization of
the voice/data traffic associated with the SS7 messages utilizing the SS7 network.
Complainants characterize interstate voice/data traffic as toll traffic that is carried by
47 Complainants ' Briefp.14
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Boise-15342Ll 0029164-00082
IXCs, and intrastate voice/data traffic as being comprised of local, EAS, meet-point
billed and toll traffic. Complainants further characterize Qwest's restructure as "the
assessment of SS7 charges on messages on intrastate traffic not previously subject to SS7
charges" and state that this did not occur for interstate traffic. However, neither of these
characterizations is relevant or correct.Nor do such characterizations support
Complainants ' allegations.
Until Qwest restructured its FCC Access Tariff, Qwest did not assess charges for
utilizing its SS7 network on its SS7 customers for any message associated with toll or
meet-point-billed traffic. Qwest charged its interstate SS7 customers for links and ports
only and recouped its usage costs only from those that were assessed switched access rate
charges. The same is true at the intrastate level. Qwest only charged its intrastate SS7
customers links and ports but did not assess any SS7 usage charges regardless of whether
the SS7 message was associated with local, EAS; intra-MTA, meet-point billed, or toll
traffic. Recovery for using the SS7 network was recovered through Idaho switched access
rates.
Complainants' characterizations are also inaccurate in that Qwest charges for
messages associated with all interstate traffic, which includes toll traffic and meet-point
billed traffic (not just toll traffic as alleged by Complainants) in accordance with its FCC
Access Tariff. Under the current Idaho Catalog offering, Qwest charges for messages
associated with all intrastate traffic, including local, EAS , meet-point-bi1led, and toll
traffic. SS7 messages associated with all traffic types is charged because SS7 messages
for all traffic types utilize Qwest's SS7 network.Complainants would have this
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Boise-153421.l 0029164-00082
Commission believe that SS7 messages associated EAS , local, and meet-point-billed
traffic do not use Qwest's network. They do.
Qwest notes that with the proposed Idaho Catalog structure the assessment of SS7
message charges is identical to that of the FCC Tariff. The FCC Tariff assesses SS7
charges on messages associated with all types of interstate traffic, i., toll and meet-
point-billed access. Under Qwest's proposal , the Idaho SS7 Catalog offering would no
longer assess SS7 charges on messages associated with EAS , local, and intra-MTA
traffic, leaving the assessment of SS7 message charges only on the intrastate toll traffic
and intrastate, meet-point-billed access traffic.
Furthenuore, contrary to Complainants' allegation of improper unbundling,
Qwest restructure of its Idaho SS7 Catalog offering is consistent with the federal
restructure and the FCC'Access Charge Reform Order. Complainants' citations to the
FCC Access Charge Reform Order are conveniently selective and fail to give the
Commission a clear understanding of the FCC analysis and ruling.Complainants
inaccurately leave the Commission with the impression that a carrier has improperly
unbundled SS7 if that carrier has not acquired and implemented "measuring equipment"
that identifies the jurisdiction of the associated voice/data traffic.48 The FCC never
placed any such conditions upon carriers desiring to unbundle SS7. Rather the FCC
specifically stated that it would not require incumbent LECs to install "metering or other
equipment needed to measure third party usage of signaling facilities... (because J the
costs of mandating the installation of metering equipment may well exceed the benefits
of doing SO.49 The FCC further stated:
48 Complainants' Briefpp. 15-16.
49 Access Charge Reform Order para. 252.
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Instead, we will penuit incumbent LECs to adopt and acquire the
appropriate measuring equipment as needed to implement such a plan.
Specifically, incumbent LECs may implement the same unbundled rate
structure for SS7 services that we approved in the Ameritech SS7 Waiver
Order. We recognize, however, that other signaling rate structures may
achieve the same benefits that are available under the Ameritech rate
structure. Hence, an incumbent LEC may implement an unbundled
signaling rate structure that varies from the approach implemented in the
Ameritech SS7 Waiver Order by filing a petition demonstrating that the
establishment of new rate elements implementing such a service is
consistent with the public interest.
Complainants ' gross mischaracterization that Qwest admitted "that it filed its Idaho SS7
signaling message structure prior to deploying the proper measuring equipment"
completely ignores the above cited paragraph. 51 Qwest made no such admission. In
restructuring its FCC Access Service Tariff, Qwest detenuined that the cost of
implementing a plan identical to Ameritech's and installing metering equipment to
identify the jurisdiction of the associated voice/data traffic exceeded the benefits of doing
so as predicted by the FCC. Qwest subsequently chose to implement a different approach
although based upon the Ameritech waiver. The FCC found Qwest's plan to be in the
public interest. 52 Qwest implemented this same structure in Idaho, mirroring the Idaho
SS7 offering to that contained in its FCC Tariff. There is no doubt that Qwest properly
unbundled SS7.
The SS7 network is separate from the voice/data network.
Contrary to arguments present by the Complainants, the SS7 network
completely separate from the voice/data network. Both Complainants and Qwest agree
that SS7 is an out of band signaling network. 53 Nevertheless, despite admitting that the
50 Id., para. 253.51 Complainants' Brief, p. 16.
52
US WEST Order paras. 7 and 9.53 (Florack) (Tr. 303-304) (Craig) (Tr. 206).
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two networks are separate 54 Complainants allege the networks are inseparable, citing
Idaho Code ~ 62-603(13). Complainants ' reliance , however, is misplaced. While section
62-603(13) may have defined "telecommunication service" as including "signals" and
messages " it does not follow that the SS7 network and the voice/data network are not
separate networks.
Further, the FCC has recognized that the SS7 network is separate and distinct
from the voice/data network.55 Complainant's reliance upon
Elkhart and the Report and
Order for Access for 800 Service for their contention that the FCC has "repudiated,,56 that
SS7 message signaling is part of a separate network is also misplaced and inaccurate.
Qwest initially notes that again Complainants are being selective in their citation to legal
authority. Rather than squarely repudiating the separateness of the SS7 network and the
voice/data network Elkhart recognizes that in-band SS7 technology transmits the
signaling and the actual voice communication over the same circuit network but that the
new out-of-band or common channel signaling "allows signaling to be transmitted over
an additional system of switches and circuits.Thus, the FCC recognized the
separateness of signaling from the voice/data network. Additionally, as Qwest noted in
54 Complainants statements that Illuminet built its own SS7 network and is a SS7
competitor of Qwest' s and yet does not carry end user traffic or , in other words, did not build a
voice/data network, are admissions that Complainants recognize the existence and separateness of
the SS7 network and the voice/data network.
