OAH Docket No. 7-2500-15151-2

PUC Docket No. P-421/C-02-1597

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE PUBLIC UTILITIES COMMISSION

 

In the Matter of the Complaint of Desktop Media, Inc. Against Qwest Corporation

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND RECOMMENDATION

 

                   

 

          The hearing in this matter was held on April 15 and April 17, 2003, before Administrative Law Judge Richard C. Luis in the Large Hearing Room of the Minnesota Public Utilities Commission, 200 Metro Square Building, 121 East 7^th Place, St. Paul, Minnesota.  The record closed on June 2, 2003, with the receipt of the parties' reply briefs.

 

          Gregory Merz, Attorney at Law, Gray, Plant, Mooty, Mooty & Bennett, 3400 City Center, 33 South Sixth Street, Minneapolis, Minnesota 55402, appeared on behalf of Desktop Media, Inc. (Desktop).  Larry Espel, Attorney at Law, Greene Espel Law Firm, 200 South Sixth Street, Suite 1200, Minneapolis, Minnesota 55402, and Joan Peterson, Qwest Corporate Counsel, 200 South Fifth Street, Room 395, Minneapolis, Minnesota 55402, appeared on behalf of Qwest Corporation (Qwest).  Linda Jensen, Assistant Attorney General, 525 Park St., Suite 200, St. Paul, Minnesota 55103, appeared on behalf of the Department of Commerce (the Department or DOC).  Kevin O'Grady, Rate Analyst, appeared for the staff of the Minnesota Public Utilities Commission (the Commission or MPUC).

 

ISSUES

 

1.       Did Qwest fail to provision unbundled switching in a timely fashion as required by the interconnection agreement governing Desktop’s access to Qwest’s network?

2.               Does the Qwest process that prevents the migration of customers to Desktop that appear in Qwest records to be customers of volume internet service providers constitute discrimination in violation of 47 U.S.C. § 251(c)(3) and Minn. Stat. § 237.09, subd. 2?

3.               Did Qwest fail to provide simple message device indicator ports as requested by Desktop in violation of the interconnection agreement governing Desktop’s access to Qwest’s network?

4.               Did Qwest’s failure to provision dark fiber requested by Desktop violate the parties’ interconnection agreement, and if so, what remedy is appropriate?

5.               Are direct measures of quality (DMOQs) credits available under the parties' interconnection agreement for any demonstrated noncompliance?  If so, what amount does Qwest owe to Desktop for DMOQs credit?  If not, can some other amount be determined for failures to comply with the interconnection agreement?

 

NOTICE

          Notice is hereby given that pursuant to Minn. Stat. § 14.61, and the Rules of Practice of the Public Utilities Commission and the Office of Administrative Hearings, exceptions to this report, if any, by any party adversely affected must be filed within twenty (20) days of the mailing date hereof or such other date as established by the Commission's Executive Secretary or as agreed to by the Parties with the Commission's Executive Secretary.

          Questions regarding filing of exceptions should be directed to Dr. Burl Haar, Executive Secretary, Minnesota Public Utilities Commission, Suite 350 Metro Square, 121 Seventh Place East, St. Paul, Minnesota 55101.  Exceptions must be specific and stated and numbered separately.  Oral argument before a majority of the Commission will be permitted to all parties adversely affected by the Administrative Law Judge's recommendation who request such argument.  Such request must accompany the filed exceptions or reply, and an original and 14 copies of each document should be filed with the Commission.

          The Minnesota Public Utilities Commission will make the final determination of the matter after the expiration of the period for filing exceptions as set forth above, or after oral argument, if such is requested and had in the matter.

          Further notice is hereby given that the Commission may, at its own discretion, accept or reject the Administrative Law Judge's recommendation and that said recommendation has no legal effect unless expressly adopted by the Commission as its final order.

          Based upon the record, the Administrative Law Judge makes the following:

FINDINGS OF FACT

 

Procedural History

1.       On September 24, 2002, Desktop filed a Complaint against Qwest with the Commission.  The Complaint asserted that Qwest: 1) failed to permit ordering of UBS; 2) failed to provide SMDI as a UNE; 3) interfered with Desktop’s  providing voice service to customers of a certain Internet Service Provider (ISP); and 4) refused to provide dark fiber between Red Wing and Winona.  The Complaint sought payments from Qwest on the schedule for failure to meet DMOQs ($2500 per day per violation).  Qwest filed an Answer on October 9, 2002.  The PUC then referred this matter to the Office of Administrative Hearings for contested case hearing.

 

The Interconnection Agreement

 

2.               Section 251(c) of the Telecommunications Act of 1996 (the Act) requires incumbent local exchange carriers (ILECs) to provide competitive local exchange carriers (CLECs) with interconnection, access to unbundled network elements (UNEs), and collocation on "rates, terms and conditions that are just, reasonable and nondiscriminatory. . .."  Section 251(c)(1) requires ILECs and CLECs to negotiate agreements in good faith regarding these obligations.

3.               On December 2, 1996, the Commission approved the first arbitrated interconnection agreement (“ICA”) between AT&T and U S WEST Communications, Qwest's predecessor.  In the order approving this agreement (known as “the AT&T ICA”) the Commission also initiated a generic investigation to establish prices for interconnection and unbundled network elements in the territory served by US WEST.[1]  Competing local exchange carriers (“CLECs”) can opt-in to existing agreements to enter an ICA with Qwest.

