WOODWARD,WOODWARD, COTHRANCOTHRAN &RHERNDONHERNDON AttorneysAttorneys atatLawLaw EDWARDEDWARDM.M.WOODWARD,WOODWARD, JR.JR. 12001200MAINMAIN STREET,STREET,SUITESUITE600600 DARRADARRAw.W.COTHRANCOTHRAN POSTPOSTOFFICEOFFICEBOXBOX1239912399 EDWARDEDWARDM.M.WOODWARD,WOODWARD, SR.SR. WARRENWARREN R.R.HERNDON,BERNDON, JR.JR. COLUMBIA,COLUMBIA, SOUTHSOUTH CAROLINACAROLINA 2921129211 (1921-2000)(1921-2000) TELEPHONETELEPHONE (803)(803)799-9772799-9772 FACSIMILEFACSIMILE(803)(803)799-3256799-3256

DecemberDecember 21,21,20052005

REGULAR MAIL VIAVIA REGULAR MAIL S8 O,I' PUBLNOPURLlC SERVICESEfVCECOMMISSIONCQMMfSS(0t( E( EAVE Mr.Mr. CharlesCharles L.A.L.A. TerriniTerrini ChiefChief Clerk/AdministratorClerk/Administrator DECDEC 22 88 20052005 SouthSouth CarolinaCarolina PublicPublic ServiceService CommissionCommission ECEIVEi_ SynergySynergy BusinessBusiness Park,Park, TheThe SaludaSaluda BuildingBuilding 101101 ExecutiveExecutive CenterCenter DriveDrive EQ'EIVE. Columbia,Columbia, SouthSouth CarolinaCarolina 2921029210

Re:Re: PetitionPetition ofof MCImetroMCImetro AccessAccess TransmissionTransmission Services,Services, LLCLLC forfor ArbitrationArbitration ofof CertainCertain TermsTerms andand Conditions ofof ProposedProposed AgreementAgreement withwith HorryHorry TelephoneTelephone Cooperative,Cooperative, Inc.Inc. ConcerningConcerning InterconnectionInterconnection andand ResaleResale underunder thethe TelecommunicationsTelecommunications Act ofof 1996,1996,Docket No.No. 2005-188-C2005-188-C

Petition ofof MCImetroMCImetro Access Transmission Services, LLC forfor Arbitration ofof CertainCertain TermsTerms and Conditions of Proposed AgreementAgreement with Farmers Telephone Cooperative, Inc.,Inc., Home Telephone Co.,Co., Inc.,Inc., PBT Telecom,Telecom, Inc. and Telephone Company, Concerning InterconnectionInterconnection and ResaleResale under the Act of 1996, Docket No. 2005-67-C

Dear Mr. Terrini:

This is to advise the Public Service Commission (the "Commission""Commission") ) of a recent development regarding the above-referenced dockets.

The parties' testimony and post-hearingpost-heating briefs inin the above-referenced proceedings cited a decision of thethe Iowa Utilities Board, InIn re Arbitration ofSprint Communications Company, L.L.P.P. v. AceAce CommunicationsCommunications Group,Group, etet al.al.,, DocketDocket No. Arb-05-2, 2005 WL 1415230, Order Granting Motions toto DismissDismiss (May(May 26, 2005). The Commission reliedrelied on that decisiondecision inin itsits Order Ruling onon Arbitration,Arbitration, CommissionCommission OrderOrder No. 2005-544, pp. 12-13,12-13, dated October 7, 2005, in DocketDocket No.No. 2005-67-C.2005-67-C. On NovemberNovember 28,28, 2005,2005, thethe IowaIowa UtilitiesUtilities Board issuedissued itsits Order onon Rehearing, reversingreversing itsits previousprevious decision.decision. AA copycopy ofof thethe OrderOrder onon RehearingRehearing isis attached.attached. ItIt cancan alsoalso be foundfoundat:at: htt://www.http:llwww.state.ia.uslgovernmentJcomlutillstate. ia.us/ overnment/com/util/ privatelOrders1200511128_arbO52.pdfrivate/Orders/2005/1128 arb052. df

InIn thethe casecase beforebefore thethe IowaIowa UtilitiesUtilities Board,Board, SprintSprint CommunicationsCommunications Company,Company, L.L.P.P. ("("Sprint"),Sprint" ), likelike MCI,MCI, seeksseeks interconnectioninterconnection inin orderorder toto provideprovide switching,switching, numbernumber portability,portability, 911911 circuitscircuits andand otherother servicesservices toto aa carriercarrier customer.customer. NotwithstandingNotwithstanding thatthat SprintSprint wouldwould provideprovide differentdifferent networknetwork configurationsconfigurations forfor eacheach entityentity thatthat intendsintends toto useuse Sprint'sSprint's servicesservices (p.(p. 7),7), andand thatthat eacheach contractcontract withwith eacheach carriercarrier customercustomer wouldwould reflectreflect "a"a lotlot ofof materialmaterial differences"differences" (p.(p. 8),8), Mr.Mr. CharlesCharles L.A.L.A.TerriniTerrini DecemberDecember 21,21,20052005 PagePageTwoTwo

