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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
Net2000 Communications, Inc., )
Complainant, ) File No. EB-00-018
)
v. )
)
Verizon - Washington, D.C., )
Inc. )
Verizon - Maryland, Inc., and )
Verizon - Virginia, Inc., )
Defendants.
MEMORANDUM OPINION AND ORDER
Adopted: December 21, 2001 Released: January 9,
2002
By the Commission:
I. INTRODUCTION
1. In this Memorandum Opinion and Order, we deny a
complaint filed by Net2000 Communications Services, Inc.
(``Net2000'') against Verizon - Washington, D.C., Inc., Verizon -
Maryland, Inc. and Verizon - Virginia, Inc. (collectively,
``Verizon'' or ``Defendants'') pursuant to section 208 of the
Communications Act of 1934, as amended (``Act'').1 As more
specifically detailed below, we find that Verizon did not violate
the Act or our rules by denying Net2000's requests for the
conversion of certain special access circuits to enhanced
extended links (``EELs'').
II. BACKGROUND
A.The Parties
2. Net2000 is a competitive local exchange carrier
(``CLEC'') that provides local exchange, exchange access, and
interexchange telephone services within the service areas of the
Defendants and other local exchange carriers.2 The Defendants
are corporate subsidiaries of Verizon Communications Inc.3 Each
is a common carrier that maintains its headquarters in and
provides local exchange telephone services to the public within
the state indicated by its name.4 The Defendants are also
incumbent local exchange carriers (``ILECs'') within the meaning
of Section 251(h) of the Act.5
B. The Right of CLECs to Have Special Access
Circuits Obtained from ILECs Converted or Re-
Priced as Unbundled Network Elements
3. Our rules implementing Section 251(c)(3) of the Act6
require ILECs, upon request, to ``convert'' or re-price certain
special access circuits into a combination of unbundled network
elements called an ``enhanced extended link'' or ``EEL.'' While
not an unbundled network element itself, an EEL is comprised of
an unbundled loop (including multiplexing/concentration
equipment) and unbundled dedicated transport.7 The conversion of
existing tariffed special access circuits to EELs will, in many
cases, significantly reduce the CLEC's expense and commensurately
decrease the ILEC's income for those facilities.8
4. The Complaint before us concerns Net2000's efforts to
have its special access circuits converted to EELs and Verizon's
responses to those efforts. The facts underlying Net2000's
Complaint are largely undisputed.9 On the other hand, the
parties substantially dispute the applicable rules used to
convert special access circuits to EELs. Consequently, a brief
review of the statute and the relevant Commission orders is
necessary to understand the positions and actions of the parties
with respect to the EEL conversion requests at issue.
5. In our First Report and Order in Implementation of the
Local Competition Provisions in the Telecommunications Act of
1996 (``Local Competition Order''),10 we prescribed rules to
implement section 251(c)(3) and specified that local loops11 and
interoffice transmission facilities12 were among the ``network
elements'' that ILECs were required to provided to requesting
carriers on an unbundled basis. We also stated in section
51.315(b) that ``an incumbent LEC shall not separate requested
network elements that the incumbent LEC currently combines.''13
The implementation of section 51.315(b) was stayed and the rule
was subsequently vacated by the Eighth Circuit in Iowa Utilities
Board v. FCC.14 The United States Supreme Court reversed in AT&T
Corp. v. Iowa Utilities Board, thus reinstating section 51.315(b)
of our rules.15 The Supreme Court, however, also determined that
the Commission did not apply the appropriate criteria, in
accordance with section 251(d)(2) of the Act,16 in specifying in
section 51.319 the minimum ``network elements'' that must be
provided to requesting carriers by ILECs. It therefore vacated
section 51.319 and remanded this issue to the Commission for its
reevaluation using appropriate criteria.17
6. On remand, we issued the UNE Remand Order and
reinstated section 51.315(b). There we concluded that ILECs were
required to provide requesting carriers access to combinations of
loops and dedicated transport network elements that are currently
combined and purchased through special access tariffs, and
moreover, ``requesting carriers [were] entitled to obtain such
existing loop-transport combinations at unbundled network element
prices.''18
7. Shortly after the UNE Remand Order was released,
however, we issued an order supplementing that decision19 to
respond to serious policy concerns relating to the potential for
ILECs to be required to re-price a large part of their exchange
access facilities at the much lower ``unbundled network element''
rates.20 The Commission modified the UNE Remand Order to provide
that, pending consideration and resolution of these policy
concerns in the pending Fourth Further Notice of Proposed
Rulemaking,21 ``interexchange carriers (``IXCs'') may not convert
special access services to combinations of unbundled loops and
transport network elements, whether or not the IXCs self-provide
entrance facilities (or obtain them from third parties).'' The
Commission emphasized, however, that ``[t]his constraint does not
apply if an IXC uses combinations of unbundled network elements
to provide a significant amount of local exchange service, in
addition to exchange access service, to a particular customer.''
