ROLAND, FOGEL, KoBLENz^^gMDcaoNE., LLP
ATTORNE^Sftl^i^s-ALBANY
ALBANY, NEW YORK 12207 KEITH J. ROLAND EDMUND A. KOBLENZ USHER FOGEL 1908-1972 MARK L. KOBLENZ J_| A. ABBA KOBLENZ EMILIO A.F. PETROCCIONE 1922-1979 KEVIN M. COLWELL TEL: (518)434-8112 GEORGE A. ROLAND* FAX: (518)434-3232 COUNSEL •ALSO ADMITTED TO FLORIDA BAR May 24, 2002
Hand Delivered
Hon. Janet H. Deixler, Secretary NYS Public Service Commission Three Empire State Plaza Albany, New York 12223
Re: Case 01-C-1787 - iiNETA/erizon Arbitration - Initial Brief
Dear Secretary Deixler:
Enclosed please find the original and twenty-four (24) copies of the Initial Brief of Interactive Information Network in this proceeding.
The original brief contains the original Affidavit of Edward F. White.
This brief is being served electronically upon counsel for Verizon, counsel and Staff for the Commission, and the Administrative Law Judge today, with copies of the White Affidavit being transmitted by facsimile or hand delivery.
KJR/mac Enclosures cc: Sandra D. Thorn, Esq. Leigh A. Hyer, Esq. Maureen McCauley, Esq. Hon. William L. Boutellier Gregg Pattenaude Patricia Grille Edward F. White Larry Weiss r RECEIVED PU?UC SERVICE ORIGINAL. COMMISSION STATE OF NEW YORK05£C-FiLES'ALDAHY
PUBLIC SERVICE COM^ pH ^ 06
Petition of Interactive Information Network, Inc. For Arbitration of Interconnection Terms and Conditions and Related Case 01-0-1787 Arrangements with Verizon New York, Inc.
INITIAL BRIEF
9 INTERACTIVE INFORMATION NETWORK, INC.
•
-r Keith J. Roland - Roland, Fogel, Koblenz & Petroccione, LLP One Columbia Place Albany, New York 12207 (518)434-8112
Dated: Albany, New York May 24, 2002 STATE OF NEW YORK PUBLIC SERVICE COMMISSION
Petition of Interactive Information Network, Inc. For Arbitration of Interconnection Terms and Conditions and Related Case 01-C-1787 Arrangements with Verizon New York, Inc.
INITIAL BRIEF
INTERACTIVE INFORMATION NETWORK, INC.
I. PRELIMINARY STATEMENT
This is an arbitration under Sections 251 and 252 of the
Telecommunications Act of 1996, in which this Commission is asked to specify the terms of an Interconnection Agreement between Interactive Information Network (iiNET) and Verizon New York Inc. (Verizon).
The overriding issue in this arbitration is whether the Commission will make it possible, by specifying the necessary and appropriate terms of an interconnection agreement, for a competitive local exchange carrier to assume the role of hosting pay per call services once Verizon exits the market in March of 2004. If such a competitor is denied the necessary forms of interconnection, including, as described below, appropriate and reasonable billing and collection services, large portions of the information provider industry in New York, particularly those which provide low cost services, such as short pre-recorded 976 messages, will simply disappear. The billing and collection sought by iiNET is for Verizon to bill its own end users when they make calls to iiNET customers. Today, most CLEC interconnection agreements include terms for the delivery of calls from CLEC end users to Verizon pay- per-call services, including billing and collection by CLECs from their own end users, and remittance of monies to Verizon. iiNET simply seeks assurance that calls will flow in the opposite direction, including a requirement for billing and collection.
The testimony offered on behalf of iiNET by Larry Weiss, who has been intensely involved in the offering of pay per call services for many years, makes clear that, absent the provisioning of economic billing and collection services, the great majority of these pay per call services will simply be put out of business when Verizon exits the market. iiNET does not believe that was the Commission's intention when it approved Opinion 99-5, and iiNET does not believe that the forced termination of pay- per-call services, used by hundreds of thousands of New York consumers, will be in the public interest.
The genesis of iiNET's formation was the determination by the
Commission, issued in Opinion 99-5 on March 25, 1999, in Case 98-C-1079, to permit
Verizon to discontinue its provisioning of "InfoFone services" after a five year transition, to end in March of 2004. As described in more detail below, InfoFone services are "pay per call" services in which members of the public pay a premium charge, via their telephone bill, to obtain recorded information or otherwise interact with specific persons or programs.
One of the reasons for forming iiNET was to have available, for the information providers in New York, a vehicle to provide the equivalent of Verizon's
2 InfoFone services after Verizon exits the market in March of 2004. (TR 326).
This arbitration has been anticipated since 1999. At that time, it was understood by all IPs that if pay-per-ca!l services in New York were to continue, a CLEC would have to step forward to replace Verizon as the host for these services. Indeed, it was Verizon itself which suggested that IPs form, or find, a CLEC which would take over Verizon's role. (TR 413).
But to enable such a CLEC to fulfill the expectations of the Commission and the IPs, and to offer a mechanism for continuation of pay-per-call services, that
CLEC would need appropriate forms of interconnection with Verizon.
How the Commission resolves this arbitration will determine whether the expectations underlying Opinion 99-5 - that pay-per-call services used by hundreds of thousands of New York customers will be allowed to survive - will be realized.
The history of negotiations between iiNET and Verizon over this interconnection agreement is contentious. Verizon has known, since March of 1999, that it would be necessary for a CLEC, such as iiNET, to step forward to host the information providers who would otherwise be thrown out of business by Verizon's decision to discontinue InfoFone services in March of 2004. Yet Verizon apparently engaged in no planning, and appears to have given no consideration, for three years, as to how it would interface with, and transition over to, such a CLEC. (TR 138).
Verizon personnel assigned to negotiate this interconnection agreement - which iiNET had emphasized at the outset would involve pay-per-call services - had only the most rudimentary understanding of this subject matter. (TR 409-410). In fact, all of iiNET's efforts to negotiate an interconnection agreement in good faith were met, for nearly two
3 years, "with nothing but avoidance, dodges and run arounds". (TR 410-411).
Indeed, even in this arbitration proceeding, the majority of Verizon's filings, testimony and responses have been in the form of procedural gaming, rather than a good faith attempt to achieve a workable agreement.
During this proceeding, Verizon objected to significant portions of iiNET's testimony on the ground it addressed subjects "that fall outside the scope of Sections
251 and 252 of the Act", specifically identifying non-bottleneck billing and collection for pay-per-call services, and ultimate disposition and use of information service NXX codes. Verizon also objected to consideration of certain matters which Verizon asserted were not correctly raised by iiNET for consideration by the Commission. See
Verizon "Motion to Strike Portions of Pre-Filed Testimony of Larry Weiss", April 25,
2002.
The most critical ruling by the ALJ was to determine that, under the
Telecom Act, billing and collection "are matters which do not go to issues that can be covered in an interconnection agreement pursuant to the federal statute". (TR 245).1 iiNET respectfully disagrees with that conclusion, and includes in this Brief an appeal of that ruling. As discussed below, billing and collections for a CLECs pay-per-call services can, have been, and, in the circumstances of this case, should be included by
1 The ALJ also determined that while number portability was clearly raised as an issue in the pleadings, the testimony of Mr. Weiss indicated there were no outstanding issues on this subject because Verizon had indicated it would port all InfoFone numbers until it discontinues information services in March of 2004. (TR 244). Verizon has since clarified it would not port 976-1212 and 976-1616, the time and weather operated by iiNET under contract with Verizon. Accordingly, iiNET will be requesting that the Commission initiate action with respect to the status of the InfoFone NXX codes, after March of 2004, in a separate proceeding. the Commission in an interconnection agreement. In this regard, iiNET will show that
B&C terms have in fact been arbitrated by Commissions - including this very
Commission - and that the statutory framework of the Telecom Act does not restrict the
Commission's authority as Verizon claims. In fact, in an earlier arbitration before this
Commission, New York Telephone specifically argued the Commission had full authority to, and should, mandate B&C for pay-per-call services.
Finally, a number of other factors, including language in the existing
Verizon/Sprint and other interconnection agreements; the non-discriminatory obligations of the Telecom Act, the Communications Act, and the Public Service Law; and the fact
Verizon currently provides billing and collection services to itself, and unrelated local exchange companies and CLECs, warrant the Commission's inclusion of mandatory billing and collection provisions for information services.
With respect to the other issues which Verizon argued should not be considered by the Commission in this proceeding, the ALJ properly ruled they were before the Commission. Those disputed issues are addressed below.
iiNET's approach to an interconnection agreement has always been clear.
Its request was to create a new agreement consisting of an adoption of all the "voice" provisions of the existing interconnection agreement between Verizon and Sprint,2
2 See Agreement between New York Telephone Company d/b/a Bell Atlantic- New York and Sprint Communications Company L.P. effective as of June 23, 2000. The Commission is asked to take judicial notice of this document, which is a public document in the Commission's files, and which was the subject of a specific Order from the Commission approving the agreement. Under the Telecom Act, the Commission has full authority to consider relevant, extra-record evidence. MCI v. Pacific Bell. 1998 US Dist. Lexis 17556. See also TR 406. while crafting (by agreement or arbitration) a separate section for pay-per-call services different from that which Sprint was willing to accept.3 iiNET has never asked to "opt in" to the entire existing Sprint Agreement (TR 166, 221), because it understands that an
"opt in" must accept the entire interconnection agreement, word for word, and iiNET cannot accept the existing provisions of the Sprint Agreement relating to information services.
There is nothing incorrect about iiNET's approach. It is entitled, under the
"pick and choose" provisions of Section 252(i), and Section 51.809 of the FCC's Rules
(47 CFR § 51.809), to obtain, as an integrated unit, all of the related "voice traffic" provisions of the Sprint Agreement. AT&T Corp. v. Iowa Utilities Board. 119 S. Ct. 721 at 738.
By agreeing to all of the "voice provisions", iiNET has met the FCC's requirement that it accept all terms that are "legitimately related" to the desired term.
See In re Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, 11 FCC Red. 15499, August 8, 1996, First Report and Order para. 1315.
As will be shown below, the terms and conditions of interconnection requested by iiNET are just and reasonable; are within the authority and jurisdiction granted to this Commission; are necessary to preserve pay-per-call services in this state; and will further the public interest.
3 iiNET has never said it wanted "the Sprint pay-per-call" language as written. Among other things, iiNET wanted (a) mandatory, not optional, delivery of traffic, and (b) fully reciprocal pricing using the rates in the Sprint Agreement. II. DESCRIPTION OF iiNET AND PAY-PER-CALL SERVICE
iiNET was certificated by this Commission as a Competitive Local
Exchange Carrier (CLEC) on August 20, 1999, in Case 99-C-0942. (TR 326). While iiNET intends to be a full service CLEC, providing local exchange voice services to its customers, it will also provide "pay-per-call" services to Information Providers. (TR
331). Indeed, one of the reasons for forming iiNET as a CLEC was to have available, for the Information Providers in New York, a vehicle to provide the equivalent of
Verizon's InfoFone services after Verizon exits the market in March of 2004. (TR 326).
iiNET's principals have had extensive experience in designing, building, and operating telephone information, entertainment, auto-attendant and voice mail systems and services. Larry Weiss, the President of iiNET, is also the principal in Larry
Weiss Associates, Inc. which, throughout the early 1980s, pioneered a variety of interactive information and entertainment services, including the first interactive singles bulletin board and the first interactive multi-theater movie listings services. LWA was among the first to provide interactive programs in New York on the 540 exchange, and today operates sophisticated time and weather services, as well as other interactive sen/ices, throughout Verizon served areas in the northeast. In addition, LWA operates
"service bureaus" in New York, Boston, Philadelphia, Providence, and Portland, Maine, providing technical and creative services to dozens of Information Providers. (TR 325-
326).
"Information Provider" is a generic term that refers to independent companies that operate a service via telephone, usually, but not always, on a "pay-per- call" basis. The term comes from the fact that many Information Providers offer
7 recorded information via telephone, including programs such as weather forecasts, stock reports, employment opportunities, and athletic competition results. In addition,
Information Providers offer programs other than pure information, including entertainment services (such as psychic and comedy offerings), premium communications (such as group bridging, voice mail and bulletin board services), message forwarding and reminder services (such as hotel style wake up services) and other programs. Live conversations and consultations with health practitioners, technicians, mechanics, attorneys, counselors, advisors, entertainers, and other live persons also fall under the broad category of "Information Provider", usually when the call is billed on a "pay-per-call" basis. (TR 326-327).
In New York State, "pay-per-call" has been available through Verizon since the early 1970s. Since the 1980s, Verizon's "pay-per-call" programs available for
Information Provider use have been offered as Interactive Information Network Services
(IINS), which use the 970 and 540 exchanges; Group Bridging Services (GBS), which use the 550 exchange; Circuit Nine Services, which use the 910, 920, 900 and 880 exchanges; and MAS Announcement Services (MAS), which use the 976 exchange.
As of the past few years, all of these have been collectively branded by Verizon as
"InfoFone services", and are generally known as such. (TR 327-328).
Historically, 976 MAS service has involved short, pre-recorded messages
(less than one minute in length) offered at a fixed per call rate tariffed by Verizon; the current price is $.40 per call. IINS and GBS are subject to variable pricing and call lengths, with the Information Providers establishing the per call or per minute price on a non-tariff basis.
8 Under Verizon's tariff offerings for InfoFone services, Verizon bills its own end users for the $.40 tariffed MAS charge, or the variable rates established by IINS and GBS providers. From the monies collected by Verizon from its end users, Verizon retains certain amounts or percentages for itself and forwards the balance to the
Information Provider offering the specific service.4
While many "information services" are provided on a pay-per-call basis, not all information services require the end user to pay separate charges for obtaining the information provided. Under the definition of "information service" put forth by
Verizon, any time a caller accesses pre-recorded audio messages, which could provide information such as time, weather, sports, current events, or a myriad of other subjects, with or without a separate charge, the caller would be accessing an information service.
Verizon itself hosts many of these information services. To give but one example, end users in New York City can dial 212-777-3456 which is the AOL/New
York Times Movie Phone. The caller hears pre-recorded announcements promoting current films, and by interacting with the service, the caller can obtain detailed information on movies playing in New York City. The specific purpose for which that telephone number is dialed is to obtain such pre-recorded information. (TR 345-346).
Numerous other examples of information services which are accessed through the dialing of "normal" telephone numbers on the Verizon network were set forth in Mr.
4 The compensation arrangements between Verizon and the Information Providers vary according to the type of service, and are described in detail at TR 328- 330. For MAS 976 calls, the current tariff price is $.40 per call, which is billed to the end user by Verizon. Of that $.40, Verizon retains $.105 per call for transport, switching and billing and collection, and remits the balance of $.295 to the Information Provider, less federal excise tax. (TR 329). Weiss' testimony. (TR 346).
