20050603Petition and appendix A.pdf

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Dean J. Miller, (ISB No. 1968)
McDevitt & Miller LLP
420 West Bannock Street
O. Box 2564, Boise-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
ioe~mcdevitJ- miller .com
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In the Matter of Level 3 Communications
LLC's Petition for Arbitration Pursuant to
Section 252(b) of the Communications Act of
1934, as amended by the Telecommunications
Act of 1996, and the Applicable State Laws for
Rates, Terms, and Conditions of
Interconnection with Qwest Corporation
Case No. 6?WE-:r- -05 -ll
PETITION FOR ARBITRATION
ABLE OF CONTENTS
Negotiation Letter.............................. ...............
............ ..... .......
..................................... Appendix A
Dispute Points List........................................................ ................................................. Appendix B
Level 3' s Proposed Interconnection Agreement............................................................ Appendix C
PETITION FOR ARBITRATION
COMES NOW Level 3 Communications, LLC ("Level 3"), by and through its attorneys
and hereby petitions the Idaho Public Utilities Commission ("Commission ) for arbitration of
certain terms, conditions, and prices for interconnection and related arrangements with the Qwest
Corporation ("Qwest"). This Petition is filed pursuant to Section 252(b) of the Communications
Act of 1934, as amended by the Telecommunications Act of 1996 1 (the "Act"), 47 D.C. ~
252(b) and Idaho Code 62-615. Level 3 respectfully requests that the Commission resolve each
of the issues identified in Section V of this Petition by ordering the Parties to incorporate Level
s position into an Interconnection Agreement for execution by the Parties.
This Petition includes background information on the parties, the history of Level 3 '
interconnection negotiations with Qwest, the Commission s jurisdiction and applicable legal
standards, and a comprehensive presentation of the unresolved issues including the positions of
both Parties on all of the major issues. The Appendices to the Petition set forth the following
additional information: (1) the letter stating the date for filing of this Petition, pursuant to
Sections 251 and 252 of the Act2 (attached hereto as
Appendix A); (2) a Disputed Points List
(attached hereto as Appendix B); and, (3) the proposed Interconnection Agreement with Level
s proposed language in bold/underline format and Qwest's proposed language in bold/italics
format (the "Proposed Interconnection Agreement") (attached hereto as Appendix C). Level 3
respectfully requests a reasonable opportunity to supplement this Petition to provide any
additional information deemed necessary by the Commission.
In support of this Petition, Level 3 states as follows:
47 USC ~ 252(b); Telecommunications Act of 1996, Pub L No. 104-104, 110 Stat 56 (1996) (the 1996
Act). The 1996 Act amended the Communications Act of 1934, 47 USC ~ 151 et seq. Level 3 refers to the
amended Communications Act of 1934 as the "Act."
47 USC ~~ 251 and 252.
PETITION FOR ARBITRATION
THE PARTIES.
Level 3 is a facilities-based competitive local exchange carrier ("CLEC") providing local
exchange, interexchange and local exchange telecommunications services in this state pursuant
to Certificates of Service Authority issued by this Commission. Level 3 maintains tariffs on file
with the Commission describing the terms, conditions, and rates for its services, and files annual
reports on its operations. Level 3 is a Delaware limited liability company with its principal place
of business at 1025 Eldorado Boulevard, Broomfield, Colorado, 80021. Its telephone number is
720-888-1000 and its fax number is 720-888-5134. Level 3' s certificate of authority from the
Idaho Secretary of State is on file with the Commission.
Qwest is a Delaware corporation with its principal place of business located in Denver
Colorado. Qwest is an Incumbent Local Exchange Carrier ("ILEC") in this state within the
meaning of Section 251(h) of the Act3 Within its operating territory, Qwest has been the
incumbent provider of telephone exchange service during all relevant times.
Qwest's regulatory counsel for this State is:
Mary Hobson, Esq.
Stoel Rives
101 So. Capitol Blvd., Suite 1900
Boise, Idaho 83702-5958
Tel: [phone]
Fax: [phone]
mshobson~stoel.com
All correspondence, notices, inquiries, and orders regarding this Petition should be served
on the following individuals for Level 3.
47 USC ~ 251(h).
PETITION FOR ARBITRATION
Dean J. Miller (ISB No. 1968)
McDevitt & Miller LLP
420 West Bannock Street
O. Box 2564, Boise-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
j oe~mcdevitt- miller .com
Erik Cecil
Regulatory Counsel
Level 3 Communications, LLC
1025 Eldorado Boulevard
Broomfield, CO 80021
Tel.: [phone]
Fax: [phone]
Mail: erik.cecil~leve13.com
During the negotiations with Qwest, the primary contacts for Qwest have been:
Jeffrey T. N odland
Senior Attorney
Qwest Legal Dept/CD&S
1801 California St., Suite 900
Denver, Colorado 80202
Tel.: [phone]
Mail: ieff.nodland~qwest.com
Thomas M. Dethlefs
Senior Attorney
Qwest Legal Dept/CD&S
1801 California St., Suite 900
Denver, Colorado 80202
Tel.: [phone]
Mail: !homas.dethlefs~qwest.com
The primary Qwest negotiators were:
Nancy J. Donahue
Staff Advocate Policy & Law
1801 California
Suite 2410
Denver, CO 80202-1984Tel.: [phone]E- Mail: N ancy .Donahue~qwest.com
PETITION FOR ARBITRATION
Luba Hromyk
Qwest Legal Dept/CD&S
1801 California St., Suite 900
Denver, CO 80202
Tel.: [phone]
Fax.: [phone]
Mail: Luba.Hromyk~~.com
II.THE INTERCONNECTION NEGOTIATIONS AND RESOLVED ISSUES.
Since its operations in the state began in 1998, Level 3 has operated under the terms and
conditions of an Interconnection Agreements with Qwest. The agreement was filed with this
Commission on April 1 , 2002 and approved on May 22 2002.4 During the course ofLevel3'
operations the Parties have agreed to two amendments to the Existing Agreement which the
Parties have submitted to the Commission, and which the Commission has approved.
On March 14 2005, Level 3 sent Qwest a bona fide request to negotiate a successor
agreement pursuant to Sections 251 and 252 of the Act. That request is attached hereto as
Appendix A. Level 3 and Qwest began negotiations toward a successor agreement. Qwest and
Level 3 have met on numerous occasions with the intent to either come to agreement, or identify
for the Commission those issues that remain in dispute between the Parties. These negotiations
provided resolution to a number of issues. However, the Parties have not resolved differences
over contract language and policy issues that are substantial and critical to Level 3' s business
plans. Attached as Appendix B is the Disputed Points List ("DPL") detailing remaining disputes.
Level 3 asks the Commission to arbitrate each of these remaining disputes, to find in Level 3'
favor, and to adopt Level 3' s Interconnection Agreement.
IPUC Case No. QWE-02-
Amendments were filed by Qwest and Level 3 and approved on July 18 2002 and December 11 2002.
PETITION FOR ARBITRATION
Level 3 will continue negotiating with Qwest in good faith after this Petition is filed, and
hopes to resolve issues prior to any arbitration hearing. To facilitate such resolution, Level 3 will
participate in Commission-led mediation sessions, if available.
III.JURISDICTION.
This Commission has jurisdiction over this Petition for Arbitration pursuant to Section
252(b)(1) of the Act.
Under the Act, parties negotiating for interconnection, access to unbundled network
elements, or resale of services within a particular state may petition the state commission for
arbitration of any unresolved issues during the 135th to the 160th day of such negotiations.7 The
statutorily prescribed period for arbitration expires on the date set forth in Appendix A.
Accordingly, Level 3 files this Petition with the Commission on this date to preserve its rights
under Section 252(b) of the Act and to seek relief from the Commission in resolving the
outstanding disputes.
Pursuant to Section 252(b)(4)(C) of the Act 8 this arbitration is to be concluded not later
than nine months after the applicable request for negotiations, which for purposes of this petition
is September 21 , 2005.
Request for Negotiations Received:
9 Month Negotiation Period Commenced:
135th Day Thereafter:
160th Day Thereafter:
9 Months Thereafter:
December 25 , 2004
December 25 2004
May 9, 2005
June 3, 2005
September 21 2005
47 USC ~ 252(b)(1).
47 USC ~ 252(b).
47 USC ~ 252(b)(4)(C).
PETITION FOR ARBITRATION
IV.APPLICABLE LEGAL STANDARDS.
This arbitration must be resolved under the standards established in Sections 251 and 252
of the Act, the rules adopted and orders issued by the Federal Communications Commission
FCC") in implementing the Act, and the applicable rules and orders of this Department.
Section 252 of the Act requires that a state commission resolving open issues through arbitration:
(1.)ensure that such resolution and conditions meet the requirements
of section 251 , including the regulations prescribed by the (FCC)
pursuant to section 251; (and)
(2.establish any rates for interconnection, services, or network
elements according to subsection (d) (of section 252).
The Commission may, under its own state law authority, impose additional requirements
pursuant to Section 252(e)(3) of the Act, as long as such requirements are consistent with the Act
and the FCC's regulations.
The Commission should make an affirmative finding that the rates, terms, and conditions
that it prescribes in this proceeding are consistent with the requirements of Sections 251 (b) and
(c), and 252( d) of the Act.
Section 252( d) sets forth the applicable pricing standards for interconnection and network
element charges as well as for transport and termination of traffic. Section 252( d)(1) that
d)eterminations by a State commission of the just and reasonable rate for the interconnection of
facilities and equipment. . . and the just and reasonable rate for the network elements. . . shall
(i) based on the cost (determined without reference to a rate-of-return or other rate-based
47 USC ~ 252( e); Implementation of the Local Competition Provisions of the Telecommunications Act of
1996, CC Docket No. 96-98, First Report and Order, 11 FCC Rcd. 13042, ~~ 233, 244 (1996) (Local CompetitionOrder). See also 47 U.C. ~ 251(d)(3) (contemplating that states may impose additional "access and
interconnection obligations" over and above those required by federal law). This Petition sets forth a detailed
explanation of Level 3's position on the key legal issues in dispute between the Parties with some references to
applicable provisions of the Act, FCC rulings and regulations, and certain state commission rulings. Level 3'
analysis of the Commission s prior rulings on these issues will be supplemented in the bench book or briefs
submitted to the Arbitrator during this proceeding.
PETITION FOR ARBITRATION
proceeding) of providing the interconnection or network element (whichever is applicable), and
(ii) nondiscriminatory, and (B) may include a reasonable profit." Section 252(d)(2)(A) further
states in pertinent part that "a State commission shall not consider the terms and conditions for
reciprocal compensation (for transport and termination) to be just and reasonable unless (i) such
terms and conditions provide for the mutual and reciprocal recovery by each carrier of costs
associated with the transport and termination on each carrier s network facilities of calls that
originate on the network facilities of another carrier; and (ii) such terms and conditions
determine such costs on the basis of a reasonable approximation of the additional costs of
terminating such calls.
UNRESOL VED ISSUES.