55 In the Matter of Ameritech Operating Companies Petition for Waiver of Part 69 of the
Commission s Rules to Establish Unbundled Rate Elements for SS7 Signaling, DA 96-446, 11
FCC Rcd 3839 (Rel. Mar. 27, 1996) para. 2...(SS7 networks are separate from, but interconnected
with, the telecommunications networks used to carry voice and data communications between
end users.
)("
Ameritech Order 56 Complainants' Brief, p. 17.
57 See, Elkhart at 1055.
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the introduction to its Section the FCC limited future application of its ruling when it
stated that "our conclusion is limited to the specific facts before us. ,,
Elkhart precedential value of this FCC decision is further limited in that it was
issued prior to the enactment of the 1996 Telecommunications Act and the FCC's Access
Charge Reform Order. The only other authority cited by Complainants' allegation that
Qwest's Idaho SS7 charges are inconsistent with its FCC Tariff is Report and Order for
Access for 800 Service which, just like Elkhart was issued prior to the 1996
Telecommunications Act and the FCC's Access Reform Order.Clearly, any legal
holdings or repudiations made in either of these authorities cited by Complainants have
been superceded by the FCC's Access Charge Reform Order as they pertain to SS7. In
the Access Charge Reform Order the FCC not only recognized that the SS7 network is
separate from the voice/data network59 but stated that the costs of SS7 should be borne by
the users of the SS7 network.
Complainants final argument that the SS7 network and the voice/data network are
inseparable is their allegation that "Qwest's suggestion that the 'jurisdiction' of the SS7
message is also baseless.61 Complainants state:
Such a contention is inconsistent with its own Catalog that relies upon the
jurisdiction of the voice traffic to detenuine the jurisdiction of the SS7
58 59 Id.
59
See generally, Access Charge Reform Order at para. 244 ("SS7 is a network protocol
used to transmit signaling information over common channel signaling networks. ... (S)signaling
networks like SS7 establish and close transmission paths over which telephone calls are carried.
60
FCC Access Reform Order para. 35 ("First, we reform the current rate structure to
bring it into line with cost-causation principles, phasing out significant implicit subsidies.); para.
36 ("In this Order, we reshape the existing rate structure in order to eliminate significant implicit
subsidies in the access charge system. To achieve that end, we make several modification to
ensure that costs are recovered in the same way that they are incurred.); para. 249 ("Unbundling
of SS7 services from transport and local switching ensures that transport and local switching
customers do not pay for SS7 services they do not use.61 Complainants ' Brief
, p.
18.
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signaling messages vis-a-vis the voice traffic they support. Qwest's own
FCC filing, which unbundled SS7 signaling message charges from its
interstate access rates, necessarily implies that it allocated its SS7 message
costs between intrastate and interstate jurisdiction.
Complainants have misconstrued Qwest's position.Obviously Qwest must separate
interstate from intrastate SS7 messages so that both Qwest and its SS7 customer knows
whether it is the FCC Access Tariff or the Idaho Access Catalog governs its SS7
purchase.What Qwest has said regarding its position that the jurisdiction of the
associated voice/data is irrelevant is that the jurisdiction of the associated call does not
control or govern how SS7 messages are charged. Qwest has also said that for the
purpose of assessing charges under the Idaho Access Catalog, or the FCC Access Tariff
the jurisdiction of the associated call is irrelevant because each and every message uses
the SS7 network and, thus, results in usage costs to Qwest.Qwest's responses to
Complainants ' alleged "Rules" in the preceding Section show this to be true.
Complainants "inseparable" argument, therefore, is not really that the SS7
network is not separate and distinct from the voice/data network. Rather, Complainants
argument is that Qwest may not charge SS7 services separately from voice/data services.
Such argument is not supported by the FCC'Access Charge Reform Order.The
purpose of pennitting incumbent LECs to unbundle SS7 from switched access rates was
to allow incumbent LECs to charge separately for SS7 services. The FCC concluded that
incumbents may implement Ameritech's SS7 unbundled rate structure or petition for a
different rate structure, as discussed in Section II.A above. The FCC further concluded
that a rate differential would not be imposed between the different types of SS7
62 Id. (citation omitted).
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messages, I.e., SS7 call set up/take down messages and SS7 database messages.
Clearly, the FCC intended for incumbent LECs to separately charge for the usage costs
incurred on the separate SS7 network.
Thus , while Qwest disagrees with Complainants' characterization that the SS7
message is an integral component of the voice/data traffic, the record indicates that the
SS7 network is a separate and distinct network from the voice/data network. Legal
precedent indicates that the FCC intended for incumbent LECs to charge separately for
SS7 services.
C. Illuminet is using Qwest's network; its "agency" relationship with its
carrier/ customers does not eliminate its responsibility to pay for its use.
Qwest discussed the legal and factual defects of Complainants
' "
agency
argument at length in its Post-Hearing Memorandum 65 and will not repeat that discussion
here. However, in their Brief Complainants raise some new theories that require reply.
Complainants ' latest theory in its ongoing effort to ignore the fact that Illuminet is
not a telecommunications carrier and not a party to any of the so-called "inter-carrier
agreements" that Complainants (erroneously) claim govern how Qwest must charge for
SS7, is that Illuminet is merely its carrier/customers
' "
transport agent"66 Under this
theory llluminet does not use Qwest's SS7 network messages use the network. Since the
messages are generated by its customers, Illuminet claims it, should not pay for use of the
SS7 network.
The defect of this argument is that it totally ignores the reality of the important
business relationship at the heart of Complainants ' complaint: Illuminet sells SS7
63
Access Charge Reform Order at para. 254.
64 See generally, Access Charge Reform Order; Ameritech Order; and USWEST Order.65 See Qwest's Post Hearing Memorandum , Section II B 1
, pp.
13-66 Complainant's Brief, p. 19
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services, not "transport" services to its carrier/ customers.67 As Illuminet's witness , Mr.
