20090306Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL

DATE: MARCH 6, 2009

SUBJECT: CASE NO. QWE-T-08-04
QWEST’S MOTION TO BIFURCATE SGAT AND PAP ISSUES
AND FOR A PROCEDURAL ORDER

On January 23, 2009, Qwest filed a Motion to Bifurcate SGAT and PAP issues and
for a procedural Order in this case. The Motion requests that the Commission approve
withdrawal of Qwest’s Statement of Generally Available Terms and Conditions (SGAT) and
issue a procedural order to establish a schedule to complete consideration of Qwest’s Application
to allow withdrawal of its Performance Assurance Plan (PAP). The PAP and its performance
indicator definitions (PIDs) currently are exhibits to the SGAT. Qwest’s Motion asks that the
Commission separate the question of withdrawal of the SGAT from the issues surrounding the
PAP and PIDs, and ―grant Qwest permission to withdraw its Idaho SGAT based on the written
record compiled in this docket.‖ Qwest Motion, p. 5.
Qwest’s Motion states that its initial Petition in this case ―delineated two separate
requests of the Commission: the authority to withdraw the SGAT and, separately, permission to
withdraw the PAP and accompanying PIDs.‖ Qwest Motion, p. 2. Because the PAP and
accompanying PIDs are exhibits to the SGAT, the parties viewed withdrawal of the SGAT as
removal of the PAP. The two intervening parties in this case, 360networks (USA), Inc. and
Integra Telecom of Idaho, Inc., filed comments arguing against removal of both the SGAT and
the PAP. Staff comments filed on July 7, 2008 focused on removal of the PAP, and argued that
the Commission should delay its decision on Qwest’s Petition regarding removal of the PAP
until a multi-state review process currently underway is completed. This review process,
DECISION MEMORANDUM 2
identified as the ROC review process, as noted in Qwest’s Motion ―deals exclusively with the
PAP and PIDs and is not intended to address the SGAT.‖ Qwest Motion, p. 3.
QWEST COMMENTS ON WITHDRAWAL OF THE SGAT
Qwest stated its position regarding withdrawal of its SGAT in comments filed on
September 15, 2008. Qwest notes that the 1996 federal Telecommunications Act requires Qwest
as the incumbent local exchange carrier (ILEC) to enter into interconnection agreements (ICAs)
with competitive local telecommunications carriers (CLECs). An ICA is a negotiated agreement
submitted for approval by state commissions, and Qwest views an SGAT as merely an offer or
starting place for negotiations. The Act imposes a duty on both ILECs and CLECs to negotiate
in good faith the particular terms and conditions for an ICA. If the parties are unable to reach
agreement, state commissions are authorized to resolve disputes through compulsory arbitration.
47 U.S.C. § 252(c)(1). Qwest points out that this process of negotiation and arbitration if
necessary takes place without reference to any SGAT.
Qwest notes that the Section 252(f) of the Act provision for filing an SGAT is
permissive rather than mandatory, that is, an ILEC ―may prepare and file with the state
commission the statement of the terms and conditions that such company generally offers within
that state to comply with the requirements of section 251.‖ The Act does not require that Qwest
either create or maintain an SGAT. Further, Qwest notes that an ILEC’s decision to file an
SGAT does not relieve it of the duty to negotiate the terms and conditions of an ICA. Qwest
used its SGAT as a template ICA agreement for a time; however, Qwest has not offered the
SGAT as an option for interconnection or as a starting point for negotiations since August 2004.
Qwest argues that no section of the 1996 Act requires that an SGAT play a part in
ICA negotiations. Qwest notes that since it removed its SGAT as an interconnection agreement
template in 2004, no CLEC has complained to the Commission that Qwest no longer offered the
SGAT as an ICA template or as a starting point for negotiations. Additionally, 34 ICAs have
been approved by the Commission since Qwest stopped offering the SGAT, and approximately
one-half of those were based on Qwest’s negotiation template that replaced the SGAT. Qwest
argues this demonstrates that it is meeting its interconnection agreements in Idaho, including its
obligation to negotiate ICAs in good faith, even though the SGAT has not been available to
CLECs since 2004.
DECISION MEMORANDUM 3
Qwest argues that although its SGAT was derived through a multi-party process, this
fact does not demonstrate the absence of the SGAT affects CLECs’ ability to negotiate ICAs.
Qwest Responsive Comments, p. 7. In addition, Qwest argues that if the SGAT were to come
before the Commission today for approval, the Commission would be obliged to reject it under
Section 252(f)(2) as not complying with Section 251 and applicable regulations. Changes in the
law since the SGAT was submitted would require material modifications to the SGAT, which
Qwest claims would be an irrelevant and burdensome exercise. Qwest Responsive Comments, p.
8. Qwest argues that ―piecemeal and continuous updates to the SGAT to reflect changing law
and industry practices involve a sizeable commitment of resources for Qwest and the
Commission.‖ Qwest Responsive Comments, p. 9. Qwest claims it is more efficient to consider
any CLEC objection to Qwest proposed ICA language in arbitrations, which has the advantage
of deciding disputes in the context of an actual commercial negotiation between competitors.
Qwest argues that the fact there have been no disputes brought to arbitration in Idaho in recent
years shows that the process is working efficiently, while regular SGAT updates would require a
huge investment of time and resources and provide no objective benefit. Qwest Responsive
Comments, p. 9. Whether an approved SGAT exists, Qwest asserts, has no bearing on whether
ICAs are actually reached in today’s competitive environment. Qwest Responsive Comments, p.
10.
The Intervenors assert that Qwest’s template proposal that replaces the SGAT is not
accountable to anyone but Qwest for fairness or competitive neutrality. Qwest notes that its
template is offered as a baseline agreement for negotiations, and its terms are subject to objection
and negotiation by a CLEC seeking an ICA. Qwest Responsive Comments, p. 11. Further,
Qwest notes that all ICAs are subject to the Commission’s role as arbitrator in the absence of
successful negotiation, and the Commission is required to approve all ICAs whether adopted by
negotiation or arbitration. Qwest argues that ―withdrawal of the SGAT in no way impacts or
diminishes this Commission’s role in approving the terms and conditions of section 252
agreements.‖ Qwest Responsive Comments, p. 12.
INTERVENOR COMMENTS REGARDING REMOVAL OF THE SGAT
In written comments filed July 7, 2008, 360networks noted that an SGAT, although
―not an absolute legal requirement to gaining Section 271 relief, once Qwest offered to make it
available and it has been relied upon, Qwest should not be allowed to unilaterally withdraw it.‖
DECISION MEMORANDUM 4
360networks Comments, p. 3. 360networks contends that having a Commission-approved
SGAT ―eliminates significant transaction costs that are incurred in negotiating and potentially
arbitrating an ICA with Qwest and is critical to competitors both small and large.‖ 360networks
Comments, p. 4. 360networks also contends a competitive carrier’s ability to opt into other