22
8. We also stated that it would ``not be necessary for
incumbent LECs and requesting carriers to undertake an auditing
process to monitor whether or not requesting carriers are using
unbundled network access solely to provide exchange access
service.''23 Rather, we stated that an ILEC must allow
requesting carriers to ``self-certify that they are providing a
significant amount of local exchange service,'' in order that
their ability to convert their facilities to combinations of
unbundled loops and transport network elements ``will not be
delayed.''24
9. Thereafter, the Commission, on June 2, 2000, released a
Supplemental Order Clarification.25 This order was adopted by
the Commission in response to a joint submission by several ILECs
and CLECs requesting that the Commission ``clarify the
Supplemental Order regarding the minimum amount of local service
a requesting carrier must provide in order to convert special
access services to combinations of unbundled loop and dedicated
transport network elements.''26 We defined more precisely the
``significant amount of local exchange service'' threshold for
circuit conversion by adopting three ``safe harbor'' scenarios
that a circuit must meet to be eligible for EEL conversion.27
The first two prescribed safe-harbor options are applicable to
carriers whose operations are collocated in at least one ILEC
central office. The third option applies to requesting carriers,
such as Net2000, whose operations are not collocated at ILEC
offices. Besides the significant amount of local exchange
traffic requirement, the third option had two additional
requirements: (1) when a loop-transport combination includes
multiplexing (e.g., DS1 multiplexed to DS3 level), each of the
individual DS1 circuits must meet these requirements; and (2)
the loop-transport combination must not be connected to the
incumbent LEC's tariffed services.28
10. The Commission reiterated that ILECs ``must allow
requesting carriers to self-certify that the are providing a
significant amount of local exchange service over combinations of
unbundled elements.''29 Although the procedures specified in the
Supplemental Order did not permit ILECs to conduct audits to
verify that the requesting carriers complied with the local
exchange usage requirements, the Commission determined that, in
light of its action to continue the temporary constraints on
usage, it should permit the ILECs to conduct limited audits for
this purpose, but only subsequent to the processing of the
requesting carriers' conversion orders.30
C.Net2000's Conversion Requests and Verizon's Responses
Thereto
11. In the instant matter, Net2000 made written requests
for the conversion of its special access circuits to EELs
subsequent to the UNE Remand Order. These requests were
interspersed among the other subsequent relevant orders. The
first such request was made on March 23, 2000. Net2000 requested
that Verizon convert 24 DS1 special access circuits in the
District of Columbia to EELs.31 In an accompanying letter,
Net2000 certified that the circuits provided ``a significant
amount of local exchange service to the particular customers
served by those facilities.''32 Verizon subsequently rejected
Net2000's conversion request because, according to Verizon, it
failed to conform to the Commission's requirements.33
12. On May 9, 2000, Net2000 sent its second conversion
request letter to Verizon. In this letter, Net2000 requested
that all of its special access circuits be converted to EELs,
retroactively to the effective date of the UNE Remand Order,
February 17, 2000.34 Net2000 again ``self-certified that
Net2000's special access circuits [were] used to provide a
significant amount of local exchange service to the particular
customers served by those facilities.''35 Verizon rejected the
conversion request again stating that it was defective.36
13. On October 17, 2000, Net2000 sent another letter to
Verizon, in which Net2000 made its third request for the
conversion of its circuits.37 This letter was in response to
Verizon's objections that the May 9, 2000 conversion request was
invalid, in part, because Net2000 had not specified the circuits
to be converted. With this conversion request, Net2000 provided a
list, specifically identifying the circuits subject to the
conversion request. Net2000 stated that this list comprised all
of its circuits in service. Net2000 with that request also
confirmed the self-certification contained in its prior May 9,
2000 letter.38
14. Verizon responded on October 20, 2000,39 stating that
it would begin to process this latest conversion request and that
the circuits that are converted would be re-priced retroactively
from the first day of the month following the date of the
request, in this case November 1, 2000. Verizon, however, did
not complete its processing of Net2000's October 17, 2000
conversion request until December 1, 2000 - after the complaint
and answer were filed in this proceeding.40
15. On December 15, 2000, Net2000 sent its fourth letter
and requested the conversion of additional DS3 circuits,
containing some of the previously requested DS1 circuits for
which conversion had been denied by Verizon on the grounds that
they were commingled with prohibited tariffed services. It also
submitted a list for conversion of additional circuits currently
in service that were omitted from the conversion list attached to
its October 17, 2000 letter. Net2000 confirmed its May 9, 2000
self-certification that all of its special access circuits were
``used to provide a significant amount of local exchange service
to the particular customers served by those facilities in accord
with the orders of the Federal Communications Commission.'' With
respect to the additional circuits requested in the letter,
Net2000 stated that ``these special access circuits are used to
provide a significant amount of local exchange service to the
particular customers served by those facilities in accord with
option 3 of the FCC Supplemental Order Clarification.''41
16. Verizon reported by letter of March 15, 2001 that it
had completed processing of Net2000's December 15, 2000
conversion request as well as the supplemental circuit data that
Net2000 provided pursuant to its October 17, 2000 request for
circuits in the District of Columbia, Maryland, Virginia, New
Jersey and Pennsylvania. Some DS1s, however, were rejected
because, according to Verizon, they violated our ``co-mingling''
prohibition.42
D.Pleadings and Procedural History
17. Net2000's Complaint was filed on November 6, 2000. It
sets forth three counts. In Count I, Net2000 contends that
Verizon's failure to accept Net2000's self-certifications and
refusal to convert special access circuits requested by Net2000
in compliance with our applicable orders constituted an ``unjust
and unreasonable practice under section 201(b) of the
Communications Act, 47 U.S.C. § 201(b). In Count II, Net2000
charges that Verizon's attempts to conduct an alleged pre-
conversion audit of Net2000's conversion requests constitutes an
unlawful use restriction in violation of Section 251(c) of the
Act and our rules and order thereunder. In Count III, Net2000
contends that Verizon's failure to allow conversion of special
access circuits to EELs is a violation of the cancellation and
reconfiguration provisions of Verizon's special access tariff,
and as such, violates section 203(a) and (c) of the Act.