The Proposed Interconnection Agreement consists of the following:
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.
Section 20.
Section 21.0:
Section 22.
General Terms and Conditions
Interpretation and Construction
CLEC Information
Definitions
Terms and Conditions
Resale
Interconnecti on
Collocation
Unbundled Network Elements
Ancillary Services
Network Security
Access to Operational Support Systems (OSS)
Access to Telephone Numbers
Local Dialing Parity
Qwest D EX
Referral Announcement
Bona Fide Request Process
Audit Process
Construction Charges
Service Performance
Network Standards
Signature Page
47 U.C. ~ 252(d)(2)(A).
PETITION FOR ARBITRATION
The unresolved issues are set forth in the DPL, which is attached as Appendix B. The
DPL assigns each issue a number, identifies the section(s) of the Proposed Interconnection
Agreement that is (are) affected by the issue, and sets forth the positions and the proposed
language for the Interconnection Agreement of the Parties on each issue. As described in the
DPL terms and conditions to which the Parties have agreed are in normal text. Level 3' s contract
terms that Qwest opposes appear in bold underline text.Qwest's proposed terms that Level 3
opposes appear in bold italic text.
Despite reasonable attempts, Level 3 and Qwest could not reach agreement on the format
of the DPL. The attached DPL organizes the list of issues according to how they are presented in
this Petition. The proposed language of the actual agreement, which contains all terms
disputed and agreed upon -is attached as Appendix
Level 3 presents the disputed issues according to their relative importance in order to
simplify the presentation of the issues. Accordingly, Level 3 ranks only the most fundamental
interconnection issues as "Tier I issues These issues include, for example, whether Qwest
may compel Level 3 to establish more than a single point of interconnection per LA T A
forcing Level 3 to assume costs on Qwest's side of the network and whether Qwest may prohibit
Level 3 from exchanging all of Level 3' s traffic over the interconnection trunks established
under the Agreement.
While Tier II 12 issues are equally as important to Level 3 , most are derivative of
fundamental points of business, law and policy presented by Tier I issues. Thus, for example
should the Commission agree with the FCC and several state and federal courts that Level 3 may
Issues 1 A through J, 2A and 2B, 3A - C, and 4, and 5.
Issues 6 through 22.
PETITION FOR ARBITRATION
exchange IP Enabled (or Voice over IP
- "
VoIP") traffic over interconnection trunks, then
approval of Level 3' s proposed definition of "call record" which would allow the Parties to
identify and account for the exchange of such traffic is a relatively easy determination.
TIER I ISSUES
There are four unresolved Tier I issues, each of which relate to the rates, terms and
conditions that will govern how Level 3 and Qwest interconnect their networks and compensate
each other for the exchange of various types of traffic:
Issue 1:Whether each Party bears its own costs of exchanging traffic at a Single
Point of Interconnection per LATA.
Issue 2:Whether Level 3 may exchange all traffic over the interconnection trunks
established under the Agreement.
Issue 3:Whether Qwest's election to be subject to the ISP-Remand Order for the
exchange of ISP-bound traffic requires Qwest to compensate Level 3 for
ISP-bound Traffic at the rate of $0.0007 per minute of use.
Issue 4:Whether Qwest and Level 3 will compensate each other at the rate of
$0.0007 per minute of use for the exchange ofIP enabled or Voice over
Internet Protocol traffic.
Issue 5:Whether the Agreement should incorporate by reference, interconnection
terms and conditions that conflict with the specific terms of the
Interconnection Agreement at issue in this proceeding.
PETITION FOR ARBITRATION
TIER I - ISSUE NO.
Statement of the Issue: Whether Level 3 may exchange traffic at a single
point of interconnection ("SPOI") within a LATA in a manner whereby each party bears
the cost of interconnection on their side of the point of interconnection.
Sections of the Proposed Interconnection Agreement Affected:
Sections 7.1.1 , 7.1.1.1 , 7.1.1.2, 7.1.1.3, 7.1.1.4, 7.1.1.4., 7.1.2, 7.2.2.1.1 , 7.2.1.2.
2.2.1.4.1.1.3 1.1.3., 7.3., 7., 7., 7.3.
Level 3 Position.
Level 3 may establish a single Point of Interconnection ("SPOI") in each LATA at any
technically feasible point on Qwest's network for the exchange of traffic. These technically
feasible points include but are not limited to Qwest end offices and tandem offices. As a result
Level 3 may establish a SPOI through a Level 3 collocation at a Qwest wire center, a third party
collocation at a Qwest wire center, or through the establishment of transport facilities. Each
Party is solely responsible for all costs on its side of the Point of Interconnection. In other
words, Level 3 would have each party bear the costs of the facilities (i. e. the "highways" as it
were) as well as the costs of the trunking (i. e. the lines on the highways) to the point of
interconnection. Where necessary for purposes of network management, however, Level 3
agrees to coordinate trunking from Qwest's network to Level3's network to assist Qwest with
moving traffic off its tandems. Because Level 3 has constructed its own all IP network, it
requires no such assistance from Qwest on its side of the network.
13 In the Disputed Points List (DPL) filed contemporaneously with this Petition, there are seventeen (17)
subparts to this Issue Number 1: Issues 1 A through Issues 1J address disputed contract terms that relate to this
statement of the issue.
PETITION FOR ARBITRATION
Qwest Position.
Qwest proposes that Level 3 establish and pay for LIS trunk groups to each Qwest access
tandem in a LATA, or establish LIS trunk groups to each Qwest local tandem in a LA T A where
Level 3 desires to originate or terminate traffic. In addition, Qwest's terms shift to Level 3
Qwest's costs of transporting Qwest's own traffic from its end users to the Point of
Interconnection.
Basis for Level3's Position.
Section 252(c)(2) Requires that Qwest Permit a SPOI with Level3's Network
A Point of Interconnection ("POI") is the location where two carriers physically connect
their networks for the purpose of exchanging traffic. In this case, it is the place where Level 3
brings its facilities to connect to Qwest's existing network. Each party has control over its
network on its respective side of the POI. This allows each party to provide service according to
the technical requirements of its network, on its own side of the POI.
Qwest has dozens of switches in each LA T A, linked by one or more tandem switches.
The tandem and end office switch architecture was constructed by Qwest at a time when
monopoly regulation and then existing technology encouraged a dense star and hub architecture.
Since then technology and transport have evolved, as has the law. Under the Act, each party
bears its own costs to bring traffic to a single POI per LATA (though carriers often aggregate
traffic from areas much more vast for purposes of Internet peering). Thus, the most efficient way
for Level 3 - or any carrier, including Qwest when it competes out of region - to interconnect is
simply to establish a single point of interconnection, usually at or near one of the ILEC tandem
switches. Level 3 , accordingly, has constructed and interconnected its network in the most
efficient manner possible, and desires to continue to do so. Moreover, Level 3 will continue, at
PETITION FOR ARBITRATION
its own expense, to bring all traffic bound for Qwest's end users in a LATA to the SPOI.
Similarly, Qwest will, at its own expense, bring all traffic from its end users bound for Level 3 to
the SPOI. This efficient arrangement permits Level 3 to interconnect its network to a single
point on the incumbent's network, without the unnecessary expense and delay associated with
replicating century-old network architecture.
Section 251(c)(2) of the Act permits Level 3 to establish a single point of interconnection
for the exchange of all traffic, including interexchange traffic:
251 (c). In addition to the duties contained in subsection (b) of this
section, each incumbent local exchange carrier has the following
duties:
(2) Interconnection
The duty to provide, for the facilities and equipment of any
requesting telecommunications carrier, interconnection with the
local exchange carrier s network:
(A) for the transmission and routing of telephone exchange
service and exchange access;
(B) at any technically feasible point within the carriernetwork;
Section 51.100 of the FCC's rules requires that Qwest allow Level 3 to exchange all
traffic including information services traffic over a single point of interconnection it has
established for the exchange of telephone exchange service or exchange access traffic under 47
C. ~ 251(c)(2):
Sec. 51.100 General duty.
(a) Each telecommunications carrier has the duty:
(1) To interconnect directly or indirectly with the facilities
and equipment of other telecommunications carriers; and
PETITION FOR ARBITRATION
(b) A telecommunication carrier that has interconnected or gained
access under sections 251(a)(1), 251(c)(2), or 251(c)(3) of the Act
may offer information services through the same arrangement, so
long as it is offering telecommunications services through the same
arrangement as well. 47 C.F .R. ~ 51.100.
The FCC has stated definitively that CLECs such as Level 3 have the legal right under
Section 252 to select a single point of interconnection or POI on the ILEC's network. In the
Local Competition Order the FCC stated:
The interconnection obligation of section 251 (c )(2), discussed in this
section allows competing carriers to choose the most efficient points
at which to exchange traffic with incumbent LECs thereby lowering
the competing carriers' costs of among other things, transport and
termination of traffic.
The FCC has consistently applied the Act to prevent ILECs from increasing the CLEC'
costs by requiring multiple points of interconnection, or by ILEC efforts to shift costs to CLECs
in exchange for obtaining the right to establish a SPOI. For example, in its order approving
Southwestern Bell Telephone s ("SWBT") application for Section 271 authority in Texas, the
FCC stated that CLECs have the option to interconnect at as few as one technically feasible point
within each LATA:
New entrants may select the most efficient points at which to exchange
traffic with incumbent LECs, thereby lowering the competing carriers
cost of, among other things, transport and termination.
14 The FCC's specific inclusion of "information services" in this rule is highly significant, because, while
information services are always provided by means of "telecommunications see 47 U.C. ~ 153(20) (defming
information services ), they do not necessarily involve "telecommunications services.This parallels Section
251 (b)( 5)' s requirement that LECs such as Qwest establish reciprocal compensation arrangements "for the transport
and termination of telecommunications.47 V.C. ~ 251(b)(5) (emphasis added). See discussion of Issue Nos. 3
and 4 infra.
15 Local Competition Order at ~ 172 (emphasis added).
16 Application by SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell
Communications Services, Inc. d/b/a Southwestern Bell Long Distance Pursuant to Section 271 of the
Telecommunications Act of 1996 To Provide In-Region, InterLATA Services In Texas 15 FCC Rcd 18354, ~ 78
(2000).
PETITION FOR ARBITRATION
Further, the FCC stated in that Order:
Section 251 , and our implementing rules, require an incumbent LEC to
allow a competitive LEC to interconnect at any technically feasible
point. This means that a competitive LEC has the option to
interconnect at only one technically feasible point in each LATA.
Federal courts have also held that CLECs may interconnect at a Single Point of
Interconnection. In one case, the Third Circuit reversed and remanded a Pennsylvania Public
Service Commission decision requiring World Com to interconnect in each access tandem
serving area in Bell Atlantic-Pennsylvania s network.18 The Court explained that a CLEC'
decision on where or where not to interconnect is subject only to concerns of technical
feasibility19 and held that requiring multiple interconnection points could be costly and would be
inconsistent with the goals of the Act. 20 Specifically the Court stated:
To the degree that a state commission may have discretion in
determining whether there will be one or more interconnection points
within a LATA, the commission, in exercising that discretion, must
keep in mind whether the cost of interconnection at multiple points
will be prohibitive, creating a bar to competition in the local service
area. If only one interconnection is necessary, the requirement by the
commission that there be additional connections at an unnecessary cost
to the CLEC, would be inconsistent with the policy behind the ACt.