SprintSprint holdsholds itselfitself outout toto serveserve allall potentialpotential usersusers indiscriminatelyindiscriminately -- i.e.,i.e., SprintSprint isis willingwilling toto provideprovide wholesalewholesale servicesservices toto anyany "last-mile""last-mile" retailretail serviceservice provider,provider, includingincluding cablecable companies,companies, thatthat wisheswishes toto useuse Sprint'sSprint's servicesservices inin Iowa.Iowa. (p.(p. 14.)14.) Consequently,Consequently, thethe IowaIowa UtilitiesUtilities BoardBoard foundfound thatthat "[w]hile"[w]hile SprintSprint doesdoes notnot offeroffer itsits servicesservices directlydirectly toto thethe public,public, itit doesdoes indiscriminatelyindiscriminately offeroffer itsits servicesservices toto aa classclass ofofusersusers soso asas toto bebe effectivelyeffectively availableavailable toto thethe"public,public, thatthat classclass consistingconsisting ofof entitiesentities capablecapable ofof offeringoffering theirtheir ownown last-milelast-mile facilities."facilities. (Id.)(Id.) Accordingly,Accordingly, thethe BoardBoard determineddetermined thatthat Sprint isis aa "common"common carrier,"carrier, " and,and, therefore,therefore, aa "telecommunications"telecommunications carrier"carrier" entitledentitled toto interconnectioninterconnection underunder 4747 U.S.C.U.S.C. §§)$251251(a)(a) &&,(b).(b).

Likewise,inin thethe proceedingsproceedings beforebefore thethe Commission,Commission, thethe undisputedevidenceevidence isis thatthat thethe servicestoto be providedbyby MCIMCI areare not limitedlimited toto thosethose providedprovided forfor thethe benefitbenefit ofofTimeTime WarnerWarner ' CableInformationInformation Services,Inc ("TWCIS").I("TWCIS"). MCI seeksseeks toto offer itsits servicesservices toto otherother customerscustomers similarly situatedsituated toto TWCIS. Thus, as isis the casewithwith Sprint,MCI isis aa "commoncarrier" andand "telecommunicationscartier,"carrier, "becauseit "holds"holds itself to serveserve indifferentlyindifferently all potentialpotential users,"users, " and"allows customerstoto 'transmitintelligenceintelligence of theirtheir own designand choosing.choosing. '''2'"

In theIowa case,theBoardalso acknowledgedthat:

there appears to be an underlying concern in the RLEC [i.e.,[i.e., the rural ILEC] position that Sprint and MCC [i.[i.e.,e., its carrier customer]are insisting upon this particularbusiness model inin order to achieve someas-yet-unspecifiedadvantage. For example, the RLECs argued that if they are required to enter into an interconnection agreement with Sprint, rather than MCC, thethe RLECs might be denied some rightsrightsunder (§ 251. During the course of this proceeding, Sprint was able to respondrespondto each ofof thetheconcerns raisedraisedby the RLECs, but the RLECs may still be concerned. The Board will notnotreject Sprint'sSprint'spreferred business model onon thethe basis of unspecifiedunspecifiedconcerns,concerns,butbut thethe Board emphasizes that if any anti- competitive problems develop asasaaresultresultofof thisthisapproach,approach,thetheRLECsRLECsmay filefile anan appropriateappropriatecomplaintcomplaint with thethe Board. (pp.(pp. 15-16.15-16.)) (Transcript(Transcript references omitted.omitted.))

SeeSeethethetranscripttranscriptofofhearing,hearing,T.T.185,185,220-22,220-22,ininDocketDocketNo.No.2005-67-C.2005-67-C.TheTheCommissionCommissiontooktookjudicialjudicial noticenoticeofofthatthatproceedingproceedingininDocketDocketNo.No.2005-188-C;2005-188-C;seeseetranscripttranscriptofofthatthathearing,hearing,atatT.T.14.14. 2 TriennialTriennialReviewReviewOrder,Order,$¶152,152,citingcitingNationalNational Ass'nAss'n ofof RegulatoryRegulatory UtilityUtility CommissionersCommissioners v.v. FCC,FCC, 533533 F.F.2d2d 601,601,608-09608-09 (D.(D.C.C. Cir.Cir. 1976).1976). Mr. CharlesL.A.L.A. Terrini December21,2005 PageThree

Likewise,theILECsin theproceedingsbeforethethe CommissionhavespeculatedthatMCI may or may not engage in activities that have not occurred and may not occur, and concerning which MCI in every respect has provided numerous assurances of its good conduct and intentions, even to the extent of stipulating that VolPVoIP or IP-enabledIP-enabled traffictraffic will be treatedtreated similarly to other voice traffic covered by the parties' agreement, including the determination' of the jurisdictionjurisdiction of this traffic for purposes of billing for intercarrierintercarrier compensation. 3 If MCI breaches the agreement, or otherwise engages inin conduct thethe ILECs deem inappropriate, the ILECsILECs have recourse toto complaint procedures for redress.redress.

InIn summary, the IowaIowa Utilities Board's Order on Rehearing provides analysis and authorityauthority that merits a decision by the Commission toto adopt MCI's proposed contract language. IfIf you need further information,information, please do not hesitate toto contact me or Kennard B. Woods, on behalf of MCI.

Very trulytruly yours,

WOODWARD, COTHRAN & HERNDON

Darra Cothran [email protected]@wchlaw. corn DWC/bjd

Enclosure.

cc:CC: Kennard B. Woods, Esquire Dulaney L. O'Roark, III, Regional Director, MCI Law & Public Policy Joseph Melchers, Esquire Margaret M. Fox, Esquire John M. Bowen, Jr.,Jr., Esquire Florence P. Belser, Esquire Shannon Bowyer Hudson, Esquire Frank R. Ellerbe, III, Esquire

3 See §) 1.61.6 of the parties' interconnection agreement in Docket No. 2005-188-C. The same language will be insertedinserted inin thethe interconnectioninterconnection agreements resultingresulting fromf'rom thethe arbitration in Docket No. 2005-67-C, given thatthat this languagelanguage was agreed-upon by thethe partiesparties before thethe hearing inin thatthat case. For transcripttranscript references toto MCI's assurances, see, e.g.,~e, T. 188, 194, 244, in Docket No. 2005-67-C, and T. 82, 85-86 inin Docket No. 2005-188-C. STATE OF IOWA

