Decision No. C02-209

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

DOCKET NO. 01B-493T

Ruby Ranch Internet Cooperative Association, Petitioner,

Qwest Corporation, Respondent.

Initial Commission Decision

Mailed Date: March 1, 2002

Adopted Date: February 25, 2002

Appearances:

Carl Oppedahl, Dillon, Colorado, for Ruby Ranch Internet Cooperative Association; and
Timothy Tymkovich, Esq., Denver, Colorado, and Winslow Bouscaren, Esq., Denver, Colorado, for Qwest Corporation.

I. By the Commission

A. Statement

1. Ruby Ranch Internet Cooperative Association ("Ruby Ranch") initiated this proceeding by filing its Petition for Arbitration on October 30, 2001. Qwest Corporation ("Qwest") filed its Response on November 19, 2001. The Administrative law Judge ("ALJ") held a prehearing conference on December 12, 2001. At that conference, the ALJ scheduled an arbitration hearing for January 31, 2002. The hearing was held as scheduled. During the course of the hearing Exhibits 1 through 16, 18 through 19, and 22 through 35 were identified, offered, and admitted into evidence. At the conclusion of the hearing, the parties were authorized to file statements of position no later than February 11, 2002. Both parties timely filed statements of position.

2. The Commission has previously determined that due and timely execution of its functions imperatively and unavoidably require that the recommended decision of the ALJ be omitted and the Commission make the initial decision. See Decision No. R01-1280-I, December 13, 2001. Therefore, the Commission enters this initial decision.

B. Findings of Fact

1. Ruby Ranch is a recently formed non-profit corporation formed to provide high speed Internet access to an area in Summit County, Colorado. Forty homes have been built in the Ruby Ranch subdivision, and construction of a 41st home has commenced. Sixty houses may be built in the subdivision under current land use controls.

2. Two neighborhood residents have a private microwave system connecting their houses to their office in Dillon, Colorado, three miles away. That office has frame relay service to an Internet provider in Boulder. Ruby Ranch residents have purchased a digital subscriber line access multiplexor ("DSLAM") to provide symmetric digital subscriber lines ("SDSL") service to the members.

3. Ruby Ranch seeks to connect the DSLAM to individual neighborhood residences and to the houses with the microwave links using Qwest subloops. Qwest has a cross-connection junction box centrally located in the neighborhood, near a barn. Ruby Ranch proposes to install the DSLAM in the barn, and connect it via buried cable to the junction box, approximately 300 feet away.

4. Qwest currently has 400 subloops in the Ruby Ranch area, and uses 120. Ruby Ranch would need at most 60 subloops to serve all 60 homes, assuming all homes were built and all residents use Ruby Ranch's services.

5. Ruby Ranch's proposal does not involve interconnection because there would be no exchange of traffic between Ruby Ranch and Qwest. Ruby Ranch does not seek collocation. Ruby Ranch's proposed rental of the subloops would not involve connection of Ruby Ranch to any central office or wire center.

6. The SDSL technology that Ruby Ranch proposes to utilize requires a dedicated copper pair. There is no line-splitting involved, so issues of cross talk on the same line do not exist. The DSLAM and SDSL signals are approximately one volt. This compares with ordinary plain old telephone service ("POTS") voltage of approximately 48 volts when not in use, 5 to 12 volts when in use, and 90 volts when ringing.

7. Qwest will need to install a field connection point ("FCP") at or near the cross-connect box. Qwest will also need to install a block of 100 pairs of screw terminals inside the cross-connect box in a spare location. Ruby Ranch will run a 100-pair buried cable from the FCP to the barn where it will connect to the DSLAM.

8. All of Ruby Ranch's proposed equipment is compatible with the Qwest network. All of Ruby Ranch's equipment and cable will be grounded in accordance with manufacturer and industry specifications.

9. There is no direct metallic connection between the facilities that Ruby Ranch proposes to utilize and Qwest's central office or switching facilities. The only connection between Ruby Ranch's facilities and Qwest's facilities (other than the subloops) would be through one of two indirect routes. First, there is a metallic sheathing around the cable containing the subloops that Ruby Ranch seeks to utilize. This metallic sheathing is connected to Qwest's network indirectly. Second, depending on the way that Ruby Ranch's network is grounded, there is the potential for the grounding to form a connection.

10. Qwest is technically able to accommodate Ruby Ranch's proposal. Qwest has indicated its willingness subject to certain conditions. First, Qwest asserts that Ruby Ranch must have a $1,000,000 general liability insurance policy in effect, naming Qwest as a co-beneficiary. Second, Qwest seeks to charge a quote preparation fee of $1,107.09. This fee would cover the costs for Qwest to estimate the cost of constructing the field connection point.(1) Third, Qwest has proposed a $120.67 subloop provisioning charge for each subloop that is provisioned.(2) Fourth, Qwest asserts that the monthly subloop charge would be $8.73, since the Dillon exchange is classified as a zone 2 exchange in Decision No. C01-1302, which establishes prices for Qwest's Statement of Generally Available Terms and Conditions.