In another case, US WEST, the predecessor to Qwest, appealed an Arizona Corporation
Commission arbitration decision allowing AT&T to interconnect at a SPOI on US WEST'
network.22 The Ninth Circuit held that AT&T could choose to interconnect at a SPOI. The
Court stated "(a)n incumbent carrier denying a request for interconnection at a particular point
Id. (citing Local Competition Order at ~~ 172, 209) (emphasis added).
MCI Telecommunication Corp. v. Bell Atlantic-Pennsylvania 271 F.3d 491 517 (3rd Cir. 2001).
Id., 271 F.3d. at 518.
Id. at 517.
MCI Telecommunication Corp. v. Bell Atlantic-Pennsylvania 271 F.3d. at 517. (internal citations omitted).
US West Communications, Inc. v. Jennings 304 F.3d 950 960-961 (9th Cir. 2002).
PETITION FOR ARBITRATION
must prove interconnection at that point is not technically feasible" and held that, because US
West had not provided evidence that interconnection at a SPOI was technically infeasible, AT&T
was permitted to interconnect at a SPOI.23 And in April 2001 , the FCC succinctly stated that "
ILEC must allow a requesting telecommunications carrier to interconnect at any technically
feasible point, including the option to interconnect at a single PO I per LA T A. ,,
Section 252(c)(2) Requires that Each Carrier Bear the Cost to Bring its
Traffic to the SPOI.
Section 252( c )(2) further requires that each carrier bear its own costs to bring its
originated traffic to the Point of Interconnection. More specifically, Section 51.703(b) of the
federal interconnection rules provides that "a LEC may not assess charges on any other
telecommunications carrier for telecommunications traffic that originates on the LEC'
network." 47 C.R. ~ 51.703(b). In the Local Competition Order the FCC explained the basis
for its rule.
Given that the incumbent LEC will be providing interconnection to its
competitors pursuant to the purpose of the 1996 Act, the LEC has the
incentive to discriminate against its competitors by providing them less
favorable terms and conditions of interconnection than it provides itself?5
The FCC recognized, when it codified Rule 703(b), that the financial responsibilities for
interconnection for the exchange of traffic should be borne solely by each carrier on its side of
the POI. This rule prohibits carriers from shifting to other carriers the costs of transporting
traffic to the POI, instead requiring each carrier to bear the responsibility for the costs of
delivering its traffic to other carriers for termination.
Id.
24 In the Matter of Developing a Unified Intercarrier Compensation Mechanism, Notice of Proposed
Rulemaking, CC Docket No. 01-92 (reI. April 27, 2001) at ~ 112.
See Local Competition Order at ~ 218.
PETITION FOR ARBITRATION
In its Virginia Arbitration Order 26 the FCC addressed the principles relating to a CLEC'
right to select a POI and the obligation of the originating carrier to pay for its transport costs to
the POI. In that case, the ILEC (Verizon) proposed language that would have required AT&T to
deliver its traffic all the way to the ILEC end office. The ILEC further proposed that if AT&T
did not establish a POI at every ILEC end office, it would require AT&T to pay for the transport
costs that the ILEC incurred to deliver its own originating traffic from its originating switch to
AT&T's switch or POI. The FCC rejected the Verizon s proposed terms and found that 47
R. 51.703(b) prohibited Verizon from charging AT&T for traffic originating on the ILECs
network. 27
Recently, in Qwest v. Universal Telecom 2004 WL 2958421 , the court reaffirmed that an
originating carrier may not shift charges or costs it incurs in transporting its customers ' traffic to
a Point of Interconnection. Citing TSR Wireless, LLC v. US West Communications, Inc.
FCCR 11166, 11189, ~ 40 (2000i8 the court held that FCC decisions prohibit an ILEC, and
Qwest in particular, from imposing charges on a CLEC to recover Qwest's costs of transmitting
traffic delivered to a CLEC Point of Interconnection.
Similarly, in a dispute between BellSouth and MCI on this very point, the Fourth Circuit
held:
In sum, we are left with an unambiguous rule, the legality of which is
unchallenged, that prohibits the charge that Bellsouth seeks to impose.
Rule 703(b) is unequivocal in prohibiting LECs from levying charges
for traffic originating on their own networks, and, by its own terms,
admits of no exceptions. Although we find some surface appeal in
BellSouth'suggestion that the charge here is not reciprocal
26 In re Petition of AT&T Communications of Virginia Inc., Pursuant to Section 252(e)(5) of the
Communications Act for Preemption of the Jurisdiction of the Virginia Corporation Commission Regarding
Interconnection 17 FCC Rcd 27039 (2002) (Virginia Arbitration Order).
Id.
Aff'd sub nom. Qwest Corp. v. FCC 252 F.3d 462 (D.C. Cir. 2001.)
PETITION FOR ARBITRATION
compensation, but rather the permissible shifting of costs attending
interconnection, the FCC, as noted above, has endorsed cost-shifting
related to interconnection only as it relates to the one-time costs of
physical linkage, and in doing so, expressly declined the invitation to
extend the definition of "interconnection" to include the transport and
termination of traffic.
Level 3' s Interconnection Agreement reflects the applicable law, and the Interconnection
requirements imposed on both Qwest and Level 3 by Section 251. Qwest's proposed terms
including the entire SPOP Amendment must be rejected by the Commission.
ISSUE NO.
Statement of the Issue.
Whether Level 3 may exchange all traffic over the interconnection trunks established
under the Agreement.
Sections of the Proposed Interconnection Agreement Affected.
Section 7.2., 7.2.2.9.3.2.
Level 3 Position.
Level 3 has constructed a nationwide advanced fiber optic backbone. Where it
interconnects with incumbent LECs, such as Qwest, Level 3 has constructed or paid for
extensive co-carrier facilities capable of carrying all forms of traffic (i. e. interLA T A, Local, and
IntraLATA). Level 3 asks that the Commission confirm Level3's right to pass all forms of
traffic over this network without having to construct an additional network for various types of
calls. Level 3 proposes that the Parties will identify and bill for the various categories of traffic
29 MCImetro Access Transmission Services, Inc. v. BellSouth Telecommunications, Inc.352 F.3d 872, 881th Cir. 2003).30 In the Disputed Points List ("DPL") filed contemporaneously with this Petition, there are two (2) subparts
to this Issue Number 2: Issues 2 A and B address disputed contract terms that relate to this statement of the issue.
PETITION FOR ARBITRATION
by declaring Percent Local Usage ("PLU"), Percent Interstate Usage ("PIU"), and Percent IP
Usage ("PIPU") jurisdictional factors each month, subject to the right to audit and true-up.
Qwest Position.
Qwest seeks to require Level 3 to establish at least two separate trunk groups, one for
local and IntraLA T A traffic, and a second for InterLA T A, ISP-bound and VoIP traffic, unless
the ISP and VoIP provider s Point of Presence ("POP") is in the same local calling area as the
originating calling party (in which case Level 3 may use LIS trunks to exchange that traffic).
Qwest's proposal shifts costs to its competitor. It segregates traffic in a manner that eliminates
Qwest's obligation to compensate Level 3 for traffic Level 3 terminates on Qwest's behalf
particularly ISP-bound and VoIP traffic.
Basis for Level3's Position.
Section 251 (c) of the Act governs the legal duties related to interconnection of the ILEC
network. Pursuant to Section 251 (c )(2), Qwest is obligated to provide Level 3 with
interconnection "at any technically feasible point within its network" for "telephone exchange
service and exchange access" transmissions. Section 251 (c) reads in part as follows:
(c) Additional Obligations of Incumbent Local Exchange Carriers. - In
addition to the duties contained in subsection (b), each incumbent local
exchange carrier has the following duties:
*****
(2) Interconnection - The duty to provide, for the facilities and
equipment of any requesting telecommunications carrier, interconnection
with the local exchange carrier s network-
(A) for the transmission and routing of telephone exchange service and
exchange access;
(B) at any technically feasible point within the carrier s network;
PETITION FOR ARBITRATION
(C) that is at least equal in quality to that provided by the local exchange
carrier to itself or to any subsidiary, affiliate, or any other third party to
which the carrier provides interconnection; and
(D) on rates, terms, and conditions that are just, reasonable, and
nondiscriminatory, in accordance with the terms and conditions of the
agreement and the requirements of this section and section 252.
Section 51.100 of the FCC's rules requires that Qwest allow Level 3 to exchange all
traffic, including information and interexchange traffic, when it has established points of
interconnection for telecommunications exchange or exchange access traffic:
Sec. 51.100 General duty.
(a) Each telecommunications carrier has the duty:
(1) To interconnect directly or indirectly with the facilities and
equipment of other telecommunications carriers; and
*****
(b) A telecommunication carrier that has interconnected or gained access
under sections 251(a)(1), 251(c)(2), or 251(c)(3) of the Act, may offer
information services through the same arrangement, so long as it is
offering telecommunications services through the same arrangement as
well. 47 C.F .R. ~ 51.100 (emphasis added.
In addition, the federal rules make clear that interconnection may be established
for the exchange of all local and interexchange access traffic:
Sec. 51.305 Interconnection.
(a) An incumbent LEC shall provide, for the facilities and equipment of
any requesting telecommunications carrier, interconnection with the
incumbent LEC's network:
(1) For the transmission and routing of telephone exchange traffic
exchange access traffic, or both;
(2) At any technically feasible point within the incumbent LEC'
network including, at a minimum:
*****
(iii) The trunk interconnection points for a tandem switch;
*****
PETITION FOR ARBITRATION
(3) That is at a level of quality that is equal to that which the
incumbent LEC provides itself, a subsidiary, an affiliate, or any
other party, except as provided in paragraph (4) of this section.
a minimum this requires an incumbent LEC to design
interconnection facilities to meet the same technical criteria and
service standards that are used within the incumbent LEC'
network. This obligation is not limited to a consideration of
service quality as perceived by end users, and includes, but is not
limited to service quality as perceived by the requesting
telecommunications carrier;
(4) That, if so requested by a telecommunications carrier and to
the extent technically feasible, is superior in quality to that
provided by the incumbent LEC to itself or to any subsidiary,
affiliate, or any other party to which the incumbent LEC provides
interconnection.
Section 251 (c )(2) does not impose any jurisdictional restriction on the traffic, as Qwest
avers with its proposed "local interconnection service" trunk groups. Nor do the FCC's rules
impose such a jurisdictional requirement for interconnection. Section 251 (c )(2) expressly states
that ILECs must interconnect for the exchange of "telephone exchange service" and "exchange
access." The latter is, without question, often jurisdictionally interstate in nature. Similarly,
nothing in Section 251(c)(2) or the FCC's rules under it draws a distinction between "local" and
non-local" traffic for purposes of interconnection obligations or even reciprocal
compensation.