DEPARTMENT OF COMMERCE

UTILITIES BOARD

IN RE ARBITRATION OF:

SPRINT COMMUNICATIONS COMPANY L.P.,L.P., Petitioning Party,

VS.vs. ACE COMMUNICATIONS GROUP, CLEAR LAKE INDEPENDENTINDEPENDENT TELEPHONE COMPANY, FARMERS MUTUAL COOPERATIVE TELEPHONE CO. OF SHELBY, FARMERS TELEPHONE COMPANY, FARMERS MUTUAL TELEPHONE COMPANY, GRAND RIVER MUTUAL TELEPHONE CORPORATION, HEART OF IOWA COMMUNICATIONS COOPERATIVE, HEARTLAND TELECOMMUNICATIONS COMPANY OF IOWA d/b/a DOCKET NO. ARB-05-2 HICKORYTECH, HUXLEY COMMUNICATIONS, IOWA TELECOMMUNICATIONS SERVICES, INC.,INC. , d/b/a IOWA TELECOM f/k/af/k/a GTE MIDWEST, KALONA COOPERATIVE TELEPHONE, LA PORTE CITY TELEPHONE COMPANY, LEHIGH VALLEY COOPERATIVE TELEPHONE ASSOCIATION, LOST NATION-ELWOOD TELEPHONE COMPANY, MINBURN TELECOMMUNICATIONS, INC.,INC. , ROCKWELL COOPERATIVE TELEPHONE ASSOCIATION, SHARON TELEPHONE, SHELL ROCK TELEPHONE COMPANY d/b/a BEVCOMM c/o BLUE EARTH VALLEY TELEPHONE COMPANY, SOUTH CENTRAL COMMUNICATIONS, INC.,INC. , SOUTH SLOPE COOPERATIVE TELEPHONE COMPANY, SWISHER TELEPHONE COMPANY, VAN BUREN TELEPHONE

COMPANY, INC.,INC. , VENTURA TELEPHONE COMPANY,

INC.,INC. , VILLISCA FARMERS TELEPHONE COMPANY, WEBSTER CALHOUN COOPERATIVE TELEPHONE ASSOCIATION, WELLMAN COOPERATIVE TELEPHONE ASSOCIATION, and WEST LIBERTY TELEPHONE COMPANY d/b/a LIBERTY COMMUNICATIONS,

Responding Parties.

ORDER ON REHEARING

(Issued November 28, 2005) DOCKETDOCKET NO.NO.ARB-05-2ARB-05-2 PAGEPAGE 22

INTRODUCTIONINTRODUCTION

OnOn MarchMarch 31,2005,31, 2005,SprintSprint CommunicationsCommunications CompanyCompany L.P.L.P.(Sprint)(Sprint) filedfiled withwith thethe UtilitiesUtilities BoardBoard (Board)(Board) aa petitionpetition forfor arbitrationarbitration pursuantpursuant toto 4747U.S.C.U.S.C.§g 252,252,

seekingseeking anan interconnectioninterconnection agreementagreement withwith 2727ruralrural locallocal exchangeexchange carrierscarriers

(RLECs)(RLECs)"1 inin Iowa.Iowa. TheThe RLECsRLECs filedfiled twotwo motionsmotions toto dismissdismiss onon AprilApril 15,15,2005,2005,

arguingarguing thatthat SprintSprint waswas notnot entitledentitled toto invokeinvoke thethe arbitrationarbitration provisionsprovisions ofofthethe federalfederal

law.law. OnOn MayMay 26,26, 2005,2005, thethe BoardBoard issuedissued anan orderorder grantinggranting thethe motionsmotions andand

dismissingdismissing Sprint's petition. TheThe BoardBoard foundfound that,that, basedbased onon thethe recordrecord atat thatthat time,time,

SprintSprint would not be making its services available onon aa commoncommon carrier basisbasis in thethe

exchanges at issue. As a result, Sprint was notnot entitled to invoke thethe arbitrationarbitration and

negotiation process under the federal act. "Order Granting Motions toto Dismiss" at

pages 11-17.

On June 23, 2005, Sprint filed a complaint in the United States District Court

for the Southern District of Iowa, '2 asking the court to overturn the Board's decision.

InIn thethe course of those proceedings, itit becamebecame apparent thatthat SprintSprint intended to

' Ace CommunicationsCommunicationsGroup,Group,ClearClearLakeLakeIndependentIndependentTelephoneTelephone Company,Company, Farmers Mutual CooperativeCooperative TelephoneTelephone Co.Co. ofof Shelby, FarmersFarmers TelephoneTelephone Company, FarmersFarmers MutualMutual TelephoneTelephone Company,Company, GrandGrand RiverRiver MutualMutual TelephoneTelephone Corporation,Corporation, HeartHeart ofof IowaIowa CommunicationsCommunications Cooperative,Cooperative, HeartlandHeartland TelecommunicationsTelecommunications CompanyCompany ofof IowaIowa d/b/ad/b/a HickoryTech,HickoryTech, HuxleyHuxley Communications,Communications, IowaIowa TelecommunicationsTelecommunications Services,Services, Inc.Inc.,, d/b/ad/b/a IowaIowa Telecom, KalonaKalona CooperativeCooperative Telephone,Telephone, LaLa PortePorte CityCity TelephoneTelephone Company,Company, LehighLehigh ValleyValley CooperativeCooperative TelephoneTelephone Association,Association, LostLost Nation-ElwoodNation-Elwood TelephoneTelephone Company,Company, MinburnMinburn Telecommunications,Telecommunications, Inc.Inc.,, RockwellRockwell CooperativeCooperative TelephoneTelephone Association,Association, SharonSharon Telephone,Telephone, ShellShell RockRock TelephoneTelephone CompanyCompany d/b/ad/b/a BEVCOMMBEVCOMM c/oc/o BlueBlue EarthEarth ValleyValley TelephoneTelephone Company,Company, SouthSouth CentralCentral Communications,Communications, Inc.Inc.,, SouthSouth SlopeSlope CooperativeCooperative