C. Applicability of § 252

1. Ruby Ranch filed its petition for arbitration pursuant to the provisions of 47 U.S.C. § 252 of the Telecommunications Act of 1996. Ruby Ranch is not certified by this Commission as a provider of any telecommunications service, and, apparently, does not intend to obtain any such certification in the future.(3) According to the evidence here, Ruby Ranch intends to provide DSL service to residents in the Ruby Ranch subdivision, in part, by leasing subloops from Qwest. Even though Ruby Ranch is not presently certified as a provider of telecommunications services, we find that it is, nevertheless, entitled to request an interconnection agreement with Qwest for the purchase of unbundled network elements (e.g., subloops). As such, the provisions of § 252 apply, including the availability of arbitration before this Commission.(4)

2. Section 252 of the Act is clear that any "telecommunications carrier" may request negotiations and arbitration with an incumbent local exchange carrier ("ILEC") such as Qwest. Accord, 47 U.S.C. § 251(c) (ILEC has duty to negotiate with any requesting telecommunications carrier, and to provide interconnection and unbundled network elements to requesting telecommunications carriers). Section 153(43) defines "telecommunications" as:

the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received.

"Telecommunications carrier" is defined as "any provider of telecommunications services...." See 47 U.S.C. § 153(44). Finally, § 153(46) of the Act defines "telecommunications service" as:

the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available to the public....

3. It appears that Ruby Ranch, in its provision of DSL to residents of the subdivision, qualifies as a "telecommunications carrier," even without certification from this Commission. Nevertheless, under the definition of "telecommunications service," Ruby Ranch is obligated to provide its service to all requesting end-users in the subdivision to meet the statutory criteria of providing service to "the public."(5) Thus, for example, the operators of Ruby Ranch will not be able refuse DSL service to residents in the subdivision for arbitrary or discriminatory reasons. With this understanding of Ruby Ranch's future obligations, we conclude that the provisions of § 252 do apply in this case. Ruby Ranch is entitled to request an interconnection agreement from Qwest, and is entitled to arbitration before this Commission.(6)

D. Issue No. 1 - Subloop Activation Charge

1. Ruby Ranch argues that the $120.67 subloop activation charge is not justified. Ruby Ranch notes that since there is no central office connection there is less work required than the activation of an actual POTS or business line. Ruby Ranch analogizes to an ordinary business line which has a $54 activation charge, and suggests that because only half the work is involved,(7) an activation fee of $27 is warranted.

2. Qwest stands by the Commission's decision in Docket No. 99A-577T. See Decision No. C01-1302. It originally argued that it cannot craft individual numbers for individual carriers. It changed its argument in its Closing Statement of Position. Qwest now argues that Ruby Ranch failed to provide sufficient cost justification for different rates. See Qwest's Position Statement, p. 2. It also notes that the $120.67 charge contains an allocation of joint and common costs, was approved by the Commission, and, therefore, suggests that it is justified.

3. We adopt Qwest's position. The subloop pricing method proposed by Ruby Ranch, while straight-forward, is based on an existing rate of Qwest for another service. The record does not indicate that this is an appropriate basis for establishing the non-recurring charge for a subloop. Notably, the unbundled network element requested by Ruby Ranch fits the "classic" definition of a subloop. The non-recurring charge for subloops was recently established in Docket No. 99A-577T based on Qwest's Total Element Long-Run Incremental Cost. In Docket No. 99A-577T, the Commission, in effect, determined that the rates established there comply with the Act including the pricing standards set forth in § 252(d). See 47 U.S.C. § 252(f). One of the pricing requriements established by the Act is that rates be nondiscriminatory. See 47 U.S.C. § 252(d)(1). We note that the rates approved in Decision No.C01-1302 are intended to be generally available to all requesting telecommunications carriers. In order for us to approve a rate different from that established in 99A-577T for a specific carrier, we must be persuaded that good reason exists for approving a different rate. We find there is no basis in this case to charge Ruby Ranch a rate different than the currently approved subloop rate of $120.67.

E. Issue 2 - Monthly Recurring Subloop Charge

1. Ruby Ranch states that during the negotiations it had great difficulty getting Qwest to provide the monthly recurring price for subloops. According to Ruby Ranch, Qwest initially stated that the subloops were in zone 3, then later said the subloops were in zone 1. Still later Qwest claimed that the subloops were in the base rate zone. Finally at the hearing Qwest stated that the subloops were in zone 2.

2. Qwest now argues that the Commission's recent decision in 99A-577T placed the Dillion exchange in zone 2, and that is the rate Ruby Ranch should pay.