Section 251(c)(2) does give the requesting carrier, Level 3 , the right to choose the manner
in which the interconnection will take place. The ILEC, in turn, must provide the facilities and
equipment for interconnection at that point.
31 The FCC's intercarrier compensation rules, in 1996, made specific reference to "local" traffic. However
by 2001 the FCC had realized that the term "local" did not actually appear in the relevant portions of the statute, and
that using it had led to "ambiguities" and had been a "mistake " which the FCC undertook to "correct" at that time
by amending its rules to delete references to that term. See In the Matter of Intercarrier Compensation for ISP-
Bound Traffic, Order on Remand, CC Docket No. 99-, FCC 01-131 (reI. April 27, 2001) (ISP Remand Order) at ~
45. Of course, it is natural and appropriate to refer to "local" traffic in the context of retail offerings to end users;
the term causes confusion, however, when it is used to try to define relationships between interconnecting carriers.
PETITION FOR ARBITRATION
Level 3 has chosen to interconnect via a single physical interconnection facility meeting
at a specific point of interconnection in each LATA. Qwest's proposed contract terms seek to
impose a configuration whereby Level 3 must either establish separate facilities to different
locations, or to create a number of otherwise irrelevant "trunk groups" of traffic to be carried on
the facilities to the single interconnection point, but with no technical justification for doing so.
Level 3 understands that when the total amount of traffic between its network and a particular
Qwest end office reaches a certain level, sound network engineering calls for the establishment
of separate "trunk groups" on each parties' network that allow traffic to and from that end office
to be routed directly, rather than through Qwest's tandem switch. But the only relevant
consideration for such trunk groups is the Qwest end office to and from which the traffic is going
and coming. There is no technically sound reason to divide up traffic to or from the same end
office into different trunk groups based on the "type" of traffic it might be. Yet this costly and
technically inefficient division of traffic by "type " as opposed to by destination, is exactly what
Qwest is demanding.
F or this reason, Qwest's proposed terms have nothing to do with technical trunking
requirements or network design concerns. Qwest's insistence that Level 3 exchange interstate
traffic over Feature Group D (FGD) trunks is an attempt by Qwest to obtain access charges
all traffic that rides through those trunks, and ISP-bound and VoIP Traffic in particular. This
justification, however, is completely without merit; Qwest may not force Level 3 to interconnect
in such a manner that is based solely on Qwest desire to collect access charges.
Level 3' s Agreement permits the carriers to exchange all traffic over a common set of
interconnection trunks, and rely upon allocation factors to determine the compensation due.
Carriers nationwide, including Qwest, have traditionally utilized percentage allocations to
PETITION FOR ARBITRATION
determine billing and compensation responsibility. Carriers, including Level 3 , provide
auditable records to verify these traffic percentages.
The FCC Wireline Competition Bureau has made clear that ILECs may not force CLECs
to use multiple trunk groups as a way to govern the compensation that relates to the traffic that
flows through the trunks. In the Virginia Arbitration Order the FCC rejected the Verizon
efforts to do exactly what Qwest proposes to do through its proposed contract terms provisions:
We find Verizon s objection to AT&T's use of the term ESIT to be
lacking. As AT&T explains, the use of this term merely
recognizes the parties' agreement to exchange 251 (b)( 5) traffic and
toll traffic on the same trunk groups, applying a percentage of use
factor to determine the portion of traffic subject to reciprocal
compensation and the portion subject to access charges. Verizon
fails to explain how this does violence to Virginia s regime
governing intrastate access.
State Commissions that have addressed this issue, have specifically found that "economic
entry into the market requires that (the CLEC) be permitted to use its existing trunks for all
traffic whenever feasible. ,,
Level 3' s proposed Interconnection Agreement, consistent with this history, encourages
true facilities-based competition by permitting Level 3 to rely on existing network
interconnection configurations (built and established under the existing Qwest Interconnection
Agreement) to exchange Level 3' s customers ' traffic with Qwest. State Commissions have held
See Section 7.3., and Issue No. 14.
33
Virginia Arbitration Order at ~ 57.
34 In the Matter of the Application of Sprint Communications Company, LP. for Arbitration to Establish an
Interconnection Agreement with Ameritech Michigan MPSC Case No. U-11203, Order Approving Arbitration
Agreement with Modifications, Jan 15, 1997, pp. 4-5. See also, US West Communications v. MFS Intelenet, Inc.
193 F3d 1112, 1124-25 (9th Cir 1999).
PETITION FOR ARBITRATION
that the costs imposed on CLECs in the development of their interconnection plan are key
considerations in defining the terms and conditions of an Interconnection Agreement.
Level 3' s Section 7.1 reflects the applicable law, and the Interconnection
requirements imposed on both Qwest and Level 3 by Section 251. Qwest's proposed terms
including the entire SPOP Amendment must be rejected by the Commission.
ISSUE NO.
Statement of the Issue.
Whether Qwest may exclude ISP-bound traffic from compensation due under the FCC'
ISP Remand Order through contract terms that seek to create artificial geographic
designations of the ISP.
Sections of the Proposed Interconnection Agreement Affected.
Section 7., 7.3.6.3 , the Definition ofVNXX.
Level 3 Position.
Existing federal law requires Qwest to compensate Level 3 for terminating all ISP-bound
traffic originated by Qwest customers, and terminated to a Level 3 ISP. Under the terms of the
ISP Remand Order once Qwest elects to exchange local circuit switched traffic at the rate of
$0.0007 , all ISP-bound traffic is subject to that same rate.
Qwest Position.
Qwest asserts that it is permitted to deny intercarrier compensation for ISP-bound Traffic
unless the ISP is physically located within the calling area of the originating caller. Qwest
proposes terms that would provide for a rate of$0.0007 per minute of use for calls that originate
35
Re Southwestern Bell Telephone Company, Tx. PUC Docket No. 22315, Mar 14 2001.36 In the Disputed Points List (DPL) filed contemporaneously with this Petition, there are three (3) subparts to
this Issue Number 3: Issues 3 A through C address disputed contract terms that relate to this statement of the issue.
PETITION FOR ARBITRATION
and terminate within the Qwest-Iocal calling area (which does not govern Level3's local calling
area), and would apply a "bill and keep" arrangement for calls where the ISP is located
physically outside of the Qwest-Iocal calling area of the party originating the calls. Qwest'
proposed terms are not based on an accurate reflection of the current state of the law. As the
FCC found in the Vonage Order Information Services Traffic has no "local" area - all such
traffic is jurisdictionally indeterminate.
Basis for Level3's Position.
Qwest Opted Into the Fee'ISP Remand Order Compensation Regime.
Section 251 (b )( 5) of the Act imposes on each local exchange carrier ("LEC"
) "
the duty to
establish reciprocal compensation arrangements for the transport and termination of
telecommunications. ,,37 With respect to reciprocal compensation obligations, under the Act
Section 251 (b )( 5) applies to all telecommunications traffic, irrespective of where the calling and
the called parties are physically located. Section 251 (b )( 5) applies to "the transport and
termination of telecommunications.
In the ISP Remand Order 38 the FCC found that all telecommunications traffic is subject
to reciprocal compensation arrangements unless it falls within the exemptions established by
Section 251(g) of the Act (47 U.C. ~251(g)). In addition, the ISP Remand Order ordered that
ILECs have the option of electing to exchange telecommunications traffic under Section
251(b)(5) at the rate of$0.0007 per minute of use, or the state-commission approved reciprocal
compensation rate. For those ILECs that elect to exchange telecommunications traffic at
47 USC ~ 251(b)(5).
38 In the Matter of lntercarrier Compensation for ISP-Bound Traffic Order on Remand, CC Docket No. 99-
, FCC 01-131 (reI. April 27, 2001.) (ISP Remand Order).
PETITION FOR ARBITRATION
$0.0007 per minute of use, FCC Rules require them to exchange ISP-bound traffic at the same
rate of $0.0007 per minute of use.
Upon information and belief, Qwest has elected to exchange telecommunications traffic
under Section 251(b)(5) under the FCC'ISP Remand Order compensation regime. Qwest'
contract proposals, however, provide numerous exceptions to Qwest's compensation obligations
limit the type of traffic subject to compensation, and selectively use the reciprocal compensation
regime that the FCC sought to eliminate in the ISP Remand Order:
It would be unwise as a policy matter, and patently unfair, to allow
incumbent LECs to benefit from reduced intercarrier compensation rates
for ISP-bound traffic with respect to which they are net payors, while
permitting them to exchange traffic at state reciprocal compensation rates
which are much higher than the caps we adopt here, when the traffic
imbalance is reversed. Because we are concerned about the superior
bargaining power of incumbent LECs, we will not allow them to "pick
and choose" intercarrier compensation regimes, depending on the nature
of the traffic exchanged with another carrier. The rate caps for ISP-bound
traffic that we adopt here apply only if an incumbent LEC offers to
exchange all traffic subject to 251(b)(5) at the same rate.
Because Qwest has opted into the FCC's compensation regime adopted in the ISP
Remand Order for Section 251 (b )( 5) traffic, Qwest is required to compensate Level 3 at the rate
of $0.0007 per minute of use for all ISP-Bound Traffic. The ISP Remand Order makes clear that
the federal compensation regime of $0.0007 applies to all ISP-bound traffic: "We conclude that
this definition of 'information access' was meant to include all access traffic that was routed by a
LEC 'to or from' providers of information services , of which ISPs are a subset. ,,
Level3's contract terms are supported by the FCC Core Forbearance Order which
addressed Core s petition requesting the FCC refrain from enforcing the provisions of the ISP
Remand Order. In summarizing its ISP Remand Order the FCC stated that:
Id. at' 89 (emphasis in original).
Id. at ~ 44 (emphasis added).
PETITION FOR ARBITRATION
Its Growth Cap rules "imposed a cap on total ISP-Bound minutes for
which a LEC may receive this (intercarrier) compensation equal to the
total ISP-Bound minutes for which the LEC was previously entitled
compensation, plus a 10 percent growth factor. ,,41 and
Its New Market rules allowed two carriers to exchange traffic on a bill-
and-keep basis if the two carriers were not exchanging traffic prior to
adoption of the ISP Remand Order and the ILEC "has opted into the
federal rate caps/or ISP-Bound traffic.
The FCC's decisions on ISP-bound traffic reject any differentiation of ISP- Bound traffic
based on the location of the originating and terminating NP A-NXX; and reject any
differentiation on the basis of the physical geographic location of the calling and called parties.