CommunicationsCommunications Company,Company, SwisherSwisher TelephoneTelephone Company,Company, VanVan BurenBuren TelephoneTelephone Company,Company, Inc.Inc.,, VenturaVentura TelephoneTelephone Company,Company, Inc.Inc.,, VilliscaVillisca FarmersFarmers TelephoneTelephone Company,Company, WebsterWebster CalhounCalhoun CooperativeCooperative TelephoneTelephone Association,Association, WellmanWellman CooperativeCooperative TelephoneTelephone Association,Association, andand WestWest LibertyLiberty TelephoneTelephone CompanyCompany d/b/ad/b/a LibertyLiberty Communications.Communications. '2SSprintrint Comm.Comm. Co.Co. LPLPv.v. IUB,IUB, CaseCase No.No.4:05-CV-003544:05-CV-00354 (S.(S.D.D. IowaIowa 2005).2005). DOCKET NO. ARB-05-2 PAGE 3

introduce evidence inin thethe court proceedings that Sprint had not presented to the

Board. In thethe same general timetime frame, public utility commissions in other states were considering similar evidence and concluding that in similar circumstances Sprint would be a telecommunications service provider.3' Accordingly, Sprint and thethe Board

stipulated to a remand of thethe court proceedings to allow the Board toto reviewreview the

previously-unseen evidence and arguments and reconsiderreconsider its May 26, 2005, order.

On August 18, 2005, the Court approved a 60-day remand for thatthat purpose.

On October 17, 2005, thethe Court granted a jointjoint motion of the parties toto extend

the remand to November 21,2005.21, 2005.

The major issue at this time is whether Sprint's proposed activities inin thethe

RLEC exchanges will support a findingfinding that Sprint will be a "common carrier" in those

exchanges. IfIf so, then Sprint will be a "telecommunications service provider" (as

defined in 47 USC g§ 153) and is therefore entitled to invoke the arbitration process

under the federal act. If the Board findsfinds that Sprint meets the test, then the

arbitration proceedings will be resumed at the stage where theythey were terminated,

with approximately 79 days left. " Determining whether a carrier is a "common carrier,"carrier, as opposed toto a private

carrier or contract carrier, requiresrequires application of a two-pronged test that can be

summarized as follows:follows:

"Final Order" ( 3See,e.g.,e.g. , CambridqeCambrid e TelephoneTele hone Co.,Co. etetal.al.,, Docket Nos. 05-0529, etetal.al.,, "Final Order" (Illinois Commerce Commission, JulyJuly 13, 2005) (Rehearing(Rehearing denied August 23, 2005); Petition of SprintS rint Comm. Commerce " Co. L.P.L.P. for Arbitration, "Order Resolving Arbitration Issues,"Issues, Cases 05-C-0170 and 05-C-0183 (New(New York Public Service Commission, May 24, 2005). DOCKET NO. ARB-05-2 PAGE 4

1. Does thethe carrier hold itself out to serve all potential users indifferently?

2. Does thethe carrier allow customers toto transmittransmit intelligence of their own design and choosing?

NARUC v. FCC, 525 F.2dF.2d 630 (D.C.(D.C. Cir. 1976). The firstfirst prong was further clarified in United States Telecom Ass'n v. FCC, 295 F.3dF.3d 1326, 1329 (D.C.(D.C. Cir. 2002), by noting thatthat a carrier thatthat offers itsits service only toto a defined class of customers can still be considered a common carrier if itit holds itselfitself out toto serve all within that class indiscriminately. The focus of this proceeding is on the first factor; therethere isis no dispute inin thisthis record that Sprint does not regulate or alter the content of thethe messages it transmits.

Regarding the first factor,factor, Sprint's position isis that "as long as Sprint offers its services indiscriminatelyindiscriminately to entities thatthat are capable of providing their own last mile facilities; [sic][sic] itit may enter into separate agreements with users and maintain its " status as a common carrier."carrier. (Sprint Prehearing Brief at p. 15.)15.) In other words,

Sprint argues thatthat as longlong as itit is willing to provide interconnection services toto any company (or anyone else with last-mile facilities), itit isis a common carrier, even if itit negotiates individual,individual, confidential contracts with each such entity.

Sprint also argues thatthat itit is a telecommunicationstelecommunications service provider because it will indirectly offer service "to thatthat subset of thethe general public consisting of customers of MCC [MCC Telephony Services of Iowa, Inc.]Inc.] and other similarly " situated competitive service providers thatthat utilize Sprint's serviceservice...... " (Sprint

Prehearing Brief at p. 8.)8.) InIn other words, Sprint argues thatthat itit can establish its own DOCKET NO. ARB-05-2 PAGE 5

status based on the fact that MCC will serve the public indiscriminatelyindiscriminately and Sprint will be serving MCC. The RLECs argue thatthat this proves too much, since the same argument would make every supplier that MCC deals with into a telecommunications service provider.

The RLECs point out thatthat they have expressed theirtheir willingness toto negotiate with MCC, or with Sprint as agent for MCC, but Sprint has refused to negotiate in any capacity other thanthan in itsits own name. The RLECs appear to be suspicious of this approach and insist they have a right toto an interconnectioninterconnection agreement with the competitive local exchange carrier (CLEC) thatthat will actually be offering retailretail service toto the public, this is, with MCC.

