Ruby Ranch Internet Cooperative Association c/o Oppedahl & Larson LLP P.O. Box 5088 Dillon, CO 80435-5088 970-468-6600 carl@rric.net
August 27, 2001
Via Federal Express
Mr. David Solomon, Chief Enforcement Bureau Federal Communications Commission 445 12th Street, S.W. Washington, D.C. 20554 Ms. Dorothy Attwood, Chief Common Carrier Bureau Federal Communications Commission 445 12th Street, S.W. Washington, D.C. 20554 Mr. Bruce N. Smith, Director Colorado Public Utilities Commission 1580 Logan Street, Office Level 2 Denver, CO 80203 Ms. Barbara Fernandez, Chief of Staff Colorado Public Utilities Commission 1580 Logan Street, Office Level 2 Denver, CO 80203
Re: Complaint against Qwest
Refusal to Provide Available Subloops on Reasonable Terms
Dear Ms. Attwood, Ms. Fernandez, Mr. Smith, and Mr. Solomon:
We, the Ruby Ranch Internet Cooperative Association, seek your assistance because Qwest is not acting reasonably or even rationally (see Parts III and IV below). We do not know who — the FCC or the Colorado Commission— has regulatory authority over this matter (see Part II). Nevertheless, we seek your immediate assistance because of our need to bury cable before the snow begins falling, generally by the end of October (see Part V).
We wish to provide DSL services to ourselves because Qwest has decided not to provide DSL services to neighborhood. We need access to certain subloops that Qwest has installed some twenty years ago on our Ranch, is not using, and will never use. Yet, Qwest refuses to provide access to these “bottleneck” facilities except upon unreasonable terms that it refuses to explain or justify.
I. Background Facts
Ruby Ranch (http://www.rubyranch.com) is a 540-acre residential neighborhood located in an unincorporated portion of Summit County, Colorado.(1) There are 54 lots on the Ranch, with 35 homes constructed. The maximum number of houses that might be built is 60.
Ranch residents have a keen interest in obtaining “always on,” high speed internet connections for their personal and business needs. The best data rate available with dial-up access using lines from the local telephone company, Qwest, is 26 kbps. This rate does not meet the needs of Ranch residents. For example, earlier this month, one resident had to devote several hours to send an important file to a client in Hong Kong.
Qwest and AT&T Cable have each stated they have no intention to provide high-speed internet access to Ranch residents in the near future. Such access is currently available from Netbeam (www.inetbeam.com), which provides fixed wireless services using the unlicensed 2.4 GHz band. However, few residents have line-of-sight to Netbeam’s antenna in the area, Netbeam’s service has not been reliable, and Netbeam recently filed for bankruptcy.
Certain Ranch residents formed the non-profit Ruby Ranch Internet Cooperative Association (www.rric.net) to provide high-speed internet access to ourselves. Two Ranch residents have a private microwave system connecting their houses to their office in Dillon, three miles away. Their office, in turn, has frame relay service to an internet provider in Boulder. Residents have purchased a digital subscriber line access multiplexer (“DSLAM”) to provide symmetric digital subscriber line (“SDSL”) service to ourselves.(2) Two ranch residents purchased 2,000’ of cable to connect their homes with one of the homes connected to the microwave system. This temporary DSL service is working beautifully, confirming that we can provide quality and reliable DSL services to ourselves.
The missing — and critical link — for the Coop’s internet access service is access to Qwest subloops to connect the DSLAM to individual Ranch residences and to the houses with the microwave links.(3) Qwest has a cross-connection junction box that is centrally located on the Ranch, near our horse barn. We propose to install the DSLAM in the barn, and connect via buried cable to the junction box, approximately 300 feet away.
Qwest has ample subloops on the Ranch to meet our needs. It currently uses 30% of the available subloops (120 of 400) in the provision of its services to the 35 houses.(4) The Coop would need at most 60 subloops (assuming all 60 possible houses are eventually built and further assuming every resident uses the Coop’s service). Thus, even if we used 60 subloops, Qwest would still have 220 subloops to provide voice or other services to new or existing residents — nearly double the number of subloops it uses to serve 35 homes. Stated differently, if the neighborhood were to reach full build-out and if the present number of telephone lines per house were maintained, Qwest would use about 206 of the 400 available subloops, leaving 194 spares generating no revenue for Qwest. The Coop’s possible 60 subscribers would be using less than one-third of those 194 spares.