3. We agree with Qwest. Decision No. C01-1302 places the Dillon exchange in zone 2. We find no basis in this case for changing our previous decision. For the reasons discussed above (i.e., the significance of the rates established in Decision No. C01-1302), Ruby Ranch should pay the monthly recurring charge of $8.73 per subloop.

F. Issue No. 3 - Quote Preparation Fee ("QPF")

1. Ruby Ranch argues that the ultimate construction of the field connection point is simply the installation of a 100-block screw terminal in the existing cross-connect box. Ruby Ranch estimates that this should cost only a few hundred dollars in time and materials, and is an extremely simple job. Ruby Ranch suggests that charging a quote preparation fee which will probably exceed the actual construction charge by multiple factors is unconscionable. As an alternative, it suggests that the difference between the quote preparation fee and the actual construction charge be refunded to Ruby Ranch after the full amount has been credited towards the construction charge. Ruby Ranch also requests that the QPF be itemized, so that it may independently verify the reasonableness of any quote.

2. Qwest claims that there are many elements, including network design, that go into the construction of the field connection point; it is not simply inserting a 100-screw terminal into a box and shutting the doors. It suggests that it cannot offer an individual fee for Ruby Ranch as this would be inconsistent with its interpretation of the Commission's order in Docket No. 99A-577T.(8) Therefore it stands by the amount that the Commission set in that docket.

3. We note that the QPF established in Docket No.99A-577T is based on average cost estimates. Thus, an itemization of costs which compose a specific QPF would require some exercise of judgment. This may not be an appropriate use of Qwest resources.(9) While it may initially appear that the amount of money expended by Qwest for the engineering, administrative, and construction costs associated with the Ruby Ranch project might be below the standard QPF, the Commission, in establishing a standard based upon average costs, knew that there would be some project costs above the standard QPF and other project costs below that standard. However, we again conclude that, before diverging from the rate established in Decision No. C01-1302, the evidence must demonstrate that the standard is unreasonable for Ruby Ranch. We find no basis in this case for reaching that conclusion. Therefore, we will not require Qwest to refund to Ruby Ranch any monies not expended from the QPF, nor will we require Qwest to provide an itemization of costs for the QPF.

G. Issue No. 4 - Insurance

1. Ruby Ranch argues that no insurance requirements should be placed on it, because there is no risk of harm to the Qwest network. Ruby Ranch has offered to have its members sign documents that release Qwest from any liability in the event of any harm to the members.

2. Qwest, on the other hand, is concerned with third-party liability of any sort, even groundless or frivolous lawsuits. Qwest notes that Ruby Ranch is a newly formed non-profit association with no assets and minimal revenues. Qwest contends that unless Ruby Ranch has insurance, it will have no means to reimburse Qwest or anyone else for any property damage or injuries for which Ruby Ranch is legally liable. Qwest suggests that it is the "deep pocketed" target of a lawsuit in the event any third-party working on either Qwest's connection to Ruby Ranch's network or Ruby Ranch's network is injured. Therefore, Qwest seeks some protection if such events occur. Qwest maintains that the purpose of insurance is to protect against the unforeseeable. As an example, it notes that Ruby Ranch will be burying cable, and that trenching accidents can lead to cut cables.

3. The Commission agrees with Qwest that Ruby Ranch should have insurance in the event the need for such insurance should arise. We find the $1,000,000 figure developed from the Qwest Risk Management Group reasonable considering the circumstances of Ruby Ranch. This amount is substantially less than that required from other telecommunications carriers entering into interconnection agreements with Qwest.

H. Issue No. 5 - Contract Terms

1. The form of the actual contract between Ruby Ranch and Qwest was not originally identified by either party as a point of dispute. However, it is clear that the parties are far apart in what they consider to be a reasonable interconnection agreement, andeach party generally addressed this issue.(10) Qwest originally proposed its standard interconnection agreement of well over 200 pages. Ruby Ranch countered with a four-page agreement. Qwest countered with a 100-page agreement. Finally, Ruby Ranch proposed a six-page interconnection agreement, still arguing that a contract which contains many inapplicable provisions is unreasonable.(11)

2. We will not adopt either party's proposal as the appropriate interconnection agreement at this point in time. In the first place, we note that neither party provided sufficient evidence to justify adoption of its proposed contract in its entirety. For example, Ruby Ranch's final proposal provides that Qwest will provide service within 30 days of a request. Nothing in the record at this point supports that provision. Qwest's proposed interconnection agreement, on the other hand, contains a host of provisions that are apparently inapplicable to Ruby Ranch's specific request for service. The instant decision resolves the specific issues in dispute. Rather than directing the parties to enter into a specific interconnection agreement, we direct the parties to negotiate the specific contract to be filed for approval with the Commission pursuant to the Rules Establishing Procedures Relating to the submission for Approval of Interconnection Agreements within Colorado by telecommunications Carriers, 4 Code of Colorado Regulations 723-44. With the guidance provided in this decision, the parties should be able to agree to the terms for a complete interconnection agreement. We suspect that many of the provisions contained in Qwest's proposal are irrelevant to the contractual arrangement sought by Ruby Ranch. If the parties cannot agree to a complete interconnection agreement, each party may submit its separate proposal with supporting comments as to why its proposed contract is more acceptable than the competing proposal.