Florack explained:
The service Illuminet provides is a hubbing function that allows its carrier/
customers access to Qwest's SS7 network along with access to SS7
networks throughout the country. Illuminet bears all the costs of the
signaling links and STP resources including ongoing network
administration and maintenance. Illuminet is not reselling or repackaging
Qwest's SS7 messages and charges for its carrier/customers , but charging
only for the Illuminet SS7 network services its provides.
Not only does Illuminet provide SS7 capability to its carrier/customers, it does so in
competition with Qwest (Tr. 217). If Illuminet did not exist, its customers could not
simply "transport" their own messages, they would have to either buy SS7 services from
another provider, such as Qwest, or deploy their own STPs , B-links and ports . For
Illuminet to now claim that it does nothing more than "transport" messages is not even
consistent with the record its created through its witness.
Again the analogy to interexchange carriers is useful.IXCs do not sell
transport" services to their end users, they sell "long distance" or "toll" services for
which they receive compensation--just as Illuminet receives compensation for its SS7
services. For Illuminet to say "I am not using Qwest's network messages use Qwest's
network" is like an IXC arguing it doesn t use the ILECs networks to originate and
tenninate toll calls calls use those networks.Qwest is confident that Illuminet's
carrier/customers would be among the first to reject such an argument if an IXC tried to
use it to avoid paying their tariffed access charges.
67 See , Complaint, para. 9 (" Carriers require SS7 signaling capability to ensure that
their own end user traffic can be efficiently carried over the PSTN. Carriers can either establish
their own SS7 network or utilize the economies of scale and scope offered by third party SS7
providers such as Illuminet.68 (Tr. 218).
69 Complainants ' Brief, p. 3.
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Nor is Complainants' position supported by the FCC's decision in the directory
assistance context. Complainants incorrectly lead the Commission to conclude that the
FCC has adopted "the general rule" that "inter-carrier obligations are not affected by the
use of agents or intennediaries . An exhaustive search of the FCC's decisions, orders
and reports will reveal no such general rule. Rather the FCC's order in the Directory
Listing case, cited by Complainants , is an anomaly. No other FCC decisions, orders, or
reports addressing the interplay between agency and interconnection agreements exist.
Furthennore, no FCC decisions, orders, or reports addressing the interplay between
agency and tariff or catalog provisions exist at all.
Complainants' reliance on the Directory Listing case for any purpose in this case
is misplaced. In the Directory Listing case, the FCC recognized an agency relationship
for purposes of subpart (3) of Section 251(b) only. That is the subpart that describes the
incumbent LEC' s duty to provide access to directory assistance databases to competing
providers. In its order, the FCC, in effect, expanded the scope of a "competing provider
to allow agents of competing providers to take advantage of Section 251 (b )(3) if the
principal competing provider has an interconnection agreement with the incumbent LEc.
While Complainants admit that the Directory Listing case is not direct authority,
they are incorrect that "the policy nonetheless applies."71 In construing the duty to
interconnect under Section 251 of the Act, at no time has the FCC expanded the scope of
telecommunications carrier" to include alleged agents or any other entities.72 In its
Local Competition Order the FCC specifically addressed the definition of
70 Provision of Directory Listing Information under the Telecommunications Act of 1934
As Amended First Report and Order, 16 FCC Rcd 2736 (2001) Directory Listing case71 Complainants' Brief, p. 32.
72 Local Competition Order paras. 33 and 985 - 998.
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telecommunications carriers" and affinned the definition contained in 47 US.c. ~
153(44).The FCC subsequently reaffinned its definition of telecommunications
carriers to include only those entities that offer telecommunications for a fee directly to
the public.74 Because only telecommunications carriers (and not their "agents ) are
entitled to enter interconnection agreements under the Act, Illuminet cannot succeed to
the tenus of those agreements under federal law, even if it is found to be a
telecommunications carrier s "agent". The contractual equivalent of this prohibition is
found in the ELI interconnect agreement in this case, which specifically provides that
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." 75
Given that explicit prohibition, is difficult to understand how Illuminet can argue that it
can benefit from the provisions of that agreement.
In the end, Complainants' agency argument is fatally defective. As Qwest has
previously shown in its Post Hearing Memorandum, the argument does not comport with
the facts presented in this case by Complainants themselves and its is not supported by
Idaho law.76 The variation of the agency argument presented in Complainants' Brief is
even more defective from a factual standpoint and is repudiated by federal law.
73 Id; 47 U.c. 9 153(44) defines "telecommunications carrier" as meaning any
provider of telecommunications services, except that such term does not include aggregators of
telecommunications services (as defined in section 226 (47 USC 9 226)). A telecommunications
carrier shall be treated as a common carrier under this Act only to the extent that it is engaged in
providing telecommunications services, except that the Commission shall determine whether the
provision of fixed and mobile satellite service shall be treated as common carriage. 47 USC 9
153(46) defines "telecommunications service" 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.
74 Internet Over Cable: Defining the Future in Terms of the Past OPP Working Paper
No. 30 1998 FCC LEXIS 4518 (ReI. Sept. 3 1998).75 Exhibit No. 501 Sec. (A) 3.23 (ELI interconnection agreement).
76 Qwest's Post Hearing Memorandum, pp 13-19.
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D. Qwest is not receiving an " unlawful windfall" as the result of its
unbundling of SS7 charges.
Complainants' allegation that Qwest is experiencing an "unlawful windfall" as a
result of its unbundling of SS7 charges is completely unsupported in the record of this
case Complainants simply make this allegation and then resort to their totally discredited
claim that other "intercarrier agreements" already include SS7 signaling costS.77 As the
discussion in Section I of this brief demonstrates, there is no evidence that other
agreements78 cover the SS7 signaling costs incurred by Qwest when Illuminet uses its
network. In fact, in the most developed agreement between an Illuminet carrier customer
and Qwest for the exchange of local traffic, the ELI interconnection agreement, the
explicit agreement tenus call for the imposition of SS7 charges for messages traveling
over Qwest's SS7 network.