Another example of a Verizon information service is Verizon's own voice mail. Thus, a Verizon voice mail subscriber seeking to retrieve messages left by other callers dials a specifically designated Verizon telephone number for the specific purpose of retrieving pre-recorded messages which have been stored in a computer - just as some Information Provider programs are stored in a computer. (TR 346).5
As a Local Exchange Carrier, Verizon provides time and weather pay-per- call services under its own name (with the actual operation of those services having been contracted out to iiNET). (TR 100).
ilNET is thus no more of an "Information Provider" than Verizon itself. (TR
330).
III. ARGUMENT
POINT A: The Commission Should Address The Billing And Collection Issue And Require Verizon To Include Reasonable Billing And Collection Terms For Pay-Per- Call Services In This Interconnection Agreement
In its Petition for Arbitration, iiNET specifically identified as an issue to be determined by the Commission the "reciprocal pricing and billing for exchange of information services" (Petition, p. 11). iiNET has asked the Commission to adopt, on a reciprocal basis, the billing and collection fees for pay-per-call services set forth in the
5 Verizon's tariff describes its Voice Mail as giving subscribers "the capability to receive, send, store, retrieve voice and facsimile messages over the telephone network". See Verizon PSC NY No. 1 - Communications Tariff, Section 4, Para. 1.8 and 1.9.
10 SprintA/erizon Agreement. In its Response, among other things, Verizon asserted that
"discretionary" billing and collections services "offered by one carrier to another to collect fees charged by IP customers for value-added, ancillary services...are not subject to §251 of the Act, and therefore Verizon has no obligation to provide such services to any carrier, including iiNET." Verizon also asserted that "because B&C services are not subject to §251, they are not subject to arbitration in this proceeding."
Verizon Reply, at 12.
Disagreeing with Verizon's claim as to what was and was not subject to arbitration, iiNET filed detailed testimony describing the options which would be available to iiNET to bill and collect pay-per-call services after Verizon discontinued
InfoFone. That testimony showed all such alternatives to Verizon's continued billing (at rates comparable to those set forth in the Sprint Agreement) were not economically realistic, practical or consumer friendly. iiNET demonstrated that, particularly for lower priced services such as 976 calls priced at 40^, the deregulated prices Verizon was proposing to bill and collect such calls would make continuation of that service impossible.
iiNET also showed that, under the terms of Verizon's standard deregulated billing and collection agreements, Verizon would have the unfettered discretion to engage in discriminatory practices; it could refuse to provide B&C services to any particular carrier or for any particular program, leaving the entire information provider industry at Verizon's mercy. Those deregulated agreements would confer the ultimate power of censorship on Verizon - a power it does not have today because this
Commission prohibits Verizon from unreasonably discriminating against particular
11 providers or particular messages.6
On April 25, 2002, at the time it submitted its pre-filed testimony, Verizon filed a motion to strike all of iiNET's testimony on this subject. Its grounds were that:
"Because B&C does not fall within the scope of duties set
forth in Section 251 of the Act, the issue of whether, and on
what terms, Verizon must provide B&C for pay-per-call
information services has no business in a Section 252(b)
arbitration, which is limited to addressing the requirements of
Section 251 of the Act - not to address any other extraneous
issues between the parties outside the scope of an
interconnection agreement." See Verizon's Motion to Strike
Portions of Pre-Filed Testimony of Larry Weiss, April 25,
2002, page 3.
The same argument was made by counsel for Verizon during oral argument on the motion: "...they [referring to B&C issues] have no business in a
Section 252 arbitration which is limited to entering into an agreement to set forth the duties in Section 251 of the Act." (TR 194).
On April 30, after giving counsel for iiNET an opportunity to respond, the
Administrative Law Judge held that billing and collection "are matters which do not go to
6 iiNET offered Verizon's standard deregulated B&C agreement as a proprietary exhibit. Verizon's answering testimony did not dispute iiNET's description of Verizon's power to deny service to any provider and any program, at Verizon's sole and unfettered discretion.
12 issues that can be covered in an interconnection agreement pursuant to the Federal
statute." (TR 245). Accordingly, the Judge ordered all of iiNET's testimony and Its
exhibit on this subject stricken from the record.7
iiNET reserved all of its rights to ask the Commission to review that Order,
(TR 437), and now respectfully asks the Commission to reverse the ALJ's Order, admit
all B&C testimony and evidence, and order Verizon to provide B&C for pay-per-call
services at a fee of $.05 per call.
For the following reasons, Verizon is incorrect in asserting this
Commission has limited jurisdiction, and that it cannot address the issue of billing and
collection for pay-for-call services in the context of this arbitration proceeding.8
7 iiNET had not submitted a written opposition to Verizon's Motion to strike testimony because, under Section 3.6(d) of the Commission's rules, an opposition was not due until May 3rd, and the ALJ had not directed IiNET to respond any sooner. Because Verizon's testimony had been received on April 25th, the same date as Verizon's Motion, and because of iiNET's need to prepare cross-examination, prepare reply testimony for Mr. Weiss, and prepare the witness for his testimony and expected cross-examination, all over only two business days prior to the hearing, iiNET did not have anywhere near the time needed to do the extensive legal research necessary to present a complete opposition to the Verizon Motion. Accordingly, iiNET made its best efforts during the oral argument which occurred on April 30th, and was able to set forth the general principles which are addressed herein in more detail. Having had additional time to research these issues, iiNET is able to show that Verizon's legal arguments are incorrect and ignore this Commission's own precedent, and that the issue of billing and collection is properly before this Commission for decision.
8 Verizon objected to providing B&C under the interconnection agreement as a matter of law, and did not address what the correct rate for the service should be if the Commission determined to consider the issue. There should, however, be little disagreement on that question. Verizon has represented, and the Commission has itself found, that Verizon's cost for this service is $0.02 per call. See Case 93-C-0451, "Order Adopting Tariff Filing for MAS Announcement Rates on a Temporary Basis", July 21, 1998, pg. 3. See also Opinion 99-5, Case 98-C-1079, March 25, 1999, pg. 14-15. The Sprint Agreement, and many others, and the CMOS arrangement discussed below, sets the price for B&C at $0.05 per call.
13 1. Arbitrations Are Not Limited To Items Mandated By Section 251
The crux of Verizon's argument is that since billing and collection for pay- per-call services is not listed as a specifically mandated form of interconnection in
Section 251, it cannot be considered in a Section 252 arbitration. That is wrong on the law. Not only is this Commission authorized to address the B&C issue, it is required to do so.
Once a State Commission undertakes to arbitrate the overall dispute between carriers, it becomes obligated to arbitrate "any open issues", whether or not specifically listed in §251. AT&T Communications of the Southern States. Inc. v. GTE
Florida. 123 F. Supp. 2d 1318 at 1328 (ND Florida 2000). Billing and collection falls into that category.
The power to decide issues in an arbitration is not as narrowly circumscribed as Verizon would suggest. Thus, the court in MCI Telecommunications
Corporation v. Bell South Telecommunications. Inc.. 112 F. Supp. 2d 1286 at 1297 (ND
Florida 2000) held as follows:
"The statutory term 'any open issues' makes clear that the
right to arbitrate is as broad as the freedom to agree; any
issue on which a party unsuccessfully seeks agreement may
be submitted to arbitration. MCI and Bell South obviously
would have been free to enter a voluntary agreement that
included a compensation mechanism for breaches of the
agreement. Nothing in the Telecommunications Act would
14 have foreclosed any such voluntary agreement. Neither the
Florida Commission nor Bell South apparently contends
otherwise. Bell South chose, however, not to agree
voluntarily to any such provision. That was Bell South's
right. When Bell South determined not to agree, this
became an 'open issue' that MCI was entitled to submit to
arbitration".
Another court addressed the question of whether issues not mandated by
§251 could be arbitrated, specifically in terms of recording and billing services, against a claim from US West that the Minnesota PUC had no authority under the Telecom Act to impose a recording and billing requirement.
The Court resolved the issue by upholding the authority of the Minnesota
PUC to resolve any issue which had been raised by the parties, including recording and billing:
"During their negotiations, the parties are not bound by the
directives of subsections (b) and (c) of Section 251.
Essentially, the parties can create an interconnection
agreement of their choosing that covers any desired aspect
of interconnection. In their discussions, the parties are not
limited to those matters explicitly enumerated in Section 251
or the FCC's Rules. If the parties are unable to resolve the
issues that formed the subject of their negotiations. Section
15 252(b)(1) provides that a party 'to the negotiation may
petition a state commission to arbitrate any open issues'.
(Emphasis in opinion). The parties can bring any unresolved
interconnection issue before the state commission for
arbitration. The parties are again not limited to issues
explicitly enumerated in Section 251 or the FCC's Rules, but
rather are limited to the issues which have been the subject
of negotiations among themselves". (Emphasis added).
US West Communications Inc. v. Minnesota Public Utilities Commission. 55 F. Supp.
2d 968 at 985 (D Minn, 1999).
The District Court continued:
"Section 252(b)(4)(C) expressly provides that a state
commission 'shall resolve each issue set forth in the petition
and the response'. (Emphasis in original). If an issue has
been designated by the parties as in need of resolution by
the MPUC, the MPUC has an obligation to address that
issue and, as was noted above, the parties may raise any
issue concerning which they have attempted to negotiate a
resolution. (Emphasis added). The language of Section
251(c)(1) stating that the state commission shall ensure that
the resolution of open issues meets the requirements of
Section 251, does not confine the resolution of the issues to
16 the requirements of Section 251. (Emphasis added). If a
state commission ensures that the resolution meets the
requirements of a section, it is merely certifying that the
resolution meets the affirmative requirements of the section
while simultaneously determining that it does not conflict
with or violate the section's affirmative and negative
requirements. Not every issue included in the resolution
necessarily involves the affirmative requirements of Section
251. (Emphasis added). Thus, the only limitations that
Section 252(b)(4)(C) and (c) place upon any individual issue
addressed by a state commission during arbitration are that
the issue must be: (1) an open issue and (2) that resolution
of the issue does not violate or conflict with Section 251".
US West Communications Inc. v. Minnesota Public Utility Commission. 55 F. Supp. 2d
968 at 985-986.
There is no dispute here that iiNET and Verizon attempted to negotiate the provision of B&C, or that iiNET identified B&C as an open issue which was "set forth in the petition".
As indicated above, the US West case involved billing and collection, by
US West, of transit traffic from one CLEC to another CLEC. US West objected to billing those calls "because transit traffic does not involve a US West customer originating the call".
The Court found the billing of this traffic was not expressly addressed in
17 §251. However, it nonetheless held the MPUC had full authority to mandate its provision, holding "the MPUC's decision to require US West to make its recording and billing services available to [the CLEC] does not conflict with or violate Section 251". 55
F. Supp. 2d 968 at 986.
State Commissions have great flexibility in deciding issues. For example, in an arbitration between MCI and US West, the Washington Utilities and
Transportation Commission (WUTC) required US West to allow MCI to collocate remote switching units. The WUTC adopted a very broad definition of the term
"necessary" as meaning anything "useful" for interconnection - an interpretation of the statutory term argued to be inconsistent with that adopted by the U.S. Supreme Court.
See AT&T Corp. v. Iowa Utilities Board. 119 S. Ct. 721. On appeal, the Ninth Circuit held its task was "not to examine possible flaws in WUTC's decision-making process, but to decide whether a provision resulting from that process - the provision requiring collocation - has resulted in an agreement that fails to 'meet the requirements' of the
Telecommunications Act". The Court went on to hold as follows:
"although the Act mav not require the provision, it certainly
does not proscribe it. (Emphasis added). Sections 251 and
252 of the Act are designed to provide some flexibility in
fixing the provisions of interconnection agreements. Hence,
we conclude that the provision is valid and affirm the District
Court". MCI Telecommunications Corporation v. US West
Communications. 204 F. 3d 1262 at 1269. (CA 9, 2000).
18 That flexibility is available to this Commission. Even if the Telecom Act does not require Verizon to provide billing and collection for pay per call services hosted by a CLEC, the Act does not prohibit it, and accordingly an interconnection agreement approved by this Commission which mandated B&C in these circumstances would not fail to "meet the requirements" of the Telecommunications Act.
2. This Commission has Previously Arbitrated Billing and Collection for Pay Per Call Services
During oral argument before the ALJ, counsel for Verizon stated "I do not believe that there are any agreements that currently have terms in them by which
Verizon would bill and collect for a CLEC..." (TR 195). She also stated that "this is the first time that anyone has tried - to my knowledge - has tried to argue that billing and collections should be arbitrated and placed into an interconnection agreement". (TR
196).
Those statements are not accurate.
First, as discussed below, many New York agreements have terms which require billing and collection through use of CMOS.
Equally as important, this Commission has, in fact, twice arbitrated the provisions of an interconnection agreement relating to the billing and collection of pay- per-call services.
In the first instance, this Commission chose to arbitrate the specific billing and collection fee for IP calls in the initial arbitration held between AT&T and New York
19 Telephone.9 In that case, AT&T and New York Tel had agreed they would perform billing and collection for IP calls for each other, on a mutual basis, and also agreed that the billing entity should be reimbursed for its cost of that billing by the other carrier.
However, the parties could reach no agreement on the price for the B&C service and which entity would be liable for uncollectibles.
The Commission resolved both issues, through arbitration, and stated that
"in resolving this issue we have considered our dual interest in insuring that carriers called upon to do billing and collection are fairly compensated, and insuring that callers to IPs get the services they request at the price they expect". Opinion 96-31, Cases 96-
C-0723 and 96-C-0724, "Opinion and Order Resolving Arbitration Issues", November
29, 1996, at pages 58-59.
In its ruling, the Commission accepted AT&T's proposed B&C rate of $.08
per call, and rejected NYT's proposal of $.05 per call. The Commission also concluded,
over Verizon's objections, that "AT&T should be on the same footing as New York
Telephone with respect to uncollectibles. New York Telephone should extend to AT&T
the same forgiveness policy that it applies to its own end user customers for calls to
IPs". Opinion 96-31, at page 59.
In the second instance, this Commission was also called upon to arbitrate
billing and collection rules for pay-per-call services in the first MCI/New York Telephone
arbitration.10 However, as a matter of irony which should not pass unnoticed. New York
9 This arbitration involved AT&T as a CLEC, not an IXC.
10 Like the AT&T arbitration, the MCI arbitration involved MCI as a CLEC, not an IXC. 20 Telephone took the opposite position from the one Verizon now takes, and asserted the
Commission had full authority to require one carrier (MCI) to bill and collect on behalf of the other carrier (Verizon) when MCl's end users placed calls to information providers on New York Tel's network.