Our leasing proposal would enable Qwest to realize a return on a twenty-year-old embedded investment that it will otherwise never use. We had thought that Qwest would jump at the chance to generate new revenues because our proposal was a “win/win” situation for all involved — Qwest would assist its customers to provide new capabilities to themselves after it decided not to provide the service directly.(5) We were mistaken, seriously mistaken.
On June 1, 2001 the Coop asked Qwest to lease subloops to the Coop. Qwest responded by sending its standard interconnection contract which is over 280 pages in length — most of which had no relevance to our proposal.(6) The Coop replied by proposing a four-page contract meeting our needs, and we asked Qwest to modify our draft so the contract would meet its needs. Our proposed arrangement is very simple — to lease subloops 0.25 to 1.2 miles in length. We do not want collocation nor do we propose to exchange any traffic, thereby avoiding the often contentious issues of reciprocal compensation and collocation availability and pricing. We propose to have no metallic connection whatsoever to any Qwest switchgear. Qwest surprisingly refused to use our proposed contract. According to Qwest, we volunteers with full-time jobs had to begin with, and could only use, Qwest’s massive 280-page/single spaced document.
The parties held three “negotiating” sessions — on July 26, August 1 and August 15. We made little or no progress. Among other things, Qwest did not perform certain tasks it agreed to perform, and it has been unable to explain or justify any of its proposed prices, terms and conditions. Most terms were offered on a “take it, or leave it” basis. Although Qwest liberalized a few of its proposed terms at the most recent conference (e.g., reducing its insurance requirements to “only” $1 million), Qwest was still unable to justify the newer terms or explain why terms once offered on a “take it or leave it” basis were not, in fact, requirements set in stone.
We cannot commence service under the terms that Qwest is demanding because we would not have a viable business on those terms. We are perplexed because we propose to price our services at rates comparable to those Qwest charges for its own DSL services. If we cannot make money using volunteers, used equipment, and frame relay services shared with others, how can Qwest make money on its own DSL services?
II. Which Regulator Has Jurisdiction Over this Matter
Our Coop has one, and only one objective: to provide reliable and affordable DSL service as soon as possible and before the snow arrives at the end of October. We do not care which regulator — the FCC or the CoPUC — assists us in achieving our objective. Nevertheless, we do not know which regulator has the authority to adjudicate this matter, and it is for this reason that we are sending this letter to both Commissions.
The subloop facilities at issue are located entirely within Ruby Ranch in Summit County. This would suggest that the Colorado Commission has jurisdiction over the matter. We are also somewhat familiar with Sections 251 and 252 of the Communications Act, which appear to assign responsibility to state commissions to resolve disputes with incumbent local exchange carriers (“LECs”) like Qwest.
However, in April of this year, the FCC ruled that the provision of internet access (transport to an ISP, the function we want to perform) is an interstate service:
The Commission has held, and the Eighth Circuit has recently concurred, that traffic bound for information service providers (including Internet access traffic) often has an interstate component. . . . Thus, ISP traffic is properly classified as interstate, and it falls under the Commission’s section 201 jurisdiction. * * * Accordingly, the LEC-provided link between an end-user and an ISP is properly characterized as interstate access.(7)
It is our understanding of the law that state regulators have no authority over interstate traffic and that the FCC has exclusive jurisdiction over interstate traffic.(8)
As noted at the outset, we do not care what law applies (federal or state) or which regulator intervenes (FCC or CoPUC). We are confident that Qwest’s conduct will be deemed unreasonable regardless of the regulator that intervenes and regardless of the specific law that is applied. We do ask that you address this “what law governs” issue promptly so this legal question, over which we have absolutely no interest, does not impair our ability to commence service timely.
III. Qwest Has Not Acted Reasonably or Rationally
We on the Ranch are all customers of Qwest (we have no choice) and we are good customers of Qwest — averaging 3.4 lines per household. We have a critical need for high-speed, “always on” Internet access. We formed our Coop only after Qwest told us that it had no intention of providing DSL services itself.