Board member Stamp previously was an attorney with thethe law firm which is representingrepresenting Sprint inin thisthis matter. However, during his time with thethe firm as itit pertains to thisthis matter, Board member Stamp did not do any work forfor Sprint, was not involved inin counseling or advising Sprint, and was not privy toto any confidential information involving Sprint. After reviewing thethe relevant professional codes, General

Counsel has advised Board member Stamp that he may participate in the decision- making inin thisthis docket.

SUMMARY OF THE POSITIONS OF THE PARTIES

A. Sprint's evidence

To provide voice service, Sprint provides thethe switching, thethe public switched telephone network (PSTN) interconnectivity including all intercarrier compensation, DOCKET NO. ARB-05-2 PAGE 6

numbering resources and porting, tolltoll service, operator and directory assistance, 911 circuits, and numerous back-office functions.functions. (Transcript of hearing of October 18,

2005, at p. 22, hereinafter referred to as "Tr. 22.")22.") In thisthis case, it is MCC that provides thethe last-mile functions toto thethe customer premise, sales, billing, customer service, and installation.installation. (Id.)(Id.) Sprint uses this business model to provide competitive telephone service to over 500,500,000000 customers inin 13 states. (Tr.(Tr. 23.23.) ) Carriers such as

MCI use this same business model inin six other states. (Id.)(Id.)

Neither Sprint nor MCC isis the agent of the other party. (Id.)(Id.) Each company has independentindependent obligations under itsits contract to provide specific parts of thethe network. The business model capitalizes on the resources and capabilities of both companies toto allow market entry sooner than if either company were toto attempt to do it alone. (Tr.(Tr. 24.24.) )

Although this business model is not the only way to provide competitive facilities-basedfacilities-based telephonetelephone service, it isis a legitimatelegitimate business model that qualifies for interconnectioninterconnection under the Act, according to Sprint. The Act gives competitive LECs three options for providing service: 1) self-provisioning, 2) resale,resale, or 3) leasing unbundled network elements from an ILEC. New entrants may also employ a combined approach where one carrier provides some of the facilities necessary to provide service and other carriers provide other parts of the network. The Act also requires all LECs, includingincluding CLECs, to resell their services to other competitors. InIn DOCKETDOCKET NO.NO. ARB-05-2ARB-05-2 PAGEPAGE 77 thethe casecase atat hand,hand, SprintSprint isis oneone CLECCLEC resellingreselling itsits servicesservices toto aasecondsecond CLECCLEC-—MCC.MCC.

(Tr.(Tr. 27.)27.)

InIn overover 3030marketsmarkets acrossacross thethe country,country, SprintSprint actsacts asas aa retailretail serviceservice providerprovider byby purchasingpurchasing switchingswitching andand interconnectioninterconnection fromfrom anotheranother CLECCLEC andand purchasingpurchasing loopsloops fromfrom thethe ILECILEC toto provideprovide service.service. (Tr.(Tr. 31.)31.) SprintSprint sayssays thisthis isis comparablecomparable toto thethe proposedproposed Sprint/MCCSprint/MCC arrangementarrangement inin Iowa,Iowa, withwith MCCMCC (as(as thethe retailretail serviceservice provider)provider) purchasingpurchasing switching and interconnectioninterconnection fromfrom Sprint.Sprint. (Id.)(Id.)

InIn otherother markets, Sprint has purchasedpurchased unbundledunbundled network elementselements fromfrom anotheranother CLECCLEC whichwhich has purchased them fromfrom thethe ILEC. (Id.)(Id.) Again,Again, SprintSprint says thisthis is comparable toto the Sprint/MCC arrangement, except inin thosethose markets SprintSprint isis thethe retail service provider where in Iowa MCC will be the retailretail service provider.

Sprint has entered into arrangements with other cable companies in 18 states including MCC, Wide Open West, , Wave , and Blue

Ridge Communications. (Tr. 38.38.)) Sprint will offer its interconnection services to all entities similarly situated toto MCC with last-mile facilities to the cable companies.

Through these arrangementsarrangements Sprint provides services toto all withinwithin thethe class similar to

MCC toto allowallow thosethose servicesservices effectively toto bebe offered to thethe public. However, thethe networknetwork configurationsconfigurations willwill notnot bebe identicalidentical forfor eacheach entity thatthat intendsintends toto useuse Sprint'sSprint's services,services, becausebecause differentdifferent carrierscarriers willwill havehave differentdifferent requirements.requirements. (Tr.(Tr. 39.39.)) DOCKETDOCKET NO.NO. ARB-05-2ARB-05-2 PAGEPAGE 88

OnOn OctoberOctober 17,17,2005,2005, thethe dayday beforebefore thethe hearinghearing inin thisthis matter,matter, SprintSprint filedfiled withwith thethe BoardBoard aa proposedproposed tarifftariff forfor aawholesalewholesale serviceservice offering.4offering. (Tr.(Tr. 13.)13.) TheThe proposedproposed tarifftariff isis offeredoffered onlyonly toto competitivecompetitive serviceservice providersproviders thatthat areare similarlysimilarly situatedsituated toto cablecable companies.companies. (Tr.(Tr. 57-58.)57-58.) TheThe proposedproposed tarifftariff reflectsreflects onlyonly aa portionportion ofofthethe servicesservices reflectedreflected inin thethe contractcontract betweenbetween SprintSprint andand MCC.MCC. (Tr.(Tr. 59-60.)59-60.) TheThe contractscontracts SprintSprint hashas enteredentered intointo withwith cablecable companiescompanies toto datedate reflectreflect "a"a lotlot ofof materialmaterial differencesdifferences inin thethe businessbusiness relationshiprelationship thatthat SprintSprint hashas withwith thethe cablecable " companies oror anyany other similarly situatedsituated companycompany...... " (Tr.(Tr. 61-62.)61-62.) AsAs aa result,result, thethe pricing isis different inin each ofof thesethese contracts. (Tr.(Tr. 64.)64.)

