BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of the Petition for Arbitration of an Interconnection Agreement Between MFS Communications Company, Inc. And US WEST Communications, Inc. Pursuant to 47 USC § 252 .............................................................. ) ) ) ) ) ) ) ) ) ) ) DOCKET NO. UT-960323 DOCKET NO. UT-960323 ORDER APPROVING NEGOTIATED AND ARBITRATED INTERCONNECTION AGREEMENT I. INTRODUCTION A. Procedural History On February 8, 1996, MFS Communications Company, Inc. (“MFS”) requested negotiations with U S WEST Communications, Inc. (“USWC”) for interconnection under the terms of the Telecommunications Act of 1996, Public Law No. 104-104, 101 Stat. 56, codified at 47 USC § 151 et seq. (1996)(the “1996 Act” or “the Act”). On June 24, 1996, MFS timely filed with the Washington Utilities and Transportation Commission (“Commission”) and served on USWC, a petition for arbitration pursuant to 47 USC § 252(b)(1). The matter was designated Docket No. UT-960323. On June 28, 1996, the Commission entered an Order on Arbitration Procedure appointing Simon ffitch as the arbitrator for this proceeding and establishing certain procedural requirements. USWC filed its response to the petition. Petitions to intervene were filed by AT&T Communications of the Pacific Northwest, Inc. and Telephone Ratepayers Association for Cost Based and Equitable Rates. The petitions were denied in the Arbitrator’s Second and Third Procedural Orders respectively. “Final offer” (or “last best offer”) arbitration was adopted for this arbitration pursuant to the Arbitrator’s Fourth Procedural Order. In preparing the arbitration report in this matter, the arbitrator selected between the parties’ last proposals as to each unresolved issue, selecting the proposal which is most consistent with the requirements of state and federal law and Commission policy. The arbitrator stated he would choose either an entire proposal, or choose between parties’ proposals on an issue-by-issue basis. In the event that neither proposal was consistent with law or Commission policy, the arbitrator stated he would render a determination in keeping with those requirements. No party objected to the adoption of “last best offer” arbitration in the Arbitrator’s Fourth Procedural Order. A hearing was held before the arbitrator on September 18 and 19, 1996, at the offices of the Commission in Olympia, Washington. MFS was represented by Douglas Bonner, attorney at law. USWC was represented by Ed Shaw and Lisa Anderl, attorneys at law. Following the hearing, the parties filed final briefs and final offers on October 2 and 8. On November 8, 1996, the Arbitrator’s Report and Decision was issued resolving the disputed issues presented in the final briefs and offers. See attached, Appendix A. The parties were instructed to submit an interconnection agreement in accordance with the Arbitrator’s Report and Decision within 30 days. On December 9, 1996, MFS filed a Memorandum Requesting Approval of Arbitrated Interconnection Agreement. On the same date, USWC filed its Request for Approval of Arbitrated Agreement and a Request to Adopt, Modify, and Reject the Interconnection Agreement. Also on December 9, 1996, the parties filed a signed Arbitrated Interconnection Agreement for the State of Washington. Copies of the requests for approval were served on the Commission’s service list for this proceeding to allow for comment by interested persons. Written comments were filed by Telephone Ratepayers Association for Cost-Based and Equitable Rates (TRACER). The Commission reviewed the proposed Arbitrated Interconnection Agreement, the issues presented by the Arbitration Report and Decision, the parties filings and the record herein. On January 6, 1997, the Commission held an open meeting at its Main Hearing Room in Olympia, Washington to consider the request for approval of the Arbitrated Interconnection Agreement. Commission staff presented its recommendation that the agreement be approved. Oral comments were made by counsel for MFS, USWC and TRACER. MFS and USWC each asked the Commission to reject certain portions of the agreement and to approve the remainder of the provisions. TRACER opposed approval of the provisions relating to reciprocal compensation. At the conclusion of the open meeting, the Commission approved all provisions of the Arbitrated Interconnection Agreement as submitted and directed that a written order be prepared. B. Generic Pricing Proceeding On October 23, 1996, the Commission entered an order in this and other arbitration dockets declaring that a generic proceeding would be initiated in order to review costing and pricing issues for interconnection, unbundled network elements, transport and termination and resale. Order on Sprint’s Petition to Intervene and to Establish Generic Pricing Proceeding (October 23, 1996)( “Generic Pricing Order”) The Commission stated that rates adopted in the pending arbitrations would be interim rates, pending the completion of the generic proceeding. Accordingly, the price proposals made in this arbitration have been reviewed with the goal of determining which offers a more reasonable interim rate. The conclusions of the arbitrator with respect to price proposals and supporting information are made in this context and do not necessarily indicate Commission approval or rejection of cost and price proposals for purposes of the generic case. C. The Eighth Circuit Order and the FCC Rules The FCC rules In the Matter of the Implementation of the Local Competition Rules of the Telecommunications Act of 1996, CC Docket No. 