Complainants' claim further lacks credibility in that under their theory, in every
case where some "agreement" controls, Qwest has apparently agreed that Complainants
can use Qwest's SS7 network without charge. In no case where Complainants say
agreements control, do revenue ever flows to Qwest for signaling costs.Since
Complainants do not dispute that Illuminet uses Qwest's network to provide SS7
77 Complainants ' Brief, p. 23.78 There are actually only two types of agreements to which Complainants ever refer in
these proceedings, the interconnection agreements between Qwest and CLECs (or in some cases
ILECs) that pertain only to the exchange of local traffic and the so-called "meet-point-billing
agreements between Qwest and certain ILECs pertaining the split of switched access revenues
received from interexchange carriers. In no case have Complainants successfully demonstrated
that any of these agreements support their contention that signaling costs were addressed as part
of the exchange of communications traffic.79 See, discussion contained in Section I A of this brief, above.
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connectivity to its customers, it follows that Complainants argue that Qwest has "agreed"
to free use by a competitor80 of its network.
Complainants attempt to avoid this implausible conclusion by arguing the
Qwest's "own end users" are covering these costs in their rates.81 It must be noted that
Complainants argue this point, but they have made absolutely no effort to prove it. The
contention that Qwest will be enjoying a "double recovery" of its SS7 costs if the
Commission allows its Title 62 Catalog charges to be collected is simply one more
unsupported allegation offered up by Complainants in lieu of evidence or legal authority.
Complainants' lack of record evidence is but one of the fatal defects in
Complainants' windfall argument. Their complete mischaracterization of the history of
Qwest's rates is another. Unbelievably Complainants rely on the direct testimony ofMr.
Lafferty, for the proposition that
, "
in a rate case, rates to recover all prudent investment
and expenses allocated to the state jurisdiction, including a portion of SS7 facilities and
signaling costs, were established by the Commission.It would be hard for Mr.
Lafferty to be more wrong in the case of Qwest' s cost recovery of its SS7 investment.
In the last rate case for Qwest's predecessor 83 U S WEST Communications, Inc.
the Commission engaged in an unprecedented cost allocation exercise pursuant to Idaho
Code ~ 61-622A to remove all costs that were not directly associated with the provision
of "basic local exchange service" to local customers from the rate base. The rates that
resulted from that rate case were designed to recover only the costs of provision of basic
80 Illuminet's self-proclaimed status as a competitor of Qwest in the provision of SS7
services to other carriers is well documented. See e.
g.
(Tr. 217).81 Complainants' Brief, p. 23.82 Complainants' Brief, p. 23 , citing (Tr. 68).
83
In the Matter of the Application of U WEST Communications, Inc. for Authority to
Increase Its Rates and Charges for Regulated Title 61 Services Case No. USW -96-5 (filed
June 28, 1996).
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local exchange service to U S WEST customers and a handful of auxiliary services, not at
issue here. Thus the SS7 costs associated with Qwest local customers placing local calls
to other Qwest local customers may be included in local rates. However, under section
61-622A the Commission excluded costs associated with the provision of toll and access
services, as well as optional services such as the CLASS features supported by SS7. The
commission did not establish rates for any of those servIces.Assuming that the
Commission accomplished what it set out to do in that rate case (and certainly
Complainants have offered nothing to suggest that it did not) there are no costs associated
SS7 signaling for toll calls ( either placed or received by regulated Title 61 customers)
contained in regulated rates. Nor are costs of use of the SS7 network by customers other
than Qwest's local customers contained in regulated rates
Therefore, Complainants are simply wrong when they contend that the SS7 costs
Qwest seeks to recover are already being recovered in Commission-approved rates. Of
course Qwest did previously seek to recover them from Title 62 customers in the form of
its intrastate switched access rates (Tr. 394). It is those rates that were unbundled and
reduced, creating the new SS7 signaling charges at issue here. The fact that Qwest has
restructured its Title 62 rates in an effort to see that the actual users of the SS7 network
pay for that use, hardly amounts to a "double recovery" or an "unlawful windfall"
84 It should be noted that the majority of the EAS routes between Qwest and the ILECs
in this case were established after the last rate case. The final rate case order was entered
November 18, 1997. Various Qwestl ILEC EAS cases resolved following that date include GNR-
96-, (EAS between Swan Valley, Irwin and Palisades to Idaho Falls - final order April 13
1998); GNR-97-3 (EAS from Gray s Luke, Wayan and Freedom to the eastern Idaho EAS
region - final order April 13 , 1998); GNR-97-8(Teton County EAS request - final order April
, 1998);GNR-96-5 (EAS for Arbon and Rockland - final order April 10, 1998)and GNR-
97-7 (Bear Lake County EAS request - final order April 10, 1998)
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Furthennore Complainants ' half-hearted attempt85 to suggest that Qwest's
changes to its Title 62 Catalog are not "revenue neutral", even if proved, amount to
nothing more than a claim that Qwest's rates for SS7 signaling are too high-an
allegation that Complainants themselves repudiate (Tr. 81), and Title 62 clearly carves
out of the scope of the Commission s jurisdiction
III. Complainant's allegations concerning Qwest'
Supplemental Proposal are "flawed" and incorrect.
Qwest's Supplemental Proposal not to assess SS7 charges for messages associated
with local, EAS, and intra-MTA traffic speaks for itself, and it was offered in an attempt
to address the major concerns of its SS7 Catalog customers.It is ridiculous that
Complainants take Qwest's Supplemental Proposal and leap to the conclusion that Qwest
has somehow conceded (1) that SS7 message should not be charged separately; (2) that
Illuminet is the agent of its carrier/customers; and (3) that Qwest should not have charged
for SS7 messages associated with those types of traffic. Qwest refuted Complainants
contention that the SS7 message is an integral component of end user traffic and, thus
should not be charged separately in Section II.B of this brief.Qwest refuted
Complainants' contention that Illuminet is the transport agent of the Illuminet
carrier/customer s SS7 messages in Section II.C of this brief. Finally, Qwest refuted
Complainants' contention that there are categories of SS7 messages associated with
intrastate voice/data traffic that should not have been assessed SS7 message charges
under the Catalog in Section II.A of this brief, as well as the arguments presented below.
The Supplemental proposal maintains the assessment of SS7 messages associated
with all types toll and access traffic. Assessment of SS7 messages associated with Qwest
85 Complainants' Brief, footnote 10.
86 See Idaho Code 9 62-605(5)
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originated intrastate toll traffic is consistent with the FCC'Access Charge Reform Order
and is consistent with its FCC approved interstate tariff under which Illuminet purchases
interstate services today.