B. Sprint's argument.

Pursuant to g§ 251(a) of the Act, a party must be a "telecommunications carrier" to be entitled to interconnection. Sprint's proposed services fit the definition of

"telecommunications carrier" and "telecommunications services" within the definitions of sections 153(44) and 153(47). State commissions in Illinois and New York have affirmed Sprint on this point and the OhioOhio Commission has affirmed MCI on thisthis point.

SinceSince Sprint's switches will terminateterminate MCCMCC traffictraffic to thethe publicpublic switched telephonetelephone

'4 TheThe RLECsRLECs objectedobjected toto considerationconsideration ofof thethe proposedproposed tarifftariff asas aa partpart ofof thisthis docket,docket, basedbased onon thethe lacklack ofof timetime availableavailable toto reviewreview thethe proposedproposed tariff.tariff. (Tr.(Tr. 14.14.)) TheThe BoardBoard notednoted thethe objectionobjection andand reservedreserved thethe optionoption ofof schedulingscheduling additionaladditional hearinghearing timetime forfor cross-examinationcross-examination concerningconcerning thethe proposedproposed tariff,tariff, ifif necessary.necessary. (Tr.(Tr. 15.15.)) TheThe BoardBoard thenthen issuedissued anan orderorder givinggiving thethe RLECsRLECs untiluntil OctoberOctober 24,24, 2005,2005, toto filefile ininthisthis docketdocket aa responseresponse toto Sprint'sSprint's proposedproposed tariff,tariff, addressingaddressing thethe possiblepossible effecteffect ofofthethe tarifftariff onon thethe issueissue currentlycurrently beforebefore thethe Board:Board: whetherwhether Sprint'sSprint's proposedproposed activitiesactivities wouldwould makemake ititaa"telecommunications"telecommunications carrier'carrier' forfor purposespurposes ofof 4747 U.U.S.C.S.C. gg§§251251 andand 252.252. NoNo responseresponse waswas filed.filed. DOCKET NO. ARB-05-2 PAGE 9 network (PSTN),(PSTN), thisthis clearly falls within thethe definition of"telephoneof "telephone exchange service" in §g 153(47).

The RLECs contend that entering into an interconnection agreement with

Sprint would somehow interfereinterfere with their §g 251(b) rights with respect toto MCC. Sprint asserts that this is a red-herring argument that should be disregarded. The presence of an interconnection agreement with Sprint would in no way preclude thethe RLECs from seeking a separate agreement with MCC. (Tr. 50.)50.)

The RLECs also contend that even if theythey are required to interconnect, Sprint would not be entitled to local number portability or dialing parity pursuant toto 5g 251(b).

On this claim, Sprint argues, the RLECs are wrong on two counts. First, Sprint meets thethe statutory definitions of both "telephone exchange service" and "exchange access" making Sprint a "local exchange carrier" pursuant to 5g 153(26) and is explicitly

"local eligible for rights under 5g 251(b). Second, even if Sprint were not a "local exchange carrier" within the meaning of thethe Act, a plain reading of 5g 251(a) makes itit clear that thethe obligation toto interconnectinterconnect directly or indirectlyindirectly extends to all telecommunicationstelecommunications carriers -—not just local exchange carriers. The Tenth Circuit Court of Appeals inin

Atlas Telephone upheld thisthis principle.5 (Sprint InitialInitial Brief pp. 15-16.)15-16.)

C. RLEC evidence

In October 2004, each of the RLECs received a letter fromfrom Sprint requesting interconnection pursuant toto 55gg 251 and 252 of the Act. (Tr. 179.)179.) The letter fromfrom

s' Atlas TelephoneTele hone Co.,Co. etetal.al. v. Oklahoma Corp.Cor . Comm'n,Comm'n etetal.al.,, 400 F.3dF.3d1256(10'1256 (10t" Cir.Clr. 2005). DOCKET NO. ARB-05-2 PAGE 10

Sprint did not mention Sprint's intentintent to use the interconnection agreement to provide services to other locallocal exchange carriers or to MCC. (Id.)(Id.) After some communication, the RLECs determined that Sprint was not requesting interconnection as a CLEC, but was seeking an agreement to enable itit to provide certain business services to MCC. Iowa Telecom, and perhaps other RLECs, offered to execute an interconnection agreement either with MCC as a CLEC or with Sprint as MCC's agent. (Tr. 179.)179.) This offer was rejected.rejected. (Id.)(Id.) There have been no requestsrequests from MCC for interconnection.interconnection. (Id.)(Id.)

The RLECs believe MCC is a local exchange carrier, while Sprint isis merely one of many suppliers of resources needed by MCC toto provide local exchange "MCC service. (Tr. 180.)180.) This isis confirmed inin Sprint's prehearing brief where itit states "MCC will outsource much of the network functionality, operations and back-office systems to Sprint...Sprint. .. Service will be provided in MCC's name and MCC will be responsible for itsits local network, marketing and sales, end-user billing, customer service and " installation."installation. (Sprint Prehearing Brief p. 3.)3.)

Many ILECs and CLECs procure operator services, directory assistance, and directory publishing services from other vendors rather than producing these capabilities themselves. (Tr. 182.)182.) None of these vendors are considered local exchange carriers, even thoughthough the services theythey provide may be "vital and " necessary components of a total service package."package. (Id.)(Id.) Sprint isis trying toto convince DOCKET NO. ARB-05-2 PAGE 11 the Board to significantly expand itsits definition of carrier activities to encompass vendor and contractor services.