MCI claimed the Commission had no authority to require MCI to bill and collect Verizon's information services charges. The Commission's stated rationale for imposing that requirement was an obligation set forth in its Common Carrier Rules; MCI objected on the ground that those rules were directed toward the provision of conduit service only, and that billing and collection was neither a conduit service nor related to the transmission of communications. MCI argued, as Verizon does here, that its only obligation was to provide billing name and address information to New York Tel, so that
New York Tel could itself bill MCl's customers.
New York Tel opposed MCl's claim, and - directly opposite to the claim it makes here - insisted that the Commission had the authority in a §252 arbitration to require MCI to provide billing and collection for pay-per-call services.
In support of the Commission's authority. New York Tel argued - in direct contrast to its assertions in this proceeding - that the Commission's deregulation of billing and collection services did not preclude the Commission from mandating that a carrier provide billing and collection services when its end users made calls to Verizon's pay-per-call services. Specifically, at pages 19 and 20 of its Response to Petitions for
Rehearing in Case 96-C-0787, dated February 18, 1997, New York Telephone stated as follows:
"The Commission determined that MCI is required under the
21 Commission's Common Carrier rules to provide the necessary billing for audiotext services used by MCl's local end-user customers. MCI claims that the Commission erred in determining that such billing and collection for audiotext services constitute 'conduit services' under the Common
Carrier Rules. In support of its claim, MCI points to the portion of the definition of 'conduit services' that focuses on the provision of transmission services. What MCI ignores, however, is the portion of the definition which relates to
'functions integrally related to the provision of conduit'.
Clearly, the Commission has determined here that billing for audiotext services is integral to the provision of conduit under the Commission's Common Carrier rules. MCI presents no arguments with respect to this determination.
(Emphasis added).
MCI also argues that by requiring MCI to provide billing and collection services other than billing name and address, the
Commission had departed (without rationale) from its decision in Case 89-C-0191 to detariff and lightly regulate such billing and collection services. MCI is incorrect. First, in its order in Case 89-C-0191 issued January 30, 1992, the
Commission determined not to de-tariff billing and collection
22 services for audiotext services at that time. Second, the
Commission's decision in the instant arbitration proceeding
is not inconsistent with its decision to lightly regulate certain
billing and collection activities. MCI tries to give the
impression that the Commission's decision to lightly regulate
certain functions is tantamount to deregulation. It is not.
Instead, the Commission noted that non-bottleneck billing
and collection functions could not be deregulated under
existing law. (Opinion No. 90-33 at 5, issued December 28,
1990). Thus, the Commission was proper in determining
that in regulating the provision of non-bottleneck billing and
collection functions, MCI, as a local carrier17 should provide
such billing for audiotext services.18
17 It also should go without saying that MCI cannot hide its local exchange services (performed oy MClmetro) from regulation as such under the guise of its interexchange carrier operations.
Particularly significant was New York Tel's statement in footnote 18 of the pleading:
18 Importantly, while MCI generally claims the Commission's actions are unlawful, MCI does not claim the Commission is
generally without authority to require MCI to bill and collect
for audiotext services when MCI local end user customers
23 place calls to such services.
The Commission accepted New York Tel's argument that MCI could and should be required to provide B&C for NYT's pay-per-call services, and consequently ordered MCI to provide billing and collection for New York Tel's pay-per-call services.
See Opinion 97-3, Case 96-C-0787, "Opinion and Order Granting in Part, Denying in
Part, and Dismissing Petitions for Rehearing and Clarification", April 11, 1997, at page
34-35.
The obligation to provide B&C for pay-per-call services, the establishment of rules for uncollectibles on pay-per-call services, and the appropriate rate for B&C are not addressed in §251. Yet this Commission previously determined it had full authority to resolve those issues in arbitration proceedings since they had been raised by the parties during their negotiations.
Having set the precedent of determining rates, terms and conditions for the mutual and reciprocal billing of information provider calls between Verizon and a
CLEC, the Commission should follow that precedent in this proceeding and adopt comparable rates, terms and conditions in the arbitration agreement between Verizon and iiNET.
3. Verizon's Billing and Collection for Other LECs Requires it to Bill and Collect for iiNET
Section 251(c)(2) of the Telecom Act requires Verizon to provide interconnection to iiNET "(C) that is at least equal in quality to that provided by the local
24 exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection; and (D) on rates, terms, and conditions that are just, reasonable, and non-discriminatory, in accordance with the terms and conditions of the agreement and the requirements of this section and section 252".
That prohibition on discrimination is reinforced by the provisions of
Section 202(a) of the Communications Act, which makes it unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities or services for or in connection with like communications service, or to make or give any undue or unreasonable preference or advantage to any particular person....or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage".
And, of course, Section 91 of the Public Service Law prohibits undue preferences, undue prejudice and disadvantage, and undue discrimination.
The record is replete with examples of Verizon providing billing and collection to other carriers, and itself, on terms far more favorable than Verizon is willing to give to iiNET. These include, but are not limited to:
(a) The billing and collection provisions in the existing Sprint, AT&T,
Cablevision, and other interconnection agreements relating to pay-
per-call services;
(b) Verizon's self-billing of its own InfoFone services;
25 (c) Verizon's participation in the Centralized Message Distribution
System (CMOS), pursuant to which Verizon will bill and collect
charges belonging to an unaffiliated local exchange carrier, or a
CLEC, for a B&C fee of $.05; and11
(d) Verizon's obligation, set forth in New York interconnection
agreements, to use CMOS for billing and collection of "Alternate
Billed Calls" for CLECs.
(a) The Existing Sprint And Other Interconnection Agreements
The billing and collection rules for information services traffic are set forth
in Section 4.0 - Transport and Termination of Other Types of Traffic, at page 97 of the
Sprint Agreement. They generally speak to procedures for calls from Sprint end users
to Verizon InfoFone numbers, although, as discussed further below, the terms are in
fact mutual and reciprocal, and would apply on a call from a Verizon end user to a
Sprint InfoFone service.
11 There are, in addition, other potential examples which would have been addressed to Verizon's B&C expert on cross-examination (had the ALJ not ruled this entire area beyond the Commission's jurisdiction). These would have included Verizon's B&C for its deregulated affiliates' Yellow Page advertising charges.
In addition, Record Requests were made during the hearing for details of Verizon's billing and collection arrangements with other telephone companies, including CMOS (TR 69, 71, 74). Since the ALJ ruled B&C issues would not be considered, Verizon did not respond to those requests.
26 (i) 976 MAS Calls
These calls are flat rated, with a current price of $.40 per call. Section
4.1.3 (page 97) specifies that when a Sprint end user calls a Verizon 976 number,
Sprint will bill and collect from Sprint's own customers the "information services provider charges" (i.e., $.40) set forth in Verizon's tariff. From the amounts collected. Sprint is entitled to retain the "information services billing and collection fee set forth in Part IV" which is $.05 per call (page 78). Sprint is required to pay the $.40 MAS charge, less its
$.05 billing and collection fee, to Verizon regardless of whether Sprint actually collects the $.40 charge from its own end users.
Thus, on a call from a Sprint end user to Verizon's 976-1212 number,
Verizon bills Sprint the $.40 charge; Sprint places that charge on its own bill to its end user; and Sprint remits $.35 to Verizon whether or not Sprint actually collects from its own end user.
(ii) Variably Priced Calls
For calls to variably rated pay-per-call programs (550, 540 and 970), delivered by Sprint to Verizon, Sprint will, under Section 4.1.4 (page 97-98) bill and collect the information services provider charges from its customers. Schedule 4.1.4
(page 103) offers Sprint two billing options.
Under Option 1, set forth at page 103, Bell Atlantic rates the messages at the price set by the information provider, and bills Sprint for the full value of those calls
(less the information service billing fee). Sprint then bills its end users for the full value
27 of the call. Presumably, upon receipt of the monies from Sprint, Bell Atlantic forwards
the appropriate portion of the charge to the IP.
With respect to adjustments (as when an end user refuses to pay for an
InfoFone call). Bell Atlantic is required to apply to Sprint the same adjustment policy
applicable to Verizon's own customers, i.e., to allow two adjustments per line, per year
to Sprint end users who call these numbers. After a Sprint end user twice demands
adjustments. Sprint would have the authority (as Bell Atlantic has with its own
customers) to block that particular end user from the ability to make additional InfoFone
calls.
As worded, the Sprint Agreement would seem to give Sprint the option as
to whether it will deliver calls from its end users to Verizon pay-per-call services.
However, because iiNET believes state policy should and does require local exchange
carriers to complete all calls to working numbers dialed by their end user customers,
iiNET has always made clear that the information services traffic language in the
iiNETA/erizon Agreement should specify that each carrier must deliver calls from their
end users to the information services of the other carrier. As described below, that is
what the Cablevision Agreement provides.
In the Competition II Proceeding, the Commission adopted the basic
principle, applicable to all local exchange carriers, that "customers must be able to call
all valid telephone numbers". See Case 94-C-0095, Order Instituting Framework for
Directory Listings, Carrier Interconnection and Intercarrier Compensation, September
27, 1995, at pg. 3. That policy was reaffirmed last year in the Interconnection
Arrangements Proceeding, where the Commission stated: "...Carriers are reminded of
28 their obligation to complete customer calls regardless of disputes over intercarrier compensation or call rating designations, and to bill such customer calls appropriately..." See Case 00-C-0789, Proceeding on Motion of the Commission...to
Institute an Omnibus Proceeding to Investigate the Interconnection Arrangements between Telephone Companies. "Order Instituting Proceeding", issued and effective
May 5, 2000.12
With respect to the compensation mechanisms applicable to calls delivered by Sprint to Verizon, Verizon does not dispute that the Verizon/Sprint
Agreement contains these terms. However, it argues that the language applies only to calls from Sprint end users, and would have no applicability to calls from Verizon end users to a Sprint information provider. That assertion is not correct.
Part V, Section 4.1, at page 97 of the Agreement, does in fact indicate that the described terms apply to calls from Sprint end users to Verizon services.
However - and critically - this same paragraph specifies that "at such time as Sprint connects information services platforms to its network, the parties shall agree upon a comparable arrangement for BA-originated information services traffic".
While Verizon would assert that language is meaningless, it is not. It contractually binds Verizon to utilize comparable rates, and follow comparable procedures, if a Verizon end user were to call a Sprint IP. Indeed, the result could not
12 This is not to say that an individual end user may not request that his or her local exchange company provide end user blocking to information services. However, a carrier should not be permitted to make that decision on behalf of all its end users, and decide that the carrier (as opposed to the individual end users) will not deliver calls to a workable telephone number.
29 be otherwise. If Verizon were to utilize one particular rate and procedure for calls to its
services, but refuse to apply the same rates and procedure for calls to comparable
services of its competitor, the practice would run afoul of the prohibitions on
discrimination contained in Section 251(c)(2) and Section 202(a). And, of course, the
unacceptable discrimination would violate the provisions of Section 91(2) of the Public
Service Law.
Even if Verizon could make a case that the Sprint Agreement works in
only one direction - which it cannot - Verizon has entered into agreements with other
CLECs which do not have the "comparable" language, but instead mandate that the
same terms and conditions apply equally to traffic flowing in both directions.
Specifically, the existing AT&T/NYNEX Interconnection Agreement
provides that both AT&T and Verizon will provide billing and collection services when
their own customers call information providers on the other carrier's network:
"For information services [976 calls], the party ('originating
party') shall bill and collect such information provider
charges and remit an amount equal to such charges to the
party ('terminating party') to whose information platform the
information services traffic terminated less the information
services billing and collection fee set forth in Part IV".
See AT&TA/erizon Interconnection Agreement, Rate Application Rules, Section 7, at
page 159.13
13 iiNET understands this AT&T Agreement is currently in effect, and will remain so until the parties obtain PSC approval of a replacement agreement.
30 The information services fee set forth in Part IV of the AT&T Agreement is
$.08 per message. See Part IV: Pricing Schedule, Section 6(11), at page 147. (TR 364-
365).14
The Cablevision Agreement has the same language for 976 calls at Para.
7.1.1.2, and for variably priced calls at Para. 7.1.1.3.
Verizon may also claim that since the Sprint Agreement, as written, gives
Sprint the option of whether or not to deliver traffic to Verizon pay-per-call programs,
Verizon's obligation to agree to a "comparable arrangement" would similarly give
Verizon the option as to whether or not it would deliver calls from its end users to
Sprint's pay-per-call programs. However, as discussed above, state policy should not
recognize such an option, but instead should require Verizon to deliver calls from its
end users to another carrier's pay-per-call programs, because those pay-per-call
numbers represent "calls to valid telephone numbers".
And, even if this Commission were to provide some flexibility to a CLEC to
allow it to determine whether or not to deliver calls to other carriers' pay-per-call
programs, the same option should certainty not apply to Verizon, the near-monopoly
carrier in this State. Monopoly carriers are subject to many more requirements, and
mandatory forms of operation, than competitive CLECs. Indeed, because of its near-
monopoly status, if Verizon refused to deal with information providers and other CLECs
14 As discussed earlier, establishing the billing and collection rate at $.08 was the result of an arbitration decision by the Commission - thus undercutting Verizon's claim that this Commission has never arbitrated billing and collection issues. See, Opinion 96-31, November 29, 1996, at pages 58-59. See also MCI/New York Telephone Arbitration, Opinion 97-3, April 11, 1997, at pages 34-35.
31 with respect to pay-per-call services, Verizon would undoubtedly be engaging in an unjust and unreasonable practice, and could very well find itself in violation of the fair trade and anti-trust statutes.
There have been at least two other interconnection agreements which now parallel, or have paralleled in prior versions, the mandatory and reciprocal language and obligations of the AT&T Agreement. These are Cablevision LightPath and ACC National Telecom Corp. (now a part of AT&T). The AT&T Agreement has been adopted by several CLECs, including Choice One and PaeTec, thus extending the mandatory, two-way billing and collection obligations on pay-per-call services to numerous CLECs. (See TR 364-365).
The language in the Cablevision Lightpath/NYNEX Interconnection
Agreement, dated as of August 1, 1997, reads as follows, and exemplifies some of the language which this Commission should adopt for the iiNETA/erizon Agreement:
"7.1.1 Bundled Information Provider ("IP") Billing
Arrangement. This section describes a cooperative billing
arrangement to support interconnection to network services
for recorded information programs. These are 'pay-per-call'
audiotext programs in which a vendor contracts with the
local exchange carrier to provide recorded announcement
information or open discussion programs to the general
public.
32 7.1.1.1 Routing and Provisioning. Each party shall route
information service traffic which originates on its own
network to the appropriate information services platform(s)
connected to the other party's network. (Emphasis added).
See Interconnection Agreement under Sections 251 and 252 of the
Telecommunications Act of 1996, dated as of August 1, 1997, by and between New
York Telephone Company and Cablevision Lightpath, Inc. for New York, at page 23.