Further, Net2000 contends, Verizon has unlawfully imposed a
prohibition on the transport of tariffed and unbundled network
element (``UNE'') traffic over a shared DS3 circuits, and by
failing to include and describe this practice in its effective
special access tariff, Verizon is operating in violation of
Section 203(a) and (c) of the Act.
III. DISCUSSION
I.A. Verizon Did Not Violate Section 201(b) and Section
251(c) of the Act and Our Orders by Refusing to Convert
Net2000's Designated Special Access Circuits to EELs
Despite Net2000's Self-Certification
18. Count I of Net2000's complaint asserts that Verizon's
refusal to convert promptly Net2000's designated special access
circuits to EELs was an unjust and unreasonable practice in
violation of section 201(b) of the Act and of our Orders.
Net2000 contends that once it had certified to Verizon that the
requested circuits carried a ``significant amount of local
exchange service traffic,''43 Verizon was obligated to convert
those circuits to EELs. Verizon was not permitted, according to
Net2000, to challenge that self-certification prior to
conversion. We disagree with Net2000's characterization of
Verizon's actions. Although an ILEC may not question, prior to
conversion, the requesting carrier's self-certification of the
substantial use of the circuits for local exchange service, ILECs
are not required to convert circuits when the requested circuits
do not on their face meet the other requirements specified for
conversion.
19. Net2000 made three conversion requests prior to the
filing of its complaint and one further conversion request,
following up on its prior requests, after the complaint had been
filed, but before the close of the record in this proceeding. In
the case of each request, Net2000 claims that Verizon conducted a
pre-conversion audit prohibited by the Commission's rules and
refused to convert certain designated circuits as a result.44 We
disagree and believe that the record reflects that Verizon did
not audit Net2000's certification claims regarding its carriage
of a significant amount of local exchange traffic over the
circuits in question. Rather, Verizon accepted Net2000's
certification, but refused to convert circuits that it believed
did not meet the criteria for conversion prescribed by our rules.
20. Verizon refused to process Net2000's March 23, 2000
conversion request because it believed that at that time we
required conversion only of circuits that terminate in
collocation arrangements.45 Thus, Verizon's refusal to convert
the requested circuits requested did not result from its refusal
to accept Net2000 self-certification that the requested circuits
were used for ``a significant amount of local exchange traffic.''
Instead, the request was denied because in Verizon's view, the
conversion request did not, on its face, meet the Commission's
requirements for conversion. While we disagree with Verizon's
interpretation of our requirements, as set forth below, we find
that the March 23 requests contained other defects that justified
Verizon's denial of Net2000's requests.46
21. Consistent with its treatment of Net2000's March 23
requests, Verizon did not process Net2000's May 9, 2000
conversion request because it believed at that time that the
applicable Commission orders only permitted conversion of
circuits that terminated in collocated arrangements.47
Nevertheless we find that Verizon was justified in denying this
request because of Net2000's failure to specify the circuits to
be converted. In any case, Verizon did not reject or ignore this
request because of its refusal to accept Net2000's self-
certification.
22. Verizon did proceed to process Net2000's October 17,
2000 and December 15, 2000 requests. During the course of
processing, it discovered that some of the circuits requested for
conversion were no longer in service, could not be located in
Verizon's records, or did not comprise EELs. In some cases, it
was discovered that the DS1 circuits requested for conversion
were multiplexed onto DS3 circuits that would continue to be
provided via tariff and Verizon refused to convert these circuits
because it believed that this would violate the Commission's
prohibition against co-mingling under Option 3 of EELs with
tariffed services. Verizon, however, had not refused to convert
any circuits because it failed to accept Net2000's certification
that the circuits were used to provide a significant amount of
local exchange services.
23. Our orders require that ``once a requesting carrier
certifies that it is providing a significant amount of local
exchange service,'' an ILEC must begin processing the requests
without delay.48 We conclude, however, that while an ILEC may not
question the requesting carrier's self-certification of
substantial use for local exchange service, the ILEC is not
required to convert circuits when in fact they do not meet the
other requirements specified for conversion by the Commission.
Accordingly, Net2000 has failed to support the contention that
Verizon refused to accept Net2000's self-certification in
violation of the Act or our rules. Because Net2000 has failed to
demonstrate that Verizon conducted a pre-conversion audit in
contradiction of our rules, Net2000's second count relating to
the alleged audit of Net2000's conversion requests is also
denied.
I.B. Verizon Did Not Refuse to Convert Special Access
Circuits to EELs That Met Our Requirements for
Conversion In Violation of The Act and Our Rules
24. As discussed above, an ILEC may refuse to convert a
designated special access circuit so long as it fails to satisfy
our criteria for conversion. Net2000 contends however that
Verizon violated the Act and our rules by improperly refusing to
convert EEL-eligible circuits. Verizon refused to convert the
designated special access circuits because (1) the circuits did
not terminate in a collocation space, (2) all the DS1s
multiplexed onto the DS3s do not satisfy the EEL conversion
criteria, and (3) a loop/transport combination cannot be combined
with an access service. Net2000 alleges that none of these
reasons for denial was lawful. We deny Net2000's claims that
Verizon's refusal to convert the designated special access
circuits violated our rules and will address each issue
separately below.