We had expected Qwest to actively facilitate our proposal. After all, we proposed to generate new revenues for an embedded investment that Qwest will never use. In addition, our proposal would reduce Qwest’s costs of service to the Ranch, as Internet traffic currently routed through its local switch (in Dillon) would instead be diverted to our Coop network. (It will continue to charge the same price for local service whether or not the lines are used for dial-up access.)
We are, quite frankly, in shock over the positions Qwest has adopted and the obstructionist tactics that it has utilized. We think you will agree from the brief summary below ( which is by no means exhaustive) that Qwest has not been acting either reasonably or rationally.(9)
A. Insurance. Qwest’s initially proposed that the Coop obtain an insurance policy in the sum of $11 million — the equivalent of a $1 million policy for each Coop member.(10) During the first call, Qwest appeared sensitive to the major hurdle such a requirement would impose on us, but during the second call, Qwest indicated that the insurance requirement was non-negotiable. At no time could Qwest question answer any of our questions:
During our third, August 15 conference, Qwest lowered its demand to require “only” $1 million — the equivalent of a $100,000 policy for each Coop member. We repeated the questions above, and Qwest still could not answer any of them.
If Qwest cannot identify the technical risk it believes the Coop presents, then the Coop cannot ensure against that risk. In that case, the Coop cannot provide an insurance policy to Qwest, but Qwest has said that without such a policy, it will not rent subloops to the Coop. Qwest has placed us in a classic “Catch 22.”
B. Feasibility Fee/Quote Preparation Fee. Qwest demanded during the first call that we pay a fee of $1,707 just to have Qwest prepare an estimate of the cost to do the physical interconnection (establish a Field Connection Point) in its junction box on the Ranch. A fee of $1,707 simply to prepare an estimate is entirely unreasonable:
Qwest initially said that the Colorado Commission approved the $1,707 estimate fee, but it later admitted that this statement was false. Although Qwest has been unable (or unwilling) to cost-justify this fee, it has said repeatedly that we must accept the fee on a “take it or leave it” basis.
C. Activation Fee. Qwest stated that we must pay $126 to activate each subloop, including when the field personnel activate several subloops at one time. Qwest has been unable (or unwilling) to justify this cost. Nor could it identify the amount it imputes to itself when it activates a new DSL customer. (Qwest often has promotions where it offers potential DSL customers free activation.) Qwest nonetheless took the position that the fee was being offered on a “take it or leave it” basis.
D. Subloop Price. The subloops we seek to lease range in length from 0.25 to 1.2 miles. We had assumed that we would pay $8.33 month for each subloop because this is the price contained in Qwest’s Statement of Generally Available Terms (SGAT) on file with the Colorado Commission. Qwest initially told us that we must instead pay a so-called “Zone 3” price of $21.32 because of the distance from its serving central office — although Qwest could not explain how this classification was relevant since the subloops we want would not be connected to its central office.(11) Qwest agreed to provide an answer at the second meeting, but it did not do so. During the third conference, Qwest suddenly announced that we were instead in Zone 1 and would have to pay “only” $15.12, but Qwest still could not explain why we were in Zone 1 as opposed to its “base rate area,” which has cheaper prices.
We have repeatedly asked Qwest to cost-justify its proposed subloop prices, but it has been unwilling to respond to any of the following points that we have made:
We note that in Vermont, which we consider to be more rural than Summit County, Verizon charges $9.71 monthly for a subloop, regardless of distance.(12) In New Hampshire, which likewise we consider to be more rural than our county, Verizon charges $9.70 monthly for a subloop, regardless of distance.(13)
E. Interim Agreement. We proposed repeatedly that we execute an interim agreement to enable the Coop to commence service while a regulator resolved our differences. Qwest has refused to consider such an arrangement unless we obtain an insurance policy to protect it against unspecified risks and unless we pay it $1,707 to prepare an estimate of the cost to install a crew terminal, work that should cost $300 or less. Qwest’s refusal to assist our effort and support an interim arrangement is inexplicable because we decided to provide DSL services to ourselves only after Qwest told us it had no intent to provide these services itself.
IV. Evidence Suggests That Qwest Is Not Negotiating in Good Faith
Qwest’s positions and actions suggest that it wants to avoid generating revenues on an embedded investment it will never use, to support a service that will not compete with any of its services. In our view, Qwest’s position is not logical or rational. However, we also believe that Qwest has not been acting in good faith. Several examples make the point.