The FCC further found that the Growth Cap and New Market Rules adopted in the ISP Remand
Order that imposed a bill and keep regime for ISP-Bound traffic "are no longer necessary to
ensure that charges and practices are just and reasonable, and not unjustly or unreasonably
discriminatory. ,,
In AT&T Communications of Illinois v. fllinois Bell Telephone Company, 2005 WL
820412 (2005), the federal court reversed an Illinois Commerce Commission Arbitration
decision that approved language similar to that proposed here by Qwest. The court first noted
that the Act requires local telecommunications carriers to connect their networks so that
customers of various carriers can call one another, 47 U.C. ~ 251(c)(2), but it does not require
carriers to terminate, or complete, each other s calls free of charge. Rather, the Act envisions
reciprocal compensation" in which carriers pay each other a fee to terminate calls to their
41 Petition of Core Communications, Inc. for Forbearance Under 47 Us.e. 160(c) from Application of the
ISP Remand Order, Order, FCC 04-241 , WC Docket No. 03-171 (reI. Oct. 18 2004) (Core Forbearance Order),
Id.
Id. at ~ 24.
PETITION FOR ARBITRATION
customers. 47 U.C. ~ 251(b)(5) (stating that each ILEC has "(tJhe duty to establish reciprocal
compensation arrangements for the transport and termination of telecommunications
The court further held that ILECs, like Qwest, would not be permitted to "pick and
choose " intercarrier compensation rates once they elected to be bound by the ISP rate regime.
The court held that the ISP Remand Order explicitly states that ILECs must charge the same
rate for ISP-bound traffic, which is excluded from 251(b)(5), as it does for traffic that is subject
to that section.
The FCC Wire line Competition Bureau has also rejected ILEC efforts to impose bill and
keep for ISP-Bound traffic. In the Virginia Arbitration Order Verizon s contract terms were
summarized as follows:
Verizon objects to the petitioners' call rating regime because it allows
them to provide a virtual foreign exchange ("virtual FX") service that
obligates V erizon to pay reciprocal compensation, while denying it access
revenues, for calls that go between Verizon s legacy rate centers. This
virtual FX service also denies Verizon the toll revenues that it would have
received if it had transported these calls entirely on its own network as
intraLATA toll traffic. Verizon argues simply that "toll" rating should be
accomplished by comparing the geographical locations of the starting and
ending points of a call.
The FCC rejected Verizon s attempts to impose a bill and keep regime for FX ISP-Bound
traffic:
We agree with the petitioners that Verizon has offered no viable
alternative to the current system, under which carriers rate calls by
comparing the originating and terminating NPA-NXX codes.
therefore accept the petitioners ' proposed language and reject Verizon
language that would rate calls according to their geographical end
points. Verizon concedes that NP A-NXX rating is the established
Id.
45
, citing ISP Remand Order at ~ 89. See also, Southern New England Telephone Company v. MCI 359
Supp.2nd 229 (D. Conn. March 16 2005.
Virginia Arbitration Order at ~ 286.
PETITION FOR ARBITRATION
compensation mechanism not only for itself, but industry-wide. The
parties all agree that rating calls by their geographical starting and ending
points raises billing and technical issues that have no concrete, workable
solutions at this time.47 (emphasis added).
Just as the FCC Wire line Competition Bureau rejected the ILEC's attempt to impose a bill and
keep compensation regime for ISP-Bound FX Traffic, so too should this Commission. In fact
under the FCC's holding in the ISP Remand Order mandating that only the FCC can establish
intercarrier compensation rules for ISP-Bound traffic, the only manner in which the Commission
can address the underlying issue raised in this arbitration is to adopt Level3's proposal to apply a
uniform rate of compensation for all ISP-bound traffic.
b) There Is No Difference between Qwest's Costs in Handling VNXX ISP-
Bound and ISP-Bound Traffic.
Putting aside the fact that the FCC has fixed the rate of compensation for all ISP-Bound
traffic, the Commission should still adopt Level 3' s proposed terms. Because all traffic
originated by Qwest and terminated to Level 3 is routed to the Single Point of Interconnection
Qwest's costs and obligation in terminating its customers ' traffic is the same , regardless of the
physical location of the terminating ISP. All calls are exchanged with Level 3 at the Point of
Interconnection.
Consequently, Qwest incurs no additional costs for completing an FX or VNXX ISP-
bound call than it would any other type of call terminated at the Level 3 POI. Because Qwest'
costs to bring a call to the POI are the same regardless of the nature of the call, there is no
economic justification for treating these calls differently from any other locally dialed call.
Virginia Arbitration Order at ~ 301.
PETITION FOR ARBITRATION
c) Other State Commissions Have Found ISP-Bound Traffic to be Compensable
and have Rejected Bill and Keep.
Most state commissions that have considered the question of the appropriate rate of
compensation for ISP-bound traffic, have reached the same result articulated in the FCC Virginia
Arbitration Order. For example, the Kentucky Public Service Commission found that a CLEC'
FX service should be treated the same as BellSouth's FX service, and both services should be
treated as local traffic:
Both utilities offer a local telephone number to a person residing outside
the local calling area. BellSouth's service is called foreign exchange
FX") service and Level 3 's service is called virtual NXX service. The
traffic in question is dialed as a local call by the calling party. BellSouth
agrees that it rates foreign exchange traffic as local traffic for retail
purposes. These calls are billed to customers as local traffic. If they were
treated differently here, BellSouth would be required to track all phone
numbers that are foreign exchange or virtual NXX type service and
remove these from what would otherwise be considered local calls for
which reciprocal compensation is due. This practice would
unreasonable given the historical treatment of foreign exchange traffic as
local traffic. Accordingly, the Commission finds that foreign exchange
and virtual NXX services should be considered local traffic when the
customer is physically located within the same LATA a( s J the calling area
with which the telephone number is associatedA8
These decisions are consistent with the results reached by, among others, the North Carolina
Utilities Commission.
Importantly, several state commissions, including the California Commission, have
recognized that the ISP Remand Order addressed all ISP-bound traffic, including traffic to ISPs
using FX-like arrangements. The California Commission, like its fellow commissions in New
48 Petition of Level Communications LLC for Arbitration with BellSouth Telecommunications, Inc.
Pursuant to Section 252(b) of the Communications Act of 1934 as Amended by the Telecommunications Act of
1996, Case No. 2000-404, Order, at 7 (Ky. PSC Mar. 14 2001).
MCI Recommended Arbitration Order at 67-74.
PETITION FOR ARBITRATION
Hampshire and Alabama, recognized the FCC's exclusive jurisdiction over intercarrier
compensation for ISP-bound traffic to virtual NXX customers.
Similarly, the Public Utilities Commission of Ohio stated
, "
The Commission agrees. . .
that all calls to FXlvirtual NXX (numbers) that are also ISP-bound are subject to the inter-carrier
compensation regime set forth in the ISP Remand Order.
The Connecticut Department of Public Utility Control has ruled, also in the context of
FX-like traffic to ISPs
, "
that intercarrier compensation for ISP-bound traffic is within the
jurisdiction of the FCC and that on a going forward basis, the Department has been preempted
from addressing the issue beyond the effective date of the ISP Order (June 14, 2001)."s2
The Florida Commission also issued a decision regarding intercarrier compensation and
virtual NXX issues stating that "due to the FCC's recent ISP Remand Order which removes ISP-
bound traffic from state jurisdiction, this issue is limited to intercarrier compensation
arrangements for traffic that is delivered to non-ISP customers."S3
50 Global NAPs, Inc. (U-6449-C) Petition for Arbitration of an Interconnection Agreement with Pacific Bell
Telephone Company Pursuant to Section 252(b) of the Telecommunications Act of 1996, A.OI-II-045 , A.01-12-026
Opinion Adopting Final Arbitrator s Report With Modification (CaI. PUC July 5, 2002); Investigation as to Whether
Certain Calls are Local DT 00-223 Independent Telephone Companies and Competitive Local Exchange Carriers
Local Calling Areas DT 00-054, Final Order, Order No. 24 080 (NH PUC Oct. 28, 2002); Declaratory Ruling
Concerning the Usage of Local Interconnection Services for the Provision of Virtual NXX Service Docket 28906
Declaratory Order (Ala. PSC Apr. 29, 2004).
51 Allegiance Telecom of Ohio, Inc. Petition for Arbitration of Interconnection Rates, Terms, and
Conditions, and Related Arrangements with Ameritech Ohio Case No. 01-724-TP-ARB, Arbitration Award (PUC
Ohio Oct. 4, 2001) at 9. See also, Petition of Global NAPs, Inc. for Arbitration of Interconnection Rates, Terms,
and Conditions and Related Arrangements with United Telephone Company of Ohio dba Sprint Case Nos. 01-2811-
TP-ARB, 01-3096-TP-ARB (PUC Ohio May 9 2002) (same result).
52 DPUC Investigation of the Payment of Mutual Compensation for Local Calls Carried Over Foreign
Exchange Service Facilities Dkt. No. 01-01-29 (Conn. DPUC Jan. 30, 2002) at 41-
53 Investigation into appropriate methods to compensate carriers for exchange of traffic subject to Section
251 of the Telecommunications Act of 1996, Docket No. 000075-, Order on Reciprocal Compensation, Phases II
and IIA, Order No. PSC-02-1248-FOF-TP (Fla. PSC Sept. 10 2002), at 26.
PETITION FOR ARBITRATION
The ISP Remand Order makes clear that the federal ISP-bound traffic compensation
regime applies to all ISP-bound traffic: "We conclude that this definition of 'information access
was meant to include all access traffic that was routed by a LEC 'to or from' providers of
information services, of which ISPs are a subset.,,54 Nowhere does the ISP Remand Order limit
its regime to "local" ISP-bound traffic. 55 To the contrary, as noted above
, the ISP Remand Order
rejected the use of the term "local" as relevant to intercarrier compensation for ISP-bound calls.
Indeed, the FCC found that its initial reliance (in its 1996-era rules) on the non-statutory term
local" had been "mistaken " and had created "ambiguities" on this point. 56 One purpose of the
ISP Remand Order was to "correct that mistake 57 which the FCC did, as noted above, by
establishing a uniform rule for compensation of all information access traffic " which includes
ISP-bound traffic.
Consequently, this Commission must reject Qwest's proposed Section 7.6.3, and adopt
Level 3' s contract terms.
ISSUE NO.
Statement of the Issue.
Whether the Parties will compensate each other the rate of $0.0007 for the exchange of
Voice over Internet Protocol ("VoIP") traffic.
54
ISP Remand Order at ~ 44 (emphasis added).55 The FCC was fully aware that CLECs were using foreign exchange-like ("FX-like ) arrangements to serve
ISPs long before the ISP Remand Order was released. Several carriers-both ILECs and CLECs, asked the FCC to
include FX-like traffic within the scope of the order. See ex parte filings in FCC CC Docket No. 99-68: Letter dated
March 28, 2001 ftom Gary L. Phillips SBC Telecommunications, Inc., to Dorothy Attwood, Chief, Common
Carrier Bureau, Federal Communications Commission, at 3; Letter dated March 7, 2001 ftom Susanne Guyer
Verizon, to Dorothy Attwood, at 2-3; Letter dated December 13, 2000 ftom John T. Nakahata, Counsel to Level 3
Communications, to Magalie Roman Salas, Secretary, Federal Communications Commission, at 1.
ISP Remand Order at ~~ 45-46.
Id.