interconnection agreements does not replace the importance of an SGAT. 360networks contends
that if Qwest withdraws its SGAT, Qwest would be free to change terms and conditions as it sees
fit and leave CLECS that may not desire the terms of another carrier’s interconnection agreement
with a take or leave it choice. 360networks Comments, p. 5. 360networks asserts that removal
of Qwest’s SGAT ―would have the undesirable consequence of handicapping CLECs during ICA
negotiations and increasing the likelihood and scale of ICA arbitrations.‖ 360networks
Comments, p. 5.
Integra also argued against withdrawal of Qwest’s SGAT in comments filed July 9,
2008. Integra maintains that because SGAT changes should be filed for approval with the
Commission before Qwest implements them, the SGAT provides protection against unilateral
changes in the terms and conditions of possible interconnection agreements. Integra asserts that
if the SGAT is out of date, as Qwest claims, it is only because Qwest unilaterally chose not to
update the SGAT. Integra asserts that Qwest’s template negotiation agreement is not a
reasonable substitute for the SGAT review change process. If Qwest’s template agreement is
allowed to replace the SGAT, as Qwest intends, Integra asserts that this would allow Qwest to
unilaterally dominate carrier negotiations. Integra asserts that the unilateral decision by Qwest to
phase out the SGAT by making it obsolete and then totally withdrawing it from CLECs as an
interconnection agreement demonstrates that competitive parity is far from achieved. Integra
argues that the ―history of Qwest’s unilateral conduct regarding the SGAT demonstrates the
continued need for the SGAT.‖ Integra Comments, p. 11.
On February 19, 2009, the Intervenors filed responses to discovery requests submitted
by the Staff of the Arizona Corporation Commission in a case filed before that Commission to
consider Qwest’s withdrawal of its SGAT. In the letter accompanying the discovery responses,
the Intervenors state that the CLEC responses to the discovery ―set forth the view of those
CLECs (including CLECs participating in this matter) as to why the state commissions in all of
Qwest’s states should reject Qwest’s request.‖ The letter also states that the Intervenors ―have
no objection to bifurcating the PID/PAP issues from the SGAT issues‖ in this case.
DECISION MEMORANDUM 5
It is evident from the staff requests and responses filed by the CLECs in the Arizona
case that the legal status of the SGAT in Arizona is different than its status in Idaho. For
example, staff request No. 1.9 states that ―Qwest was required by a prior Commission order to
obtain Commission approval before it withdraws its SGAT in Arizona.‖ CLEC Data Responses,
p. 20. In Idaho, as Qwest points out in its responsive comments, this Commission never formally
approved the SGAT, instead letter it become effective within 60 days after it was filed by
operation of Section 252(f)(3)(B) of the Act.
This legal difference aside, the CLECs make clear in their Arizona discovery
responses that the SGAT is important to the interconnection process. The CLECs characterize
the SGAT ―as a key source to help frame interconnection agreement (ICA) negotiation positions;
as a resource for attempting to resolve disputes with Qwest such as in billing, carrier relations,
and change management process (CMP) contexts; and as an internal resource such as to confirm
Commission-approved terms and filed requirements (such as Commission-approved rates, which
are identified in SGAT Exhibit A, and PIDs/PAP requirements in SGAT Exhibits B and K).‖
CLEC Data Responses, p. 2. Qwest notified CLECs in Arizona that it would no longer provide
the SGAT as an option for an ICA in November 2006. The CLECs state that they ―have used the
collaboratively developed SGAT as a resource in formulating negotiation positions in response
to Qwest’s unilaterally developed negotiations template.‖ CLEC Data Responses, p. 10. The
CLECs argue against allowing Qwest’s template agreement to become a replacement for the
SGAT. ―Qwest’s choice to unilaterally declare the SGAT unavailable for opt-in despite a
Commission order that it be available for opt-in, should not be rewarded by allowing Qwest’s
conduct to become a self-fulfilling prophecy so that, now, the SGAT is no longer available and is
replaced by Qwest’s template.‖ CLEC Data Responses, pp. 10-11 (footnotes omitted).
STATUTORY AND REGULATORY BACKGROUND
Qwest correctly states in its comments that ―the SGAT on the one hand, and the PIDs
and PAP, on the other, have different origins and purposes.‖ Qwest Responsive Comments p. 2.
This distinction is significant in considering Qwest’s Motion to Bifurcate and decide the
appropriateness of withdrawal of only the SGAT on the existing record. To make the distinction
clear, Qwest committed to continuing its PAP and PID obligations if the Commission allows
withdrawal of the SGAT: ―If the Commission grants Qwest’s request to withdraw the SGAT,
Qwest will continue to make the PAP (presently designated as SGAT Exhibit K) and the PIDs
DECISION MEMORANDUM 6
(Exhibit B) available to CLECs on the same terms they are available today until Qwest is given
authority to withdraw, amend or substitute an alternative(s) for said PAP and PIDs.‖ Qwest
Motion to Bifurcate p. 5. A brief review of the origins of the SGAT is necessary to evaluate its
legal status and the propriety of its withdrawal.
Prior to enactment of the Telecommunications Act of 1996 (the Act),
telecommunications services were provided by companies operating in two distinct service
categories – local and long-distance – and one was prohibited from offering services in the
other’s arena.1 The Act provides the legal framework for long-distance companies to begin
providing local service and for local companies to begin providing long-distance service.
Congress did not simply declare all telecommunications markets to be open, however,
recognizing a huge disparity in network dependency. While it was relatively easy for the local
companies to begin offering long-distance services, it was nearly impossible for a competitor to
begin providing local service without using the local company’s network facilities. The Act
addresses this disparity by requiring all existing incumbent local service companies (ILECs) to
allow all competitors access and use of the ILEC’s facilities. The Act requires the largest ILECs,
identified as Bell Operating Companies (BOCs), to prove to the Federal Communications
Commission (FCC) that their networks are available to competitors before entering the long-
distance market.
The network connection obligations set forth in the Act, and the associated detailed
regulations adopted by the FCC, resulted in thousands of specific interconnection obligations for
ILECs, and BOCs in particular. Sections 251 and 252 of the Act state interconnection and
pricing obligations. An ILEC’s interconnection obligation is to provide 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;
(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 party to which the carrier provides interconnection; and (D) on
rates, terms, and conditions, that are just, reasonable, and non-discriminatory, in accordance with
the terms and conditions of the [interconnection] agreement and the requirements of this section
and section 252.‖ 47 U.S.C. § 251(c)(2).
1 The 1996 Act is an amendment to the Communications Act of 1934, and is codified in Title 47, U.S. Code.

