COMMISSION

MCIMETRO ACCESS TRANSMISSION   )
SERVICES, INC.,                )  Docket No. UT-971063
          Complainant,         )  
                               )  Volume 2
     vs.                       )  Pages 52 - 118
                               )
U S WEST COMMUNICATIONS, INC., )  
          Respondent.          )
-----------------------------  )

          A hearing in the above matter was held on 
August 27, 1997 at 10:40 a.m. at 1300 South Evergreen 
Park Drive Southwest, Olympia, Washington, before 
Administrative Law Judge LAWRENCE J. BERG.

          The parties were present as follows:
          U S WEST COMMUNICATIONS, INC., by ED SHAW and
LISA ANDERL, Attorneys at Law, 1600 7th Avenue, Room 
3206, Seattle, Washington 98191 (via bridge).
 
          MCIMETRO ACCESS TRANSMISSION SERVICES, 
INC., by CLYDE MACIVER, Attorney at Law, 601 Union 
Street, Suite 4400, Seattle, Washington 98101-2352 and 
ROGELIO E. PENIA, Senior Attorney, 707 17th Street, 
Suite 3600, Denver, Colorado 80202.

          THE WASHINGTON UTILITIES AND TRANSPORTATION 
COMMISSION STAFF, by SHANNON SMITH, Assistant Attorney 
General, 1400 South Evergreen Park Drive Southwest, PO 
Box 40128, Olympia, Washington 98504-0128.

          THE PUBLIC COUNSEL SECTION, by SIMON FFITCH, 
Assistant Attorney General, 900 Fourth Avenue, Suite 
2,000, Seattle, Washington 98164.
Cheryl Macdonald, Court Reporter
                P R O C E E D I N G S
           JUDGE BERG:  This hearing will come to 
order.  This is a hearing in case captioned MCImetro 
Access Transmission Services, Inc., complainant, 
vs. U S  WEST Communications, Inc., respondent.  This 
matter has also been designated docket No. UT-971063.  
The purpose of the hearing this morning is to hear 
oral arguments from the parties on the respondent U S 
WEST's motion to dismiss complaint.
           The motion to dismiss was filed on August 
15, 1997.  The Commission has received responsive 
briefs from the parties, which I believe were received 
on the due date of August the 22nd.  Notice of this 
hearing was included in the Commission's first 
supplemental order on pre-hearing conference which 
issued on July 31, 1997.
           Today is August 27, 1997.  This hearing is 
taking place at the hearing room of the Commission 
headquarters in Olympia, Washington.  My name is Larry 
Berg.  I am the administrative law judge assigned to 
this proceeding.  
           At this point in time we'll go ahead and 
take appearances beginning with the company, then MCI 
and then Commission staff.  So if you would go ahead, 
Mr. Shaw.  
           MR. SHAW:  Yes, Ed Shaw and Lisa Anderl 
appearing on behalf of U S  WEST Communications.  
           JUDGE BERG:  Would you also provide your 
formal address, please.  
           MR. SHAW:  Yes.  1600 Bell Plaza, Room 
3206, Seattle, Washington 98181.  
           JUDGE BERG:  And MCI.  
           MR. MACIVER:  Yes, thank you, Your Honor.  
My name is Clyde MacIver.  My address is 601 Union 
Street, Suite 4400, Two Union Square, Seattle, 
Washington 98101 and I'm appearing on behalf of 
MCImetro, and with me this morning is Rogelio Pena, 
also inside counsel for MCImetro, and Mr. Pena will 
give his address.
           MR. PENA:  My address in Denver is 707 17th 
Street, Suite 3600, and the zip code is 80202.  
           JUDGE BERG:  Thank you very much.  
Commission staff.  
           MS. SMITH:  Thank you.  Shannon Smith, 
assistant attorney general appearing on behalf of 
Commission staff.  My address is 1400 South Evergreen 
Park Drive Southwest, Olympia, Washington, 98504-0128, 
and I would like to note for the record my new 
telephone number which is area code 360-586 -- I'm 
sorry.  360-664-1192.  
           JUDGE BERG:  I will note for the record 
that Mr. Simon ffitch, attorney general's public 
counsel, has contacted me within the last half hour.  
There is another proceeding that is under way here at 
the Commission in which he has also entered an 
appearance.  He wanted me to make sure that his 
appearance was noted on the record.