PETITION FOR ARBITRATION
Sections of the Proposed Interconnection Agreement Affected.
Section 7.3.4.
Level 3 Position.
Level 3 seeks to use the interconnection network it has constructed and additional
facilities it may construct in the future to exchange IP Enabled and VoIP Traffic between its
network and Qwest's. Level 3' s 16 000 route-mile network within the continental United States
is optimized to provide advanced telecommunications and enhanced services. 58 Level 3'
network also extends to Europe and is connected with international routes worldwide. Level 3
also designed its facilities to permit connections to the PSTN. Level 3 requires the ability to
interconnect with Qwest for a variety of Internet Protocol-enabled signals, including VoIP.
Level 3 has invested billions of dollars to build and optimize its network, and provides a service
to Qwest by terminating Qwest's originating VoIP traffic. Accordingly, Level 3 seeks
compensation for terminating Qwest's originating VoIP traffic.
Qwest Position.
Qwest's position is that regardless of whether VoIP traffic is an information or
telecommunications service, if a Qwest customer originates a VoIP call to a Level 3 customer
Qwest is not obligated to compensate Level 3 to terminate that call.
58 Level 3' s name evokes the fact that Level 3' s network is uniquely designed and operated on an end-to-end
basis to optimize the end user customer s ability to fully exploit the benefits ofIP technology. More specifically, the
name itself "Level 3" refers to the fact that Level 3 provides the three essential building blocks of a fully optimized
facilities-based network capable of leveraging all of the benefits that Internet enabled technologies have to offer.
the physical level ("level 1) Level 3 constructed a 16 000 mile fiber optic backbone within the continental United
States. Level 3 has also constructed 2 undersea cables connecting the U.S. network to its approximately 9 000 route
mile network in Europe. Level 3 amplifies signals traveling within its network every 60 miles and reconstitutes
reconfigures and regenerates signals every 240 miles to ensure the highest quality transmission with the lowest
possible degradation in service. Level 3 also provides interconnection and collocation services at Level 3 gateway
facilities nationwide. At the data level ("level 2") Level 3 provides the most advanced network capabilities to
permit other carriers and end user customers to exchange vast quantities of traffic every day. At the network level
level 3") Level 3 has optimized the entire network to seamlessly and transparently permit carrier customers and
end users the ability to leverage the full benefits of the IP family of protocols unfettered by constraints imposed by
circuit switched or other older technologies.
PETITION FOR ARBITRATION
Basis for Level3's Position.
1) VoIP Traffic is a form of Information Service Traffic Like ISP-Bound
traffic.
The Act gives the FCC extensive authority over all "common carriers " defined as all
. ",. "" .
" 'iQpersons" engagea as a common carrIer lor nue, In Interstate ana foreign communICatIOns. - Iitle
II of the Act requires, among other things, that common carriers provide service at just and
reasonable prices, and avoid unreasonable discrimination among customers. Over the years, the
FCC has interpreted Title II to apply only to carriers that provide "basic" service.
In the 1960s, the FCC responded to the development of the computer-based data
processing industry by distinguishing between regulated telecommunications service and
unregulated data processing service. Under its previously effective rules, data processors that
used dedicated transport to haul data traffic could be characterized as telecom resellers, subject
to full regulation on the state and federal level, and the FCC did not want to subject data
processors to this regulatory burden. In addition, the FCC was concerned that telecom common
carriers entering the data processing service market might either pass along the cost of their data
processing investments to captive ratepayers or take advantage of their telecommunications
facilities to unfairly disadvantage their data processing competitors.60 By 1980, the
differentiation between "data processing" and "telecommunications" had become unworkable.
Consequently, in its Computer II decision, the FCC refined the distinction by developing the
categories of unregulated "enhanced service" and fully regulated "basic service.
47 U.C. ~ 153(10).
60 See Regulatory and Policy Problems Presented by the Interdependence of Computer and Communication
Services and Facilities, 28 FCC 2d 267 (1971) (Computer I).
61 See Amendment of Section 64.702 of the Commission s Rules and Regulations (Second Computer Inquiry),
77 FCC 2d 384 (1980) (Computer II).
PETITION FOR ARBITRATION
The FCC defined "basic service" as the provision of "pure transmission capability over a
communications path that is virtually transparent in terms of its interaction with customer-
supplied information. ,,62 Enhanced services were defined as services "offered over common
carrier transmission facilities used in interstate communications, which employ computer
processing applications that act on the format, content, code, protocol or similar aspects of the
subscriber s transmitted information; provide the subscriber additional, different, or restructured
information; or involve subscriber interaction with stored information.63
Under Computer II,
basic services were to be offered under regulated tariffs, while enhanced services were
unre gulated.
The purpose of these categories was to ensure that the "licensed transmission facilities of
a carrier are equally available to all providers of enhanced services " to minimize "the potential
for a carrier to use its transmission facilities to improperly subsidize an enhanced data processing
service without detection " and to benefit consumers by "enabling resale entities to custom-tailor
services to individual user needs. ,,64 Thus, the goal of the FCC in creating the categories was to
enhance competition and foster increased technological development in the computer industry by
keeping it free from regulation. Concerns about regulation of enhanced services extended to
regulation by state governments, and the FCC prohibited state regulation of enhanced services.
When Congress passed the Telecommunications Act of 1996, it generally retained the
FCC's basic vs. enhanced distinction. However, the Act used different terminology. The Act
defines "telecommunications service" as the "offering of telecommunications for a fee directly to
62 Computer II 77 FCC 2d at 420.
63
Id; see also 47 C.R. ~ 64.702.
64 Computer II 77 FCC 2d at 417.
65 Computer II 77 FCC 2d at 387. See also Amendment to Section 64.702 of the Commission s Rules and
Regulations (Third Computer Inquiry), 2 FCC Rcd 3072, at ~~18, 46 (Computer III).
PETITION FOR ARBITRATION
the public or to such classes of users as to be effectively available directly to the public
regardless of the facilities used.66 The term "telecommunications" is defined as "transmission
between or among points specified by the user, of information of the user s choosing, without
change in the form or content of the information as sent and received. ,,67 In contrast, the Act
defines an "information service" as "the offering of a capability for generating, acquiring,
storing, transforming, processing, retrieving, utilizing, or making available information via
telecommunications, and includes electronic publishing, but does not include the use of any such
capability for the management, control, or operation of a telecommunications system or the
management of a telecommunications service. ,,
The FCC's enhancedlbasic service regulatory dichotomy was developed to promote the
growth of data processing and other computer-related services by excluding them from Title II
regulation. The FCC took the same position with respect to enhanced services providers' access
to the Public Switched Telephone Network ("PSTN.) Specifically, in establishing the access
charge system for long-distance calls, the FCC in 1983 treated enhanced service providers
ESPs ) as "end users " rather than as "interexchange carriers." 69 It reaffirmed this decision in
1991 , and 1997.70 In 1997, the Commission expressly recognized that treating ESPs as end users
advanced the goals of the Act:
We conclude that the existing pricing structure for ISPs should remain in
place, and incumbent LECs will not be permitted to assess interstate per-
66 47 U.C. ~ 153(46).67 47 U.C. ~ 153(43).68 47 U.C. ~ 153(20). The Act's definition of "information services" appears to have been drawn more
from the Modification of Final Judgment that broke up the Bell System in 1984. See United States v. Western Elec.
Co., 552 F. Supp. 131 (D.C. 1982).
69 See In the Matter of MTS WATS Market Structure 97 FCC 2d 682, 711-15 (1983).
70 In the Matter of Access Charge Reform First Report and Order, 12 FCC Rcd 15982 (1997) (Access Charge
Reform Order).
PETITION FOR ARBITRATION
minute access charges on ISPs. We think it possible that had access rates
applied to ISPs over the last 14 years, the pace of development of the
Internet and other services may not have been so rapid. Maintaining the
existing pricing structure for these services avoids disrupting the still-
evolving information services industry and advances the goals of the 1996
Act to "preserve the vibrant and competitive free market that presently
exists for the Internet and other interactive computer services, unfettered
by Federal or State regulation.
The FCC has consistently determined that, like ISP-bound traffic, IP- Enabled Services
are (1) Information Services and (2) are Interstate in nature.
Because IP-Enabled Services traffic is a form of information services traffic, the
functions involved in the "transport and termination" of such traffic is legally identical to those
same functions when provided in the context of ISP-bound traffic. Indeed, as noted above, the
FCC found that ISP-bound traffic is essentially just a subset of the larger set of "information
access" traffic that two interconnected carriers might exchange. As a result, the only logical
conclusion is that the FCC's $0.0007/minute compensation regime applicable to ISP-bound
traffic would apply to other information services traffic as well, including IP-Enabled Services
traffic such as V oIP.
2) Intercarrier Compensation at the rate of $0.0007 per minute of use Would
Promote the Public Interest.
As with ISP-bound information services, where the FCC has ordered ILECs to
compensate CLECs for the exchange of ISP-bound information traffic, Level 3 proposes
language that requires the Parties to reciprocally compensate each other for the exchange of
VoIP traffic at the rate of $0.0007 per minute ofuse.
Access Charge Reform 12 FCC Rcd at 16133.72
In the Vonage Order the FCC concluded that it has not yet reached a conclusion on the appropriate
compensation for the exchange ofVoIP or IP Enabled traffic. Level 3's proposal here is subject to the FCC's fmal
conclusions on this issue.
PETITION FOR ARBITRATION
Qwest's proposal to deny compensation for the exchange ofVoIP traffic would
disadvantage IP-Enabled service providers and protect ILECs' dominance in local markets. New
IP-Enabled services such as cable-based VoIP increasingly offer full substitutes for local calling
services. Indeed, IP-Enabled services allow other delivery platforms - such as cable - to
compete with ILECs' existing bundled local and long distance service offerings. Against this
backdrop, Qwest's proposal to refuse intercarrier compensation for the exchange of traffic is
anticompetitive, unworkable and contrary to the goals and objectives of Section 251 (b)( 5), which
establishes a "duty to establish reciprocal compensation arrangements for the transport and
termination oftelecommunications.,,73 Restricting intercarrier compensation for the exchange of
IP Enabled or VoIP traffic would subvert Congress s express goal of encouraging IP-based
innovation. 74
F or these reasons, the Commission should adopt Level 3' s proposed contract terms that
would provide for the exchange of compensation at the rate of $0.0007 per minute of use, the
same rate that applies to the exchange of ISP-bound traffic.
73 47 U.C. ~ 251(b)(5). As noted above, even if information services traffic does not qualify as
telecommunications service traffic, by the very definition of "information services " such traffic is conveyed "via
telecommunications." At the same time, Section 251(b)(5) requires the establishment of reciprocal compensation
not for the transport and termination of "telecommunications services,but rather for the transport and termination
of "telecommunications.It follows that reciprocal compensation obligations in this case, the $0.0007 per
minute rate apply to the exchange of information services traffic such as the VoIP traffic at issue here.
