STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Illinois Bell Telephone Company : : Petition for Arbitration of : 11-0083 Interconnection Agreement with Big : River Telephone Company, LLC. : ARBITRATION DECISION DATED: June 14, 2011 11-0083 TABLE OF CONTENTS I. PROCEDURAL HISTORY .................................................................................... 1 II. APPLICABLE AUTHORITY .................................................................................. 2 III. ISSUES IN DISPUTE ........................................................................................... 4 IV. RECIPROCAL COMPENSATION -- BILL-AND-KEEP ......................................... 4 A. Issue 1: Should the ICA provide for a bill-and-keep arrangement for traffic that is otherwise subject to reciprocal compensation but is roughly balanced? .................................................................................................. 4 1. Introduction ..................................................................................... 4 2. Staff summary of the law governing reciprocal compensation ........ 5 3. AT&T Position ................................................................................. 8 4. Big River’s Position ....................................................................... 12 5. Staff’s Position .............................................................................. 14 6. Exceptions and Replies ................................................................. 16 B. Issue No. 2: If a bill-and-keep arrangement is adopted, what terms and conditions should govern such bill-and-keep arrangements? .................. 17 C. Analysis of and Conclusions on Bill-and-Keep Issues ............................. 17 V. TRANSIT TRAFFIC SERVICE ........................................................................... 20 A. Issue No. 3: Should AT&T Illinois be required to provide transit traffic service under the ICA? ............................................................................ 20 1. AT&T Illinois’ Position ................................................................... 21 2. Big River’s Position ....................................................................... 22 3. Staff’s Position .............................................................................. 23 4. Exceptions and Replies ................................................................. 24 B. Issue No. 4: If the Commission requires the inclusion of transit in the ICA, what are the appropriate rates that AT&T Illinois should charge for such service? ................................................................................................... 24 i 11-0083 1. AT&T Illinois’ Position ................................................................... 25 2. Big River Position .......................................................................... 29 3. Staff’s Position .............................................................................. 30 4. Exceptions and Replies ................................................................. 33 C. Issue No. 5: If the Commission requires the inclusion of transit in the ICA, what are the appropriate terms and conditions for transit traffic? ............ 33 1. AT&T Illinois’ Position ................................................................... 34 2. Big River’s Position ....................................................................... 35 3. Staff’s Position .............................................................................. 36 4. Exceptions and Replies ................................................................. 36 D. Analysis of and Conclusions on Transit Traffic Service Issues ................ 37 VI. ARBITRATION STANDARDS ............................................................................ 40 VII. FINDINGS AND ORDERING PARAGRAPHS .................................................... 40 ii STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Illinois Bell Telephone Company : : Petition for Arbitration of : 11-0083 Interconnection Agreement with Big : River Telephone Company, LLC. : ARBITRATION DECISION By the Commission: I. PROCEDURAL HISTORY On January 27, 2011, Illinois Bell Telephone Company (hereafter “AT&T Illinois”) filed, with the Illinois Commerce Commission (“Commission”), a Petition seeking arbitration of an interconnection agreement (“ICA”) with Big River Telephone Company LLC (“Big River”) pursuant to Section 252(b) of the federal Telecommunications Act of 1996, 47 U.S.C. 252(b). In the Petition, AT&T Illinois represents that AT&T Illinois and Big River attempted to negotiate terms and conditions of an ICA between them, but failed to reach agreement with respect to several points, and AT&T now requests Commission arbitration of these open issues. On February 10, 2011, pursuant to Section 761.210(b) of the Commission rules on “Arbitration Practice," 83 Ill. Adm. Code 761, AT&T Illinois filed the direct testimony of J. Scott McPhee and Carl C. Albright, Jr. On February 24, 2011, a pre-arbitration conference or hearing was held before an Administrative Law Judge. Appearances were entered by respective counsel for AT&T Illinois, Big River and the Staff of the Commission (“Staff”), and a schedule for the proceeding was established. The parties also agreed to extend the due date for entry of an arbitration decision to June 22, 2011. Big River filed its response to the Petition, and the direct testimony of Gerard J. Howe. Thereafter, the Staff of the Commission (“Staff”) submitted the direct testimony of Dr. James Zolnierek. On April 1, 2011, in response to Dr. Zolnierek’s testimony, AT&T filed the rebuttal testimony of Mr. McPhee and Big River submitted the rebuttal testimony of Mr. Howe. On April 5, 2011, an evidentiary hearing was held. At the conclusion of the hearing, the record was marked “Heard and Taken.” Thereafter, initial briefs (“IBs”) and reply briefs (“RBs”) were filed by AT&T Illinois, Big River and Staff. 11-0083 A Proposed Arbitration Decision was issued by the Administrative Law Judge. A brief on exceptions (“BOE”) was filed by Big River. Reply briefs on exceptions (“RBOEs”) were filed by AT&T Illinois and Staff. II. APPLICABLE AUTHORITY In Section III of its initial brief, titled “Applicable Statute," Staff cites the following provisions in Section 252(b)-(d) of the federal Telecommunications Act of 1996, 47 U.S.C. Sec. 252(b)-(d): (b) Agreements arrived at through compulsory arbitration. (1) Arbitration. During the period from the 135th to the 160th day (inclusive) after the date on which an incumbent local exchange carrier receives a request for negotiation under this section, the carrier or any other party to the negotiation may petition a State commission to arbitrate any open issues. (2) Duty of petitioner. (A) A party that petitions a State commission under paragraph (1) shall, at the same time as it submits the petition, provide the State commission all relevant documentation concerning-- (i) the unresolved issues; (ii) the position of each of the parties with respect to those issues; and (iii) any other issue discussed and resolved by the parties. (B) A party petitioning a State commission under paragraph (1) shall provide a copy of the petition and any documentation to the other party or parties not later than the day on which the State commission receives the petition. (3) Opportunity to respond. A non-petitioning party to a negotiation under this section may respond to the other party's petition and provide such additional information as it wishes within 25 days after the State commission receives the petition. (4) Action by State commission. (A) The State commission shall limit its consideration of any petition under paragraph (1) (and any response thereto) to the issues set forth in the petition and in the response, if any, filed under paragraph (3). (B) The State commission may require the petitioning party and the responding party to provide such information as may be necessary for the State commission to reach a decision on the unresolved issues. If any party refuses or fails unreasonably to respond on a timely basis to any reasonable request from the State commission, then the State commission may proceed on the basis of the best information available to it from whatever source derived. (C) The State commission shall resolve each issue set forth in the petition and the response, if any, by imposing appropriate conditions as required to implement subsection (c) upon the parties to the agreement, and shall conclude the resolution of any unresolved issues not later than 9 2 11-0083 months after the date on which the local exchange carrier received the request under this section. (5) Refusal to negotiate. The refusal of any other party to the negotiation to participate further in the negotiations, to cooperate with the State commission in carrying out its function as an arbitrator, or to continue to negotiate in good faith in the presence, or with the assistance, of the State commission shall be considered a failure to negotiate in good faith. (c) Standards for arbitration. In resolving by arbitration under subsection (b) any open issues and imposing conditions upon the parties to the agreement, a State commission shall-- (1) ensure that such resolution and conditions meet the requirements of section 251 [47 USCS § 251], including the regulations prescribed by the Commission pursuant to section 251 [47 USCS § 251]; (2) establish any rates for interconnection, services, or network elements according