D. RLEC argument.

Affording Sprint thethe legal status for negotiation and arbitration pursuant to

§§gg 251 and 252 would produce competitive distortions that would affect thethe rights of both ILECs and CLECs. Further, even if the Board were to find that Sprint isis entitled to interconnection pursuant to §g 251(a), Sprint would not satisfy the requirementsrequirements of

§g 251(b). This is because Sprint isis not providing "telephone exchange service" or

"exchange access" pursuant to §g 153. Thus, without meeting the requirements of

251(b), Sprint would not be entitled toto locallocal number portability or dialing parity.

(RLEC(RLEC InitialInitial Brief pp. 13-19.)13-19.)

BOARD ANALYSIS

At this stage of this proceeding, the Board must answer one question: Is

Sprint proposing toto operate as a common carrier in the service territories of the 27

RLECs? If the answer is , then Sprint will be a telecommunications service provider and is entitled to invoke thethe negotiation and arbitration provisions of 47 USC

§g 252 and seek interconnection pursuant toto §g 251. The Board will thenthen to-commencere-commence the arbitration docket as soon as general jurisdiction of the matter is restored to the DOCKET NO. ARB-05-2 PAGE 12 agency. This is the conclusion that the Illinois, New York, and commissions have reached. 6'

If the answer is no, thenthen Sprint does not have the right toto negotiation and ' arbitration pursuant to §g 252. z The Board will not change its May 26, 2005, order, and the matter will either return to court or MCC will send a bona fide requestrequest for negotiations to the RLECs.

In order to invoke the negotiation and arbitration procedures of §g 252 and, therefore,therefore, the interconnectioninterconnection obligations in §g 251(a), Sprint must show thatthat itit is a

"telecommunications carrier" pursuant toto §g 153(44) of thethe Act. The relevant part of

§g 153(44) defines "telecommunications"telecommunications carrier" as "any provider of " telecommunications servicesservices...... " Section 153(46), inin turn,turn, defines

"telecommunications service" as "the offering of telecommunications for a feefee directly to the public, or toto such class of users as to be effectively available directly to the " public, regardlessregardless of the facilities used."used.

6' Sprint Communications Companyan L.P.,L.P. Petition For Consolidated Arbitration with Certain Illinois S rint Communications Com " IncumbentIncumbent Local ExchangeExchan e Carriers, "Proposed Arbitration Decision,"Decision, Docket No. 05-0402 (111.(III. Commerce Comm'n, October 26, 2005); Petition Of SprintS rint Communications CompanyCom an L.P.L.P. For Arbitration To Establish An Intercarrier AA.qreementreement With IndependentInde endent Companies,Com anies, "Order Resolving Arbitration Issues,"Issues, n Case No. 05-C-0170 (NYPSC(NYPSC May 18, 2005); ApplicationA lication And Petition Inln Accordance With Section II.A.2.bII.A.2.b Of The Local Service Guidelines Filed ByB The ChampionCham ion TelephoneTele hone PUC January 20, 2005). Co.,Co. et al.,al. , Case No. 04-1494-TP-UNC, "Order On Rehearing" (Ohio(Ohio PUC January 26, 2005). This isis the decision thethe Nebraska commission recently reached in similar circumstances, SprintS~rint Communications Co. LP,LP Petition For Arbitration Between SprintS rint And Southeast Nebraska TelephoneTele hone Co.,Co., Application No. C-3429 (Neb.(Neb. PSC September 13, 2005). DOCKET NO. ARB-05-2 PAGE 13

This statutorystatutory language has been the subject of interpretationinterpretation by the FCC and " thethe courts, 8' which have held that in order to be a "telecommunications carrier,"carrier, an " entity must be a "common carrier."carrier. The leading case is Vir,qinVir in Islands TelephoneTele hone v.

FCC, 198 F.3dF.3d 921 (D.C.(D.C. Cir. 1999), inin which thethe court affirmed an FCC determination that an AT&TATBT affiliate was not a "telecommunications carrier" under the " act because it would not function as a "common carrier."carrier.

Common carrier status isis determined by a two-pronged test: First, whether the carrier holds itself out to serve all potential users indiscriminately and, second, whether the carrier allows each customer to transmit informationinformation of the customer'scustomer' s own design and choosing. United States Telecom Ass'n v. FCC, 295 F.3dF.3d 1326,

1329 (D.C.(D.C. Cir. 2002), citing National Ass'n of Re.qulatoryRe ulato Util. Comm'rs v. FCC, 525

F.2dF.2d 630, 642 (D.C.(D.C. Cir. 1976). The key determinant is whether an entity isis holding itself out to serve indiscriminately. Vir.qinVir in Islands Tel.,Tel. , 198 F.3dF.3d at 927, citing

NARUC I, 525 F.2dF.2d at 642. "But a carrier will not be a common carrier where its practice isis to make individualizedindividualized decisions inin particular cases, whether and on what termsterms to deal. It isis not necessary that a carrier be required to serve all " indiscriminately;indiscriminately; it isis enough that its practice is, inin fact,fact, toto do so."so. NARUC I,I, 525 F.2dF.2d at 641, footnotes omitted.

8' Because as state commission assumes federal authority when it acts pursuant to §252f252 of thethe Act, the Board is required toto employ thesethese standards when arbitrating an interconnection agreement. Bell Atlantic-Delaware,Atlantic-Delaware Inc. v. Global NAPS South,South Inc.,Inc. , 77 F.Supp.2dF.Supp. 2d 492, 500 (D.(D. DE 1999). DOCKET NO. ARB-05-2 PAGE 14

Applying thesethese standardstoto the record before it, the Board finds that Sprint has carried its burden of showing that it is proposing to operate as a common carrier in the RLEC service territories.territories. It is clear that Sprint is willing to provide wholesale services to any last-milelast-mile retail service provider that wants Sprint's services in Iowa.