As Complainants are fully aware, Illuminet purchased a bi-directional SS7 link to
facilitate the connection to and the utilization of Qwest's SS7 network. The SS7link was
bi-directional before Qwest restructured SS7 services in Idaho and it is still bi-directional
meaning that Illuminet knowingly purchased a SS7 link over which it transmitted and
received SS7 messages. This bi-directionallink is the same bi-directionallink contained
in Qwest's FCC Access Tariff. Pursuant to the FCC'Access Charge Reform Order
Qwest charges Illuminet and any other purchaser under its FCC tariff for messages
associated with originated and tenninated interstate toll traffic. The FCC found Qwest's
SS7 rate structure to be in the public interest.87 The fact that the Idaho SS7 rate structure
also charges for SS7 messages associated with originated and tenninated toll traffic is
entirely consistent with the FCC tariff to which Illuminet does not object. Complainants
allegation that a carrier may not charge for originating and tenninating traffic is merely
an unsupported statement, as Qwest demonstrated in its response to Complainant'
alleged "Rule 1." Accordingly, Qwest's proposal to continue billing for SS7 messages
associated with originating and tenninating toll traffic would not result in Qwest
unreasonably profiting from its Catalog SS7 service.
87 US WEST Order paras. 7 and 9.88 Qwest notes that it does assess charges for originating and terminating traffic on its
Feature Group products. Qwest requests that the Commission take judicial notice of Section 6
Switched Access Service, contained in its Access Service Catalog. For example, after stating that
customers using Feature Groups are charged per access minute for communications to and from
the end users in Section 6. 1. 1. A. 3 and 6.2.4.A.5 of the Catalog, Section 6.6 provides that
(o)riginating and terminating calls will be measured (i., recorded or assumed) by the Company
to determine the basis for computing chargeable access minutes.
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Similarly, Qwest's application of SS7 message charges associated with toll calls
for which Qwest and another LEC jointly provide access (i., meet-point-billed toll calls)
is also consistent with Qwest's FCC tariff. Should an interstate toll call originate or
tenninate in a meet-point-billed access environment, the FCC tariff imposes the SS7
message charges on the messages associated with call set-up for that call, just as in the
intrastate context.
Furthennore, contrary to Complainants' contentions , Qwest never maintained that
SS7 facilities could not be subject to meet-point-billing principles.89 Rather, Qwest has
maintained that because Illuminet purchased SS7 out of Qwest's Catalog and not
pursuant to any meet-point-billing agreement (or interconnection agreement for that
matter), such principles do not apply and are, in fact, irrelevant to this proceeding.
Further, Complainants' reliance upon the FCC's 1995 Elkhart case is misplaced.
As discussed earlier, the FCC issued its decision in Elkhart prior to the enactment of the
1996 Telecommunications Act and the FCC's subsequent orders.Thus, any legal
holdings or conclusions reached in Elkhart regarding SS7 and meet-point-billing
principles have been superceded. Furthennore Elkhart dealt with facilities not message
charges.In fact Elkhart predated the Access Charge Reform Order which first
authorized unbundling of SS7, by two years.
It is ridiculous for Complainants to suggest that application of SS7 message
charges to meet-point-billed traffic is not consistent with the principles of cost causation.
Meet-point-billed traffic is access traffic and, thus, SS7 messages associated with such
traffic are properly subject to the FCC'Access Charge Reform Order.One of the
89 This is the point of the Elkhart case, discussed in Section I of this brief.90 See, Section I.D of this brief.
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overriding principles in the Access Charge Reform Order is that the costs of SS7 should
be borne by the users of the SS7 network91 Since Illuminet admitted at hearing that it
uses Qwest's SS7 network in a meet-point-billed scenario, (Tr. p. 269), Qwest is at a loss
at how Complainants can possibly contend that they should not have to pay for that use.
Assessing SS7 charges for messages associated meet-point-billed traffic obviously does
not result in umeasonable profiting on the part of Qwest.
Finally, Qwest notes that it is entitled to receive payment in full from Illuminet
for assessment of all SS7 charges pursuant to the filed rate doctrine. Granting a refund or
credit to Illuminet regarding the back balance constitutes unlawful retroactive
ratemaking.92 While Qwest will not unduly repeat its arguments presented in its Post
Hearing Brief, Qwest briefly addresses contentions made by Complainants that its
Supplemental Proposal allows Qwest to umeasonably pro fit. There are numerous
United States Supreme Court decisions holding that the filed rate is binding upon the
carrier, the customer and the regulatory agency and that the tariff constitutes the law.
The Commission has recognized that the tariff is the law under which purchased services
are governed.The Commission has stated that the filed rate doctrine precludes
refunding or remitting of any rates, tolls, rentals, or charges specified in the rates on file
with the Commission.95 In addition, the Ninth Circuit has held that the filed rate
91 See footnote 45 above.
92
See Qwest's Post Hearing Memorandum , Section II., at pp. 10-13 and Section
II.B.2.c at pp. 26-27.
93
See Qwest's Post Hearing Memorandum, Section II., at pp.lO-13.
94
See generally, Arkansas Louisiana Gas Co. v. Hall 453 U.S. 571 , 101 S.Ct. 2925 , 69
LEd.2d 856 (1981); AT&Tv. Central Office Telephone 524 U.214 118 S.Ct. 1956, 141
LEd.2d 222 (1988).
95 In the Matter of the Investigation of Certain Property and HPN- W-89-1 Contributions
of Hayden Pines Water Company, Idaho Public Utilities Commission, Case No. PHN-89-
Order No. 23362 (1990).
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doctrine also precludes attempts to interpret the tenus and conditions of the tariff or
Catalog by the use of extraneous agreements.96 FCC has a rule that operates the same as
the filed rate doctrine in that it precludes the reference to extraneous documents, like
interconnection agreements.97 The FCC has stated that the tariff would be rendered
unlawful if the interconnection agreement must be consulted to ascertain whether
compensation is required under the tariff. 98 Similarly, the practice certainly exists before
the Commission that Catalogs must be self-contained and not cross-reference extraneous
documents, although the practice has not been formally codified into a Commission rule.
Accordingly, the filed rate doctrine operates to bar Complainants' alleged "Rules" and
contentions that the tenus, conditions, and provisions of interconnection agreements and
meet point billing agreements govern the assessment of SS7 charges to Illuminet. It also
bars Illuminet's attempts to avoid payment for SS7 service. Qwest assessed all charges
to Illuminet in accordance with the tenus and conditions of its Idaho Access Service
Catalog. Qwest is entitled to recover all charges assessed under the current SS7 offering
and the Supplemental Proposal.