4.               In November 2000, Desktop Media, Inc. opted into the AT&T ICA to govern the terms and conditions of Desktop’s interconnection with Qwest.  By opting into the AT&T ICA, Desktop agreed to accept the interconnection terms applicable to AT&T.  Qwest agreed to fulfill the interconnection obligations applicable to itself in the document.  The interconnection agreement between Qwest and Desktop (hereinafter “the ICA”) provides in part:

 

In the performance of their obligations under this Agreement, the Parties shall act in good faith and consistently with the intent of the Act.  Where notice, approval, or similar action by a Party is permitted or required by any provision of this Agreement (including, without limitation, the obligation of the Parties to further negotiate the resolution of new or open issues under this Agreement), such action shall not be unreasonably delayed, withheld or conditioned.[2]

 

5.               Section 9.7 of the ICA obliges Qwest to provide unbundled switching.[3]  Terms for unbundled network elements (UNE) that are available to CLECs are set out in the ICA Attachment 3.  Unbundled switching is identified as a UNE at part 6 of that attachment.[4]

6.               Attachment 4 of the ICA governs access to ancillary functions.  Included in ancillary functions is unused transmission media.  Dark fiber is explicitly identified as unused transmission media.[5] 

7.               Attachment 11 of the ICA sets out the performance standards and DMOQs that Qwest has agreed to meet in providing interconnection.  Qwest agreed to pay credits on a per occurrence and overall performance basis when those performance standards are not met.[6]

 

Unbundled Switching

 

8.               Desktop began its relationship with Qwest in 2000.  Desktop completed and submitted to Qwest a customer questionnaire providing Desktop’s billing information.  Qwest assigned an account manager, Joshua Neilson, to assist Desktop in the completion of interconnection orders.  On May 6, 2002, Corey Hauer, President of Desktop, emailed Neilson to inquire about ordering functionality through the unbundled network element-platform (UNE-P) process, allowing Desktop to cross-connect a DS-1 facility to a digital switch port.[7]  Neilson inquired of a process manager at Qwest as to what other steps needed to be taken to allow Desktop to order this functionality.[8]  On May 31, Neilson emailed Hauer to indicate that the request was not understood.[9]  On June 5, 2002, a conference call was held between Hauer, Neilson, and Judy Rixe, Qwest Wholesale Sales Manager.  At this telephone conference, a Qwest employee identified the functionality that Desktop want to order as unbundled switching (UBS).[10]  Three types of UBS that Desktop wanted to order were identified:  analog, T1, and ISDN Primary Rate Interface (PRI).  In that conference call, Hauer confirmed that Desktop was asking for those three types of UBS.  The Qwest personnel on the conference call were unable to identify how to place an order for UBS.  Hauer was told that he would be provided with ordering instructions.

9.               On June 6, 2002, Rixe contacted other Qwest staff to confirm that the UBS wanted by Desktop could be delivered.[11]  One staffer suggested that Desktop might not have requested UBS in its customer questionnaire and therefore the uniform service order codes (USOCs) for these products would not have been loaded.[12]  Another staffer responded that:  

FYI - - Even if they requested UBS elements in their questionnaire, nothing would have been done.  The management decision was made not to load UBS elements into CPS or establish a Summary Bill until such time as a CLEC indicated a firm interest in ordering UBS.[13]

10.           Qwest pointed to the large amount of work required as supporting its policy of not loading USOCs before a CLEC expresses a “firm interest” in ordering unbundled elements.  The loading process requires examination of the ICA to determine element prices and the association of that price with the particular USOC that is then placed in a table (of a database) that is the source of the itemized billing of the CLEC.

11.           A second questionnaire was sent to Desktop, and was completed and returned by July 16, 2002.  Qwest updated its customer contact information from the questionnaire by July 25, 2002.  There is no information contained in the customer questionnaire that is necessary for Qwest to load USOCs or perform other necessary tasks to provide UBS to an existing customer.  Desktop had provided Qwest a completed questionnaire to Qwest when the ICA was executed in 2000.  The only difference between the first questionnaire and that submitted on July 16, 2002 by Desktop was an “x” in the box alongside unbundled switching in the 2002 rendition.[14]  The questionnaire identifies the processing time as running from 30 to 45 days.[15]

12.           The Qwest ordering process for existing customers begins with the customer inquiry regarding a specific product or feature.  Qwest then determines if the requested service is included in the ICA.[16]  Qwest then either provides the service according to the ICA or seeks to amend the ICA.  For existing customers (such as Desktop) the new questionnaire is used to verify existing information regarding billing for assigning a new billing account number.[17]

13.           On July 17, 2002, Hauer received an email from Rixe indicating that UBS loading of USOCs was ongoing.  Hauer repeated his request for ordering instructions on August 9, 2002.  Qwest sent ordering instructions to Hauer on August 15, 2002.  These instructions were for PRI UBS and analog UBS.  No instructions were provided for T1 UBS.[18]  Also on August 15, 2002, Qwest sent to Desktop a document entitled Amendment for Local Switching to the Interconnection Agreement between Qwest Corporation and Desktop Media, Inc. of the State of Minnesota (ICA Amendment).  The ICA Amendment expands upon the existing language in the AT&T ICA for UBS.  The ICA Amendment consists of eleven pages of specific description of the UBS functionality that will be provided.  The ICA Amendment also includes an Exhibit A that sets prices for each of the specific items identified in the expanded UBS description.  Most of those prices have not been approved by the MPUC.  The cover letter from Qwest informed Hauer that he was to execute the three originals of the ICA Amendment and return them to Qwest.  The letter also stated, in part:

Upon execution by Qwest, one fully executed original Amendment will be returned to you, one will be retained by Qwest and the third will be filed with the Minnesota Public Utilities Commission.

Should Qwest not receive the executed Amendment by October 18, 2002, Qwest may rescind its willingness to consider the Agreement’s terms and conditions, and will consider that you have withdrawn from good faith negotiations.[19]

14.     Rixe discussed with other Qwest employees what rates to load for the USOCs needed for Desktop’s order.  Rixe indicated that Qwest’s negotiators told her that Qwest never negotiates rates.[20]  She also indicated that there was “little risk in loading the SGAT rates.”[21]   Those rates had not yet been approved by the Commission.