I.B.1. ILECs Were Required to Convert Special Access
Circuits That Did Not Terminate In Collocation
Arrangements
25. Verizon argues that the conversion of special access
circuits to EELs that do not terminate in collocated arrangements
was not required by the Commission in its UNE Remand Order or in
its Supplemental Order. It contends that this was not required
until the Commission issued its Supplemental Order Clarification,
which set forth ``safe-harbor option 3, as a basis for which non-
collocated carriers are permitted to request the conversion of
their special access circuits.49 Verizon relies principally on
the following language from the UNE Remand Order:
In particular, any requesting carrier that is
collocated in a serving wire center is free to order
loops and transport to that serving wire center as
unbundled network elements because those elements meet
the unbundling standard, as discussed above. Moreover,
to the extent those unbundled network elements are
already combined as a special access circuit, the
incumbent may not separate them under rule 51.315(b),
which was reinstated by the Supreme Court. In such
situations, it would be impermissible for an incumbent
LEC to require that a requesting carrier provided a
certain amount of local service over such facilities.50
26. Although the language quoted above specifically
addressed the situation of collocated carriers, we did not state
or imply that only collocated carriers had a right to use
unbundled network elements or convert special access circuits to
EELs. Indeed, following the paragraph relied upon by Verizon, we
specifically clarified ``that interexchange carriers are entitled
to use unbundled dedicated transport from their POP to a serving
wire center in order to provide local telephone exchange
service.''51 This language recognizes the viability of a
conversion to an EEL in a non-collocation network configuration.
Also, as Verizon points out, our Supplemental Order specifically
modified paragraph 486 in the UNE Remand Order, to the extent
that that paragraph would have allowed collocated carriers to
convert their special access circuits to EELs without any
restrictions requiring local exchange service use.52 However,
the language in the Supplemental Order permitting the conversion
of special access to EELs for use ``to provide a significant
amount of local exchange service'' clearly applies to both
collocated and non-collocated situations.53
27. Finally, we note that Verizon does not dispute that the
term ``significant amount of local exchange service'' in safe-
harbor Option 3 relates to non-collocated circuits. Since
nothing in the Supplemental Order Clarification suggest that the
Commission intended to make a change in any collocation
requirement, we find this to be further evidence that special
access circuits that did not terminate in collocation
arrangements were eligible for conversion to EELs.
I.B.2. All Individual DS1 Circuits Multiplexed Onto
DS3 Circuits Must Meet the Applicable Local
Exchange Service Use Criteria to Have DS3s
Converted to EELs
28. Net2000 argues that whether circuits are used for ``a
significant amount of local exchange service'' and therefore
qualify for conversion to EEL should be judged on an ``end-user-
by-end-user basis.'' It should not matter, Net2000 contends,
whether a dedicated DS1 between the CLEC's office and the
customer's premises that is used to provide local exchange
service is carried on a multiplexed DS3 transport channel that
includes other DS1s used for other services.54 It proposes that
DS3 circuits derived from both EEL-eligible and non-EEL-eligible
DS1 circuits be priced utilizing ``ratcheting,'' similar to mixed
use DS3 circuits carrying both special access and switched assess
DS1s,55 so that proportionate unbundled network element rates
would apply to the converted DS1s and proportionate special
access rates would apply to the non-converted DS1s.56 The
arguments made by Net2000, however, ignore the specific language
of Option 3. There is no provision anywhere in the Supplemental
Order Clarification, or in prior orders for ``ratcheting.'' The
language of Option 3 clearly and specifically requires that
``[w]hen a loop-transport combination includes multiplexing
(e.g., DS1 multiplexed to DS3 level), each of the individual DS1
circuits must meet [the substantial local exchange service use]
criteria.''57 There is no ambiguity in this language. Although
Net2000 argues that it would be better if CLECs were permitted to
convert only the parts of their DS3s that are used to provide
local exchange service and to continue to obtain the remaining
parts of the DS3s by tariff, this clearly is not permitted under
our rules.
I.B.3. The Commission's Rules prohibit the ``Co-
mingling'' or Combining of Unbundled Network
Elements with Access Services on the Same
Facilities
29. As described above, for a DS3 circuit to meet the
conversion criteria under Option 3 of the Supplemental Order
Clarification, all of its derived DS1 circuits must meet the
prescribed ``significant local exchange service'' criteria. In
addition, we specified that, ``[t]his option does not allow loop-
transport combinations to be connected to the incumbent LEC's
tariffed services.''58 This restriction prevents Net2000, for
example, from converting a DS1 special access circuit from its
customer's premises and terminating at a local Verizon switching
center, which is connected to a mixed use DS3 facility between
the Verizon switching center and a Net2000 operating office. In
that case, Net2000 must continue to obtain the DS3 circuit under
tariff because the DS3 circuit contains exchange access,
interstate or other traffic that does not qualify as
``significant local exchange service'' use under the prescribed
criteria. Accordingly, Net2000 is prevented from converting not
only the mixed use DS3 but also any DS1 circuits connected to the
tariffed DS3.