II. ORDER

A. The Commission Orders That:

1. The issues presented in the Petition for Arbitration filed by Ruby Ranch Internet Cooperative Association on October 30, 2001 are resolved as set forth in the above discussion.

2. Within 30 days of the final Commission decision in this docket, Ruby Ranch Internet Cooperative Association and Qwest Corporation shall submit a complete proposed interconnection agreement for approval by the Commission, pursuant to the provisions of 47 U.S.C. § 252(e) of the Telecommunications Act of 1996.

3. The 20-day period provided for in § 40-6-114, C.R.S., within which to file applications for rehearing, reargument, or reconsideration begins on the first day following the Mailed Date of this Decision.

4. This Order is effective on its Mailed Date.

B. ADOPTED IN COMMISSIONERS' DELIBERATIONS MEETING

February 25, 2002.

THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

________________________________

Commissioners

COMMISSIONER POLLY PAGE CONCURRING, IN PART, DISSENTING, IN PART.

Footnotes

Qwest has conceded at hearing that the quote preparation fee would be credited against the actual construction charge. However, if the construction charge were less than the quote preparation fee, Qwest does not propose to refund the difference.
The quote preparation fee and the subloop provisioning fees quoted in the main text are less than the quotes originally given by Qwest. Qwest has modified its proposal to Ruby Ranch to reflect the Commission's Decision No. C01-1302 entered in Docket No. 99A-577T. Qwest has utilized what it believes are the applicable prices from that order in its testimony and most recent offer to Ruby Ranch.
DSL service, the only telecommunications service Ruby Ranch intends to provide, is not regulated under State law. Therefore, Ruby Ranch does not need any certification from the Commission.
Qwest itself does not argue that Ruby Ranch could not seek arbitration before the Commission. Rather, we raise this question on our own motion, since the question of whether § 252 applies to Ruby Ranch's requests of Qwest implicates the Commission's jurisdiction over this matter.
We do not address the additional question of whether DSL-service constitutes "telecommunications," or falls elsewhere under the Federal Communications Commission's taxonomy.
Offering nondiscriminatory service to the "public" or "effectively available to the public" - sort of a semi-common carrier role - would appear to be the linchpin entitling Ruby Ranch to wholesale rates. Otherwise, Ruby Ranch would fall into the category of retail end-user.
Ruby Ranch notes that if a business line is installed in the subdivision, four connections would be needed (one at the central office in Dillon, one at the subscriber line box in Willowbrook, one at the cross-connect box within the Ruby Ranch subdivision, and one at the individual subscriber's network interface device). However, under the Ruby Ranch proposal, only two connections will be needed--at the cross-connect box and at the individual subscriber's NID. In addition, Ruby Ranch states that it will be faxing in its orders for activation, thus requiring less human interaction for Qwest as well.
As noted above, Qwest changed from this position in its posthearing Statement of Position.
It could also lead to other undesirable outcomes. For example, Qwest would have an incentive to be liberal in estimating employee hours associated with a particular QPF in order ensure that all QPF monies were expended. The customer could seek Commission review of the itemized bill in order to determine if the number of hours claimed by Qwest were reasonable. This would not be a good use of Commission resources considering the magnitude of the costs involved and the likely nature of the disputes (e.g., arguing over the amount of employee time spent on a project).
Although, as stated infra, neither party provided sufficient evidence to justify wholesale adoption of its particular proposed contract.
Ruby Ranch agreed at hearing that the references to line-sharing in this proposal were in error and should be removed.

III. COMMISSIONER POLLY PAGE CONCURRING, IN PART, AND DISSENTING, IN PART:

I concur with the above decision in all respects, except for the ruling concerning the Quote Preparation Fee ("QPF"). I conclude that Ruby Ranch Internet Cooperative Association ("Ruby Ranch") provided sufficient evidence to demonstrate that a QPF of $1,107 is likely to be excessive. The record demonstrates that the services being requested by Ruby Ranch--unbundled subloops for a small number of lines--are limited. As such, the QPF established in Decision No. C01-1302 is almost certainly excessive for the limited services and arrangements being requested by Ruby Ranch. I would require Qwest Corporation ("Qwest") to itemize construction costs to provide the unbundled subloops to Ruby Ranch. To the extent the QPF exceeds reasonable costs, Qwest should be required to make a refund to Ruby Ranch.

THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

________________________________

Commissioners

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