15.           More than 800 USOCs were loaded to afford Qwest a means of billing Desktop for the requested UBS.  Qwest asserted that its loading of USOCs was complete on August 21, 2002.[22]

16.           Desktop faxed a local service request (LSR) to Qwest to order one PRI ISDN trunk port and trunk on August 18, 2002.[23]  The LSR had been prepared by Desktop with the assistance of a Qwest customer service representative.  No electronic ordering is available for this product.  Qwest assigned purchase order numbers to Desktop’s order.  On August 20, 2002, Qwest rejected the LSR, asserting that three items on the LSR were inaccurate and five items were incomplete.[24]  Desktop resubmitted the LSR with the proper information.[25]   Qwest rejected the resubmitted LSR as being on the wrong form.[26]  On September 6, 2002, Desktop submitted a new set of orders using different forms.

17.           Due to the difficulties in placing Desktop’s order, a Qwest supervisor reviewed the ordering form and developed “job aids” to be used by Qwest customer service representatives.[27]  The supervisor expressly prohibited the forwarding of the job aids to Desktop.[28]  Qwest identified errors in Desktop’s September 6, 2002 submission and rejected the order.  Desktop submitted further revised forms on September 18, 2002.  Qwest accepted Desktop’s revised LSR as complete on September 19, 2002.  Desktop received a firm order confirmation (FOC) on October 3, 2002.  Qwest was prepared to deliver PRI UBS on October 3. 2002.  Desktop received the ordered PRI UBS on October 11, 2002.

18.           On September 23, 2002, Desktop submitted an order for analog UBS.  Qwest failed to fill the order due to missing USOCs that Qwest had not loaded.  Qwest loaded those USOCs on September 26, 2002.  Desktop described its subsequent experience with the electronic ordering process for analog UBS as “orders typically ‘flow through’ with minimal problems.”[29]

19.           On December 18, 2002, Qwest provided Hauer with ordering instructions for T1 UBS.  These instructions were inadequately detailed to allow Desktop to submit an order for T1 UBS.  Instructions for moving a telephone number from an analog switch port to a digital switch port were not sent to Desktop until January 2003.[30]  Desktop has acknowledged, however, that it has not placed any orders for T1 switching.[31]

20.           Qwest relies upon ordering information being available on Qwest’s website prior to June 5, 2002 as precluding any finding of noncompliance with the ICA.  The Department points out that the information on the website lacks any reference to a new customer questionnaire.[32]   No customer can order UBS over Qwest’s website.  Every UBS order must initially pass through Qwest’s customer service personnel.  None of these persons could provide accurate ordering instructions to Desktop until September 23, 2002 (for analog UBS) and September 6, 2002 (for PRI).[33]  Qwest’s failure to provide ordering information to a CLEC in a timely manner is a willful violation of the terms of the ICA.  The failure to provide accurate ordering information (including appropriate forms) merely extends the period of damages for that noncompliance.  The absence of any orders from Desktop for T1 switching renders damages inappropriate for Qwest’s failure to supply ordering instructions for that particular product.

21.           The finding of willfulness is reinforced by Qwest’s effort to impose charges on the ordered UBS that had not been approved by the Commission.  While referring to “good faith negotiations” in its letter to Desktop, Qwest’s internal policy was to not negotiate the terms contained in Qwest’s “offer.”[34]  The purpose of the letter was to use Qwest’s superior negotiating position to impose charges on Desktop for functionality that should have been provided at zero-cost on an interim basis, subject to true-up upon completion of a cost study and approval of the charges by the Commission.  The costs proposed are sufficiently high to imply that Qwest was attempting to deter Desktop from going though with the UBS order.  While not constituting a delay in itself, Qwest’s letter is evidence of its intention to not provision UBS for Desktop in accordance with the ICA.

22.           Desktop and the Department assert that the period of noncompliance should extend from May 6, 2002, when Desktop first inquired about UBS.  That inquiry was insufficiently clear to support a finding that Qwest should have known what was being asked for by Desktop.  This absence of clarity in Desktop’s May 6 request is supported by the facts surrounding the June 6, 2002 telephone conference, where Qwest for the first time recognized the request as being for UBS and initiated the ordering process.  The order period begins on June 6, 2002.[35]

23.           Qwest asserts that any period of damages must be reduced by the time allotted for loading USOCs (identified as 30 to 45 days).  The
e-mails exchanged among Qwest personnel demonstrate that the time taken for loading USOCs was not related to the number of USOCs, but rather depended on the decision of what rates to charge Desktop.[36]  Qwest’s policy of not loading USOCs until the CLEC indicates a firm interest in ordering the product also supports placing the costs of noncompliance on Qwest.  See Finding 9.  Qwest has failed to show that the time identified for loading USOCs has any effect on the availability of accurate ordering instructions for UBS.  The failure on Qwest’s part to present accurate ordering instructions caused the delay in this case, and the fact it may require 30-45 days to load USOCs is immaterial.  Qwest should not receive “credit” for the time assumed for loading USOCs, when all that possible time had already passed while Qwest delayed its decision on the appropriate rate.

24.           Desktop and the Department maintain that the period of noncompliance extends to the date that Qwest made the ordered features available.  Assuming that Qwest’s ordering process was functioning correctly, some time would elapse between an accepted order and providing the feature.  Therefore, Qwest’s failure to afford ordering instructions ends with the acceptance of an order that can be filled, or with an order properly rejected.  For PRI, the order was accepted on September 23, 2002.  For Analog UBS, Qwest had the proper forms available for Desktop’s resubmitted order on September 6, 2002.  That order was rejected due to errors by Desktop.  A final resubmitted order was accepted as complete on September 19, 2002.  For Analog UBS, the period of Qwest’s noncompliance ended on September 6, 2002.