74 See, e.
g.,
47 U.C. ~ 230(b)(2) ("It is the policy of the United States. . . to preserve the vibrant and
competitive free market that exists for the Internet and other interactive computer services, unfettered by Federal or
State regulation. "
PETITION FOR ARBITRATION
ISSUE NO.
Statement of the Issue.
Whether the Agreement should incorporate by reference, interconnection terms and
conditions that conflict with the specific terms of the Interconnection Agreement at issue in this
proceeding.
Sections of the Proposed Interconnection Agreement Affected.
Each reference by Qwest in the Agreement to Qwest's Statement of Generally Available
terms. See for example, Qwest's attempt to adopt terms defined in its SGA T in the definitions
section, and Sections 5., 5., 5.12.1 , 5.12., 5., 5.15., 5.16.1.1 , 5.16., 5.18., 5.18.
23., 5.27.1 , 5.30., 6., 6.2.2., 6., 6.2.3., 6.3.1b, 6.3.1c, 6.2.
, 6., 6.2., 6.4., 7., etc.
Level 3 Position.
Throughout Qwest's proposed draft of the Agreement, Qwest attempts to incorporate by
reference, without consent by Level 3 , varying and undefined terms into this Interconnection
Agreement by making reference to the Statement of Generally Available Terms" or "SGA T" on
file with the Commission. While Qwest may make Interconnection available to Level 3 through
the terms and conditions of its SGAT, Qwest may not modify the terms of this Agreement with
unknown and undefined references to its SGA
The parties have already agreed in Section 5.2.1 of the Agreement that Level 3 may
obtain Interconnection services under the terms and conditions of a then-existing SGA T or
agreement to become effective at the conclusion of the term or prior to the conclusion of the term
if Level 3 so chooses. However, Qwest may not pick and choose unspecified and possibly
inconsistent terms and conditions from the SGA T to modify its obligations under the Agreement.
PETITION FOR ARBITRATION
The Commission should strike from the Agreement any attempt by Qwest to incorporate
into this Agreement, unspecified provisions of the SGA
TIER II ISSUES.
The Tier II issues concern language within the Agreement that requires modification so
that the Agreement is internally consistent, commercially reasonable, and in compliance with
applicable laws.
Issue No.
Statement of the Issue.
Because Level 3 does not have "Switch Technology , should the Agreement provide that
Automated Message Accounting ("AMA") records are inherent in the parties' network.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Automated Message Accounting.
Level 3 Position.
Automated Message Accounting is term of art that generally refers to the sequence of
information associated with calls. Qwest seeks to impose a definition of Automated Message
Accounting or "AMA" on Level 3 that provides a billing record structure that is currently
inherent in circuit switches. However, Level 3 operates Gateways and softswitches, not circuit
switches. Therefore, if both parties are to provide message accounting, the Agreement should
not indicate that such "AMA" structures are an inherent part of both parties' networks.
PETITION FOR ARBITRATION
Issue No.
Statement of the Issue
Whether the Agreement should provide that End User Customers are those customers that
are on the public switched telecommunications network, and that end users only
exchange calls to or from the public switched telecommunications network.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Basic Exchange Telecommunications Service.
Level 3 Position.
Level 3 provides IP Enabled services whereby Level 3' s customers complete Voice over
IP telecommunications. Qwest's proposed definition would describe the services subject to this
Agreement as only those communications where an end user that obtains service from the public
switched telecommunications network, place calls to, or receive calls from, other stations on the
public switched telecommunications network. This definition is unnecessary, and excludes the
types of IP Enabled traffic that is exchanged with Level 3. Level 3 opposes the definition in its
entirety.
Issue No.
Statement of the Issue
Should the Parties' be permitted to agree on the types of call record information.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Call Record.
Level 3 Position.
PETITION FOR ARBITRATION
This issue is directly linked with Level 3' s proposals for the exchange of intercarrier
compensation. Level 3 proposes that the parties use "Call Records" in exchanging billing
information. The "Call Record" reference allows for more flexibility for the Parties to agree to
new or different technologies in recording. Qwest's proposed "CPN" reference limits the Parties
to only that form of technology. Further, the technology does not exist that will allow for "CPN"
to be included in the call flow of IP-Enabled Traffic. Qwest's proposed definition of "Call
Record" locks in place the types of information that the Parties will exchange to track calls
monitor compensation, and establish billing records. Under Qwest's proposal
, "
Call Record"
shall include only the following: charge number, Calling Party Number ("CPN"), Other Carrier
Number ("OCN"), Automatic Number Identifier ("ANI"), or Originating Line Indicator ("OLI"
Level proposes that the Parties leave open the option to exchange additional information that
may be relevant and useful.
In light of the FCC'Vonage Order which addresses and defines VoIP services, Qwest'
proposed term cannot be sustained. Qwest would have the Commission adopt a set of billing and
record standards that cannot apply to IP-PSTN traffic. Level3's terms merely allow the Parties
the ability to be flexible in the exchange of call records and formats that will allow them to adapt
to the changing environment.
Issue No.
Statement of the Issue
What is the proper definition of "exchange access
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Exchange Access.
Level 3 Position.
PETITION FOR ARBITRATION
Level 3 proposes to define the term "Exchange Access" in accordance with Section 153
of the Act: The term "Exchange Access" means the offering of access to telephone exchange
services or facilities for the purpose of the origination or termination of telephone toll services.
It is not clear the basis for Qwest's opposition to this definition.
10.Issue No.1 O.
Statement of the Issue
Should the definition of "Interconnection" include terms that would exclude the Parties
from exchanging VoIP traffic, and certain ISP-bound traffic.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Interconnection.
Level 3 Position.
Qwest's proposed definition of "Interconnection" describes the types of traffic that may
be exchanged by the Parties. However, Qwest's definition excludes VoIP traffic. Qwest'
proposed definition should be rejected because it is a back-door attempt to regulate the types of
traffic that may be exchanged between the Parties. Level 3' s definition of Interconnection
identifies all forms of traffic that may be exchanged between the Parties, and most closely
matches the terms of the Act.
11.Issue No. 11.
Statement of the Issue
Should the definition of "Interexchange Carrier" be defined by relying on a type of traffic
that is defined by the federal Communications Act.
Sections of the Proposed Interconnection Agreement Affected.
PETITION FOR ARBITRATION
Definitions
, "
Interexchange Carrier.
Level 3 Position.
Level 3' s contract defines an Interexchange Carrier as a carrier that provides Telephone
Toll Service, a type of service that is actually defined by the federal Communications Act.
Qwest's proposed definition should be rejected because it relies upon other ambiguous terms that
are not found in the federal Act. It is unclear what Qwest's objection is to Level3's definition
which most closely matches the terms of the Act.
12.Issue No. 12.
Statement of the Issue
Whether the Agreement should define the term "IntraLATA Toll Traffic" using terms
defined in the federal Communications Act.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
IntraLA T A Toll."
Level 3 Position.
Level3's proposed agreement defines the term "IntraLATA Toll Traffic" by reference to
a type of traffic
, "
Telephone Toll", which is defined in the federal Act. Qwest's proposed
definition should be rejected, however, because it relies upon terms that are not found in the
federal Act, and are vague and ambiguous.
13.Issue No. 13.
Statement of the Issue
PETITION FOR ARBITRATION
Whether the Agreement should contain a definition of a term that is used by Qwest to
shift to Level 3 the costs of Qwest's facilities on Qwest's side of the point of
interconnection.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, ""
Local Interconnection Service or "LIS" Entrance Facility
Level 3 Position.
Qwest's definition of Local Interconnection Service must be rejected. Qwest's definition
is another attempt to shift to Level 3 the costs of Qwest' s network on Qwest's side of the Point
of Interconnection. Qwest has the obligation under Section 251 to interconnect its network for
the exchange of traffic between the parties. Qwest also has the obligation to interconnect in a
manner that allows Level 3 to exchange traffic at a single point of interconnection, without
having Qwest's costs of interconnection imposed on Level 3.
14.Issue No. 14.
Statement of the Issue
Should the definition of "Telephone Exchange Service" be defined based on the unknown
geographic physical location of the originating and terminating caller, or should it mirror
the terms of the Act.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Telephone Exchange Service.
Level 3 Position.
Level 3' s proposed definition of "Telephone Exchange Service" is derived directly from
the Act. 47 U.C. ~ 153. Qwest's proposed definition of "Exchange Service" is not derived
from the Act, and should be rejected by the Commission. Qwest's proposed definition of
PETITION FOR ARBITRATION
Exchange Service" is another back -door attempt to regulate the types of traffic that may be
exchanged between the Parties.
15.Issue No. 15
Statement of the Issue
Should the definition of "Telephone Toll Service" be defined based on the Act'
definition.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
Telephone Toll Service.
Level 3 Position.
Level 3 proposes to define the term "Telephone Toll Service, and to adopt the definition
set forth in the Act. 47 U.C. ~ 153. Qwest offers no explanation for its opposition to Level 3
defining this term.
16.Issue 16.
Statement of the Issue.
Assuming that the Agreement will define "Voice over Internet Protocol" or "V oIP"
should the definition of "VoIP" contain substantive terms that limit the circumstances in
which the Parties will exchange traffic, and the compensation that will be derived from
the exchange of V oIP traffic.
Sections of the Proposed Interconnection Agreement Affected.
Definitions
, "
V oIP.
Level 3 Position.
PETITION FOR ARBITRATION
Level 3 is agreeable to identifying a definition of VoIP traffic that is reasonably related to
the FCC'Vonage Order. Qwest's proposed definition not only does not match the definition of
VoIP adopted by the FCC, it goes far beyond just defining the traffic. Qwest's proposed
definition of VoIP directly controls the substantive rights and obligations to exchange traffic
based on the physical geographic location of the originating caller. A key and fundamental
component of the FCC's definition of VoIP service is that the location of the end users are not
generally known. Therefore, Qwest's proposed definition fails.
Moreover, Qwest' s proposed definition seeks to create compensation terms and
conditions, and structure the routing obligations of this traffic. It is improper for Qwest to
attempt to govern the compensation and routing obligations of parties through definitions. The
Commission should reject Qwest's proposed definition ofVoIP in its entirety.
17.Issue 17.
Statement of the Issue.
Is Level 3 required to forecast and manage the capacity requirements of Qwest's network
facilities and trunks on the Qwest side of the Point of Interconnection.
Sections of the Proposed Interconnection Agreement Affected.
Sections 7.2.2.8.4, 7.2., and 7.2.2.
Level 3 Position.
In Sections 7.2.2.8.4, 7., and 7.2 Qwest proposes a series of terms and
conditions that require Level 3 to assume costs for forecasting trunk capacity requirements for
the interconnection and exchange of traffic with Level 3. While Level 3 has long exchanged
forecasts with Qwest for purposes of ensuring reliability on Qwest's side of the network, Level 3
PETITION FOR ARBITRATION
cannot assume responsibility for Qwest's costs. Moreover, these forecast requirements are not
for the facilities and network requirements on Level 3' s side of the Point of Interconnection.