30. Net2000 argues that the prohibition against co-mingling
``applies to the connection of converted circuits to tariffed
circuits and not to the provisioning of EEL-eligible circuits
over the same facilities also used to support additional
services.'' ``Any other interpretation,'' Net2000 contends,
``renders the Commission's option to convert multiplexed circuits
at non-collocated arrangements meaningless, since a carrier would
be forced to convert each and every DS1 circuit riding a DS3
circuit in every instance.''59 Net2000 again makes policy
arguments that, whatever their merits, are inconsistent with the
actual language of the rule in effect at the time of its
requests, as clarified in Option 3. The criteria prescribed in
the Commission's Supplemental Order Clarification under Option 3
without ambiguity prohibit the conversion of DS3s carrying mixed
traffic and also prohibit the conversion of otherwise EEL-
eligible circuits which connect to non-eligible DS3.60 The
Commission, moreover, in its Supplemental Order Clarification
specifically refused to modify these restrictions. At paragraph
28, we stated:
We further reject the suggestion that we eliminate the
prohibition on ``co-mingling'' (i.e., combining loops
or loop-transport combinations with tariffed special
access services) in the local usage options discussed
above. We are not persuaded on this record that
removing this prohibition would not lead to the use of
unbundled network elements by IXCs solely or primarily
to bypass special access services.''61
I.B.4. Converted Circuits Need Not Be Re-Priced
Retroactive to the Date of the UNE Remand Order
31. Net2000 contends that all of its existing special
access circuits should be converted to EEL pricing, effective
February 17, 2000, which is the effective date of our UNE Remand
Order.62 Verizon has taken the position that it will make the
re-pricing effective on the first day of the month following the
date of each valid conversion request by Verizon. In this
regard, Verizon rejected the March 23, 2000 and May 9, 2000
requests as invalid, because of lack of collocation, specificity,
and improper co-mingling. It accepted Net2000's request as valid
and agreed to re-pricing eligible requested circuits, as of
November 1, 2000 for the circuits requested on October 17, 2000
and the additional circuits supplementing the October 17, 2000
request. It has also agreed to re-price the circuits requested
on December 15, 2000, effective January 1, 2001.63
32. There is no basis for Net2000's claim that all of its
special access circuits should be re-priced from the effective
date of the UNE Remand Order. The UNE Remand Order did not
automatically convert all eligible special access circuits to
EELs on the effective date of that order. We held that, in
accordance with section 251(c)(3) of the Act and section
51.315(b) of the Rules, the ILECs had a duty to provide such
conversion to a ``requesting telecommunications carrier.''
Accordingly, ILECs were under no obligation to provide
conversions unless and until such conversions were requested.
Verizon's proposal to make the conversions effective on the first
day of the month after they are requested is reasonable and in
accord with the requirements of the Act and our orders.
I.B.5. Summary - Verizon Did Not Unlawfully Refuse
to Comply With Net2000's Requests to Convert
Special Access Circuits to EELs
33. Net2000 has not shown that Verizon has refused to
convert any circuits requested by it that met the criteria for
conversion prescribed by the Commission. We conclude that
Verizon should not have rejected Net2000's March 23, 2000
conversion request on the grounds that only circuits terminating
in collocated arrangements were eligible for conversion. We
conclude, however, that the requested circuits were, in any
event, ineligible for conversion because those circuits were
subject to the significant amount of local exchange service
requirement articulated in our Supplemental Order64 and more
precisely addressed under Option 3 of our Supplemental Order
Clarification.65 Thus Net2000's March 23, 2000 request for
conversion of circuits under the identical scenario described in
Option 3 but in conflict with that Option's co-mingling
restriction was inappropriate.66 Net2000's May 9, 2000 request
was defective because there was no identification of the circuits
requested for conversion. Furthermore, Net2000's request for
conversion of all of its special access circuits was also
inappropriate for the reasons stated above concerning their March
23, 2000 request. In the case of Net2000's subsequent conversion
requests on October 17, 2000 and December 15, 2000, Verizon was
justified in denying conversion for the requested circuits which,
on their face, violated the Commission's co-mingling prohibition
under Option 3 or did not meet the definition of an EEL.
34. We note, however, that the re-pricing of none of the
circuits requested by Net2000 had been implemented when the
record closed in this proceeding. Verizon in its letters of
December 1, 2000 and March 15, 2001, reporting on its processing
of Net2000's requests, stated that it would proceed to implement
the re-pricing of eligible circuits only after Net2000 had
notified it to proceed and Net2000 had executed a amendment to
its interconnection agreement with Verizon containing terms
governing the provision of EELs.67
35. We conclude that it was reasonable for Verizon to
request that Net2000 confirm that it wished to go ahead with the
conversions before implementation. Verizon had calculated that
the conversions requested by Net2000 would result in relatively
large termination liability and minimum period charges as a
result of conversion of special access circuits being provided in
accordance with Verizon's term tariff offering. Net2000 should
be given the opportunity to cancel or modify its request to avoid
or minimize such charges.68
36. With respect to the need for the execution of an
amendment to the interconnection agreement between the parties,
Verizon contends that without such an amendment it would have no
vehicle to provide or bill for the non-tariffed loop/transport
combinations.69 Net2000 contends, on the other hand, that an
amendment is unnecessary because ``the existing agreements
already provide for access to UNE combinations, of which the EEL
is an example.''70 Net2000, moreover, has objected to the
amendments proposed by Verizon because it believes that this
language will lessen its flexibility in acquiring facilities from
Verizon.71 The record in this proceeding does not permit us to
determine whether an amendment to the parities' existing
interconnection agreement is necessary for the implementation of
Net2000's conversion requests or whether the amendments proposed
by Verizon are appropriate for this purpose. Although Verizon's
proposed amendments are attached to its Answer in this
proceeding, the existing interconnection agreement is not part of
the record. Verizon's attorney had advised the Commission staff
in the initial status conference, herein, that we would not be
required to rule on this issue in this proceeding.72
Unfortunately, the parties, apparently, have not yet agreed upon
whether and how their interconnection agreement should be
revised. In this regard, each party blames the other for their
failure to reach an agreement.73
37. Verizon is required by our UNE Remand Order,
Supplemental Order and Supplemental Order Clarification to
promptly implement the conversion of eligible special access
circuits to EELs upon request.74 Although an applicable
governing interconnection agreement is required for Verizon to
bill for any converted EELs, Verizon is not permitted to require
CLECs to execute unneeded amendments or amendments with
unfavorable terms as a condition to the conversion of their
special access circuits to EELs.75
38. We note that the dispute between the parties on the
need for the execution of amendments to their interconnection
agreement has not, so far, delayed the implementation of the
conversion the circuits requested by Net2000. In this regard,
Verizon has reasonably sought Net2000 confirmation before it
proceeds with the conversions, in any event. Net2000 has not
yet, as far as we are aware, confirmed its conversion request.