IV. Complainants' requested relief is not only not "necessary
---
granting relief is contrary to the law of the State of Idaho and will
itself lead to lengthy and difficult proceedings.
Having completely failed to demonstrate that Qwest's Title 62 charges are
unlawful or precluded by any agreement or Commission policy, Complainants resort to
the ridiculous claim that granting their relief is "necessary" to avoid a "chaotic and
96
Brown v. MCI WorldCom Network Services, Inc.277 F.3d 1166 (9th Cir. 2002). For
a more detailed discussion, see II.B.2.c of Qwest' s Post Hearing Memorandum.
97 47 CFR 61.74(a). See also, In the Matter of Bell Atlantic-Delaware v. Global NAPs
Inc.15 FCC Rcd 5997 (2000).
98 In the Matter of Bell Atlantic-Delaware v. Global NAPs, Inc.15 FCC Rcd 5997
(2000).
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inequitable pricing structure that will spawn years of litigation.99 Not only does this
proposition assume the correctness of Complainants ' discredited arguments , this latest
claim backs any record evidence to support it and relies instead on mischaracterization.
One such mischaracterization is the claim that Qwest will recover Qwest's own
SS7 message costs
, "
even when Qwest's retail end user customer initiated the call and
Qwest is the only company that receives any revenue from that call." 100 Under Qwest's
SS7 Catalog the only time Illuminet is charged is when a message passes over Qwest's
network connection with Illuminet. Illuminet is not charged unless its carrier customers
are involved in the underlying communications traffic. Messages associated with Qwest
to Qwest calls are not charged to Illuminet.
To put it another way: Illuminet is never charged when Qwest is the only
company receiving revenue for the calls. In the case of toll calls originated by a Qwest
customer and tenninating to an Illuminet ILEC customer, the tenninating ILEC receives
tenninating access revenue. In the case of the EAS or local call, the tenninating ILEC or
CLEC receive exactly the same revenue from the call that Qwest does, i.e. the local
service revenue from its end user customer. Furthermore, Illuminet receives revenues
from its carrier/customer for providing them with SS7 services on all of these calls.
Although the record is not clear whether Illuminet's charges are volume sensitive, it is
clear that Illuminet is in the business of providing SS7 to carrier/customers because it is a
business that generates revenues. At bottom, the reason this case was brought is because
Illuminet seeks to preserve its free use of Qwest' s network so that it can go on generating
SS7 revenues from its carrier/customers.
99 Complainants ' Brief, p. 27.100 Complainants' Brief, p. 27.
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Complainants ' attempt to rely on the objections of Qwest's counsel to questions
beyond the scope of the present case for the purpose of demonstrating that "utter chaos
will ensue if Qwest's charges stand is even more inappropriate. Complainants ' have
offered nothing to show what costs they may wish to recover, or how they may choose to
do so.Those topics must wait for an appropriate proceeding in which a record
developed that pennits analysis of these claims for cost recovery, if they are ever made.
If the requirement that new cases be filed and evidence produced is the "utter chaos" to
which Complainants ' refer, that overstatement speaks for itself.
However, one further observation about Complainants' bringing their own cases
for SS7 charges may help to put Complainants' overblown rhetoric into perspective.
Many of the Complainants, unlike Qwest, are fully regulated Title 61 companies. For
them, as Mr. Lafferty erroneously argued for Qwest, the costs of SS7 service are captured
in regulated rates. If those costs increase because these Title 61 companies continue to
use third party providers instead of opting for Infrastructure Sharing Agreements, they
may seek a rate increase from the Commission. The Commission will authorize such an
increase if it detennines that the SS7 costs incurred by these regulated companies are
prudent in light of the options available to them, and if the Commission finds that those
costs are not offset by other revenues or efficiencies that have been gained since the last
rate case for each individual company. While that process may be time consuming and
expensive, it is the process; it is not "chaos" and it is not a "pernicious effect" of Qwest
recovering its costs.
Complainants would prefer to short-cut the regulatory process by simply
persuading this Commission to force Qwest to abandon the attempt to recover its costs.
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To do so, however, the Commission must take dramatic and unprecedented steps toward
the regulation of Qwest's deregulated services and investments. At the opening of this
brief Qwest explained that the Commission does not have regulatory authority to grant
the relief requested here. If the Commission attempts to take jurisdiction, it will be re-
regulating a Title 62 charge, a step that has never been taken by the Commission since
the Telecommunications Act of 1988 was enacted.
What is the "wrong" that is alleged to require this drastic move? It is only this: a
third party SS7 provider will experience increased costs, which, we are told, will be
passed on to its customers. Its customers, however, have choices that may reduce or
avoid these increases. Furthermore, the customers that are ILECs have the option of
seeking relief in the fonn of revenue increases from the Commission. CLEC customers
have the option of renegotiating their interconnection agreements with Qwestl01
Meanwhile if the Commission does choose to re-regulate SS7, contrary to the
legal authority that it lacks the jurisdiction to do so , the Commission will have to take
investments that were allocated to Title 62 in the last rate case back into Title 61. Idaho
Code ~61-622A. Since no current Title 61 rate covers the SS7 network usage by third
parties, a Title 61 rate will have to be established. How will the Commission decide to
whom that rate applies? Should it be borne by Qwest's traditional Title 61 customers? Or
will the Commission ultimately conclude, as the FCC and Qwest have done, that those
who actually use the SS7 network should pay?
These questions are not the product of exaggerated rhetoric, these are the practical
considerations that flow from a Commission decision to re-regulate a Title
101 It should be noted however that the FCC and Idaho-approved SGAT contains
provisions for per message charges for SS7. See Idaho SGAT, Section 9.13.
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technology. These matters must be considered before the Commission concludes that the
way to avoid "lengthy and expensive litigation" is to grant the relief Complainants here
seek.
v. Qwest's SS7 Service Offering was Restructured in Accordance with the
Competitive Principles Articulated in the FCC'Access Charge Reform Order
Complainants spend two and a half pages complaining about the alleged anti-
competitive impacts of Qwest's SS7 service offering upon Illuminet and its
carrier/customers. The truth of the matter is that prior to Qwest restructuring its SS7
offering, IXCs were competitively disadvantaged because IXCs were subsidizing those
carriers, such as Illuminet and others, that utilized Qwest's SS7 network but did not pay
switched access rates. The FCC issued its Access Charge Reform Order to address this
subsidy problem.