           The parties should have also received a 
letter that was directed to the Commission indicating 
that public counsel was not filing any written brief 
in this matter.  Mr. Ffitch indicated to me that as 
well he did not have any oral arguments prepared.  
However, if he does join us he will have an 
opportunity to make comments assuming that his 
appearance is timely and it fits in with the rest of 
the presentation here this morning.
           Let the record reflect that Mr. Shaw of 
U S  WEST Communications is appearing by the 
Commission's conference bridge telephone line.  As the 
parties will also recall, in the first supplemental 
order on pre-hearing conference there was some brief 
discussion about the format to be followed here this 
morning.  In that pre-hearing conference order it 
indicated that U S WEST shall have 40 minutes total 
time within which to argue its motion and to reply to 
the other parties.  The other parties shall have 20 
minutes each to present their arguments.  The parties 
have uniformly indicated to me that they did not think 
that their presentations would take up the full time 
allotted.  Nevertheless if in fact we cover some 
unexpected ground the parties shall be entitled to use 
that time which was previously specified for this 
hearing.  
           The procedure of the hearing will be that 
U S WEST shall go ahead and present its oral arguments 
in favor of its motion to dismiss, followed by Mr. 
MacIver on behalf of MCI and then Ms. Smith on behalf 
of Commission staff.  If Mr. ffitch joins us he would 
present his comment or oral arguments after Ms. Smith.  
That would be followed up with a final reply from 
U S WEST.  
           I will indicate that I will certainly try 
and let the parties make their presentation as direct 
as possible without interruptions.  However, there is 
one issue that I wish to address here at the outset 
before we actually begin the presentations by the 
parties.  It was clearly evident from the briefs that 
were filed by the parties that the language relating 
to the dispute resolution clause in what shall be 
referred to as the interim agreement, which was 
attached as Exhibit A to the motion to dismiss, seemed 
to play a central role in all of the written arguments 
of the parties, and so I'm anticipating that the 
oral arguments of the parties will also spend some 
time focused on that language, and that language in 
the interim agreement appeared in section 23, in 
particular, 23.1 identified as dispute resolution.
           And I will also note for the record that 
U S WEST was put in a position where it filed its 
motion at a point in time when the interim agreement 
was in effect and prior to the approval of a 
negotiated arbitrated agreement between these parties 
in docket No. UT-960310.  What I want to discuss 
preliminarily with the parties is a clause in the 
recital that occurs at the very top of page 2.
           And Mr. Shaw, I'm going to begin discussion 
with you, so I want to make sure that you have that 
agreement to refer to.  
           MR. SHAW:  I do.  
           MR. MACIVER:  What are you referring to?  
           JUDGE BERG:  I'm referring to the interim 
agreement which was attached as Exhibit A to the 
motion to dismiss.  The pages are numbered in the 
bottom right-hand corner.  I'm looking at the top of 
page 2 where there is a clause that states, "Whereas 
U S  WEST Communications and MCImetro are actively 
negotiating a definitive agreement pursuant to the 
Telecommunications Act of 1996, and agree that no term 
or condition in this interim agreement shall have any 
precedential value with respect to such definitive 
agreement." 
           Mr. Shaw, for the moment, dealing with the 
designation of a definitive agreement in the abstract, 
can you share with me what your interpretation of the 
meaning of regarding "no term or condition in this 
interim agreement shall have any precedential value" 
has on our discussions of other terms and conditions 
contained in the interim agreement, particularly the 
dispute resolution terms and conditions?  
           MR. SHAW:  If I understand your inquiry, 
and as we try to find out in our papers, this interim 
agreement was undertaken by the parties so as not to 
delay interconnection pending the final resolution of 
a definitive agreement or an agreement pursuant to the 
federal act and the arbitration process before the 
Commission.  And the understanding of the parties, as 
far as U S WEST is concerned, that because we were 
anxious to not delay interconnection with provision of 
service pending that agreement, neither party was 
going to compromise its position that it was taking in 
the arbitration proceedings by signing or agreeing to 
this interim agreement, and it was done to effectuate 
the intent of the parties that the interim agreement 
would control until replaced by the definitive 
agreement which has not yet been signed between the 
parties, but is very close.  
           JUDGE BERG:  I believe the parties have 
been directed to file that agreement with the 
Commission on or about September 3, 1997.  I have also 
received some indication from both Mr. Harlow and Mr. 