25.           Desktop has demonstrated that Qwest failed to provide accurate ordering information in violation of the ICA from June 6, 2002 to September 23, 2002 (for analog UBS) and June 6, 2002 to September 6, 2002 (for PRI).  These periods of 110 days for UBS and 93 days for PRI, are time that Desktop could have been serving customers and constitute lost opportunities to compete.

Migration Issues

26.           Desktop offers local telephone service as part of its business.  When existing customers of another local exchange carrier (LEC) agree to have Desktop provide their local telephone service, Desktop contacts Qwest to accomplish the transfer.  This transfer of service is known as “migration.”  To accomplish successful migration of customers between LECs, Qwest must first locate the customer service record (CSR).  Desktop alleges that Qwest will not migrate any POTS (plain old telephone service) customer if that customer’s CSR bears the notation DVDP.[37]  Qwest identifies that notation as referring to the customer receiving services from a volume internet service provider (VISP).  VISP’s provide a combination of resold digital subscriber line (DSL) and internet services that are bundled with Qwest local telephone services.

27.           Qwest asserts that the “customer of record” for DSL in a VISP relationship is the VISP, not the end user, who is actually receiving (and paying for) the service.[38]  Qwest’s process for changing DSL service begins with finding the DVDP notation on the end user’s CSR.  The new DSL provider is told to inform the end user that the existing DSL service provider (the VISP) must be told to terminate the DSL service and only after the VISP informs Qwest to terminate the DSL service will Qwest make that change.[39]

28.           Qwest does not immediately record the fact of the DSL disconnection.  Rather, the notation of the disconnection is placed in a batch process that takes, on average, three to five days to update the CSR with the information that the VISP DSL service has been disconnected.  Desktop has encountered delays of over thirty days before the CSR was updated.[40]  Qwest requires that the same process be used when a CLEC, such as Desktop, seeks to have the local service changed.  Only after the end user’s CSR is updated will Qwest begin processing the migration order.

29.           At no time during this proceeding did Qwest identify any technical reason why a DVDP notation in the CSR requires any involvement by the VISP in the migration of an end user’s local service to a new LEC.  Qwest characterized Desktop’s complaint as “regarding the transfer of DSL customers served by volume ISPs.”[41]  Qwest relies upon the FCC categorization of DSL as an “information service” as demonstrating that the Commission lacks jurisdiction over Desktop’s complaint on this issue.

30.           Contrary to Qwest’s characterization of this issue, Desktop has unambiguously identified the problem encountered by the DVDP as being a barrier to customers’ migration of POTS local service to other LECs (including Desktop).[42]  In at least one instance, a customer has been prevented from migrating to Desktop for local service even after providing the cancellation number for dial-up service from a VISP.[43]  Dial-up internet access occurs over the local loop of POTS.  For a customer to utilize dial-up internet access, the customer must obtain POTS from Qwest or a CLEC. 

31.           Regarding jurisdiction, the ICA states “the parties recognize and agree that the Commission has continuing jurisdiction to implement and enforce all terms and conditions of this Agreement.”[44]  Independent state authority over ICAs is preserved by 47 U.S.C. § 252(e)(3).  The Commission is expressly authorized in state statute to address telephone service practices that are determined to be “in any respect unreasonable, insufficient, or unjustly discriminatory.”[45]  The Commission has jurisdiction over the issues raised by Desktop.

32.           Qwest acknowledged that the DVDP notation had been added to CSRs as a “tracking indicator” for dial-up accounts.[46]  At the hearing in this matter, Qwest identified the presence of the DVDP on CSRs for dial-up accounts as a problem for migration of customers to a new LEC.[47]   To address this situation Qwest initiated a change to its own process through the formal Change Management Process (CMP).  No CLEC requested that the CMP be used to change Qwest’s treatment of orders where the CSR bears a DVDP notation.  Qwest has not shown that there is any technical reason why the DVDP cannot simply be ignored when LSRs are received for such CSRs.

33.           This is not the first instance where the issue of DSL service and order status resulting in a rejection of a migration order has been addressed.  As stated in the ALJ Recommendation from the Qwest 271 OSS Checklist Docket:

Qwest has not demonstrated that a business reason exists for requiring the end-user customer to have completed the disconnection from Qwest’s DSL product before Qwest will even accept an order from a competitor for line sharing over the same loop.  The nature of this business practice creates an inherent barrier to CLECs attempting to enter the DSL market.[48]

34.           Qwest’s stated rationale for the policy in this matter is that the VISP is the customer, not the end user.  The rationale is inapplicable to dial-up customers of VISPs.[49]  Desktop has demonstrated that Qwest’s rejection of LSRs for dial-up customers with the DVDP notation is unsupported by any valid business purpose.  Qwest’s practice of requiring a cancellation code from dial-up customers is nothing more than a barrier to migration.  This barrier denies CLECs a meaningful opportunity to compete for the business of those customers.  Qwest’s policy regarding DSL customers of VISPs is the mirror image of the practice described in the 271 OSS Docket as “an inherent barrier” to competition.

35.           Requiring customers to confirm disconnection of DSL service prior to migration of the local service of those customers to CLECs is not supported by any technical justification.  Qwest has acknowledged that LSR rejection is under its control.[50]  Qwest indicated that it is “currently reviewing the ramifications of eliminating the DVDP code.”[51]  Qwest asserts that this review renders Desktop’s objections to be moot.  Qwest has also stopped rejecting LSRs where the DVDP notation appears on the CSR where the customer has VISP dial-up internet access.[52]

36.           The current review described by Qwest is directed toward handling of LSRs where the DVDP notation reflects VISP DSL access.[53]  As of the date of the hearing, Qwest had not begun the CMP process for this issue.[54]  Since there is no assured solution of this issue, the issue is not moot.

37.           The record in this matter does not contain adequate detail regarding damages to make a finding regarding damages resulting to Desktop from Qwest’s discriminatory conduct.