The FCC'Access Charge Reform Order contains numerous paragraphs
discussing competition and the reasons why access charges needed to be refonned to
comply with cost causation principles. The FCC initially noted that Congress enacted the
1996 Telecommunications Act because it sought to establish "a pro-competitive
deregulatory national policy framework" for the telecommunications industry.l02 The
FCC'Access Charge Reform Order is the "third part in a trilogy of actions collectively
intended to foster and accelerate the introduction of competition into all
telecommunications markets, pursuant to the mandate of the 1996 ACt.,,103 Some of the
FCC's analysis regarding access charge refonn and competition follow:
(TJhe congressional mandate that we implement pro-competitive
deregulatory policies is a continuing reminder that, wherever feasible
102 Access Charge Reform Order para. 1 (citing Telecommunications Act of 1996, Pub.
L. No. 104-104, 110 Stat. 56 (codified at 47 U.C. 99 151 et. seq.
)).
103 Id.
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should select competition instead of regulation as our means of
accomplishing the stated statutory goals. Reliance on competition is the
keystone that unifies our ... access refonn orders.l04
Our decision also fulfills the congressional intent that we eliminate the
rules that have helped sustain de facto or de jure monopolies in access
markets and instead create the conditions for competitive entry on a
sustainable, long-tenn basis.
...
Consequently, this Order sets forth a plan
for removing distortions and inefficiencies in both the current "rate
structures" (the tenn used to describe the manner in which a particular
charge is assessed, such as through a per-minute-of-use fee or a flat-rated
fee) and "rate levels" (the tenn used to describe the aggregate size of a
particular access charge.By rationalizing the access charge rate
structure, we ensure that charges more accurately reflect the manner in
which the costs are incurred, thereby facilitating the movement to a
. .
105competztzve mar et.
In light of Congress s command to create secure and explicit mechanisms
to achieve universals service goals we conclude that implicit subsidies
embodies in the existing system of interstate access charges cannot be
indefinitely maintained in their current fonn. In this Order, therefore, we
take two steps with respect to the rules governing the interstate access
charges of price cap incumbent LECs. First we reform the current rate
structure to bring it into line with cost-causation principles phasing out
significant implicit subsidies. Second, we set in place a process to move
the baseline rate level toward competitive levels.l06
In this Order we reshape the existing rate structure in order to eliminate
significant implicit subsidies in the access charge system. To achieve that
end we make several modifications to ensure that costs are recovered in
the same way that they are incurred.1O7
The Ameritech waiver (adopting a rate structure for SS7 signaling that
unbundles SS7 signaling functions) was granted to allow Ameritech to
realign its charges for SS7 services more closely with the manner in which
such costs are incurred.
...
Unbundling of SS7 services... ensures that
customers do not pay for SS7 services they do not use.108
104 Id. at para. 10 (emphasis added).
105 Id. at para. 13 (emphasis added).
106 Id. at para. 35 (footnote deleted)(emphasis added).
107 Id. at para. 36 (emphasis added).108 Id. at paras. 65 and 249 (emphasis added).
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It is clear that unbundling SS7 services out of switched access rates is far from
being anti-competitive as Complainants allege. In fact, the unbundling furthers the stated
competitive goals of the Act as the FCC carefully articulated in the above-cited
paragraphs of its Access Charge Reform Order. There can be no doubt that Qwest's SS7
restructure that was implemented in accordance with Part 69 and the FCC'Access
Charge Reform Order is pro-competitive. The fact that Qwest's SS7 offering is not anti-
competitive and instead promotes competition was implicitly recognized by the FCC'
declaration that the restructure was in the public interest.109 The FCC also recognized
that Qwest's SS7 offering concerning the utilization of its SS7 network was not anti-
competitive when it further stated:
Therefore, we find that U S WEST's proposed rate structure would more
accurately reflect the mannerin which signaling costs are incurred.
This language is the exact same language that the FCC used in its FCC Access Charge
Reform Order which Qwest previously cited. Thus, assessing SS7 message charges for
meet-point-billed access traffic and all types of toll traffic is not anti-competitive.
Nor is it anti-competitive or selectively discriminatory to offer various SS7
service options. As Qwest pointed out Section II.B.2.b of its Post Hearing Brief, the
1996 Telecommunications Act specifically envisions that different SS7 options are
available depending upon the classification of the purchaser. Section 259 creates an
exception for independent LECs to share an incumbent LECs SS7 infrastructure.l10
Section 251(C)(3) provides for the provisioning of SS7 on an unbundled network element
basis to telecommunications carriers, but not to non-telecommunications carriers. 111
109 USWEST Order at paras.7 and 9.
110
See Qwest Post Hearing Memorandum, Section ILB., pp. 21-24.
111 Id.
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Offering Infrastructure Sharing Agreements to ILECs for SS7 services and SS7 as UNEs
to CLECs and wireless providers are not examples of anti-competitive behavior. The fact
that the 1996 Act provides for special exceptions does not make Qwest's compliance
with such provisions to be anti-competitive.If anything, Qwest is furthering the
competitive goals of the 1996 Act as recognized by the FCC by offering such options.
Finally, Qwest's actions regarding Syringa do not constitute evidence that Qwest
can "engage in undetected and selective discrimination" regarding its SS7 service
offering. There was no intent on the part of Qwest to discriminate in favor of Syringa
against Illuminet.Rather Qwest actions were based upon a desire to treat Syringa
consistently with its contention that it was simply an ILEC consortium. (Tr. p. 354).
Qwest chose to maintain the old SS7 contract with Syringa for an interim period of time
only while it assessed what options were available to entities (and particularly ILECs)
under the new SS7 regime instead of unilaterally and immediately cutting off service to
Syringa. (Tr. pp. 356-357, 371 and 378) Once the SS7 assessments were completed, the
old SS7 contract with Syringa was tenninated and Syringa was notified of its SS7 options
. (Tr. pp. 360 and 375-376)
VI. The public interest is not served by
granting the Complainants ' requested relief.