MacIver that MCI intends to file an agreement in 
compliance with Commission orders at some point today.  
Is that correct, Mr. MacIver?  
           MR. MACIVER:  Yes.  
           JUDGE BERG:  All right.  So that's helpful, 
Mr. Shaw.  Can you put that likewise into some 
perspective as to whether the dispute resolution terms 
of the interim agreement should control the decision 
on the U S WEST motion to dismiss or whether the 
dispute resolution terms in the agreement, which was 
approved by the Commission, should control 
determination on this issue?  
           MR. SHAW:  It is our position that in the 
time period that's covered by the complaint that the 
interim agreement controls.  We fully recognize that 
the alternative dispute resolution language of the 
definitive agreement that has been under discussion by 
the parties and presumably will be filed is not the 
same, and from the effective date of that, going 
forward, the definitive agreement is going to control.  
That does not take away from the contractual 
obligations.  We'll argue further here that MCI 
contractually obligated itself during the time period 
of which this dispute arose that led to this complaint 
to engage in the negotiation, mediation and 
arbitration process.
           So I suppose if MCI in the context of this 
complaint wishes to allege facts and circumstances 
beyond yesterday, the 26th of August, which would -- 
on the face of the interim agreement, which would have 
been the end of its term that we're going to have two 
agreements that control, but it is our position that 
for the time period from the filing of the complaint 
until August 26th the terms and the conditions of the 
interim agreement control.  
           JUDGE BERG:  All right, I understand your 
position.  Thank you.  Mr. MacIver, I also understand 
from your brief that it is MCI's position that in fact 
the successor agreement, the definitive agreement, 
supersedes the interim agreement.  Is that a fair 
characterization?  
           MR. MACIVER:  Yes.  I believe that, as 
Mr. Shaw has recognized, the interim agreement governs 
the relationship of the parties until it is replaced 
by the definitive agreement.  My understanding is that 
the definitive agreement has already been executed.  
My further understanding -- by both parties and that 
it will most likely be filed this afternoon.  It is 
our position that it really doesn't make a difference 
on this sole issue of requirement to arbitrate which 
agreement prevails.  Our complaint is a complaint 
relative to a pattern and practice that includes the 
period of the interim agreement and continues through 
today.  
           For example, if MCI is not getting 
provisioned with adequate T1s three months ago and it 
still is not getting adequately provisioned today each 
day is a continuing violation, so it's not a snapshot 
of one day or one period in the provisioning 
complaint, and I would also point out, Your Honor, 
that the complaint is not -- this is not a breach of 
contract complaint.  Our complaint is based on our 
rights under the federal laws, under the state laws, 
rules and regulations, under the interconnection 
orders of this Commission, as well as under the 
agreement between the parties whether it be the 
interim agreement or the definitive agreement.  
           JUDGE BERG:  I will let both parties 
restate those arguments in their presentations if they 
so choose.  Mr. MacIver, I wanted to just briefly 
address with you the significance of the language in 
this recital clause that I discussed with Mr. Shaw 
that no term or condition in this interim agreement 
shall have any precedential value.  My understanding 
from Mr. Shaw's statements was that that clause was 
intended so that none of the terms or conditions in 
this agreement would preempt the party's right to 
negotiate contrary terms and conditions in a 
definitive agreement.  Do you have any other 
interpretation of the purpose of this recital clause?  
           MR. MACIVER:  No.  I believe that Mr. Shaw 
is correct on that.  I think the parties were willing 
to enter into an agreement but wanted it clearly 
understood that that would not handicap those parties 
taking any position, whether it was consistent with or 
contrary to the interim agreement and their 
negotiations for the definitive agreement, so I would 
agree with Mr. Shaw on that.  
           JUDGE BERG:  All right.  Thank you both.  
At this point, then, I'm prepared to go forward and to 
turn the floor or the microphone, as the case may be, 
over to you, Mr. Shaw.  
           MR. SHAW:  Thank you.  I believe that this 
motion addresses about five issues that I want to 
comment on, and first is the contract binding between 
the parties and which contract applies, which we've 
already briefly discussed, and what is a reasonable 
interpretation of that contract, and that the issue of 
Commission jurisdiction and what U S WEST position is 
in regard to Commission jurisdiction, and what is the 
best public policy for the Commission to effectuate in 
deciding this motion.