Simple Message Device Interface Access

38.           Desktop asserts that Qwest has refused to provide a switching feature known as the Simple Message Device Interface (SMDI) as required under the ICA.  Desktop also referred to this feature as “MSD” and “MSD-Interoffice.”[55]  Qwest responded that the functionality requested by Desktop is actually a product offered under tariff that is not required to be offered under the ICA.  Qwest asserted that some aspects of Desktop’s request would require Qwest to upgrade switches in seven central offices, which is beyond the requirements of the ICA.  The Department agreed that upgrading switches was beyond the obligations of the ICA.  But the Department asserted that the functionality requested must be made available under the ICA, should Qwest upgrade those switches.

39.           SMDI is the feature of the central office switch that allows a voice recording unit (VRU) to indicate that a message is waiting on a voicemail system.  The message indicator can be visual (by activating a light attached to the telephone) or audible (by activating a stutter dial tone when the receiver is lifted).  SMDI is used by every voicemail system that provides a message waiting indicator.

40.           Section 6.2.1.21 of the UNE portion of the ICA expressly addresses the attachment to Qwest’s network of voicemail and voice messaging services provided by a CLEC.  That section states:

If an AT&T customer subscribes to AT&T provided voice mail and messaging services, USWC shall redirect incoming calls to the AT&T system based on presubscribed service arrangements (e.g. busy, don’t answer, number of rings).  In addition, USWC shall provide a Standard Message Desk Interface-Enhanced (SDMI-E) interface to the AT&T system.  USWC shall support the Inter-switch Voice Messaging Service (IVMS) capability.[56]  

41.           For lower volume central offices, Qwest has deployed a system known as the Message Delivery Service (MDS).  MDS consists of two modems connected by two transport elements, the MDS circuit and a multi-line hunt group.[57]  One modem is connected to the VRU and the other modem is located in the individual central office, connected to a port on the switch where SDMI is accessed.  MDS lacks the capability of routing information between switches, so the MDS arrangement of modems and transport must be installed in each central office being served by the VRU.  In Desktop’s situation, MDS would need to be obtained between its VRU and each of the central offices serving those Desktop customers who would be accessing the voicemail system.

42.           In the Minneapolis-Saint Paul area, Qwest has deployed a system known as MDS-Interoffice (MDSI).  MDSI connects the VRU to a single switch.  Switching capabilities in the system allow the single connection to route messages (and the message waiting indicator signal) to any MDSI-equipped switch.  The software in the switch directs the signal to the appropriate telephone.  MDSI consists of the same elements as MDS, as well as the transport between the switches.

43.           Six central office switches serving Desktop customers are equipped with MDS in the Rochester LATA.[58]  In the Saint Paul LATA, the central office switch in Red Wing (where Desktop has a presence) is equipped with MDS.[59]  None of these switches are equipped with MDSI.  Desktop asserts that Qwest must upgrade these switches to provide MDSI in response to Desktop’s request for SMDI.  As Hauer stated:

In the rural markets that we serve, there is simply not the population density, unless we were to become the majority carrier to offer voicemail service with the message waiting indicator, because of the high cost of the tariff [for MDS] and because Qwest has not invested in the necessary upgrades to their switches to offer the SDMI product.  If Qwest had SDMI in southern Minnesota like they have in all of their metro exchanges, then it wouldn’t be an issue because it would be financially feasible to even pay the rates that we shouldn’t, which is the tarriffed price [for MDSI].[60]

44.     The ICA between Desktop and Qwest defines local switching.  That definition states:

“Local Switching” is the Network Element that provides the functionality required to connect the appropriate originating lines or trunks…to a desired terminating line or trunk.  Such functionality shall include all of the features, functions and capabilities the underlying [Qwest] switch providing such Local Switching function is then capable of providing … .[61] 

45.     In addition to the ICA language, significant limitations on an RBOC’s obligation to upgrade exist in the applicable case law. Both Qwest and the Department point out that the obligation to provide interconnection does not include any requirement that facilities be upgraded or additional capability be added.  As the FCC has stated in its UNE Remand Order:

In the Local Competition First Report and Order, the Commission limited an incumbent LEC's transport unbundling obligation to existing facilities, and did not require incumbent LECs to construct facilities to meet a requesting carrier's requirements where the incumbent LEC has not deployed transport facilities for its own use. Although we conclude that an incumbent LEC's unbundling obligation extends throughout its ubiquitous transport network, including ring transport architectures, we do not require incumbent LECs to construct new transport facilities to meet specific competitive LEC point-to-point demand requirements for facilities that the incumbent LEC has not deployed for its own use.[62]

46.     The FCC’s UNE Remand Order was issued to address issues remanded by the Eighth Circuit Court of Appeals in Iowa Utilities Board v. FCC.[63]  On the issue of upgrading facilities the Eight Circuit stated:

subsection 251(c)(3) implicitly requires unbundled access only to an incumbent LEC's existing network–not to a yet unbuilt superior one."[64]

47.           All the parties in this matter agree that Qwest would have to upgrade its switches in order to provide MDSI to those central offices identified by Desktop.  Qwest has shown that transport between central offices is also required when the MDSI service is made available.  The law is clear that Qwest is not obligated to upgrade its network to afford a CLEC access to a switch feature that is not currently installed.

48.           Another argument advanced by Qwest was that MDSI is a tarriffed product, not a switch feature.  Qwest asserted that the use of VRUs rendered MDS and MDSI to be information services, governed by the principles in the FCC’s regulatory approach for Open Network Architecture (ONA), not for Unbundled Network Elements (UNEs).[65]  The alternative to the tarriffed rate is pricing the identifiable elements of the product under the Total Element Long Run Incremental Cost (TELRIC) process.[66]  The Department disagreed with Qwest’s assessment, noting that a variety of elements that are expressly included in the ONA also appear as identified elements that are UNEs under ICAs.