Additional terms in the Cablevision Agreement, set forth on pages 23-27, provide the specific billing and collection mechanisms which are mandatory for both parties. The billing and collection fee is the same $.08 per message which appears in the AT&T Agreement. (See Attachment A, Pricing Schedule, Page A-2).
iiNET is entitled, at the very least, to these same terms.
Verizon has also argued that since iiNET "asked for the terms of the
Sprint Agreement", it must accept the voluntary and one-way terms which Verizon alleges apply in the Sprint Agreement to B&C for pay-per-call services. That is not correct.
First, iiNET has never said it wanted the specific billing and collection terms of the Sprint Agreement. Unlike all of the "normal voice" provisions of the Sprint
Agreement, which iiNET was willing to accept, iiNET made specific proposals as to the language which should be included in the iiNETA/erizon Agreement relating to information services. These included the mandatory (as opposed to optional) delivery
33 of traffic, and the mutual and reciprocal application of rates and rules for the billing and
collection of pay-per-call services. (TR 376).
Second, as discussed above, the terms of the Sprint Agreement are not
one way, but rather represent a commitment and obligation on the part of Verizon to
enter into a "comparable arrangement" which must mean that the rates and practices
applicable to calls from Sprint end users to Verizon IPs would similarly apply on calls
from Verizon end users to Sprint IPs. The fact that Sprint may not actually have
established information providers on its own network is irrelevant. The obligation and
^P commitment of Verizon for a comparable arrangement was made, and Verizon cannot
make such an offer to one CLEC but deny it to another.
Third, as discussed above, even if Sprint, as a CLEC, did have the option
on whether to deliver pay-per-call traffic to Verizon, that same option cannot be
available to Verizon as the near monopoly carrier. Under state policy, Verizon must
deliver calls "to all valid telephone numbers".
Accordingly, the language best suited for the iiNETA/erizon Agreement is
to modify the Sprint language (which iiNET has always said was not acceptable) to look
like the Cablevision language.
Finally, Verizon cannot justify its refusal to deliver calls to iiNET's pay-per-
call numbers - or its option not to deliver such calls - on the ground Verizon might be
responsible for these charges if its end users refuse to pay. iiNET proposes Verizon
enjoy the same adjustment policy it now follows, and does not seek to hold Verizon
responsible for charges it cannot collect from its own customer.
34 (b) Verizon's Provision of Billing and Collection to its Own InfoFone Services
Today, Verizon provides InfoFone services to its own end users, and end users of CLECs, on the 976, 970, 550, and 540 exchanges.15 In providing that service,
Verizon bundles network transmissions and capacity (to deliver a call to the platform of the IP) with billing and collection service, pursuant to which the IP charges appear on
Verizon bills, for the benefit of the IPs.
However, Verizon is unwilling to provide those integrated services, in a bundled form, to any of its competitors who may chose to offer their own version of
InfoFone services.
Section 51.315 of the FCC's Rules provides that "(b) Except upon request, an incumbent LEC shall not separate requested network elements that the incumbent LEC currently combines". That rule was upheld by the Supreme Court.
AT&T Corp. v. Iowa Utilities Board. 119 Sup. Ct. 721 at 736-737. There is no authority, in the FCC's orders or Court interpretations, for an ILEC to discontinue providing the combination which is being used by a CLEC to provide service, should the ILEC itself decide it does not want to use the combination for its own purposes.
15 Mr. D'Amico asserts CLEC end users are unable to reach Verizon InfoFone numbers because Verizon has not put the correct translations in its switches. (TR 275). Mr. Safara stated Verizon blocks calls to all InfoFone exchanges except 976. (TR 277). However, Mr. Weiss was prepared to testify, and made an offer of proof, that InfoFone IPs receive a substantial number of calls from CLEC end users, and that such calls are not limited to 976 MAS calls. (TR 426-430). The ALJ erred in declining to admit that testimony. In fact, the Cablevision Interconnection Agreement, at paragraph 7.1.1 makes specific provision for delivery of information service calls from Cablevision (a CLEC) to Verizon: "Where CLI utilizes the NYNEX network through the purchase of unbundled network elements. Information Service Traffic may be routed over NYNEX information service trunks on a shared basis".
35 The fact Verizon may discontinue provision of that bundled service to its
own customers after March of 2004 is irrelevant. Nothing in the Telecom Act suggests
that, once Verizon is obligated to provide a bundled service to its competitors (which it
clearly would be today), that obligation would end if Verizon decides, for whatever
reason, to no longer offer that same service to its own customers. Indeed, the US
Supreme Court has just reconfirmed the obligations of LECs to offer bundled services
when necessary to promote competition:
"In sum, what we have are rules that say an incumbent shall,
for payment, 'perform the functions necessary', 47 CFR
§§51.315(c) and (d) (1997), to combine network elements to
put a competing carrier on an equal footing with the
incumbent when the requesting carrier is unable to combine.
First Report and Order ^294, when it would not place the
incumbent at a disadvantage in operating its own network,
and when it would not place other competing carriers at a
competitive disadvantage, 47 CFR §51.315(c)(2) (1997).
This duty is consistent with the Act's goals of competition
and nondiscrimination, and imposing it is a sensible way to
reach the result the statute requires."
Verizon Communications Inc. v. FCC. 535 US , S. Ct.
May 13, 2002, at mimeo pg. 68,
It is inconceivable that a LEC would be given the green light to "pull the
36 plug" on a competitor when and if the LEG no longer wishes to offer a particular retail service to its own customers. That would subject the competitor's ability to provide service to its customers upon the whim of what Verizon wants to offer to its own customers.
Verizon itself stressed, during the first MCI arbitration (quoted above), the integral link of billing and collection services to the conduit services which it is obligated to provide "on demand" to any similarly situated user under the Commission's Common
Carrier Rules (16 NYCRR §605.2).
Those Common Carrier Rules also provide that "no restriction may impede access between a content service provider and a willing customer, except where required by law". See 16 NYCRR Section 605.2(b).
Those same rules require Verizon to provide "segregable services and functions requested by users to the extent technically and economically practicable".
See 16 NYCRR Section 605.2(a)(3).
These common carrier rules represent "State Policy", which, as described below, this Commission has the right to enforce in a §252 arbitration. They make clear, as New York Tel previously argued, that one carrier should provide B&C to another carrier, at rates of $0.05 or $0.08, for pay-per-call services.
(c) Verizon's Participation in CMOS
Verizon provides billing and collection services for other local exchange carriers, and will bill its own end users for charges owed to such other carriers. The mechanism for that billing and collection is Centralized Message Distribution System, or
37 CMOS. What Verizon provides through CMOS is no different from what iiNET is
requesting Verizon to provide to it.
CMOS is described in the annexed Affidavit of Edward White, who has a
working familiarity with this system, its history, and its various applications.16 Mr. White
shows that CMOS is a national clearinghouse for the telecommunications industry for
quick and secure carrier to carrier message exchange and settlements. The system
was created by the original Bell telephone system, and continues to operate today, with
Verizon as a participant.
In its simplest terms, CMOS allows a carrier, other than Verizon, to obtain
billing and collection service from Verizon, with Verizon billing its own end user for the
charges belonging to the other carrier. That other carrier's charges show up on a
Verizon bill; the other carrier's charges are collected by Verizon from Verizon's own end
users; and Verizon remits (through a settlement process) to the other carrier, the other
carrier's charges, less a billing and collection fee of $.05, which is retained by Verizon.
A typical example of how this CMOS arrangement might work was set
forth at paragraph seven of the White Affidavit:
"A New York resident with a Verizon home telephone, who
uses a Verizon calling card, takes a trip to California and
visits a city in the area where Pacific Bell provides the local
or intraLATA toll service. The New Yorker places a local or
intraLATA toll call on the Pacific Bell network using his
16 The ALJ authorized the submission of affidavits regarding CMOS as part of this brief. (TR 249).
38 Verizon calling card; the Pacific Bell charge for that call is
$0.50. Pacific Bell will originate and terminate the call using
its network facilities. Pacific Bell will record and rate the call,
arriving at the $0.50 charge for the call plus an
administration fee of, let's assume, $0.75. Pacific Bell will
then send that call record with the $1.25 charge
(representing monies due to Pacific Bell) to its RAO
(Revenue Account Office) host, which will forward that call
record to Verizon. Verizon then places the $1.25 charge on
the Verizon end-user's Verizon bill. The call is specifically
listed on the Verizon bill as a Verizon charge; it does not
appear on a separate bill page, and is not described as
billed on behalf of another carrier. Verizon will bill and
collect Pacific Bell's full charge of $1.25. Through the
settlement process. Pacific Bell will receive $1.20, and
Verizon will retain a billing and collection fee of $0.05.
While Verizon's witnesses at the April 30th and May 1st hearings asserted they had little, if any, knowledge of CMOS (TR 308), no question exists Verizon is an active participant in CMOS, pursuant to which it will bill and collect charges for other LECs, and CLECs, for a B&C fee of $.05.17
17 It is somewhat surprising the Verizon witnesses, particularly Mr. Safara, were unfamiliar with CMOS because, as described below, the use of CMOS for inter-carrier
39 Of critical importance is that companies in the Verizon corporate family are including provisions for use of CMOS in interconnection agreements with CLECs.
Attached to the White Affidavit is a copy of relevant pages from an Interconnection
Agreement dated October 9, 2001, between Verizon California and Sprint, which defines CMOS on page 35, and specifies, on pages 72 and 90, how the "CMOS network" will be used for the billing of "in collects" and "out collects".18
(d) Verizon's Use of CMOS in New York State for Billing and Collection of "Alternate Billed Calls" for CLECs
The previous paragraph discussed Verizon's use of the CMOS clearinghouse on a national scale. But even more critical is the fact Verizon has specific provisions for use of CMOS, to bill and collect on behalf of CLECs, in existing
New York interconnection agreements.
billing is specified in several Verizon interconnection agreements with CLECs in New York.
18 As discussed below, Verizon cannot argue that CMOS is used only by out-of- state affiliates, and therefore not relevant to Verizon's obligations towards iiNET in New York. As indicated in the White Affidavit, Verizon New York does in fact today bill, and collect from. New York end users charges belonging to other local exchange carriers. References to the Verizon California Agreement were offered simply to show that Verizon, and its chief negotiator with authority over interconnection agreements in New York (Jeff Masoner), are fully aware of CMOS, even if the witnesses proffered by Verizon in this arbitration hearing are not. That fact that CMOS is used by Verizon, either as part of the old Bell system network, or in connection with interconnection agreements with CLECs, shows it is technically feasible for Verizon to provide that service to other local exchange carriers. Accordingly, as a matter of policy, this Commission should require carriers in New York to have access to the same type of services and facilities which Verizon makes available to competitors inside and outside the State.
40 For example, the Cablevision Lightpath Agreement specifies in the
Measurement and Billing provision, at page 18, as follows:
5.6.6 The Parties acknowledge that there are certain types
of calls that require exchange of billing records between the
Parties. These types of records may include intraLATA
alternate billed calls (e.g.. calling card, bill-to-third-party, and
collect call records). The exchange of billing records for
calls of this type that are intraLATA shall be handled through
the existing Centralized Message Data System ("CMOS")
processes. The payments of revenues for these types of
calls shall be handled through Calling Card and Third
Number Settlement ("CATS") with the CMOS host and local
arrangements with NYNEX, unless otherwise handled by the
New York State Toll Pool.19
As set forth in the White affidavit, the B&C fee under CMOS is $0.05 per call.
As another example, in the original AT&T/New York Telephone
Agreement (which, as indicated above, iiNET believes Is in effect today), there is a
19 Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996, dated as of August 1, 1997, by and between New York Telephone Company and Cablevision Lightpath, Inc. for New York , at pg. 18.
41 section dealing with "alternate billing to third numbers" which appears on pages 18
through 21.
Section 10.5.1.1 is entitled "AT&T Originating Call Charged to Customer
Served by a NYNEX Line", and involves the situation where a customer places a call on
the AT&T system which is charged to a NYNEX customer. The charge to be paid by
the NYNEX customer is established by AT&T, so AT&T sends the call rating
information to Verizon which then bills its own customer for the price established by
AT&T. NYNEX collects that amount from its own customer and, as set forth in
paragraph 10.5.1.1 "shall pay AT&T for such call the billed amount less the billing and
collection fee specified in Part IV". That billing and collection fee, as discussed earlier,
is $.08 per call.20
The scenarios described above are comparable to the billing and
collection with iiNET is seeking from Verizon. The charge for the call belongs to AT&T,
and the party responsible for paying the charge is a Verizon customer. Accordingly,
Verizon bills its own customer for that charge, collects the charge established by AT&T,
and forwards the amount collected from the NYNEX customer, less the $.08 billing and
collection fee, to AT&T.
That is directly comparable to a situation where the charge for an
20 The situation described involves an AT&T customer obtaining service through AT&T's resale of NYNEX lines. Accordingly, after NYNEX remits to AT&T the amount of the call billed to the NYNEX customer (less the $.08 billing and collection fee), NYNEX also bills AT&T for the cost of the call at the wholesale discount rate. While Verizon might argue this is a special case, the use of CMOS in the Cablevision Agreement, where there are no references to originating calls over resold lines, would undercut any claim use of CMOS is limited to special situations.
42 information service call belongs to iiNET, with the party responsible for paying that
charge being a Verizon end user who originated that call. In this situation, Verizon
should bill and collect the iiNET charge from Verizon's end user, and remit the amounts
which Verizon collects from its end user, less the billing and collection charge of $.08 to
iiNET.21
Verizon is likely to argue the type of service for which it bills under CMOS
is distinct from the type of services for which iiNET wishes comparable billing. Any
such argument must fail. Under CMOS Verizon takes a billing record from another
carrier and puts it on its end user's bill; when the money is collected, Verizon forwards
the money, less Verizon's $0.05 B&C fee, to the earning carrier. The type of call for
which the charge is made is irrelevant.
The bottom line is that Verizon now bills and collects for charges
belonging to other local exchange carriers and even CLECs in New York. Any calls to
an iiNET pay-per-call service will have the same status as the Pacific Bell calls, the
Cablevision calls, and the AT&T calls which are billed and collected through CMOS, i.e., they will be charges belonging to iiNET, a local exchange carrier. iiNET is entitled to
21 While not in the record, iiNET has learned that Verizon also has CMOS type billing arrangements with Frontier Telephone of Rochester under which those carriers will bill and collect for each other, similar to the Verizon/Pacific Bell scenario. That arrangement, which would have been reported by Verizon had it been required to respond to iiNET's on the record information request, can be verified by Commission Staff.