96-98, First Report and Order (August 8, 1996), Appendix B- Final Rules. implementing the local competition provisions of the Act have been appealed and those rules relating to costing and pricing have been stayed by the United States Court of Appeals for the Eighth Circuit. Iowa Utilities Board et al. v. FCC, No. 96-3321, Order Granting Stay Pending Judicial Review (8th Cir. Oct. 15, 1996). The order also stays the “MFN” rule. The provisions of the FCC order and rules not subject to stay are adhered to in the Arbitrator’s Report and Decision and this order. Those provisions which are subject to stay do not require compliance pending resolution of the underlying appeal. This Commission is free, therefore, to disregard those specific federal requirements. The stay does not preclude reference, however, to underlying rationale and analysis contained in the federal order for whatever value it may have on its merits. Having considered the Arbitrator’s Report and Decision, the Arbitration Interconnection Agreement and accompanying requests for approval filed by the parties to this arbitration, the entire record herein, and all written and oral comments made to the Washington Utilities and Transportation Commission (“Commission”), the Commission makes the following findings and conclusions: II. FINDINGS OF FACT 1. The Washington Utilities and Transportation Commission is an agency of the state of Washington, vested by statute with authority to regulate in the public interest the rates, services, facilities and practices of telecommunications companies in the state. 2. The Washington Utilities and Transportation Commission is designated by the Telecommunications Act of 1996 as the agency responsible for arbitrating and approving interconnection agreements between telecommunications carriers, pursuant to Sections 251 and 252 of the Act. 3. This arbitration and approval process was conducted pursuant to and in compliance with the Commission’s Interpretive and Policy Statement Regarding Negotiation, Mediation, Arbitration, and Approval of Agreements Under the Telecommunications Act of 1996, Docket No. UT 960269, June 27, 1996. The arbitrator’s adoption of “last best offer” arbitration in the Fourth Procedural Order was reasonable and consistent with the authority delegated to the arbitrator in the Commission’s Order on Arbitration Procedure, June 28, 1996. No party objected to adoption of “last best offer” arbitration in the Fourth Procedural Order. 4. On November 8, 1996, pursuant to the Commission’s Order On Arbitration Procedure in this docket, the arbitrator issued an Arbitrator’s Report and Decision resolving the disputed issues between the parties to this proceeding, MFS and USWC. See Appendix A. 5. On December 9, 1996, the parties submitted a signed Arbitrated Interconnection Agreement to the Commission for approval in part. The Arbitrated Interconnection Agreement properly incorporates the decisions of the arbitrator as to the disputed issues. To the extent the final provisions vary from specific decisions of the arbitrator, pursuant to agreement of the parties, the provisions are treated as negotiated provisions. 6. The Commission has reviewed and analyzed the staff recommendation, the Arbitrator’s Report and Decision, the Arbitrated Interconnection Agreement, the filings of the parties, and the record herein, including the oral comments made at the open meeting. The Commission hereby adopts and incorporates by reference the findings and conclusions of the Arbitrator’s Report and Decision. 7. At an open meeting on January 6, 1997, the Commission adopted the staff recommendation that the Arbitrated Interconnection Agreement be approved as submitted. 8. USWC made reference in its filings to the “competitive checklist” requirements of Section 271 of the Act. 47 USC § § 271(c)(2)(B) This order makes no findings with regard to the requirements of that section and no determination as to whether USWC is in compliance. III. CONCLUSIONS OF LAW 1. The arbitrated provisions of the Arbitrated Interconnection Agreement meet the requirements of Section 251 of the Telecommunications Act of 1996, including the regulations prescribed by the Federal Communications Commission pursuant to Section 251 which have not been stayed, and the pricing standards set forth in Section 252(d) of the Act. 2. The negotiated provisions of the Act do not discriminate against a telecommunications carrier not a party to the agreement and are consistent with the public interest, convenience, and necessity. 3. The Arbitrated Interconnection agreement is otherwise consistent with Washington law and with the orders and policies of this Commission. ORDER IT IS ORDERED that: 1. The Arbitrated Interconnection Agreement for the State of Washington between MFS Intelenet, Inc., and U S WEST Communications, Inc., is approved. 2. The prices contained in the Agreement are interim prices, subject to replacement by prices adopted in the Commission’s generic cost and price proceeding, Docket No. UT 960369 et al. 3. In the event that the parties revise, modify or amend the Agreement approved herein, the revised, modified, or amended Agreement shall be deemed a new negotiated agreement under the Telecommunications Act and shall be submitted to the Commission for approval, pursuant to 47 USC § § 252(e)(1) and relevant provisions of state law, prior to taking effect. DATED at Olympia, Washington and effective this day of January 1997. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION SHARON L. NELSON, Chairman RICHARD HEMSTAD, Commissioner WILLIAM R. GILLIS, Commissioner