A. The Baseline Contract. As noted, Qwest’s initial contract proposal was over 280 pages in length. We responded with a four-page proposal that met our needs and asked Qwest to make revisions so the contract met its needs as well. Qwest refused, stating that it was more efficient for we volunteers (all of whom have demanding full-time jobs) revise Qwest’s contract line-by-line.
B. Threats Not to Deal. During the second, August 1 conference, Qwest announced at the beginning of the call that it was questioning whether it even had an obligation to negotiate with the Coop because the Colorado Commission has not licensed the Coop as a telephone company (although we will not be providing telephony services). Qwest’s attorney made this threat even though FCC rules on point specify that it constitutes bad faith for an incumbent LEC to refuse to negotiate condition negotiations upon unless the requesting carrier obtaining state certification.(14)
In response to our request, Qwest agreed to give us an answer to this obviously very important question within a week. Qwest did not do so. Qwest did not mention this subject during the third call, so we can only assume that it has abandoned this position.
C. Take It, or Leave It/Refusal or Inability to Explain/Justify Demands. Most of the terms Qwest has announced are offered on a “take it or leave it” basis — although Qwest refuses to justify these terms when we ask for explanations:
We do not need to be experts in telecommunications law to know that Qwest is not acting in good faith. We do note, however, the FCC rules on point specifically state that an incumbent LEC like Qwest engages in bad faith when it refuses to provide requested information about its network or refuses to provide cost data.(15)
D. Inadequate Capacity for Basic Phone Service. Qwest has ample subloop capacity on the Ranch (400, of which it is using 120). In contrast, it has only 120 loops connecting the Ranch to the rest of its network (and the public switched telephone network). All but one of these loops is in use, meaning that Qwest can only support service for only one more residential line. Two houses are scheduled for construction later this year. Qwest does not have existing capacity to support service to both houses (and neither house will have service if an existing resident requests an additional line).
Qwest is aware of the problem and has been aware of the problem for some time. In response to Qwest’s request earlier this year, the Ranch has granted an easement so Qwest can install additional capacity (an optical fiber) and a new junction box on the Ranch. We have repeatedly asked Qwest to confirm that it will install new facilities before the snow begins in the fall, so Ranch residents can be assured of obtaining basic voice services as needed. Qwest has repeatedly refused to answer this very basic and critically important question. Qwest’s most recent statement on the issue is contained in its August 14 letter to the Coop:
I understand Qwest is discussing the possibility of increasing capacity via installation of a digital loop carrier terminal, but there are no firm plans to do so at this time.
This Qwest response is completely unacceptable.
V. We Seek Expedited Relief
Ranch residents have an immediate need for high-speed internet access, as evidenced by the recent incident where a transmission of an important file to a client in Hong Kong took several hours over Qwest dial-up lines. In addition, houses on the Ranch are located between 9,000 and 9,300 feet above sea level, and the winters are severe (e.g., water lines must be buried at least eight feet deep). All utilities on the Ranch are buried.
To provide its service, the Coop must purchase and install cable to connect Qwest’s nearby junction box with the DSLAM that will be located in the Ranch’s barn. This cable must be buried, but the snow often falls before the end of October. (Technically, excavation can be done during winter months, but the costs escalate substantially, and we cannot afford these extra costs given our very limited budget.) The Coop therefore respectfully requests that you act expeditiously on this complaint.
You no doubt have procedures you must follow. Nevertheless, service to Ranch residents should not be delayed because Qwest’s obstructionist tactics require the intervention of a regulator.
VI. Conclusion and Relief Sought
We who have been involved in the Qwest “negotiations” have dealt with arrogant companies during the course of our profession careers. However, we can say with confidence that we have never dealt with a company as arrogant as Qwest, one so committed to act inconsistently with the interests of its own customers and shareowners.
For all the foregoing reasons, we ask the FCC or the Colorado Commission (or both) to order Qwest to execute a subloop leasing contract with our Coop on prices, terms and conditions that are just, reasonable, and non-discriminatory. Qwest is well aware of these issues, as we have discussed them ad nauseam. Qwest should be capable of providing a reply within a week or less (particularly since we shared a draft of this letter with Qwest a week before we submitted it to you).