Accordingly, even assuming that Verizon has proposed an unneeded
requirement that Net2000 execute an amendment to their agreement
as a means to restrict or delay the conversion of Net2000's
special access circuits to EELs, such violation has not yet
occurred and we need not rule on this issue now.
I.C. Verizon Did Not Violate Section 203(a) and 203(c)
of the Act By Failing to Convert Special Access
Circuits to EELs, Retroactively to the Effective Date
of Our UNE Remand Order or by Failing to Provide in its
Special Access Tariffs That Tariffed and UNE Traffic
May Not Be Transported Over a Shared DS3 Circuits
39. In the Third Count of its Complaint, Net2000 contends
that Verizon violated Section 203(a) of the Act by failing to
convert special access circuits to EELs, retroactively to the
effective date of the Commission's Third Report and Order, and
``unlawfully imposing a prohibition on the transport of tariffed
and UNE traffic over a shared DS3 circuit that is not set forth
in Verizon's tariffs.''76
40. Net2000's section 203 claims in its complaint are
difficult to follow. Net2000 fails to explain why it is
necessary for Verizon to incorporate the rights and obligations
for conversion of special access circuits in its tariffs. In any
event, as we have concluded above, Verizon is not obligated by
the applicable Commission orders to convert special access
circuits to EELs retroactively to the effective date of the Third
Report and Order or to permit the transport of tariffed and UNE
traffic over a shared DS3 circuits. We therefore conclude that
Net2000 has failed prove any section 203 violations on the part
of Verizon.
IV. CONCLUSIONS
41. In light of all the forgoing, we conclude that Verizon
did not conduct pre-conversion audits of Net2000's conversion
requests in violation of the Supplemental Order and Supplemental
Order Clarification in violation of section 201(b) of the Act.
We conclude further that Verizon did not unlawfully refuse to
convert eligible special access circuits to EELs in violation of
section 251(c) of the Act and the Commission's rules and orders
implementing that section and that Verizon did not violate
sections 203(a) and (c) of the Act by failing to allow conversion
of special access circuits to EELs or by prohibiting the
transport of tariffed and UNE traffic over shared DS3 circuits.
V. ORDERING CLAUSE
42. ACCORDINGLY, IT IS ORDERED, pursuant to Sections 4(i),
4(j), 201, 208, and 251 of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 151, 154(i), 201, 208, 251 and Sections
0.111 and 0.311 of the Commissions Rules, 47 C.F.R. §§ 0.111 and
0.311 that the formal complaint of Net2000 Communications
Services, Inc. against Verizon - Washington, D.C., Inc., Verizon
- Maryland, Inc. and Verizon - Virginia, Inc. IS DENIED.
43. IT IS FURTHER ORDERED that this proceeding IS
TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
_________________________
1 47 U.S.C. § 208.
2 Net2000 Communications v. Verizon - Washington, D.C., Formal
Complaint, File No. EB-00-018, at ¶¶ 4-5 (filed Nov. 6, 2000)
(``Complaint''); Net2000 Communications v. Verizon - Washington,
D.C., Joint Statement of the Parties, File No. EB-00-MD-018, at ¶
1 (filed Dec. 7, 2000) (``Joint Statement'').
3Net2000 Communications v. Verizon - Washington, D.C., Answer,
File No. EB-00-018, at ¶ 6 (filed Nov. 22, 2000) (``Answer'').
4 Complaint at ¶ 6.
5 47 U.S.C. § 251(h). See Joint Statement at ¶2.
6 See generally, 47 C.F.R. §§ 51.305 - .321. Section
251(c)(3). of the Act provides that ILECs have:
The duty to provide, to any requesting telecommunications
carrier for the provision of a telecommunications service,
nondiscriminatory access to network elements on an unbundled
basis at any technically feasible point on rates, terms, and
conditions that are just, reasonable, and nondiscriminatory
in accordance with the terms and conditions of the agreement
and the requirements of this section and section 252. An
incumbent local exchange carrier shall provide such
unbundled network elements in a manner that allows
requesting carriers to combine such elements in order to
provide such telecommunication service.
7 See Implementation of Local Competition Provisions of the
Telecommunications Act of 1996, Third Report and Order and Fourth
Further Notice of Proposed Rulemaking, 15 FCC Rcd 3696, 3906-
3910, ¶¶ 474-482 (1999)(``UNE Remand'').
8 47 U.S.C. § 252(d)(1)(cost determined without reference to
rate of return or other rate-based proceeding).