Qwest's proposed terms would require Level 3 to assume costs for forecast and manage trunks
and facilities on Qwest's side of the POI. Moreover , Qwest seeks to impose financial penalties
and security deposit requirements if Level 3 does not properly advise Qwest how to manage its
own Interconnection facilities on Qwest's side of the POI. The entire premise of these sections
is based upon Qwest' s improper attempt to shift to Level 3 Qwest' s own network cost. The
Commission should reject this effort.
18.Issue 18.
Statement of the Issue.
May the Parties rely upon jurisdictional allocation factors to identify the compensation
for the types of traffic exchanged.
Sections of the Proposed Interconnection Agreement Affected.
Section 7.3.7.3.1.1 7.3.1.2 1.3, 7., 7., 7.1.1 , 7.
7.3.9.4 9.4.5.1 , 7.3., 7.
Level 3 Position.
Irrespective of the applicable rate of compensation for ISP-bound and IP-Enabled traffic
the Commission must address and resolve the logistical issues of how the Parties will
interconnect their networks and bill each other for the exchange of traffic. Level 3' s Section
9 of the Agreement allows the Parties to accurately measure and exchange compensation
based on allocation factors that rely upon call records. Unlike Qwest's vague and ambiguous
proposed terms, Level 3' s contract establishes clear instructions on how the Parties will measure
PETITION FOR ARBITRATION
and report Interexchange, ISP-bound and IP-Enabled traffic, irrespective of the rate of
compensation to be established by the Agreement.
There can be no dispute by Qwest that allocation factors are regularly used to apportion
compensation for the exchange of traffic. Qwest's own proposal would rely upon allocation
factors to apportion the costs of facilities and trunks on Qwest's side of the Point of
Interconnection. The companies can establish Percent of Local Use ("PLU") and Percent of
Interstate Use ("PIU") allocators to account for the calls exchanged between the networks. Level
3 proposes to create an additional allocator called Percent ofIP Use to measure the percent ofIP-
Enabled Traffic that is exchanged between the Parties.
Jurisdictional allocation factors are not new to the industry. For decades, the FCC has
relied on these factors to track and bill for compensation.75 For instance
, in the 1989 Joint Board
Recommended Decision and Order the federal-state Joint Board on Universal Service created a
reporting process to track what percent of usage of the ILEC's network was interstate and what
percent was intrastate for billing purposes. It is referred to as the "Percent Interstate Usage" or
PIU" method. The core of the "PIU" method is that compensation is based upon the
jurisdictional percentage of the traffic that is exchanged over the trunks. Audits confirm the
allocation so that charges may be properly allocated.76 The "PIU" audit and reporting process
was meant to protect both the ILEC and its IXC customer in the event of a dispute, and has done
so since its inception.77 The FCC adopted this Joint Board recommendation and instructed the
75 The FCC established rules for the calculation of "PIU" factors more than two decades ago, allowing
interexchange carriers and LECs to interconnect without establishing separate trunk groups for interstate and
intrastate traffic. See Investigation of Access and Divestiture Related Tariffs, 97 FCC 2d 1082 (1984). See also
Petition, ~~ 39, 42.
76
See Determination of Interstate and Intrastate Usage of Feature Group A and Feature Group B Access Service
Recommended Decision and Order 4 FCC Rcd 1966 (1989) (Joint Board Recommended Decision and Order).
Id. at ~ 76.
PETITION FOR ARBITRATION
ILECs to include "PIU" audits as a part of the dispute resolution mechanism in their access
tariffs.
19.Issue 19.
Statement of the Issue.
Whether the Parties should use the FCC's 3: 1 ratio to determine what traffic is ISP-bound
traffic or whether they should use Qwest's method for tracking ISP-bound traffic where
the Commission has previously ruled that Qwest's method is sufficient.
Sections of the Proposed Interconnection Agreement Affected.
Section 7.
Level 3 Position.
ISP-bound traffic should be identified using the FCC's rebuttable presumption that traffic
which exceeds a 3: 1 terminating to originating ratio is deemed to be ISP-bound traffic. Qwest'
inclusion of language concerning a prior commission ruling is inappropriate given that Qwest
has voluntarily opted into the FCC's ISP-bound compensation framework, a key aspect of which
is the 3: 1 ratio. Furthermore, the Agreement should not reference unspecified "prior
commission rulings. These vague and ambiguous terms will only lead to disputes.
20.Issue 20.
Statement of the Issue.
In identifying IP enabled traffic, should the parties allow for call records that will include
information other than calling Party number.
Sections of the Proposed Interconnection Agreement Affected. Section 7.
PETITION FOR ARBITRATION
Level 3 Position.
Level 3' s proposed terms and conditions allow the parties to exchange records that may
include information other than just the Calling Party Number of the originating caller. Level 3
proposes relying on "Call Record" to identify the data within the call records. The "Call
Record" reference allows for more flexibility for Level 3 and Qwest to agree to new or different
technologies in recording. Qwest's proposed "CPN" reference limits the Parties to only that
form of technology.
21.Issue 21.
Statement of the Issue.
Whether, when ordering Interconnection, Level 3 could be deemed to be implicitly
agreeing to pay the costs of the trunks and facilities on Qwest's side of the POI.
Sections of the Proposed Interconnection Agreement Affected.
Section 7.4.
Level 3 Position.
As noted in Issue 1 , Level 3 is not required to pay the costs of the trunks and facilities on
the Qwest side of the POI. However, Qwest's proposed agreement contains terms that may
imply that Level 3 is obligated to pay for a portion of Qwest' s costs incurred on the Qwest side
of the POI. Level3's proposed Section 7.4.1.1 is necessary to clarify and confirm that Level 3 is
not required to pay these costs.
PETITION FOR ARBITRATION
22.Issue 22.
Statement of the Issue.
Whether Qwest may compel Level 3 to incur special construction charges for work
completed on Qwest's facilities and network on Qwest's side of the POI.
Sections of the Proposed Interconnection Agreement Affected.
Section 19.1.1.
Level 3 Position.
Through Section 19.1 of the agreement, Qwest seeks to impose special construction
charges on Level 3 for costs incurred by Qwest in building out its network for interconnection
with Level 3. Section 19.1 is necessary to clarify that Qwest may not compel Level 3 to pay
for costs on Qwest's side of the POI.
VI.CONCLUSION
In its Proposed Interconnection Agreement (attached hereto as Appendix C), Level 3 has
presented reasonable modifications to the Prior Interconnection Agreement that are consistent
with the FCC's Rules, this Commission s Orders, public policy, and with the public interest
convenience, and necessity. Level3's Proposed Interconnection Agreement will help benefit the
evolving telecommunications services and economic development within the state.
WHEREFORE, Level 3 Communications, LLC respectfully requests that this
Commission:
Conduct an arbitration pursuant to Section 252(b) of the Federal Act, 47 U.C. ~
252(b );
PETITION FOR ARBITRATION
Resolve the above listed items, disputed between the Parties, in Level 3
Communications, LLC' s favor;
Find that Level 3 Communications, LLC's contract proposals are consistent with
the applicable law and commercially reasonable;
Issue an Order adopting the Proposed Interconnection Agreement of Level 3
Communications, LLC, attached hereto as Appendix C; and
Grant such other relief as is fair and justified.
Respectfully submitted
VEL 3 COMMUNICATIONS, LLC.
Ufl)
Erik Cecil
Regulatory Counsel
[phone] (voice)
E- Mail:erik.cecil~leve13 .com
Level 3 Communications, LLC
1025 Eldorado Boulevard
Broomfield CO 80021
[phone] (facsimile)
Dean J. Miller, (ISB No. 1968)
McDevitt & Miller LLP
420 West Bannock Street
O. Box 2564, Boise-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
j oe~mcdevitt- miller .com
Counsel to Level 3 Communications, LLC
Date: June 3, 2005
PETITION FOR ARBITRATION
CERTIFICATE OF SERVICE
I hereby certify that on June 03, 2005, I caused to be served a true and correct copy of the
foregoing document, by the methode s) indicated, upon:
Mary S. Hobson
STOEL RIVES LLP
101 So. Capitol Blvd., Suite 1900
Boise, Idaho 83702
msho bson (g)stoel. com
Attorneys for ~west Corporation
Hand Delivered
Federal Express S. Mail T elecopy
y~
~;?if ~Y.
BEFO RE THE ID AH 0 PUBLIC UTILITIES CO MMISSI
*****
In the Matter of Level 3 Communications
LLC's Petition for Arbitration Pursuant to
Section 252(b) of the Communications Act of
1934, as amended by the Telecommunications
Act of 1996, and the Applicable State Laws for
Rates, Terms, and Conditions of
Interconnection with Qwest Corporation
Case No.u.J E T - as -
PETITION FOR ARBITRATION
APPEND IX A
NEGOTIATION CORRESPONDENCE
APR 04 2005 13: 16 FR QWEST03/15/05 16: 13 FAX 720 888 S134
Mffi 14 221215 13: 1? FR GWSST
303 992 1776 TO 97208885134
LEVEL 3 COHKUNICATIONS
3B3 992 1776 TO 972e8a3S134
P. 02/03
ItJ 003P. 03~3
. .-
Qwe$t CorpDrariOQ
1801 California ~Q'eet, Suite
Den~ 'er Colondo SO2~1984
Pher e: [phone]
Pa.cs~c; (30!) g.sS.:JS2.1
E.m: dl: Nancy.t)onahue_qwe..q.com
Nane:)' Donahue
Staff AdvocatQ P~y & UlW
Qwest--2.
Spl"t tIt S'f1fi~(J
MarJ:b 14, 2005
Richard E. Thayer, Esq.
Leve I 3 CommUbications
10~ Eldorado Blvd.
Brotfnfield, CO 80305
720- 388-~6ZO
nett. :Iw verO1eve13 ..com
DeaJ Mr. Thayer,
On tohalf of QWC8t. I am writing to memorialize tho understanding our co.mpanies have reached
reg&. -dint the b~blc; for DCgotiatiq an Jmcrconncction ~(OCJ1i between uvt81 3Cog'munit:8liou and Qwcst Corporation for the Stms of ldabo. Iowa and Oregon.
11\8 parties agree Ibm f'* the P\IrpOSe of derennining the relevant datea for the atbitration windowas Sr!t fonb m. the Pedem1 ToIeco'lf'~u taicati()DS Act of J996 C'-Act), the periQd during whicheither party may fila for arbitra!i~ nnder s=tion 252 (b) (1) of Ar.t cmnmP.ncl!s on May 9200~ and ends on June 3. 2005. inclusi'VO.
If th: fOtegoina does not COtJJpOtt with your uncIerstanc:iing. tban plcase lXJotact me; as soan aspo", ~b1e at (303) 5)65-3887. 0dJe~ please executA!. tJ:ds lerrar in Ihe s~ provided belowagr&9ng r.o ebc aOoyo IO~ form timcftames and fax a signed copy of tbJa letter to my aneuticD at(!O3) 96.5..3327.
Sinc:n:L
pS::/
Agn for Leve! 3 C9mznlDlications
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