49.           Qwest is free to contract with information service providers under the ONA structure established by the FCC.  Qwest also contracts with CLECs, under the terms contained in ICAs.  Contrary to Qwest’s position in this matter, the ICA expressly referenced the availability of SDMI as a UNE for provision of a CLEC’s “voice mail and messaging services.”[67]   All the terms needed to allow for SDMI access are found in the ICA between Desktop and Qwest.  Qwest is obliged to meet the terms of the ICA, which in this case means allowing access to the SDMI switch features as UNEs.

50.           The Department also asserts that “the SMDI/MDS and SMDI/MDS switch functionality is merely one of the ‘features, functions and capabilities of the Qwest switch’ that should therefore be available at cost-based rates.”[68]  As configured by Qwest, MDS and MDSI are combinations of switch features and transport.  The switch features that Desktop seeks are available to CLECs for interconnection under the express terms of the ICA.[69]  There is a transport portion of the two tarriffed services that runs between the CLEC and a central office switch.  This is “dedicated transport” under the ICA.[70]  For a CLEC (or dedicated voice messaging provider) using MDS, dedicated transport must be obtained between the VRU and each central office served.  Dedicated transport is purchased by CLECs on a flat rate.[71]

51.           Under MDSI, a CLEC must purchase dedicated transport to only one MDSI-equipped switch.  The remaining transport to the other switches at individual central offices is provided by “common transport.”[72]  Common transport is purchased by CLECs on a usage sensitive, TELRIC rate.[73]  Desktop indicated that only one trunk would be required with MDSI, rather than at least five trunks with MDS.[74]  Desktop described the current cost of that trunking as “each costing 8 [hundred] or $900 a month … .”[75]

52.           The switch features of MDSI are available as UNEs under the terms of the ICA.  Provision of these switch features is only required where the features are installed.  The dedicated and common transport portions of MDS and MDSI (where provided) must be paid for by the CLEC under the terms of the ICA.

Provision of Dark Fiber

53.           Dark fiber is currently installed, unlit, optical fiber, typically running between central offices.  Lighting fiber is accomplished by adding electronics at each end of an individual strand of dark fiber that permit the transmission of information.  Under the ICA, Qwest is obligated to offer dark fiber for lease to CLECs.[76]

54.           On November 17, 2000, Desktop submitted a request for eight strands of dark fiber between Qwest’s central offices at Red Wing and Winona.[77]  Desktop made this request on Qwest’s form entitled “Unbundled Dark Fiber Availability Inquiry and Request.”[78]

55.           Qwest confirmed that two unlit strands of dark fiber were available on the route requested.  Desktop submitted the “Provisioning (Order)” portion of Qwest’s form on December 5, 2000.[79]  Desktop ordered the two available strands of dark fiber (hereinafter “the Red Wing-Winona order”).  A portion of the form inquired as to “DID CLEC REQUEST RESERVATION.”  Neither the “Y” (yes) nor the “N” (no) response was checked on the form.

56.           Desktop submitted five other orders for dark fiber at the same time as the Red Wing-Winona order.  Qwest provisioned the other five dark fiber orders.  Some of these routes terminated in central offices where Desktop lacked a collocation presence.  Desktop began paying Qwest for the provisioned dark fiber, even though Desktop lacked the ability to attach electronics to the fiber to “light” it and thereby use the facility for providing service to customers.

57.           Qwest did not make the two unlit strands available to Desktop.  Qwest later indicated that Desktop was required to establish collocations at the two central offices before the order would be filled.[80]  There is no reference to collocation as a prerequisite for ordering unused transmission media in the ICA.  Desktop is obliged under the ICA to identify “appropriate connection points” to allow the attachment of electronics to the dark fiber.[81]

58.           No document issued by Qwest identified any need for collocation at a central office as a prerequisite for obtaining dark fiber between those locations.  The Department pointed out that Qwest’s product catalog (PCAT) provides for an alternative point of termination (APOT) for the dark fiber where a CLEC lacks collocation in a central office.[82]   Qwest did not offer Desktop an APOT for the Red Wing-Winona order.

59.           Desktop applied for collocation at those two central offices in December 2000.[83]  Qwest completed the requested collocations in June and July 2001.[84]  Qwest took no action on Desktop’s existing Red Wing-Winona order.  On April 25, 2002, Qwest assigned the two unlit strands on that route to another customer.[85]  Upon assigning that fiber, capacity on that route was exhausted.[86]

60.           Qwest indicated that Desktop needed to re-file the order form for its dark fiber request.  Desktop re-filed its order for dark fiber on September 5, 2002.    Qwest did not indicate at this time that any legal prohibition existed that would prevent Qwest from provisioning the requested strands of dark fiber.  Qwest responded to Desktop’s re-filed order that fiber on the route was exhausted.

61.           Qwest asserted that Desktop’s failure to request reservation of the dark fiber on the form of the Red Wing-Winona order precludes any damages, since Desktop did not reserve the dark fiber.  Desktop and the Department both pointed out that the ICA requires Qwest to reserve the ordered dark fiber for a period of 90 days.[87]  Provisioning of the dark fiber is required within 20 days of the confirmation that the dark fiber is available.[88]

62.           Qwest’s position regarding reservation of dark fiber would elevate the terms of Qwest’s form above the terms of the ICA.  This result is contrary to contract law, as the parties have not negotiated the terms of Qwest’s form.[89]  This result is also violative of the Commission’s requirement for approval of the terms of the ICA.  The express terms of the ICA are controlling here, and those terms required Qwest to reserve and provision the dark fiber identified as available for the Red Wing-Winona order.[90]