43 have its charges collected by Verizon in the same way - and at the same price - that
Verizon collects these other carriers' charges.
iiNET seeks nothing more than to have Verizon bill its own end users for
calls those end users place using the IiNET network, and for which iiNET establishes a
charge. That is precisely what Verizon does for other local exchange companies, and
CLECs, today. This Commission should not permit Verizon to offer a critically and
necessary service to one class of local exchange carriers, while refusing that very same
service to competing LECs in New York. It does not matter whether the Commission
'^^ invokes authority to require the provision of CMOS billing and collection services to
iiNET under the terms of the Telecom Act, Section 202(a) of the Communications Act,
or Section 91 of the Public Service Law. Each stands as full authority for requiring
Verizon to treat all local exchange carriers without undue preferences for some, and
undue discriminations and disadvantages to others.
The Commission Has Authority To Require Billing And Collection For Pay- Per-Call Services Pursuant To A Broad Delegation Of Authority In The Telecom Act
Section 252(e)(3) of the Telecom Act states as follows:
"Notwithstanding paragraph (2), but subject to Section 253,
nothing in this section shall prohibit a state commission from
establishing or enforcing other requirements of state law in
its review of an agreement, including requiring compliance
44 with intrastate telecommunications service quality standards
or requirements."
That language is a broad grant of authority to this Commission to require
that interconnection agreements contain provisions which meet state requirements and
advance state telecommunications policy. So long as something is not specifically
prohibited by the Telecom Act, it can be ordered by a state commission as an
advancement of state policy.22
Should the Commission determine that State policy prohibits the
discriminatory refusal to provide billing and collection services, or that State policy is
adverse to shutting down the pay-per-call industry, the Commission possesses the full
authority to require the iiNET/Verizon Interconnection Agreement to contain B&C
provisions necessary to further those state policies.
As testified to in great detail by iiNET, furtherance of those state policies
requires Verizon's provision of billing and collection services to iiNET, for pay-per-call
services, at rates comparable to those of CMOS, or $0.05 per call.
During argument on Verizon's motion to strike, iiNET cited Section
252(e)(3) as independent authority for this Commission determining the billing and collection issues. However, out of concern for possibly exposing this Commission to a review of its decision in Federal District Court, the ALJ declined to find that Section
22 As discussed earlier, the Court in US West v. Minnesota PUC determined that the provision of B&C services was not prohibited by the Telecom Act. Accordingly, this Commission has full authority under §252(e)(3) to require it as an element of state policy.
45 252(e)(3) granted the Commission sufficient jurisdiction to address B&C.
iiNET respectfully suggests it would be an error for the Commission to
adopt a finding it has no jurisdiction to act in this matter - or any other matter - under
§252(e)(3). To take that position could seriously prejudice this Commission's ability in
future arbitrations to assure the implementation of this Commission's own policies.
What is or is not a requirement of State law is, of course, up to this
Commission. In that regard, the Commission has previously indicated that continuation
of pay per call services was a matter of state policy. In connection therewith, the
Commission specifically addressed, in terms of State policy, how billing and collection
issues should be resolved for these pay-per-call services.
As Verizon points out, the Joint Proposal approved in Opinion 99-5
specifies "to the extent that BA-NY provides billing and collection services to any third
party offering pay per call services, BA-NY will provide billing and collection services on
the same terms and conditions for pay-per-call services offered by the current IPs or
their successors". Verizon argues this addresses only the B&C which would have to be
given by Verizon directly to non-regulated Information Providers, and says nothing about Verizon's obligation to provide B&C to a CLEC which hosts Information Providers after the transition.
If that is the case, Verizon cannot argue this Commission has previously determined how B&C for pay-per-call services should be made available to CLECs, as opposed to non-regulated IPs. Indeed, as Verizon likes to point out, non-regulated entities are not entitled to services and facilities which must be made available to certificated CLECs, such as Unbundled Network Elements at TELRIC pricing. Thus,
46 nothing in the language of the Joint Settlement now limits the Commission's ability to
specify how billing and collection for pay per call services hosted by CLECs will be
structured, since in this situation, the B&C is given to the regulated CLEC, and not the
non-regulated IP.
Verizon, of course, argues that this Commission has in fact deregulated
billing and collection services. While that may be true in general, it does not apply to
the billing and collection for InfoFone. As the Commission stated:
"Except for elements included in the package of Bell
Atlantic-New York IP services known as InfoFone. we have
detariffed the non-bottleneck elements of B&C services".
Opinion 99-5, March 25, 1999, at page 15.
Verizon itself emphasized to the Commission that the Commission had
not, in Case 89-C-0191, deregulated B&C for audiotext services. New York Telephone
Response to Petitions for Rehearing, Case 96-C-0787 (MCI Arbitration), at pg. 19.
A fair reading of Opinion 99-5 indicates the Commission expected
marketplace solutions would develop which would allow IPs access to B&C from third
parties that would permit continuation of pay per call services. Critically, the
Commission made clear IPs would have the opportunity to raise this issue again with the Commission if practical and realistic alternatives did not appear:
"Whether the market is defective, so that the price of B&C
service fails to respond to competitive pressures as
47 expected in a detariffed environment, is an issue that IPs
can raise at any time by exercising their existing rights to
challenge unlawful refusals to deal (as suggested in the IPs'
arguments about B&C services to CLECs) or other anti-
competitive behavior. We also retain the option of acting to
remedy market failures on our own initiative, because
adoption of the joint proposal's terms does not diminish our
authority to impose new terms in response to unforeseen
circumstances (as the signatories acknowledge in paragraph
17)".
Opinion 99-5, March 25, 1999, page 16.
iiNET, acting on behalf of itself and the IPs which will depend upon
Verizon providing B&C service to CLECs, has accepted the Commission's invitation and
put forth specific evidence that the market is in fact defective, and that the Commission
should act to remedy market failures in order to assure the continuation of pay per call
services used by hundreds of thousands of New York customers.
The issue in this proceeding is whether information providers, as
customers of a CLEC, will have a realistic opportunity to continue providing their services to the public. The Commission once before decided that termination of pay- per-call services would be contrary to the public interest. It could very well once again
(and should) decide that balancing the benefit to IPs and CLECs, against the insignificant burden on Verizon of continuing to provide the same B&C services which it now.provides to itself, justifies imposing additional requirements on Verizon.
48 That issue, and its resolution, is very much a matter of state policy.
Accordingly, this Commission has authority, under Section 252(e)(3), to implement that
policy in an interconnection agreement. Should the Commission so chose, it has full
jurisdiction to follow its own precedent (in the MCI arbitration) and require Verizon to
provide billing and collection for iiNET's pay-per-call services.
Verizon is Incorrect that this Commission Cannot Consider iiNET's Argument that Billing and Collection Should be Designated as an Unbundled Network Element
As described above, this Commission can (and should) resolve billing and
collection issues because they were raised by iiNET in the Petition, and because the
provisioning of B&C would be consistent with state policy. But as a separate and
alternate authority, iiNET has asked this Commission to designate billing and collection,
in the limited context of the exchange of pay-per-call traffic between Verizon and a
CLEC, as an Unbundled Network Element. Verizon scoffs at the idea, claiming it would
be preposterous to consider B&C as a UNE.23
Verizon is, however, far off the mark. Indeed, Verizon's own assertions to this Commission, in the MCI arbitration, that "conduit services includes functions
23 Verizon argues this Commission has deregulated non-bottleneck elements of B&C, and therefore may not impose a B&C requirement in an arbitration. But, as discussed above, Verizon took the exact opposite position in the original MCI arbitration, and this Commission did in fact determine B&C, for pay-per-call services, has not been deregulated, and should be included in an arbitrated agreement.
Moreover, it is critical the Commission's deregulation of certain elements of B&C was never considered in the context of ILEC to CLEC (as opposed to ILEC to IXC or ILEC to end user), and never addressed Verizon's refusal to provide to a CLEC the very same B&C that it uses to provide service to Verizon's own InfoFone customers.
49 integrally related to the provision of conduit, such as billing and collection services",
support iiNET's argument.
Section 251(c)(3) of the Telecom Act imposes a duty on all Incumbent
Local Exchange Carriers "to provide, to any requesting telecommunications carrier for
the provision of a telecommunications service, non-discriminatory access to network
elements on an unbundled basis at any technically feasible point on rates, terms and
conditions that are just, reasonable and non-discriminatory in accordance with the
terms and conditions of the agreement and the requirements of this Section and
Section 252". Pursuant to that authority, the FCC has designated a minimum number
of Unbundled Network Elements which every ILEC must make available to
interconnecting CLECs. However, the list of mandatory UNEs is not limited to the
minimum ones designated by the FCC. Instead, the FCC has specifically authorized
state commissions to designate additional facilities or services as Unbundled Network
Elements, provided they meet the statutory "necessary" and "impair" standards. See
Implementation of the Local Competition Provisions in the Telecommunications Act of
1996, CC Dockets 96-98 and 95-185, "First Report and Order", August 8, 1996, at para.
244. MCI v. Michigan Bell. 79 F. Supp. 2d 768 at 785 (1999).
The definition of network element must be broad to be consistent with the
Act. MCI v. Michigan Bell, op dt, 79 F. Supp. 2d 768 at 784.
The testimony proffered by iiNET's witness analyzes the need for billing and collection services; the availability (or more properly non-availability) of alternatives to the existing Verizon B&C services; and the direct impact on iiNET's ability to offer pay-per-call services to information providers absent the provision of B&C as a UNE (or
50 on the terms set forth in the Sprint and AT&T Agreements). Mr. Weiss concluded
"there are no realistic, practical, economic, or operational alternatives" to iiNET
obtaining B&C services from Verizon in connection with information provider programs
provisioned on the iiNET system. (TR 368).24 iiNET also demonstrated that obtaining
B&C through self-provision, or as an alternative from a third-party supplier (including
from Verizon on a deregulated basis) "will, in light of the costs, uncertainty of
availability, and practical difficulties in having end users forward payment to iiNET,
materially diminish iiNET's ability to provide those information provider services". (TR
368).
The Commission may or may not credit iiNET's proffered testimony, and
may or may not determine that billing and collection for pay-per-call services meets the
necessary and impair standards. But those are matters to be determined based on the
evidence in the record. The parties should have been permitted to offer their evidence
and arguments on this issue to the Commission, but the striking of all testimony on this
subject, on jurisdictional grounds, precluded that result.
POINT B: iiNET Is Entitled To Receive Reciprocal Compensation On Calls From Verizon End Users To iiNET's Pay Per Call Programs
Section 251(b)(5) of the Telecom Act imposes an obligation on all local
24 As discussed at the outset, all testimony on B&C, except for limited cross- examination on CMOS (which Verizon's witnesses could not address), was stricken from the record. However, because this brief appeals that ruling, and urges the Commission to consider the stricken testimony, it is referenced at a few points. If the Commission nonetheless determines it will not consider B&C, it should ignore the record citations in this portion of iiNET's brief.
51 exchange carriers "to establish reciprocal compensation arrangements for the transport
and termination of telecommunications". Under Section 252(d)(2)(A), reciprocal
compensation must "provide for the mutual and reciprocal recovery by each carrier of
costs associated with the transport and termination on each carrier's network facilities
of calls that originate on the network facilities of the other carrier".
Accordingly, the purpose of reciprocal compensation is for a carrier which
originates traffic to compensate the carrier which terminates that traffic for the costs
incurred in that termination.
While Verizon is apparently willing to pay reciprocal compensation on
"voice traffic" to iiNET, it is not willing to pay reciprocal compensation on calls from
Verizon end users to iiNET's pay-per-call services. The only justification given by
Verizon was that the FCC specified, in its "ISP Remand Order",25 that information
services traffic was governed by Section 251(g) of the Telecom Act, and not Section
251(b)(5), which mandates reciprocal compensation. Verizon offered no substantive argument (separate from its legal claim) as to why reciprocal compensation should not apply to these calls, and Verizon made no argument that iiNET will not incur costs in terminating these calls from Verizon end users.
In contrast, iiNET demonstrated that it would in fact incur substantially the same cost to terminate "pay-per-call" traffic from Verizon as it does to terminate "voice traffic". (TR 343-344). iiNET also showed that by delivering traffic to iiNET's pay-per-
25 In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996. and Intercarrier Compensation for ISP-Bound Traffic. Order on Remand and Report and Order Dockets 96-98 and 99-68 FCC 01-131 16 FCC Red. 9151, issued April 27, 2001.
52 call services, Verizon would avoid portions of its own cost of local transport, terminating
local switching, and delivery over a local loop. Permitting Verizon to deliver that traffic
to iiNET for termination, thus imposing costs on iilMET, while refusing to pay iiNET for
the costs incurred by iiNET, would result in an unjust enrichment for Verizon. (TR
344).26
As Verizon stated, its opposition to paying reciprocal compensation to
iiNET, on calls to pay-per-call services, "is a pure legal issue". (TR 118). That being
the case, the rug has been pulled out from Verizon's legal argument.
Specifically, on May 3, 2002, the United States Court of Appeals for the
District of Columbia Circuit held, as a matter of law, that the FCC had no basis to
exclude information services traffic from the requirement to pay reciprocal
compensation on the ground such traffic was covered by Section 251(g) and not
Section 251(b)(5). See WorldCom Inc. v. Federal Communications Commission. 2002
WL 832541, F3d May 3, 2002.
Accordingly, there is no basis, as a matter of law, to hold that "information services traffic", including pay-per-call services, is covered by §251 (g), and thus there is no basis to claim this traffic is not subject to the mandatory payment of reciprocal compensation.
The only question is the level of reciprocal compensation which should be paid on the specific type of information services traffic known as pay-
26 As discussed in Point D below, if Verizon were to impose a reasonable charge on its own end users to recover Verizon's cost of transporting those calls, iiNET would not object.
53 per-call traffic.27 In this regard, pay-per-call traffic is simply a type of "convergent
traffic" for which this Commission has already determined that the costs of termination
may be less than the cost of terminating non-convergent traffic. Specifically, the
Commission has held that convergent traffic above the 3:1 ratio should be paid at the
lower end office reciprocal compensation rate, and not the tandem reciprocal
compensation rate. See Opinion 99-10, issued and effective August 26, 1999, in Case
99-C-0529, "Convergent Traffic Order").28
Since there is no prohibition on paying reciprocal compensation on pay-
per-call information services traffic - and indeed there exists an obligation under Section
251(b)(5) to pay reciprocal compensation on such traffic - it is this Commission's
Convergent Traffic Order which governs, and requires, the payment of reciprocal
compensation on calls to iiNET's prospective pay-per-call services.
Other reasons exist which require Verizon to pay reciprocal compensation to iiNET.
First, InfoFone calls are not the only manner in which the public can
27 The DC Circuit Decision did hold open the level of reciprocal compensation which could be paid on one particular type of information services traffic, i.e., internet traffic. In this regard, it is critical that the FCC's Orders which had been relied upon by Verizon specifically dealt only with the reciprocal compensation rate to be applied to internet service traffic. There was no specific FCC directive with respect to the level of reciprocal compensation to be paid on other types of "information services traffic".