The final part of Complainants ' argument , found in part VI at page 30 of their
Brief simply rehashes their earlier arguments and then spells out the relief Complainants
seek in specific terms. First, they request that the Commission "direct Qwest to refund
and credit as soon as possible, all unlawfully assessed SS7 message charges." (emphasis
original). Second, Complainants request that the Commission
, "
direct Qwest not to refile
any SS7 rate or rate structure changes until and unless Qwest first coordinates such filing
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in advance with the affected third party SS7 providers and their carrier/customers
Complainants contend that this measure is necessary to promote the "public interest
benefits associated with the efficient use of Commission and party resources.
The total departure from precedent and authority represented by these requests is
extraordinary. First, as even Complainants would have to admit, for the Commission to
grant any rate-related relief in this case, it must somehow gain jurisdiction over a service
it does not regulate. Although Qwest asserts that Idaho Code ~ 62-605 (5) cannot be used
for this purpose, even if the Commission were to attempt it, there is nothing in that statute
or any provision of the Idaho Code that permits the Commission to engage in retroactive
revision of Title 62 rates (or Title 61 rates for that matter). Complainants ' total disregard
for the extraordinary nature of this demand is underscored by the fact that they did not
bother to cite a single authority to support the notion that they can expect retroactive
relief from deregulated rates.Under Complainants ' theory, apparently the entire
statutory framework provided Title 62 can be ignored if the Commission can be
persuaded that there is an "inter-carrier dispute" that requires resolution. Not only that
but, apparently Complainants also believe that the freedoms granted to Title 62
companies can be wiped away retroactively leaving the Title 62 Company with no
compensation for the use of its network.
Complainants' request that the Commission direct Qwest to "coordinate" any re-
filing of SS7 charges with third SS7 providers and their customers likewise demonstrates
a complete lack of understanding of the regulatory process in which they are now
attempting to meddle. If SS7 remains a Title 62 service, as it should under the legal
authorities presented here, the Commission will have no authority to require Qwest to
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meet the demands of Complainants in a future Title 62 offering l12 . If the Commission is
to grant any relief, it must find a way to regulate SS7 under Title 61. Should that occur
then the Commission is itself faced with the task of developing a rate design that recovers
the costs of the fonner Title 62 assets that must be reabsorbed into the Title 61 rate base.
Idaho Code ~61-622A.
Qwest suggests that it is naive of Complainants to claim that granting their relief
here promotes efficient use of the Commission s and parties ' resources. In fact, if the
Commission is convinced that Qwest's Title 62 SS7 charges can be and should be
clawed back" under ~ 62-605(5) it must take upon itself the responsibility of setting new
rates under Title 61. That process may well involve Complainants as intervenors, but it
will not spare anyone s resources.
VII.Complainants' reliance upon the Nebraska Order in misplaced.
Complainants attached the recent order issued by the Nebraska Public Service
Commission relating to SS7 as authority and a roadmap for the Idaho Commission in this
proceeding. Qwest submits that the Commission cannot rely upon any analysis and
holdings contained in the Nebraska Commission s SS7 order because that order was
issued on a different record and applying the law of another state.Although
Complainants may attempt to declare that the record was the same there, they have
offered nothing upon which this Commission can rely for that conclusion.
Furthennore, the Idaho Commission cannot rely upon the Nebraska order because
it was entered contrary to the record presented in that case, and contrary to law, and
applicable federal law.These are just some of the reasons why reliance upon the
112 Of course the Commission can suggest Qwest try to work with its customers, and
Qwest would attempt to be responsive to such a suggestion. However, negotiations in the past
have failed to reach a result satisfactory to Complainants.
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Nebraska SS7 order is a mistake. The faulty legal and factual conclusions contained in
the Nebraska SS7 order are too numerous to list.
Furthennore, Qwest notes that any decision similar to that of Nebraska would
most likely not resolve the dispute between the parties in this matter. Qwest brings to the
Commission s attention that its notice of appeal was filed with the Nebraska Commission
on February 7 , 2003, requesting that the Nebraska Commission prepare the necessary
transcripts and record for appeal to the Nebraska Court of Appeals. Pursuant to Nebraska
law, the Nebraska Commission s SS7 Order is stayed pending appeal.
This Commission should render its decision upon the record here presented, and
as such the Nebraska SS7 order lacks value as precedent on all of these bases. Qwest
further submits that the Nebraska SS7 order is not even persuasive legal authority
because, as stated above, the issues in that proceeding were not decided upon the record
presented in that case, and contrary to Nebraska law, and applicable federal law. While
Complainants might allege that many of the issues in the Nebraska SS7 proceeding are
the same issues before the Commission in this proceeding, the Commission is bound by
the law in Idaho.
CONCLUSION
Based on the foregoing authorities and arguments, Qwest respectfully requests
that the Commission dismiss Complainants ' complaint and deny the relief requested
therein.
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RESPECTFULLY SUBMITTED this 20th day of February, 2003
Stephanie Boyett-Colgan
Qwest Service Corporation
~:::~
Stoel Rives, LLP
Attorneys for Qwest Corporation
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CERTIFICATE OF SERVICE
I hereby certify that on this 20th day of February, 2003 , I served QWEST
CORPORATION'S REPLY BRIEF as follows:
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83720-0074
L1LJ Hand Delivery
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U. S. Mail
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Conley Ward
Gi vens Pursley
277 North 6th Street - Suite 200
O. Box 2720
Boise, ID 83701
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Morgan W. Richards
Moffatt Thomas
101 South Capitol Boulevard - 10th Floor
Boise, ID 83701
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Thomas J. Moonnan
Kraskin, Lesse & Cosson LLP
2120 L Street NW - Suite 520
Washington DC 20037
Phone: [phone]
Fax: [phone]
tmoorman(iV,klctel e. com
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Clay Sturgis
Moss Adams LLP
601 West Riverside - Suite 1800
Spokane, W A 99201-0663
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Ted Hankins, Director
State Government Relations
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Gail Long, Manager
External Relations
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Oregon City, OR 97045-1566 Facsimile
Richard Wolf
Illuminet, Inc.
4501 Inte1co Loop SE
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Olympia, W A 98507
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Citizens Telecommunications
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Salt Lake City, UT 84180
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LKAM Services, Inc.
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McKinney, TX 75070
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