63.           Between the Red Wing and Winona central offices lies a local access and transport area (LATA) boundary.[91]  Each LATA is the geographic limitation on services that can be provided by the LEC in that LATA.  Telecommunications traffic that crosses these LATA boundaries is handled by interexchange carriers (IXCs).  IXCs provide telecommunications services that are generically described as long distance.  Qwest was an IXC prior to its merger with U.S. West.  Upon becoming a regional Bell Operating Company (RBOC), Qwest was obliged to limit its business regarding the provision of telecommunications services to services within a LATA.[92]  Qwest explicitly identified leases of dark fiber as among the interLATA business that Qwest would divest as part of its merger with U.S. West.[93]

64.           Qwest asserts that the crossing of the LATA boundary is an absolute bar to filling Desktop’s Red Wing-Winona order.  Qwest cites the recent fine imposed by the FCC on Qwest for, inter alia, failing to divest two interLATA dark leases as a demonstration that such leasing is a prohibited practice prior to Qwest receiving § 271 approval to provide interLATA telecommunication services.[94]

65.           Included in the ICA is a provision, entitled Force Majeure, that excuses either party to the contract from responsibility for failure to perform under the ICA where such nonperformance is the result of “any law, order, regulation, ordinance, or requirement of any government or legal body … .”[95]  While Qwest’s failure to actually provide the requested interLATA dark fiber was not caused by Qwest’s adherence to the FCC requirement, the parties are bound to the requirements of this provision.  Qwest could not have provided the requested dark fiber consistent with Qwest’s obligation under the Qwest Merger Order.  Qwest’s noncompliance with the ICA regarding this order cannot properly be the subject of a damage award for failure to provide dark fiber over a prohibited route. 

DMOQ Credits and Other Remedies

66.           The ICA makes DMOQs applicable to the preorder process and establishes a category of DMOQs for "Pre-Order/Order/Provisioning and Maintenance and Repair."[96]  Attachment 11 of the ICA sets out the specific DMOQs for each identified category.  For pre-order DMOQs, eight metrics are set out.  All of these metrics contain only the notation “Intentionally deleted.”[97]

67.           Qwest asserts that the absence of specifics for these DMOQs compels a finding of no liquidated damages penalty is appropriate on the issue of UBS.  Minn. Stat. § 237.462, subd. 1 authorizes the Commission to issue an order administratively assessing monetary penalties for knowing and intentional violations of certain statutes or an approved interconnection agreement.  Qwest and the Department maintain that the record in this case is insufficient to establish that penalties should be awarded.  Desktop asserts that the per occurrence credits in Appendix A for noncompliance with DMOQs can be used even when there are no preorder DMOQs in Appendix B (specifying overall performance index, credits, and measurements).  The per-occurrence credit in Appendix A is $2500 per day for noncompliance.

68.           Appendix A is very specific as to what DMOQ applies, what failure triggers a credit, and what credit should be imposed for the failure.[98]  None of the DMOQs in Appendix A are implicated in Desktop’s complaint.  All of Qwest’s demonstrated noncompliance falls in the category of preordering and DMOQs are not listed in the ICA in that category.

69.           The Department asserts that the appropriate approach is to “permit Desktop to seek recovery of its damages, losses, and expenses from Qwest, including out-of-pocket expenses incurred as a result of this problem … .”[99]  The demonstration of such damages “can be established by a separate filing subject to comment of parties, review by the ALJ, and approval by the Commission.”[100]  Desktop concurs with the Department’s approach, as an alternative means of assessing damages, should the DMOQ provisions be found to be inapplicable.[101]

70.           Qwest objects to the reopening of this proceeding for determining the appropriate penalty.  Qwest asserts that seeking such a penalty goes beyond the ICA and the Commission’s statutory powers.  Qwest maintains that any such penalty is limited to prospective relief, not imposing monetary penalties for past practices.  Qwest relies upon Desktop’s burden of proof, and assets that closure of the record without proof of damages compels a conclusion that no damages are appropriate.

71.           Qwest’s assertions are contrary to both Minn. Stat. § 237.462, subd. 1, and the ICA.  The Commission has the authority to award penalties for noncompliance with the ICA.  The Commission has the authority to implement and enforce the ICA, under the terms of the ICA itself.[102]  The Commission’s authority to issue penalties requires consideration of:

(1)the willfulness or intent of the violation;

(2)the gravity of the violation, including the harm to customers or competitors;

(3)the history of past violations, including the gravity of past violations, similarity of previous violations to the current violation to be penalized, number of previous violations, the response of the person to the most recent previous violation identified, and the time lapsed since the last violation;

(4)the number of violations;

(5)the economic benefit gained by the person committing the violation;

(6)any corrective action taken or planned by the person committing the violation;

(7)the annual revenue and assets of the company committing the violation, including the assets and revenue of any affiliates that have 50 percent or more common ownership or that own more than 50 percent of the company;

(8)the financial ability of the company, including any affiliates that have 50 percent or more common ownership or that own more than 50 percent of the company, to pay the penalty; and

(9)other factors that justice may require, as determined by the commission. The commission shall specifically identify any additional factors in the commission's order.[103]

72.           The Commission is may only impose a penalty based on the record of the contested case.  The record must demonstrate by a preponderance of the evidence that the penalty imposed is justified, based on the factors listed above.[104]  The statute places no limitation on the ability of the Commission to structure proceedings to ensure that the required record is adequate to make appropriate findings.[105]

73.           Desktop has demonstrated that Qwest has violated the ICA and that Desktop has suffered some amount of damages as a result of those violations.  Because Desktop relied upon DMOQs for the damage assessment in this matter, Desktop did not present evidence in the contested case proceeding upon which a damage award can be made.  To foreclose Desktop from the opportunity to demonstrate damages would provide a windfall to Qwest and reward ICA violations.  Qwest is not prejudiced by affording Desktop the opportunity to make this showing.  Remanding this matter for proceedings on damages is appropriate.