28 This Commission specifically determined that it would not distinguish between ISP traffic, any other form of information services traffic, or any voice traffic which was forwarded to a CLEC in high volumes. All types of traffic were to be treated the same for reciprocal compensation purposes. And while the FCC might be able to set a specific rate for internet traffic - on the ground it is jurisdictionally interstate - the pay- per-call services at issue here are unquestionably intrastate service.
54 obtain information services by dialing a seven digit telephone number. Thus, for
example, members of the public can dial telephone numbers on the Verizon and CLEC
networks which allow the caller to receive pre-recorded audio messages, such as the
AOL/New York Times Movie Phone (212-777-3456); New York State Department of
Labor information regarding procedures for filing unemployment insurance claims (516-
942-9660); New York State Department of Environmental Conservation information
regarding hunting permits and procedures (631-444-0310); U.S. Government
Information regarding applications for U.S. passports (212-206-3500); Oyster Bay
Power Squadron programs (516-622-1356); and comedy routines from Comedian
Jackie Martling (516-922-9463). Verizon acknowledges that a caller to those numbers
will in fact access an "Information Service". (TR 119; 298-99). The difference,
according to Verizon, is that calls to "pay-per-call services" are addressed to telephone
numbers in specifically identifiable NXX codes, while calls to these other information services are not, in Verizon's view, so readily identifiable.
Despite its acknowledgment the calls described by iiNET are to information services, and thus, according to Verizon, not eligible for reciprocal compensation, and despite the fact Verizon pays and receives reciprocal compensation of these "ineligible calls" (TR 347), Verizon does not make any attempt to identify (to exclude from reciprocal compensation) information services offered through use of the
"ndn-lnfoFone" telephone numbers. (TR 301, 303-4, 306). That is true whether calls are made from Verizon end users to CLEC information service numbers (on which
Verizon would pay reciprocal compensation), and on calls from CLEC end users to
Verizon information services offered over "normal" telephone numbers (on which
55 Verizon would receive reciprocal compensation). Verizon has offered no evidence that
it is unable to engage in such identification and screening, at least with respect to well
known, heavily promoted, and large volume programs such as MoviePhone. Verizon is
fully aware of the discriminatory result, but chooses to do nothing about it.
Because Verizon is apparently willing to pay and receive reciprocal
compensation on these information services calls, it would be unlawfully discriminatory
to refuse to pay iiNET on calls to iiNET's information services.
Second, under terms of the SprintA/erizon Interconnection Agreement,
Sprint would in fact be receiving reciprocal compensation from Verizon on calls from
Verizon end users to Sprint's information provider customers. (TR 347). Furthermore,
under that same agreement, Sprint would be required to pay reciprocal compensation on calls from its end users to information providers on the Verizon system. (TR 348).
While Verizon disputes this, iiNET's testimony showed that reciprocal compensation does in fact apply on pay-per-call traffic. (TR 347-350). According to
Verizon, the Sprint Agreement explicitly provides that a "reciprocal compensation call" only refers to traffic "which qualifies for reciprocal compensation pursuant to the terms of [the Interconnection Agreement] and prevailing Commission or FCC's Rules that may exist". (TR 120). Verizon relies on its "251(g) argument" that all information access - not just internet traffic - is carved out of the definition of "telecommunications" subject to reciprocal compensation under the Act.
But therein lies the failure of Verizon's claim. As discussed above, the DC
Circuit Court has now held that information services traffic is indeed reciprocal compensation traffic covered by Section 251(b)(5) and thus, applying the language in
56 the Sprint Agreement, such traffic "qualifies for reciprocal compensation pursuant to the terms of [the Interconnection Agreement] and prevailing Commission or FCC Rules that may exist". Therefore, Verizon's own interpretation of the Sprint agreement confirms it requires payment of reciprocal compensation on pay-per-call traffic.
POINT C: Verizon's GRIP Proposal Should Not Be Adopted
GRIP stands for Geographically Relevant Interconnect Point, and would require CLECs to establish multiple interconnection points, and extensive trunking networks, to exchange traffic with Verizon. It should come as no surprise that no CLEC has agreed to GRIP.
As the ALJ noted, GRIP is a controversial issue within this jurisdiction.
(TR 214-215). Verizon has, of course, repeatedly tried to get the Commission to adopt its proposal. It tried in the Reciprocal Compensation Case (Case 99-C-0529) but failed.
It tried again in the Interconnection Docket (Case 00-C-0789) but failed. It tried again in the second Unbundled Network Elements Proceeding (Case 98-C-1357), and failed to convince the ALJ, and the Commission, that GRIP should be adopted on a mandatory basis.
As Verizon points out. Judge Linsider did recognize that the GRIP issue should be decided, through negotiation, with remaining disputes "resolved on a case by case basis".29 However, Verizon presumptively assumes that all it has to do is demand its GRIP proposal in an arbitration, and the Commission will be forced to adopt it. But
29 Case 98-C-1357, Recommended Decision on Module 3 Issues by Administrative Law Judge Joel A. Linsider, May 16, 2001, at page 198.
57 that is not how an arbitration works.
If Verizon had wished to put forth a justification for imposing a particular
GRIP proposal on iiNET, it could have done so. But it did nothing of the sort.30 Instead,
it claims that simply because the GRIP language appears in the Verizon template
interconnection agreement (which no CLEC has actually agreed to accept), then it has
offered all the justification necessary. That is not acceptable. At the very least, Verizon
has the burden of proof to demonstrate the networking rules which have long been in
effect in this State should be replaced by its heretofore unaccepted and unsupported
proposal. Simply saying "I want it" does not satisfy that burden.
Verizon acknowledges it is "financially responsible for delivering its traffic
to the CLECs interconnection point". (TR 104). Concoction of the GRIP proposal was
nothing more than an effort to escape that obligation.
Verizon hasn't put forth any specific proposal as to how GRIP would be
applied to iiNET. Verizon's Witness D'Amico couldn't state how many interconnection
points iiNET would be required to establish. (TR 285). He could provide no specific
details on network architecture, referring only to "this kind of generic language" and the fact that "operations people...kind of get together and do their thing and they work out where things should go and if there becomes a problem one way or the other where a
30 It is more than ironic that Verizon sought to remove the issue of GRIPs from this arbitration on the ground iiNET had not raised the subject in its Petition. In fact, Verizon has it all backwards. iiNET indicated it was seeking all of the "voice provisions" of the existing Sprint Agreement - which did not include GRIP. If Verizon wanted to argue for GRIP, it became Verizon's obligation to identify GRIP as an issue in its Reply. It never did so. Thus, as a threshold issue, the Commission should determine that Verizon should not be permitted to make a claim in this arbitration that its GRIP proposal should be adopted.
58 CLEC feels they want something and Verizon wants something that the parties can't agree to, then they refer back to the Project CO..." (TR 286).
No details of any specific GRIP proposal were offered by Verizon:
"I can't say that x, y, z would have to happen. I'm not sure
that a CLEC on day one can say that x, y, z is going to
happen." (TR 286-87).
Indeed, rather than responding to the question as to exactly what
Verizon's proposal would require from iiNET, the best Mr. D'Amico could offer was "this gets to maybe a chicken and egg thing". (TR 287).
Verizon had no idea of the cost impact on iiNET if it were required to establish interconnection points in each rate center in the downstate LATA, as the
GRIP Proposal would require. (TR 293).
In fact, it's not even clear what GRIP language Verizon is asking for, because there is one GRIP language in the template, but Mr. D'Amico referred to "other
GRIP variations" which might be implemented. (TR 294).
In contrast to Verizon's total lack of justification for imposing the GRIP proposal on iiNET (or even explaining how it would work), iiNET demonstrated that it Is critical for iiNET to be able to utilize the most efficient trunking and switching network possible. This requires that iiNET's initial interconnection point for all traffic from
Verizon to IiNET be established at a single IiNET switch somewhere within the downstate LATA. (TR 337-38). Forcing IINET to establish multiple interconnection
59 points, with multiple trunking requirements, and perhaps multiple collocation arrangements, would be incredibly complex, burdensome, and expensive.
Verizon does not require other newly formed CLECs to establish multiple interconnection points, as GRIP would require. (TR 338). The PSC has not ordered any CLEC to accept the GRIP proposal as part of an interconnection agreement. (TR
160, 161). There is no GRIP requirement in the Sprint Contract. (TR 171). There is no
GRIP requirement in AT&T's Contract. (TR 172). There is no GRIP requirement in
MCl's Contract. (TR 172).
Verizon's interconnection tariffs do not include GRIP requirements. (See
Verizon PSC No. 8 - Communications Tariff). Absolutely no justification exists for subjecting iiNET, and only iiNET, to the burdens and costs of GRIP.
The Administrative Law Judge asked if it didn't "seem unfair to impose upon this smaller CLEC the position that Verizon is still in the business of trying to persuade this Commission to adopt?" and whether this wasn't simply an effort "to gain some credibility for a matter that perhaps, as a regulatory matter, the Commission is still considering?" (TR215).
That is an absolutely correct reading of the situation. GRIP has never been adopted by this Commission as policy or mandated on any CLEC. Verizon has not put forth any justification as to why it should be imposed on iiNET, when no other carrier in New York is subject to that onerous obligation. Indeed, to adopt that proposal, simply because Verizon wants it, would be anti-competitive, a step backward in trying to open markets to competition, unlawfully discriminatory, and contrary to the public interest.
60 POINT D: Verizon's Proposal To Impose Access Charges On Calls To HNET Information Providers Should Be Rejected
Never once during the two years of preliminary discussions between iiNET and Verizon did Verizon indicate it would seek to impose access charges on calls from
Verizon end users to iiNET pay-per-call providers. It was only after iiNET's Petition was filed that Verizon indicated, in a telephone conference convened to discuss network architecture, that it intended to treat traffic to iiNET's pay-per-call services as access traffic subject to access charges. iiNET made it abundantly clear Verizon's proposal was unacceptable as a matter of law, and indicated there would be no basis for continuing a discussion on network architecture if Verizon insisted on treating calls to
Information Providers differently from calls to other iiNET customers.
At a meeting held in New York on March 21, at which Commission Staff were present, Verizon indicated it had changed its proposal. Instead of subjecting these calls to access charges which would be imposed on iiNET, Verizon would seek authority to impose a charge on the Verizon end users placing a call to iiNET.31 (TR
153).
Subsequently, in a letter dated March 26, 2002, to the Administrative Law
Judge, counsel for Verizon indicated that "Verizon understood that the parties agreed in principle that Verizon would deliver information services traffic to iiNET in the same manner that it delivers ordinary local interconnection traffic, subject only to customer-
31 Conceptually, iiNET would not oppose such a charge if it were set at a reasonable level which would allow Verizon to cover its own cost of transporting such calls through Verizon's network.
61 specific blocking (either at the request of the customer or for customer non-payment of charges to Verizon)". Nothing was said about Verizon seeking to impose access charges on iiNET for this traffic.
Then, in a 180 degree about face, Verizon's pre-filed testimony asserted that Verizon would be filing amendments to its PSC No. 8 Tariff:
"that would provide for per-minute charges assessed to a
carrier by Verizon for originating and transport of intrastate
information services traffic from Verizon end users to the
carrier's own information services platform using dedicated
pay-per-call information services NXX codes in lieu of
charging the end user the appropriate local or toll charges."
See TR 103.
Despite the fact such a proposed charge would directly impact on iiNET,
Verizon asserted its proposed charges "are not properly subject to arbitration in this bilateral arbitration proceeding". Instead, Verizon kindly invited iiNET to file comments on Verizon's proposed tariff at such time as it was filed with the Commission.32
Verizon's proposal must be rejected as a matter of law.
Today, Verizon does not use access trunks to route calls to its own
32 Verizon itself has never quite decided what it was looking for. When asked if it had always been Verizon's position that would file a tariff to impose access charges on a receiving carrier (instead of the calling party), Verizon's witness D'Amico stated "I don't think we had a policy one way or the other". (TR 152).
62 InfoFone services. (TR 149). It does not impose access charges on itself when it routes calls to its own InfoFone services. To suddenly adopt new rules and rate structures applicable to competitors, significantly different from the rules and rate structures applicable to the incumbent's identical service, would be unjust, unreasonable and unduly discriminatory.33
Furthermore, and of decisional consequence, is that the FCC's existing access charge orders specifically exempt enhanced service providers from carrier access charges. MTS and WATS Market Structure, Memorandum Opinion and Order,
Docket No. 78-72, 97 FCC 2d 682 at 711-722 (/Access Charge Reconsideration Order).
See also Amendments of Part 69 of the Commission's Rules Relating to Enhanced
Service Providers, CC Docket No. 87-215, Order 3 FCC Red. 2631 (1988) (ESP
Exemption Order). Verizon's effort to circumvent that rule, by imposing access charges on iiNET, cannot be permitted.
Equally as important, however, is that the legal underpinning of Verizon's claim that calls to information services should not be treated as local traffic (and thus must be treated as access traffic), has been ruled invalid by the Court of Appeals for the DC Circuit. As discussed above, the Court in WorldCom Inc. v. FCC specifically disallowed, as a matter of law, Verizon's claim that information services traffic was subject to Section 251(g), instead of Section 251(b)(5). Accordingly, calls from Verizon end users to iiNET's Information Providers must be treated as local calls under
33 Indeed, if Verizon were to impose access charges on one type of information service, it would be required to impose the same treatment on all other information providers, including, for example, schools and libraries. Such a result would be contrary to the public interest. 63 §251 (b)(5). Under the Telecom Act, originating carriers are not authorized to impose
charges - access or otherwise - on terminating carriers in connection with calls from the
originating carriers' end users to the terminating carriers' customers; to the contrary, the
Telecom Act requires the originating carrier to make payment to the terminating carrier
to compensate the terminating carrier for its costs of terminating such calls.34
Consequently, the Commission should specify. In this arbitration agreement, that
Verizon may not impose access charges on information service traffic it delivers from its
end users to liNET.
If this Commission were to hold that Verizon could impose access
charges on calls to iiNET's pay-per-call services (which it should not), that would have a
significant cost impact on iiNET and would have significant implications for the manner
in which IINET would design and construct Its network. (TR 175). Since Verizon
asserts it will, at some point in the future, file a tariff with the Commission seeking
authority to impose such access charges, IINET would not realistically be able to design
its network until some point in the indefinite future when Verizon decides to seek such
approval. That could put IINET's operations in a state of suspension, which will further
exacerbate the difficulties in raising the necessary capital and attracting qualified
personnel.