           So I would like to kind of use that as an 
argument outline and first address the issue of 
whether an interconnection agreement between two full 
carriers, two interconnecting carriers at the local 
level, is binding, and I don't believe that there is 
much controversy about that.  In our papers we spent a 
little bit of time discussing the fact that 
relationships between connecting carriers in 
Washington have historically always been by contract, 
and that has been recognized by the Commission and 
it's recognized by the statutes.  However, staff in 
its paper suggests that the parties cannot by 
agreement take away or affect the Commission's 
jurisdiction.
           On page 6 it tends to suggest that parties 
cannot agree between themselves under contract to bind 
themselves to ADR, and I think that is clearly not the 
case.  ADR is a recognized public policy with a very 
strong repeated statement by the courts, the state of 
Washington and the legislature that ADR is encouraged, 
and since the parties can and did contract their 
relationship and federal law and state law recognizes 
that inter-carrier relationships are by contract, 
clearly the parties can bind themselves to resolving 
their disputes through ADR, and/or the courts, because 
it's clear that the Commission does not have exclusive 
jurisdiction over complaints between competing 
carriers.
           For example, represented by the same law 
firm another competing carrier, ELI, instead of filing 
a complaint in front of the Commission has looked to 
file an antitrust complaint in federal district court, 
and clearly believes that the Commission does not have 
exclusive or even primary jurisdiction to resolve such 
a dispute, and the dispute is of the same general 
character on whether or not U S WEST has fulfilled its 
obligations under law to provide service and 
facilities to an interconnecting carrier.
           So clearly it is not an issue of the 
parties depriving the Commission of jurisdiction.  The 
Commission has jurisdiction over these types of 
issues, and the parties can elect, absent a contract, 
to go to court and with a contract can bind themselves 
to resolve their disputes through either binding 
arbitration or court action.  
           So I don't think that there's any issue at 
all here that this contract is binding.  And so, does 
the contract apply, the interim contract, and I think 
clearly it does.  By its own terms it's for a term 
certain until and unless later replaced by a final 
agreement or a definitive agreement under the federal 
act, and as of yesterday this interim agreement was 
still binding and applied on the relationships between 
the parties, and the Commission should recognize that.
           The Commission should support the efforts 
of the parties to voluntarily enter into such an 
interim agreement pending the final resolution of the 
definitive agreement so as not to delay services to 
the public, to effectuate interconnection.  It has 
always been U S WEST's firm position that any company 
is free to provide local service in competition with 
U S WEST and that the statutes clearly require when 
and if a carrier appears and is properly registered 
with the Commission that there will be 
interconnection, and that interconnection would be 
before -- would be undertaken pursuant to a contract.  
           The Commission proceeding on local 
interconnection, it's important to remember, was 
initiated by U S WEST.  When U S WEST was negotiating 
these interim agreements with ELI as being the first 
in time and then TCI and then later on MCI, it became 
apparent that the parties were not going to agree on 
definitive prices for interconnection services and 
facilities, and in order to tee that up and get it 
resolved prior to the passage of the federal act, 
U S WEST voluntarily filed a tariff to get that 
focused.
           There were also complaints filed at around 
the same time which were consolidated with that tariff 
proceeding, but it was a tariff proceeding with a 
proposal by U S WEST, and out of that the Commission 
answered some basic policy questions, and prescribed 
some interim arrangements and then, of course, 
everything got superseded by the federal act and all 
the parties transferred their energies and attention 
to negotiating and arbitrating agreements under the 
federal act, but in the meantime these interim 
agreements apply with the carriers that signed that.
           So the real issue that we're addressing 
here is what is a reasonable interpretation of the 
contract, and in that sense this is a fairly focused 
motion, and from the papers Your Honor can see that 
essentially the argument, contrary to -- in opposition 
to U S WEST's motion -- is that either party can elect 
to take complaints to the Commission on anything 
that's within the Commission's jurisdiction rather 
than being bound to the ADR process spelled out in the 
interim agreement.  
           And our argument is very simple, that that 
is not a reasonable reading of the contract.  As we 
discuss in our papers, the dispute resolution section, 
section 23, starting at page 2 talks about the 
parties' agreement to resolve disputes without 
litigation, and sets out a very straightforward and 
self-executing binding arbitration process to 
ultimately decide those issues if they arise.  
           JUDGE BERG:  Mr. Shaw, your voice is fading 
just a little bit.  
           MR. SHAW