74.           The Department has proposed additional remedies in this matter beyond the damage determination.  The Department recommended that a proceeding be initiated to determine if the costs for switch-based elements identified in this proceeding are currently included in the existing UNE rates.  If Qwest believes that particular switch features are not appropriately included in the existing UNE rates, Qwest can conduct a cost study and initiate a cost proceeding.

75.           The Department also recommended that Qwest and Desktop be ordered to report to the Commission if an amendment to the ICA is needed regarding UBS.  The ICA obligates the parties to negotiate in good faith whenever needed.[106]  There is no need to expand on the obligation in the ICA at this time.                

Based upon the foregoing Findings of Fact, the Administrative Law Judge makes the following:

 

 

 

CONCLUSIONS OF LAW

 

1.       The Administrative Law Judge and the Commission have jurisdiction in this matter under Minn. Stat. §§ 14.50 and 237.081.

 

2.       As the party proposing that the Commission take action, Desktop has the burden of proving facts at issue by a preponderance of the evidence.  Minn. R. 1400.7300, subp.5.  

 

          3.       Minn. Stat. § 237.081, subd. 1a, provides:

 

Upon a complaint made against a telephone company by any other provider of telephone service . . . that any of the rates, tolls, tariffs, charges, or schedules, or any regulation, measurement, practice, act or omission affecting or relating to the production, transmission, delivery or furnishing of telephone service or any service in connection with telephone service is in any respect unreasonable, insufficient, or unjustly discriminatory, or that any service is inadequate or cannot be obtained, the commission, after notice to the telephone company, shall investigate the matters raised by the complaint.

 

4.       Minn. Stat. § 237.081, subd. 4, provides:

 

Whenever the commission finds, after a proceeding under subdivision 2, that (1) a service that can be reasonably demanded cannot be obtained, (2) that any rate, toll, tariff, charge, or schedule, or any regulation, measurement, practice, act, or omission affecting or relating to the production, transmission, delivery, or furnishing of telephone service or any service in connection with telephone service, is in any respect unreasonable, insufficient, or unjustly discriminatory, or (3) that any service is inadequate, the commission shall make an order respecting the tariff, regulation, act, omission, practice, or service that is just and reasonable and, if applicable, shall establish just and reasonable rates and prices.

 

          5.       Qwest had an obligation under the ICA to provide UBS to Desktop in a reasonable manner.  Qwest failed to provide ordering instructions for the UBS Desktop sought from Qwest.  That failure for the periods of 110 days for UBS and 93 days for PRI is unreasonable.

 

          6.       Qwest had an obligation under the ICA to provide SDMI to Desktop as a UNE.  Qwest failed to provide SDMI as an unbundled element when first requested by Desktop.  Qwest has an ongoing obligation to provide switch features as UNEs, where such features are installed.  Switch features are not removed from Qwest’s unbundling obligation when such features are part of Qwest’s tarriffed MDS or MDSI products.

 

7.       Qwest’s processes regarding migration where the end user CSR has a notation indicating internet services are being received from a VISP have the effect of impairing Desktop’s ability to compete as a CLEC of POTS to customers.  Qwest’s use of these processes is a violation of Qwest’s duty to provide interconnection on rates, terms, and conditions that are just, reasonable and nondiscriminatory, as required by 47 U.S.C. § 251(c)(2)(D).  Desktop is entitled to forward-looking relief from Qwest’s continued restrictions on customer migration where a VISP notation is present on the end user’s CSR.

 

          8.       Qwest had an obligation under the ICA to provide dark fiber to Desktop in a reasonable manner.  Qwest failed to process one order for dark fiber in accordance with the terms of the ICA.  Since that particular order crossed a LATA boundary, however, the force majeure provision of the ICA operates to relieve Qwest of its obligation to provide the ordered dark fiber on that route.

         

9.               Minn. Stat. § 237.462, subd. 1, authorizes the Commission to issue an order administratively assessing monetary penalties for knowing and intentional violations of certain statutes or an approved interconnection agreement.  While there have been knowing and intentional violations of the ICA, there is no factual basis in this record to determine what monetary penalties are appropriate.

10.           In order to determine an appropriate monetary penalty, evidence as to Desktop’s actual damages resulting from Qwest’s failure to comply with the terms of the ICA is needed.

         

NOTICE

 

          THIS REPORT IS NOT AN ORDER.  THE PUBLIC UTILITIES COMMISSION WILL ISSUE THE FINAL AGENCY ORDER, WHICH MAY ADOPT OR DIFFER FROM THE FOLLOWING RECOMMENDATIONS.

 

          Based upon the foregoing Conclusions, the Administrative Law Judge makes the following:

 

 

RECOMMENDATIONS

 

          IT IS RECOMMENDED that the Public Utilities Commission issue an Order:

 

1.               Adopting the foregoing Findings and Conclusions.

 

2.               Requiring that Qwest comply with the ICA to make ordering information for UBS available to CLECs on a timely basis.

 

3.               Prohibiting Qwest from discriminating against CLECs in the handling of customer migration where Qwest records show a relationship with a volume internet service provider.

4.               Requiring that Qwest provide simple message device indicator ports as a UNE in accordance with the parties’ interconnection agreement.

5.               Denying Desktop’s Complaint regarding Qwest’s failure to provision dark fiber under the parties’ interconnection agreement.

 

6.               Denying Desktop’s request for credits under the ICA provisions for DMOQs.

 

7.               Remanding this matter to the Office of Administrative Hearings for further proceedings, to determine damages suffered by Desktop through Qwest’s failure to comply with the ICA regarding unbundled switching and Qwest’s discrimination in customer migration, for the assessment of an appropriate penalty under Minn. Stat. § 237.462.

         

 

Dated:  June 23, 2003

 

                                                                      /S/ RICHARD C. LUIS

                                                                      _________________________

                                                                      RICHARD C. LUIS

                                                                      Administrative Law Judge

 

Reported:  Shaddix & Associates.

Transcript prepared