To eliminate any uncertainty on this Issue, and avoid severe prejudice to
iiNET's ability to move forward with deployment of its network, the Commission should
34 The calls under discussion here originate and terminate In the downstate LATA, and accordingly are local calls under this Commission's policies dating back to the Competition ll Proceeding.
64 make clear, at this time, that such access charges may not be imposed on iiNET.
POINT E: Calls To iiNET Pay-Per-Call Services Should Not Be Subject To IntraLATA Toll Charges
When a Verizon end user located anywhere in the downstate LATA dials
an InfoFone number, the call is routed by Verizon through a dedicated network to
Verizon's hub at West 18th Street in Manhattan. (TR 281-282). The call is not routed
over an access network. (TR 290).
No toll charges apply on calls from any Verizon end user in any LATA to
any InfoFone number in the same LATA, regardless of the location of the caller or the
area code in which the InfoFone number was assigned. (TR 290-291).
Because of the dedicated network for routing calls to InfoFone services, a
call from a Verizon subscriber in the 516 area code to a 212-976-XXXX telephone
number would not be considered an intraLATA toll call, but would instead be treated by
Verizon as a local call and routed over the dedicated InfoFone network. That same
process should remain in place after Verizon discontinues its own InfoFone services.
As discussed with respect to Verizon's unacceptable plan to impose
access charges on pay-per-call services in the future, Verizon must continue to afford the same network routing and rating of calls to iiNET's comparable pay-per-call services as it does today for its own InfoFone calls. Since it does not treat InfoFone calls as
intra-LATA toll calls, it should not be permitted to classify similar calls to iiNET's customers as toll calls.
65 POINT F: iiNET Must Maintain An Option On The Point Of Interconnection For Pay-Per-Call Services
Verizon had originally insisted that iiNET follow the requirements in the
Sprint Agreement that information services traffic between the two carriers be routed over separate and distinct trunk groups. However, after iiNET objected, Verizon modified its position by agreeing "in principle that Verizon would deliver information services traffic to IiNET in the same manner that it delivers ordinary local interconnection traffic, subject only to customer-specific blocking..." Letter from Leigh
A. Hyer, counsel to Verizon, to Administrative Law Judge William Bouteiller, March 26,
2002, at page 1.
iiNET took that representation at face value, and therefore assumed there were no disagreements involving the routing of traffic. Subsequently, however, Verizon made clear it was adding conditions, including the requirement that iiNET pay "per- minute information access charges" (TR 103) and that Verizon apply its GRIP proposal.
iiNET has shown that GRIP should not be applied to iiNET since it has not been forced by this Commission on any other CLEC. However, should the Commission reverse this policy (which, of course, it should not), iiNET should retain the option of requiring Verizon to install, at Verizon's expense, dedicated trunks to carry pay-per-call traffic from Verizon's end users to iiNET's switching location. This is because Verizon has specified that "if information services traffic were exchanged by separate trunk groups", the GRIP proposal would not be applicable [to information services traffic].
(TR 160). Avoiding GRIP would involve significant cost savings for iiNET, and, like any other carrier, iiNET should be entitled to design its network to take advantage of
66 maximum efficiencies and least cost structures.
Indeed, as iiNET had previously suggested to its Verizon negotiator, under any circumstance iiNET should be entitled to designate an interconnection point which would take advantage of Verizon's existing, specifically dedicated pay-per-call network, in the same manner as Verizon itself takes advantage of that network.
The advantage of this separate, dedicated network, of course, is that calls to Verizon's InfoFone numbers are not subject to network congestion and blocking which might occur if the calls were routed through Verizon's normal inter-office trunking network in common with all other voice traffic. By constructing and maintaining this separate, dedicated network, Verizon can assure calls to its InfoFone numbers will get through.
Despite the fact this separate network was designed to assure reliability of service, Verizon has no intention of maintaining that network after it discontinues
InfoFone services in March of 2004. (TR 283). Apparently, Verizon believes it has no obligation to use the same secure, efficient routing when it directs calls to Information
Providers served by a CLEC, as distinguished from Information Providers served by
Verizon itself.
Verizon will likely argue that it cannot be accused of discriminating against iiNET after March of 2004, because Verizon will not be hosting any pay-per-call services after that date. Evidently, Verizon believes that its decision to discontinue offering a particular service on its network entitles it to radically alter its network architecture and degrade the quality of service once the customers take service from a competitor. That was never the intention of the Telecom Act.
67 At the very least, if Verizon is permitted to disassemble its dedicated network, iiNET should be entitled to designate a single interconnection point in the
LATA, to which Verizon will deliver all calls to iiNET, at Verizon's cost, without the application of GRIP.
POINT G: The Term Of The Agreement Should Be Three Years
Verizon is willing to sign an interconnection agreement with a maximum term of two years, while iiNET, looking ahead to the March, 2004 discontinuance of
Verizon's InfoFone services, has shown that the agreement should have a minimum term of at least three years.
As discussed at the outset, one of the principal motivations for the formation of iiNET as a CLEC was to organize a carrier which could replace Verizon's hosting of pay-per-call services when Verizon discontinues InfoFone in March of 2004.
With that purpose in mind, iiNET has demonstrated that any agreement shorter than three years would leave in question the ability of iiNET to continue providing service to
Information Providers at the end of the transition period in March of 2004; that uncertainty will prevent iiNET from obtaining the investment capital and managerial resources necessary to organize the company and build the network to provide service to Information Providers. (TR 374).
As explained by Mr. Weiss, iiNET will be required to raise substantial capital from outside investors in order to fund the purchase of necessary switching equipment; the construction of iiNET's network; the design of billing and accounting systems; and development of the business organization needed to enter the market as
68 a competitive CLEC. Such capital can be raised only if prospective investors have a reasonable assurance that the business model being proposed by iiNET, which includes the ability to provide service to Information Providers after Verizon's InfoFone services are discontinued, has a reasonable chance of success over a reasonable period of time. (TR 375). iiNET will need to recruit network planners, operations and systems personnel, and other managers who can oversee the development and offering of service. Many of those positions require considerable educational background, experience, and skills, and prospective employees are very reluctant to take a position with a new, start-up company (either by leaving an existing employer, or foregoing the opportunity of being employed by a different company) unless they have a reasonable certainty that the new business will not fold in a short timeframe. (TR
375).
Mr. Weiss also demonstrated that, at the very minimum, investors and prospective employees will want to see that iiNET has interconnection rights with
Verizon for a period of at least three years. If interconnection arrangements are established with Verizon for two years or less, as Verizon proposes, investors and prospective employees will have no assurance that the regulatory framework necessary for the success of iiNET's business plan will be in place. Consequently, it will be extremely difficult - if not impossible - to raise the capital, and obtain the employee expertise, necessary to commence business unless there is an assurance a reasonable interconnection agreement will be in place for at least three years. (TR 375-376).
Verizon offers no substantive reasons why a three year term should not be adopted. It argues, procedurally, that since iiNET is requesting a substantial portion
69 of the existing Sprint Agreement, i.e., the "normal voice provisions", iiNET must accept
the current expiration date of the Sprint Agreement. But that, however, makes no
sense.
The current Sprint Agreement is due to expire in June of 2003, which will
be less than one year after this Commission determines the form of the iiNETA/erizon
Agreement. All that would accomplish would be for iiNET to immediately serve a notice
on Verizon to commence negotiations for a replacement agreement, to take effect in
less than one year, with the result that iiNET and Verizon would be right back in front of
this Commission within 135 days arguing the very same issues now before this
Commission.35
Furthermore, while Verizon claims it would be "unfair" to extend the voice
provisions of the Sprint Agreement beyond their original time frame, it has not shown
that there is anything unusual or controversial about the voice terms of the Sprint
Agreement which would make it "unfair" to continue.36
In any event, Verizon's argument about taking the expiration date of the
Sprint Agreement for the "voice terms" would have no application to the information
services terms and conditions which will have to be determined by this Commission.
35 Section 252(b)(1) of the Telecom Act specifies a carrier may petition the Commission to arbitrate "any open issues" between the 135th and 160th day after serving a request for negotiations on an ILEC.
36 Verizon continues to argue that its "updated template agreement" is "the only appropriate 'starting point' for negotiations between iiNET and Verizon". As discussed above, iiNET finds nothing in the Telecom Act, or the FCC's Rules, which grant such an exalted position to Verizon's self-serving proposals, and there is no authority for the Verizon template being either the starting point or default arrangement on any issue.
70 Because iiNET will initially concentrate on deploying a network to host the Information
Providers being thrown off the Verizon network, those are the terms which are most
critically time sensitive, and which need to survive for a reasonable amount of time past
the March, 2004, transition date. (TR 122).
Verizon has not in any way shown that Mr. Weiss' testimony on the need
for regulatory certainty is incorrect. Since Mr. Weiss is the one who has been
attempting to put iiNET together, including raising capital and attracting skilled
employees, his testimony is the only credible evidence in the record regarding the
necessary duration of the interconnection agreement.
IV. CONCLUSION
This arbitration is the direct outgrowth of the Commission's Determination,
in Opinion 99-5, to allow a transition in the hosting of Information Providers from the
Verizon network to the network of another local exchange carrier.
All parties to that proceeding expected, by the end of the transition period,
that a CLEC would step forward to take over the hosting of pay-per-call services.
Indeed, it was Verizon's own suggestion that Information Providers find a CLEC to offer
the necessary network services after the transition. (TR 413).
But to have any realistic chance of providing the network platform for the
Information Providers who will be tossed off Verizon's network, a CLEC such as iiNET
must have reasonable and adequate interconnection arrangements with Verizon.
Paramount among these arrangements is the provision of billing and collection by
Verizon for calls made by its own end users to pay-per-call services which have
71 migrated from the Verizon network to a CLEC network. Absent such B&C arrangements, it will not be possible for iiNET, or any other CLEC, to host the pay-per- call services.
This Commission has full authority, under the terms of the Telecom Act and the Public Service Law, to specify the required just, reasonable and adequate terms of interconnection between Verizon and iiNET. This Commission has full jurisdiction under the Telecom Act to address the provisioning of B&C by Verizon for pay-per-call services. If the Commission finds refusal to provide such B&C would be unjust and unreasonable; would be discriminatory or contrary to state policy; or would impair iiNET's ability to provide service, the Commission has full authority to require
Verizon to continue to provide such services.
The public interest requires that result.
During the negotiations leading up to the Joint Proposal approved in
Opinion 99-5, Larry Weiss Associates (LWA) was an active participant, on behalf of its own programs and for the majority of other IPs which signed the Joint Proposal. It was certainly not the understanding of LWA, or for that matter any IP which signed the Joint
Proposal, that the pay-per-call industry would be closed down in five years. Instead, those who signed the agreement firmly believed they were setting the groundwork for a transition, not an ending.
The Commission's opinion indicates it anticipated the same result.
IiNET has stepped forward as the vehicle to effectuate that transition. The interests of hundreds of thousands of New York Telephone subscribers who utilize pay- per-call services require that the transition be effectuated with iiNET - and any other
72 CLEC desiring to host pay-per-call programs - obtaining interconnection terms and
arrangements sufficient to allow the continued provision of pay-per-call services.
Verizon has offered no legitimate reason why the terms of interconnection
requested by iiNET are not just and reasonable, or in any way demonstrated they would
put a burden on Verizon. Nor has Verizon shown that pay-per-call services could be
provided by a CLEC without the forms of interconnection, including billing and
collection, requested by iiNET.
iiNET's requests have been shown to be just and reasonable; necessary
for its provision of pay-per-call services; consistent with this State's public policy; and
consistent with the public interest.
This arbitration petition should adopt the form of interconnection
requested by iiNET.
Respectfully submitted.
Interactive InformationtiirfnlS Network, Inc. Jy: Keith/Roland Its Attorney Roland, Fogel, Koblenz & Petroccione, LLP One Columbia Place Albany, New York 12207 (518)434-8112
Dated: Albany, New York May 24, 2002
73 STATE OF NEW YORK PUBLIC SERVICE COMMISSION
Petition of Interactive Information Network, Inc. For Arbitration of Interconnection Terms and Conditions and Related Case 01-C-1787 Arrangements with Verizon New York, Inc.
STATE OF NEW YORK ) ) ss " COUNTY OF ALBANY )
Edward F. White, being duly sworn, deposes and says:
1. I am a Vice President at Mediacom Consulting Group, LLC and my
business address is 666 Third Avenue, 21 ^ floor, New York, New York 10017. I make this affidavit at the request of Interactive Information Network (iiNET) to describe a
billing system currently used by Verizon to bill and collect charges for other local
exchange carriers.
2. I have an Associate of Applied Science in Electrical Instrumentation Technology from Nassau Community College in Garden City, NY, a Bachelor of
Science in Electrical Engineering from New York Institute of Technology in Old
Westbury, NY. and a J.D. from New York Law School. I am currently a member of the
bar in New York State and also a member of the Suffolk County Bar Association.
3. I have been active in the telecommunications industry for the past twenty years, starting my career with the Western Electric Company, a subsidiary of
AT&T prior to divestiture. I have previously worked at Verizon and its various
predecessors for seventeen years, handling a wide variety of responsibilities including
engineering, marketing and regulatory assignments. I am currently in my third year at the Mediacom Consulting Group, which is a small consulting firm providing regulatory, business and technical support to the telecommunications industry.
4. The purpose of my affidavit is to describe and explain the Centralized
Message Distribution System ("CMOS"). The CMOS is currently administered by
Telcordia and used by local exchange carriers (including Verizon) to facilitate the exchange and settlement of billing records for other local exchange carriers. CMOS is a national clearinghouse recognized throughout the telecommunications industry for quick and secure carrier-to-carrier message exchange and settlements. This system of billing and collection was created by the original Bell Telephone System for use by the Bell Operating Companies ("BOCs") in an effort to simplify their billing of calls made by each other's end-users. CMOS allows one carrier to place a charge for its service on another carrier's bill. The carrier providing the service has no direct billing relationship with the user of its service, and therefore it relies on the second carrier to bill, on the first carrier's behalf, the end-user with whom the second carrier has a direct and regular billing relationship. The billing and collection charge that Verizon charges its sister carriers for this service is $0.05.
5. As a national clearinghouse for carrier-to-carrier message exchange,
CMOS gathers and distributes billing records regardless of where they were generated, how they were charged, and where they may be headed. CMOS significantly shortens billing process cycles, and provides a system for settlements among interconnecting carriers. It is used for exchanging such records as end-user billing records, carrier access billing records and alternately billed records for calling card calls.