DECISION MEMORANDUM 7
The interconnection pricing requirement, as stated in Section 252, requires state
commissions to determine ―just and reasonable rates for the interconnection of facilities and
equipment for purposes of subsection (c)(2) of section 251, and the just and reasonable rate for
network elements.‖ 47 U.S.C. § 252(d)(1). Section 252 states that these rates must be ―based on
the cost (determined without reference to a rate of return or other rate base proceeding) of
providing the interconnection or network element . . . , and (iii) non-discriminatory, and (B) may
include a reasonable profit.‖2 47 U.S.C. § 252(d)(1)A, B.
Section 252 also provides the means for an interconnection agreement to be
negotiated or arbitrated and approved by a state commission. It is in Section 252(f) that an
SGAT is discussed. If no competitor has requested an interconnection agreement, Section
252(f)(1) allows as an alternative that a BOC ―may prepare and file with a state commission a
statement of the terms and conditions that such company generally offers within that state to
comply with the requirements of section 251 and the regulations thereunder and the standards
applicable under this section.‖ Once an SGAT is filed with a state commission, the state
commission is required to review and approve it within 60 days, or permit the SGAT to take
effect at the end of that period. 47 U.S.C. § 252(f)(3).
Section 271 describes the review process and additional requirements a BOC must
meet to be granted long-distance authority. Section 271 includes a competitive checklist of 14
items, some of them incorporating Section 251 and 252 obligations, a BOC must satisfy. Section
271 also specifies that the FCC before making a determination on a BOC’s Section 271
application must consult with the state commission to verify the BOC’s compliance with the
competitive checklist, and thus the Section 271 proceedings commenced in state commissions.
The state proceeding initiated by Qwest was a lengthy, complicated multi-state process,
culminating in Commission decisions issued in March and April 2002.3 The FCC noted in its
Qwest Section 271 Order that the various state commissions, including the IPUC, ―each devoted
2 The Commission-approved interconnection and network element rates are contained in Exhibit A to the SGAT. As
with the PAP and PIDs, any Commission decision on withdrawal of the SGAT should not affect the continuing
effectiveness of the rates set forth in Exhibit A.
3 Commission Decision on Qwest’s Performance Assurance Plan, issued March 7, 2002; Commission Decision on
Qwest Corporation’s Compliance with Section 271 Public Interest and Track A Requirements and Section 272
Standards, issued April 1, 2002; Case No. USW-T-00-3.