9 Letter from Roderick A. Mette, Attorney, Market Disputes
Resolution Division, Enforcement Bureau to the parties counsel
(dated Dec. 15, 2000) (memorializing the oral rulings and
agreements made in the initial status conference held on December
11, 2000 in File No. EB-00-MD-018).
10 11 FCC Rcd 15, 499 (1996).
11 47 C.F.R. § 51.319(a).
12 47 C.F.R. § 51.319(d).
13 47 C.F.R. § 51.315(b).
14 120 F.3d 753 (8th Cir. 1997), rev'd in part and aff'd in part,
AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366 (1999), on
remand, 219 F.3d 744 (8th Cir. 2000), cert. granted sub nom.,
Verizon Communications, Inc. v. FCC, 121 S.Ct. 877 (2001).
15 AT&T Corp. v. Iowa Utilities Board, 525 U.S. at 393-95.
16 47 U.S.C. § 251(d).
17 AT&T Corp. v. Iowa Utilities Board, 525 U.S. at 386-92.
18 UNE Remand Order, 15 FCC Rcd 3696, 3909, ¶ 480.
19 Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996, Supplemental Order, 15 FCC Rcd
1760 (1999) (``Supplemental Order'').
20 Id. at 1761, ¶ 4.
21 In the Supplemental Order, we also expanded the scope of the
Fourth Further Notice of Proposed Rulemaking to seek comments
``on whether there is any basis in the statute or our rules which
incumbent LECs could decline to provide combinations of loops and
transport network elements at unbundled network element prices.''
Id. at 1762, ¶ 6.
22 Id. at 1760, ¶ 2.
23 Id. at 1763, ¶ 6 n.9.
24 Id.
25 Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996, Supplemental Order Clarification,
15 FCC Rcd 9587 (2000) (``Supplemental Order Clarification'').
26 Id. at 9591, ¶ 6. The need to modify the Supplemental Order
also became evident upon consideration of the significant issues
that were raised in comments in the expanded Fourth Further
Notice of Proposed Rulemaking and the additional time that would
be needed to resolve these issues. Id. at 9592-9598, ¶¶ 8-20.
27 Id. at 9598, ¶ 21.
28 Id. at 9599-9600, ¶ 22.
29 Id. at 9602-03, ¶ 29.
30 Id. at 9602-04, ¶¶ 29-32.
31 Twenty-five circuits were specified in the March 23, 2000
conversion request; however, one of the requested circuits
belonged to another carrier. Complaint, ¶ 13, Ex. 6.
32 Complaint, Ex. 1.
33 Answer at ¶ 14, Attachment A, ¶¶ 4-6 (Verizon's account
manager, responsible for Net2000's account, in meetings held on
March 29, 2000 and April 10, 2000 orally responded to the
conversion request. In these meetings, and in a prior meeting
held on March 14, 2000, she informed Net2000 that Verizon did not
believe that that Net2000's conversion request was in conformity
with the Commission's requirements. She stated that the FCC
required the conversion of only circuits terminating in
collocated arrangements and that the FCC prohibited the
commingling of tariffed service with unbundled elements. She
also advised Net2000 that, before it would process conversion
orders, Net2000 was required to execute an amendment to its
existing interconnection agreement with Verizon.).
34 Complaint at ¶ 15.
35 Id., Ex. 2.
36 Answer, ¶ 16, Attachment A, ¶ 6 (There was no immediate
written response by Verizon to this request. Verizon and Net2000
personnel, however, did participate in several meetings and
conference calls subsequently, in which Net2000 was informed of
the reasons why Verizon believed that Net2000's conversion
requests were defective.)
37 Complaint, ¶ 18, Ex. 7.
38 Id., Ex. 6.
39 Id., Ex. 8.
40 Net2000 Communications v. Verizon - Washington, D.C., Initial
Brief of Net2000, File No. EB-00-018, Ex. 1, Letter from Susan
Fox of Verizon to Anthony Hansel of Net2000 (dated Dec. 1, 2000).
(The conversion of two DS3s was denied because they were switched
access rather than special access circuits. Conversion of 17
DS1s was denied because the requested circuits were connected to
tariffed switched access circuits, and the conversions of 53 DS1
circuits and 1 DS3 circuit were denied because these circuits did
not meet the definition of EEL. That is, the identified circuits
consisted of two channel terminations connecting two end user
premises to the same Verizon wire center. Finally, 33 of the
requested DS1 circuits either could not be located on Verizon's
billing record or the circuits had previously been disconnected.)
Verizon reported that the conversion of the circuits it deemed
eligible would result in a reduction of Net2000's monthly charges
from $323,301.02 to $250,592.25 for the converted circuits.
Because some of the eligible circuits had been purchased pursuant
to the term plan provisions in Verizon's tariffs, however, the
conversions would result in one-time termination liability and
minimum period charges of $974,376.42.)
41 Initial Brief of Net2000, Ex. 2, Letter from Anthony Hansel of
Net2000 to Deborah Kugelman of Verizon (dated Dec. 15, 2000).
42 Net2000 Communications v. Verizon - Washington, D.C., Reply
Brief of the Verizon Telephone Companies, File No. EB-00-018, Ex.