6. In its simplest terms CMOS allows a carrier other than Verizon to obtain billing and collection service from Verizon, which will bill a Verizon end-user for using services provided by that carrier, and have the other carrier's charges show up on a Verizon bill at the Verizon end-user's residence or office. The Billing & Collection
(B&C) charge Verizon assesses its fellow carrier is $0.05. 7. A typical example of how this CMOS arrangement might work would be the following. A New York resident with a Verizon home telephone, who uses a Verizon calling card, takes a trip to California and visits a city in the area where Pacific Bell provides the local or IntraLATA toll service. The New Yorker places a local or intraLATA toll call on the Pacific Bell network using his Verizon calling card; the Pacific
Bell charge for that call is $0.50. Pacific Bell will originate and terminate the call using its network facilities. Pacific Bell will record and rate the call, arriving at the $0.50 charge for the call plus an administration fee of, let's assume, $0.75. Pacific Bell will then send that call record with the $1.25 charge (representing monies due to Pacific
Bell) to its RAO (Revenue Account Office) host, which will forward that call record to
Verizon. Verizon then places the $1.25 charge on the Verizon end-user's Verizon bill.
The call is specifically listed on the Verizon bill as a Verizon charge; it does not appear on a separate bill page, and is not described as billed on behalf of another carrier. Verizon will bill and collect Pacific Bell's full charge of $1.25. Through the settlement process. Pacific Bell will receive $1.20, and Verizon will retain a billing and collection fee of $0.05. 8. The process works on a reciprocal basis. A Pacific Bell customer who travels to New York can use a Pacific Bell calling card to make a local or intraLATA toll call (with Verizon providing the service over the Verizon network). Verizon records and rates the call; sends the call record to Verizon's RAO, which forwards it to Pacific Bell; and Pacific Bell puts the charge on its bill to its own end user, collects the money, and forwards it (through the settlement process) to Verizon less the $.05 billing and collection fee. Neither Verizon, nor Pacific Bell, direct bill the other carrier's end-user, nor do they choose to use credit cards or aggregators. Instead these two carriers choose to use a mutual billing and collection system that allows each carrier access to the regular and established billing relationship the other carrier has with its existing customer base. 9. It is my understanding and belief that Verizon still uses the CMOS clearinghouse, and currently provides such a billing and collection service to other local carriers. This is virtually the same billing arrangement as Verizon is currently denying iiNET. 10. At the hearings held in Albany on May 1, 2002, Verizon's panel of experts claimed little or no knowledge of the CMOS system, but certain facts appear to tell a different story. Verizon's own contract, dated October 9, 2001, between Verizon
California and Sprint, contains the definition of CMOS as follows:
Centralized Message Distribution System (CMOS).
The billing record and clearing house transport system that the Regional
Bell Operating Companies (RBOCs) and other incumbent LECs use to efficiently exchange out collects and in collects as well as Carrier Access
Billing System (CABS) records.
11. Critically, this contract was signed on Verizon's behalf by Jeffrey A.
Masoner, who I understand is the superior of Verizon's "negotiator" with iiNET, and has authority for all of Verizon's Interconnection Agreements, including those in New York. 12. I have attached the relevant pages from this Verizon contract with
Sprint, in which Verizon agrees to use CMOS and the exchange of billing records to bill its end-users on behalf of Sprint for the B&C charge of $0.05. Verizon's claims that they are unaware of CMOS are difficult to accept. 13. In fact, when the original IP billing charge was developed, CMOS was the model determined to most closely resemble, in form and function, this IP billing, and therefore the same 5^ charge was adopted for the IP billing. 14. iiNET wishes to provide Verizon with a billing record for a service
iiNET provides to a Verizon customer, and have the associated charge included in the
Verizon end-user's bill. Verizon provides the very same service today, through CMOS, to carriers with whom it chooses to do business, yet refuses to offer the same to iiNET
15. CMOS is a system left over from the divesture of the Bell System,
which was originally created to allow the BOCs to exchange various billing records
associated with each other's customers. Although the Bell System divesture is ancient
history, this cozy billing relationship still exists and is flourishing today. The billing and collection relationship iiNET has asked for from Verizon is technically the very same
relationship Verizon has today with numerous carriers under the Centralized Message
Distribution System. In fact, I understand certain CLECs, such as US LEC in North
Carolina, can participate in CMOS (either directly or through an LEC host), and thus can
obtain these B&C services from Verizon. Verizon's willingness to bill and collect for its former Bell System siblings, and other CLECs, while it refuses to provide comparable
services for iiNET, should not be permitted or sanctioned.
Sworn to before me this ^20 day/ttMay, 2002
NOTARY PUBLIC, State of New Vwk No. 4966360 Qualified In Albany County Commission Expires: J/y/a V APPENDIX 1
251/252 AGREEMENT
between
VERIZON CALIFORNIA, INC. F/K/A GTE CALIFORNIA INCORPORATED
AND
SPRINT COMMUNICATIONS COMPANY L.P.
FOR THE STATE OF CALIFORNIA
251/252 FINAL AGREEMENT • ••;••>»
Automated Message Accounting (AMA)
The structure inherent in switch technology that initially records telecommunication message information. AMA format is contained in the Automated Message Accounting document, published by Telcordia Technologies as GR-1100-CORE which defines the industry standard for message recording.
Automatic Number Identification (AND
'%^ The signaling parameter which refers to the number transmitted through the network identifying the billing ^li: • number of the calling Party.
^M&' Bill-and-Keep Arrangement
A compensation arrangement whereby the Parties do not render bills to each other for the termination of Local Traffic specified in this Agreement and whereby the Parties terminate local exchange traffic originating from End-Users served by the networks of the other Party without explicit charging among or between said carriers for such traffic exchange.
Bona Fide Request (BFR)
A process for SPRINT to request certain services, features, capabilities or functionality, associated with unbundled network elements, that are not currently offered in the Agreement.
Business Day
Monday through Friday, except for holidays on which the U.S. mail is not delivered.
Central Office Switch
A switch used to provide telecommunications services including but not limited to (1) End Office Switches which are Class 5 switches from which end-user Exchange Services are directly connected and offered, and (2) Tandem Office Switches which are Class 4 switches which are used to connect and switch trunk circuits between and among central office switches. Central office switches may be employed as combination end office/tandem office switches (combination Class 5/Class 4).
Centralized Message Distribution System (CMPS)
The billing record and clearing house transport system that the Regional Bell Operating Companies (RBOCs) and other incumbent LECs use to efficiently exchange out collects and in collects as well as Carrier Access Billing System (CABS) records.
CLLI Codes
Common Language Location Identifier Codes.
Commission
California Public Utilities Commission.
Common Channel Signaling (CCS)
A high-speed specialized packet-switched communications network that is separate (out-of-band) from the public packet-switched and message networks. CCS carries addressed signaling messages for individual trunk circuits and/or database-related services between Signaling Points in the CCS network using SS7 signaling protocol.
251/252 FINAL AGREEMENT 35 3.8 900-976 Call Blocking.
VERIZON shall not unilaterally block 900-976 traffic in which VERIZON performs switching associated with resale. VERIZON will block 900-976 traffic when requested to do so, in writing, by SPRINT. SPRINT shall be responsible for all costs associated with the 900-976 call blocking request. VERIZON reserves the right to block any and all calls which may harm or damage its network.
3.9 Access. To the extent Sprint resells a service that carries with it the access component (i.e., local dial tone),VERIZON retains all revenue due from other carriers for access to VERIZON facilities, including both switched and special access charges. However, VERIZON is not entitled to these access revenues if Sprint is reselling other wholesale offerings of VERIZON but not reselling VERIZON'S local dial tone product.
3.10 Branding. VERIZON shall provide to SPRINT the applicable charges for unbranding or rebranding and customized routing as set forth in Section 3.7.
4. Billing.
4.1 General. VERIZON will utilize CBSS to produce the required bills for resold Services. CBSS will create a bill to SPRINT along with a summary bill master within ten (10) calender days of the last day of the most recent billing cycle. State or sub-state level billing will include up to thirty (30) summary bill accounts.
4.1.1 Alternate Billed Calls. VERIZON shall record usage data originating from SPRINT Customers that VERIZON records with respect to its own retail Customers, using Services ordered by SPRINT. On resale accounts, VERIZON will provide usage in EMR format per existing file exchange schedules. Incollects are calls that are placed using the Services of VERIZON or another LEC and billed to a resale service line of SPRINT. Outcollects are calls that are placed using a SPRINT resale Service line and billed to a VERIZON line or line of another LEC or LSP. Examples of an incollect or an outcollect are collect, credit card calls.
4.1.1.1 Incollects. VERIZON will provide the rated record it receives from the CMOS network, or which VERIZON records (non-intercompany), to SPRINT for billing to SPRINT'S end- users. VERIZON will settle with the earning company, and will bill SPRINT the amount of each incollect * record less the billing and collection (B&C) fee for Customer billing of the incollects. The B&C credit will be $.05 per billed message. Any additional message processing fees associated with SPRINT'S incollect messages that are incurred by VERIZON will be billed to SPRINT on the monthly statement.
4.1.1.2 Outcollects. When the VERIZON end-office switch from which the resale line is served utilizes a VERIZON operator Services platform, VERIZON will provide to SPRINT the unrated message detail that originates from a SPRINT resale Service line but which is billed to a telephone number other than the originating number (e.g., calling card, bill-to-third number, etc.). SPRINT as the LSP will be deemed the earning company and will be responsible for rating the message at SPRINT rates and SPRINT will be responsible for providing the billing message detail to the billing company for Customer billing. SPRINT will pay to VERIZON charges as agreed to for Services purchased, and SPRINT will be compensated by the billing company for the revenue which SPRINT is due.
251/252 FINAL AGREEMENT 72 4.9 Loop Interference.
Sprint will deploy xDSL equipment that operates under the Power Spectral Density (PSD) mask defined by ANSI T1 standards. ' v /
If SPRINT'S deployment of service enhancing technology interferes with existing or planned service enhancing technologies deployed by VERIZON or other CLECs in the same cable sheath, VERIZON will so notify SPRINT and SPRINT will immediately remove such interfering technology and shall reimburse VERIZON for all costs and expenses incurred related to this interference.
VERIZON will implement spectrum management practices that provide methods to resolve service degradation caused by disturbers on nearby loop pairs when there are industry standards adopted for spectrum management. Methods may include forms of binder management designed to protect services from the effects of known disturbers. 5. Financial Matters.
5.1 Rates and Charges.
The monthly recurring charges (MRCs) and non-recurring charges (NRCs) applicable for the UNEs and Combinations, and related services made available under this Attachment are set forth in Appendix A and Appendix A-1 attached hereto and made a part of this Attachment. Compensation arrangements for the exchange of switched traffic between SPRINT and VERIZON when SPRINT uses a VERIZON port, local switching and shared transport shall be as set forth in Appendix B.
5.2 Billing.
VERIZON will utilize CBSS to produce the required bills for UNEs ordered via the LSR process. This includes NIDs, subloops, loops, loops combined with port, ports and local switching, shared transport, and line sharing. State or sub-state level billing will include up to thirty (30) summary bill accounts. Timing of messages applicable to VERIZON'S port and circuit switching UNEs (usage sensitive services) will be recorded based on originating and terminating access. VERIZON will utilize CABS to produce the required bills for UNEs and Combinations ordered via the ASR process. This includes dark fiber dedicated transport and loops combined with dedicated transport.
5.2.1 Incollects. Incollects are calls that are placed using the services of VERIZON or another LEC or local service provider and billed to a UNE port, INP number, or LNP number of SPRINT. Examples of an incollect are collect and credit card calls. VERIZON will provide the rated record it receives from the CMDS network or which VERIZON records (non-intercompany), to SPRINT for billing to SPRINT'S Customers. VERIZON will settle with the earning company, and will bill SPRINT the amount of each incollect record less the Billing & Collection (B&C) fee for Customer billing of the incollects. The B&C credit associated with SPRINT'S incollect messages that are incurred by VERIZON will be billed to SPRINT on the monthly statement.
5.2.2 Outcollects. Outcollects are calls that are placed using a SPRINT UNE port and billed to a VERIZON line or the line of another LEC or local service provider. Examples of an outcollect are collect and credit card calls. When the VERIZON Central Office Switch from which the UNE port is served utilizes a VERIZON operator services platform, VERIZON will provide to SPRINT the unrated message detail that originates from a SPRINT resale service line or UNE port,
251/252 FINAL AGREEMENT 90 but which is billed to a telephone number other than the originating number (e g calling card, bill-to-third number, etc.). As the local service provider, SPRINT will be deemed the earning company and will be responsible for rating the message at SPRINT'S rates and for providing the billing message detail to the billing company for Customer billing. SPRINT will pay to VERIZON charges as agreed to for services purchased, and SPRINT will be compensated by the billing company for the revenue due to SPRINT. When a non-VERIZON entity provides operator services to the VERIZON Central Office Switch from which the resale line or UNE port is provisioned, SPRINT must contract with the operator services provider to obtain any EMI records required by SPRINT.
5.3 Measurement of Originating Usage.
VERIZON shall record usage data originating from SPRINT Customers that VERIZON records with respect to its own retail Customers, using services order by SPRINT. On UNE port accounts, VERIZON, will provide usage in EMI format per existing file exchange schedules.
5.4 Measurement of Terminating Usage.
Until such time as industry standards are implemented for recording and measuring terminating local calls, the Parties agree to use factors to estimate terminating usage based on originating usage. Where originating usage cannot be measured, the Parties agree to use assumed minutes. The applicable factors and assumed minutes are set forth in Appendix A.
5.5 Switched Access Usaoe.
VERIZON will provide SPRINT switched access usage records (AURs) in EMI Category 11 format for those UNEs which contain this switched access usage component. SPRINT agrees to follow applicable industry standards for the meet-point billing of switched access usage as defined in MECAB.
6. Intellectual Property Matters.
The Parties acknowledge that the determination of whether intellectual property rights are implicated by SPRINT'S request to purchase a given UNE or Combination can vary greatly depending upon the individual contract terms negotiated by the vendor and VERIZON If co- extensive intellectual property rights are required for SPRINT to purchase such UNE or Combination, VERIZON shall use its best efforts to assist SPRINT in acquiring such rights. Any costs associated with acquiring such rights shall be allocated among SPRINT and all requesting carriers, including VERIZON, on a case-by-case basis. SPRINT shall abide by all reasonable vendor requirements in connection with the determination and procurement of such rights, including, without limitation, confidentiality and privity of contract requirements. To the extent that SPRINT intends to use an UNE or Combination in a manner that is different from how VERIZON uses UNEs or Combinations in its network, SPRINT shall be solely responsible for obtaining this right from the vendor.
7. Line Splitting
CLECs may provide integrated voice and data services over the same Loop by engaging in "line splitting" as set forth in paragraph 18 of the FCC's Line Sharing Reconsideration Order (CC Docket Nos. 98-147, 96-98), released January 19, 2001. Any line splitting between two CLECs shall be accomplished by prior negotiated arrangement between those CLECs. To achieve a line splitting capability, CLECs may utilize existing supporting OSS to order and combine in a line
251/252 FINAL AGREEMENT 91 3
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t