Qwest’s obstructionist tactics have already delayed needlessly our commencement of services that our Ranch residents want. An order directing Qwest to provide subloops will enable our Coop finally to begin service. However, if you only issue an order requiring Qwest to provide interconnection on reasonable terms, Qwest will have essentially benefited by its obstructionist tactics and bad faith negotiations.
We do not seek damages. Money will not provide a meaningful remedy for the delays that Qwest has caused. But the fact is that an entry of an order without a corresponding penalty will effectively reward Qwest for being unreasonable. We therefore believe that it would be appropriate to fine Qwest in a sufficient sum so that it understands that it cannot pursue the same approach with others in the future. Reasonable people ought not be subjected to such arrogance and incompetence.
Thank you for taking the time to listen to our story. We would have much preferred writing a letter advising you of our successful deployment of DSL services to ourselves.
Sincerely,
Carl Oppedahl, Board Member Ruby Ranch Internet Cooperative Ass’n
cc: Nancy J. Donahue, Lead Qwest Negotiator Martin Willard, Perkins Coie, Attorney representing Qwest Philip F. Anschutz, Chairman of the Board Joseph P. Nacchio, Chairman, CEO, Board Member Craig R. Barrett, Board Member Cannon Y. Harvey, Board Member Frank Popoff, Board Member
Footnotes:
(1) Summit County (see, e.g., http://www.summitnet.com) is home to four ski resorts: Arapahoe Basin, Breckenridge, Copper Mountain, and Keystone. Ruby Ranch is located approximately two miles north of Interstate 70 between the Town of Silverthorne and the Eagles Nest Wilderness area in the White River National Forest.
(2) Our DSLAM is a Cooper Mountain CopperEdge 150 DSL Concentrator using a Copper Mountain 24-port SDSL line card. See http://www.coppermountain.com/library/data_sheets.cfm. This is standard DSL equipment used by many major DSL service providers including incumbent LECs.
(3) Qwest holds a “bottleneck” in antitrust jargon. Replicating Qwest’s embedded facilities is not feasible. The two residents with temporary DSL service spent $700 in cable to connect their houses. We estimate that we would have to spend over $20,000 in cable alone to connect all houses with new cable. However, the really sizable cost would be the cost to bury this cable in the several miles of road on our Ranch.
(4) The fact that each house on our Ranch averages 3.4 Qwest telephone lines confirms that Ranch residents deem telecommunications important to their lives.
(5) Although Qwest has repeatedly stated it has no intention of providing DSL services to Ruby Ranch, Ranch residents inexplicably continue to receive Qwest inserts/advertisements asking residents to subscribe to its DSL service.
(6) Rather than burden your filing systems with the hundreds of pages that the Coop and Qwest have exchanged, relevant documents are available at our Coop web site: www.rric.net.
(7) Intercarrier Compensation for ISP-Bound Traffic, CC Docket No. 99-68, Order on Remand and Report and Order, FCC 01-131, at ¶¶ 52 and 57 (April 27, 2001)(emphasis in original).
(8) See 47 U.S.C. §§ 152(a), 152(b).
(9) We have been able to reach an agreement only on two terms: the length of the contract (three years), and Qwest’s agreement to pay all relocation costs if and when it installs a new terminal on the Ranch.
(10) We expect about a dozen member/subscribers at service launch.
(11) The distance between the junction box on Ruby Ranch and Qwest’s serving central office in Dillon (DLLNCOMADFS0) is 3.6 miles, although the facilities Qwest actually uses between these two points are a longer distance given how they are laid. The subloops we wish to lease, which are on the other side of the junction box, range in length from 0.25 to 1.2 miles.
(12) See Verizon Vermont SGAT § 5.15.1.5, page 5-147, available at http://www.state.vt.us/psb/sgat/sgatdoc3.pdf.
(13) See Verizon New Hampshire SGAT § 5.15.1.6, page 5-161, available at http://www.puc.state.nh.us/tcwebpage/nh5augfinal2000.pdf.
(14) See 47 C.F.R. § 51.301(c)(4). CoPUC staff has told the Coop that it need not be certified as a competitive local exchange carrier (“CLEC”) because it would provide only internet access services and that as such, it should be classified as a data LEC, or DLEC.
(15) See 47 C.F.R. § 51.301(c)(8).