A., Letter from Susan Fox of Verizon to Anthony Hansel of Net
2000 (dated Mar. 15, 2001). Verizon reported that, based on its
review, 48 of the requested DS3 circuits and 579 of the requested
DS1 circuits were eligible for conversion, while it refused or
was unable to convert 412 of the requested DS1 circuits and 6 of
the requested DS3 circuits. Verizon's major reason for denial of
conversion, in the case of 309 DS1 circuits, was that conversion
was not permitted by the Commission's ``co-mingling'' prohibition
under Option 3(i.e., the requested DS1 circuits were multiplexed
onto tariffed DS3 circuits that Net2000 did not request to be
converted). Verizon stated that it was prepared to convert 10 of
the 18 DS3 circuits requested and 222 of the 309 DS1 circuits
requested in the supplement to Net2000's October 17, 2000
request. Four DS3s duplicated circuits that had previously been
requested for conversion and 4 of the requested DS3s could not be
located in Verizon's billing records. 87 of the DS1s were
rejected because Verizon believed that they violated our ``co-
mingling'' prohibition under Option 3 because they were derived
from DS3s that still would be provided under tariff.
With respect to the additional circuits requested to be
converted on December 15, 2000, Verizon agreed that 180 of the
264 DS1 circuits and 16 of the 17 DS3 circuits were eligible for
conversion. Seventy-two of the DS1 circuits were rejected because
Verizon believed that they violated our ``co-mingling''
prohibition under Option 3. The remaining DS1 circuits were
rejected because the circuits identified either had been
disconnected, were not found in Verizon's billing records or were
being billed to a customer other than Net2000. Verizon denied
conversion of one DS3 circuit because it consisted of only a
channel termination without transport and therefore did not meet
the definition of EEL.
43 Complaint at ¶¶ 26-28.
44 Initial Brief of Net2000 at 6.
45 Verizon Reply Brief at 4.
46 See infra ¶ 33.
47 Id.
48 Id at 9603, ¶ 30.
49 Reply Brief of Verizon at 4; Answer at Part III, 13-14.
50 UNE Remand Order, 15 FCC Rcd at 3912, ¶ 486.
51 Id., 15 FCC Rcd at 3919, ¶ 488.
52 Supplemental Order, supra., 15 FCC Rcd at 1761, ¶ 4.
53 Id., 15 FCC Rcd at 1762, ¶ 5.
54 Initial Brief of Net2000 at 9-12.
55 See Verizon, Tariff F.C.C. No. 1, Page 316.29.1, §
7.2.14(C)(1)(e).
56 Initial Brief of Net2000 at 14.
57 Supplemental Order, 15 FCC Rcd at 9599, ¶ 22.
58 Supplemental Order, 15 FCC Rcd at 9599, ¶ 22.
59 Initial Brief of Net2000 at 12.
60 Supplemental Order Clarification, 15 FCC Rcd at 9599-9600, ¶
22.
61 Id. at 9606, ¶ 28.
62 Complaint at Legal Analysis ¶ 20.
63 Reply Brief of Verizon at 6.
64 Supplemental Order, 15 FCC Rcd at 1762, ¶ 5.
65 Supplemental Order Clarification, 15 FCC Rcd at 9599-9600, ¶
22.
66 Although we do not grant Net2000's complaint under Option 3,
parties are still able to file a waiver request as specified in
the Supplemental Order Clarification. Id. at 9600, ¶ 28.
67 Initial Brief of Net2000 at Ex. 1; Reply Brief of Verizon at
Attachment A.
68 Net2000 Communications v. Verizon - Washington, D.C., Reply
Brief of Verizon, File No. EB-00-018, Attachment A (March 30,
2001)(Letter from Susan Fox of Verizon to Anthony Hansel of
Net2000, dated March 15, 2001 (Verizon calculated that the
conversion of eligible circuits in the Supplemental October 17,
2000 request would result in a reduction of monthly charges from
$103,733 to $75,595, but also would result in one-time
termination liability and minimum period charges of $407,198.
Conversion of the additional circuits deemed eligible that were
requested on December 15, 2000 would result in a reduction of
monthly charges from $90,070 to $67,731, but would result in one-
time termination liability and minimum period charges of
$377,138. Verizon stated that the effective date of the re-
pricing for the circuits in the supplement to the October 17,
2000 request would be November 1, 2000 and the effective date of
the conversions requested on December 15, 2000 would be January
1, 2001.); Net2000 Communications v. Verizon - Washington, D.C.,
Initial Brief of Net2000, File No. EB-00-018, Ex. 1 (Letter from
Susan Fox of Verizon to Anthony Hansel of Net2000 (dated Dec. 1,
2000). (Verizon reported that the conversion of the circuits it
deemed eligible would result in a reduction of Net2000's monthly
charges from $323,301.02 to $250,592.25 for the converted
circuits. Because some of the eligible circuits had been
purchased pursuant to the term plan provisions in Verizon's
tariffs, however, the conversions would result in one-time
termination liability and minimum period charges of $974,376.42.)
69 Reply Brief of Verizon at 7.
70 Reply Brief of Net2000 at 5.
71 December 15, 2000 Staff Letter, supra. at 2.
72 Id.
73 Reply Brief of Verizon at 7 and Reply Brief of Net 2000 at 5.
74 See, e.g., UNE Remand Order, 15 FCC Rcd 3696, 3909, ¶ 480;
Supplemental Order Clarification, 15 FCC Rcd 9587, 9604, ¶ 33.
75 Given that the parties' interconnection agreement already
contains language for the provision of UNE combinations and that
EELs are such combinations, we suspect that no ammendment would
be necessary for the conversion of qualifying special access
circuits to EELs.
76 Complaint at ¶¶ 31-33, Legal Analysis, ¶¶ 20-23.