Thus, the Board finds thatthat Sprint isis a common carrier and therefore a telecommunicationstelecommunications carrier under thethe Act. While Sprint does not offer its services directly to thethe public, it does indiscriminatelyindiscriminately offer itsits services toto a class of users so as to be effectively available to the public, that class consisting of entities capable of offering their own last-milelast-mile facilities. Thus, Sprint meets thethe first prong of thethe

NARUC I test,test, as clarified by USTA. (Sprint also meets the second prong of the

NARUC I test by not altering the content of thethe communications itit will carry; therethere was no dispute concerning thisthis part of thethe test.)test. )

The RLECs point out thatthat each contract Sprint has with a last-mile provider has a different price and all of those prices are considered by Sprint toto be confidential. The RLECs argue, inin essence, that Sprint cannot be holding itself out to serve the public indiscriminatelyindiscriminately under these conditions. The Board disagrees for three reasons.

First, itit should be no surprise that each contract has different provisions, including different prices. The fact is that thethe business of selling these wholesale services has not evolved intointo a standardized offering. Sprint is offering numerous different wholesale services and different last-mile providers will purchase different DOCKET NO. ARB-05-2 PAGE 15

pieces to create their own distinct bundles. When each contract is for a different set of services, it should be no surprise that each contract has different pricing.

Second, it isis unsurprising that thethe parties toto these contracts consider the

specific termsterms and conditions, including the pricing, to be confidential. One of the

points of the Act was to create and foster competition inin thethe local exchange

marketplace. Competitors typically do not want theirtheir competition to know theirtheir costs

and consider cost informationinformation toto be a trade secret. It is reasonable to expect that as

competition increases, the willingness of the competitors to reveal their cost data will

decrease.

Third, because each contract involvesinvolves a unique set of circumstances and a

unique bundle of services, cost comparisons between the contracts would not be

particularly meaningful. To know that a bundle of services sold toto one last-mile

provider costs one price, and a bundle sold to another last-milelast-mile provider costs

another price would telltell a potential buyer with different needs littlelittle or nothing about

the cost of the bundle Sprint could provide to thatthat buyer. Again, this market has not ' developed to produce standardized, cookie-cutter offerings.9

Finally, there appears to be an underlying concern in the RLEC position that

Sprint and MCC are insisting upon thisthis particular business model inin order to achieve

some as-yet-unspecified advantage. For example, thethe RLECs argued thatthat ifif they are

9' InIn this context,context, it is important to note thatthat thethe Board is not relayingrelaying on Sprint's day-before-hearing tariff filing inin support of this ruling.ruling. While Sprint may have identified one small part of the overall bundle of services that can be standardized and filed as part of a tariff,tariff, it isis not a complete bundle of services and isis irrelevant toto thisthis analysis. DOCKET NO. ARB-05-2 PAGE 16 required to enter intointo an interconnectioninterconnection agreement with Sprint, rather than MCC, thethe

RLECs might be denied some rightsrights under §g 251. During the course of thisthis proceeding, Sprint was able to respond toto each of the concerns raised by the RLECs, but the RLECs may still be concerned. (See, e.g.,e.g. , Tr. 49, 50, 165.)165.) The Board will not rejectreject Sprint's preferred business model on the basis of unspecified concerns, but the Board emphasizes that if any anti-competitive problems develop as a result of thisthis approach, the RLECs may file an appropriate complaint with the Board.

Having reconsidered itsits May 26, 2005, order on the basis of thethe additional evidence presented toto the Board, thethe Board concludes that Sprint's proposed business plan with MCC inin thethe RLEC exchanges isis sufficiently affected with the public interest toto establish thatthat Sprint will be operating as a common carrier. This means, inin turn,turn, that Sprint will be a telecommunicationstelecommunications carrier in thesethese exchanges and isis thereforetherefore entitled to invoke thethe arbitration provisions of 47 U.S.C.U.S.C. §g 252. As a result, thethe Board will reinstate thethe pending arbitration proceedings at the point at which they were terminated, just as soon as general jurisdiction of thisthis matter has been restoredrestored toto the Board by Court order, by dismissal of thethe Court action, or by other appropriate means. Picking up the scheduleschedule where it left off, the parties and the Board will have only 79 days to complete thisthis arbitration (in the absence of a joint waiver or other agreement by thethe parties to extend thethe arbitration deadline). This isis an unusually tighttight time frame, made even more so by the fact thatthat the parties have DOCKET NO. ARB-05-2 PAGE 17 not negotiated to any significant degree. The parties should expect that thethe procedural schedule, once set, will be firm.

ORDERING CLAUSES

IT IS THEREFORE ORDERED:

1. The Board hereby reconsiders and rescindsrescinds itsits May 26, 2005, "Order

Granting Motions To Dismiss" inin thisthis docket, for thethe reasons given inin thethe body of this order.

2. General Counsel isis directed to file a copy of this order in the United

States District Court proceeding relating to the Board's May 26, 2005, order.

3. Upon the return of jurisdictionjurisdiction over thisthis matter from the Court, thisthis docket will be resumed as of the point at which it was interrupted.

UTILITIES BOARD

Is//s/ John R. Norris

/s/Diane/s/ Diane Munns ATTEST:

/s/Judi K. CooperCoo er /s//s/CurtisCurtis W. StampStam Executive Secretary

Dated at Des Moines, Iowa, this 2828'"th day of November, 2005.