DECISION MEMORANDUM 8
a significant portion of their resources to this process over a number of years.‖ Qwest Nine State
Order, WC Docket No. 02-314, FCC Order 02-332.
Qwest filed its application for long-distance authority with the FCC on September 30,
2002 after concluding the state Section 271 proceeding. The FCC issued a Memorandum
Opinion and Order on December 20, 2002, approving Qwest’s Application.4 A BOC requesting
Section 271 authority must either be a party to at least one effective interconnection agreement
(Track A), or have an SGAT in place (Track B). 47 U.S.C. § 271(c)(1) and (2). The FCC
determined, as did this Commission, that Qwest met the Track A standards through existing
interconnection agreements and so gave little attention to the Track B (SGAT) standards. The
SGAT accordingly had little significance in the FCC’s approval of Qwest’s Section 271
application.
In summary, Qwest is required as a BOC (and incumbent local service provider) to
allow other companies to connect and use its facilities. Interconnection agreements are filed
with the Commission for approval and are made available to other carriers. In addition to ICAs
that demonstrate the opening and availability of an ILEC’s facilities, a BOC may but is not
required to file an SGAT. When a BOC presents its case to the FCC for long-distance authority,
either existing ICAs or an SGAT may prove it has met its statutory and regulatory
interconnection duties. In Qwest’s case, it was the existence of ICAs that demonstrated Qwest
was making its facilities available to other companies.
There is not a mandate in the Act that a BOC file an SGAT, nor has this Commission
ordered Qwest to file and maintain an SGAT. The Intervenors discuss numerous advantages to
an SGAT, but do not identify a legal requirement in this state that an SGAT remain in effect.
COMMISSION DECISION
Because Qwest and the Intervenors agree to bifurcate the issues and have the
Commission determine Qwest’s Motion to Withdraw the SGAT on the existing record, the
question and record on that issue is fully submitted. Based on Qwest’s Motion and the existing
record, the issues for the Commission are as follows:
Should Qwest’s Motion to Bifurcate the two main issues in this case—withdrawal of
the SGAT and removal of the PAP and PIDs—and decide the question of withdrawal of the
SGAT on the existing record, be granted?

4 The FCC is required to rule on a Section 271 application within 90 days of filing. 47 U.S.C. § 271(d)(3).
DECISION MEMORANDUM 9
If the Motion to Bifurcate is granted, should the Commission allow Qwest to
withdraw the SGAT?

Weldon Stutzman
Deputy Attorney General

bls/M:QWE-T-08-04_ws5