IN THE MATTER OF VERIZON MARYLAND
INC.'S COLLOCATION TARIFF NO. 218.
*
*
BEFORE THE
PUBLIC SERVICE COMMISSION
OF MARYLAND
*
CASE NO. 8913
*
PROPOSED ORDER OF HEARING EXAMINER
Appearances:
Mark A. Keffer, Michael A. McRae and Matthew W. Nayden
for AT&T Communications of Maryland, L.L.C.
David A. Hill
Maryland, Inc.
and
Catherine
Kane
Ronis
for
Verizon
Luanne P. McKenna, for the Maryland Office of People's
Counsel.
Lloyd Spivak and Megan A. Sperling, for the Staff of the
Public Service Commission.
Background
On
March
20,
2002
the
Public
Service
Commission
of
Maryland ("the Commission") docketed Case No. 8913 and delegated it
to the Hearing Examiner Division.
The Commission initiated Case
No. 8913 to address unresolved collocation issues remaining from
Case No.
8766, including issues raised by Cavalier Telephone Mid-
Atlantic LLC ("Cavalier") and AT&T Communications of Maryland,
L.L.C. ("AT&T"). Case No. 8766, filed on July 16, 1997, was a
review of Verizon Maryland Inc.'s. ("Verizon") proposed collocation
tariff, and a broader inquiry than Case No. 8913.
settlement discussions took place in Case No. 8913.
Extensive
All the issues
between Verizon and Cavalier were resolved on September 9, 2003.
Several
issues
unresolved.
between
Verizon
and
AT&T,
however,
remained
On February 23, 2004, noting that AT&T and Verizon had
not pursued resolution or litigation of the outstanding issues,
this Hearing Examiner sent the parties to Case No. 8913 a letter
requiring a specific statement of outstanding issues and a proposed
procedural schedule by a date certain.
Failing receipt of those
filings, the February 23 letter stated that this Hearing Examiner
would issue a Proposed Order of Hearing Examiner closing Case No.
8913 on the Commission's docket.
On March 5, 2003 AT&T indicated
its willingness to refresh the record and proceed with Case No.
8913.
On
March
26,
2004
AT&T
filed
a
list
of
"four
basic
improvements to remedy the unfairness of Verizon's [collocation]
current policies," as follows:
1. Formally require Verizon to respond to
each [CLEC's] competitive local exchange
carrier request for collocation with complete
information
as
to
all
available
space
returned by other CLECs at that location with
pricing information reflecting the pro rata
discount for such space.
2. Provide each collocating CLEC with an
inventory of all the space it returned to
Verizon including the start date for the pro
2
rata calculation for each space, updated on a
quarterly basis.
3.
Actively
communicate
to
CLECs
the
availability of returned collocation space.
4. Utilize the correct 30 year amortization
period for calculating refunds for reused
collocation space.
Verizon responded to AT&T on April 13, 2004 and AT&T
replied on April 29, 2004.
No hearings were held in the current
phase of Case No. 8913.
Positions of the Parties
AT&T
AT&T's
arguments
address
situations
that
arise
when
CLECs who leased collocation space from Verizon return that space,
for whatever reason.
The collocation space is then available for
lease by other CLECs.
Once the space is re-leased, as discussed in
more detail below, the CLEC that returned the space is entitled to
refund of certain charges it paid to Verizon.
AT&T's arguments
boil down to two: that Verizon does not adequately advertise that
returned collocation space is available, and that it follows an
accounting practice that shortchanges CLECs on refunds of certain
collocation-related fees.
Based on its conclusions, AT&T maintains that Verizon's
handling
of
returned
collocation
space
violates
Section
251(c)(2)(D) of the Telecommunications Act of 1996 because it fails
to provide collocation on terms that are just, reasonable and non-
3
discriminatory.
AT&T argues that its suggestions for improvement
are both modest and reasonable, would allow CLECs to receive better
compensation when they return expensive collocation space, and not
unduly burden Verizon.
AT&T Position on Advertising
Verizon's
failure
to
advertise
the
availability
of
returned collocation space, according to AT&T, is not commercially
reasonable, as it requires CLECs to guess how much collocation
space is available, and where it is located.
AT&T maintains that
it would simply make good business sense for Verizon to advertise
known to potential collocation customers an inventory of available
collocation
space.
The
sooner
returned
collocation
space
advertised, the sooner it may be leased by another carrier.
is
The
sooner returned collocation space is leased to another carrier, the
sooner the original lessor is eligible for the return of certain
unamortized charges.
Speedy refunds also "mitigate the harm" CLECs
incur when they return leased collocation space to Verizon.
Thus
AT&T's first three suggestions in its filing of March 26, 2004 aim
at providing detailed information to CLECs about the availabilty of
returned collocation space.
AT&T's Position on Amortization
AT&T claims that Verizon's use of a 12 year amortization
rate for certain collocation fees unreasonably deprives CLECs of
4
refunds after they return collocation space.
Verizon's tariffs
require that when a CLEC has returned leased collocation space to
Verizon, and that space is re-leased to another carrier, the CLEC
is entitled to credit for the unamortized portion of the nonrecurring
space
and
conditioning
charge
("the
charge").
AT&T
believes that Verizon should amortize the charge over 30 years
rather than the current 12 year period.
If Verizon amortizes the
charge over 12 years, as now, and a CLEC returns collocation space
after 3 years, the CLEC would theoretically be entitled to return
of 75 percent of the charge that it pre-paid.
If, on the other
hand, Verizon used a 30 year amortization, after three years the
CLEC could receive back 90 percent of its fee once its returned the
collocation space to Verizon.
Verizon
Verizon
inherently
urges
unreasonable
that
-
all
costly
to
of
AT&T's
Verizon
beneficial to CLECs than the status quo.
and
arguments
not
any
are
more
Verizon notes that it
regularly updates its website to indicate at which offices it has
no collocation space available.
"If a particular central office is
not totally occupied," Verizon asserts, "a CLEC has every reason to
presume
space."
that
the
central
office
contains
vacated
April 12, 2004 Verizon Response, at 6.
collocation
Verizon also
points out that it has a good deal of returned collocation space
5
available,
and
only
rarely
does
a
CLEC
request
such
space.1
Verizon further states that "AT&T and other Maryland CLECs can
receive information about the availability of vacated space in
particular central offices simply by submitting reasonable requests
to Verizon MD for such information, or by requesting vacated space
when they apply for collocation."
Id. at 7.
case with additional arguments as well:
Columbia
Public
Service
Commission
has
Verizon bolsters its
that the District of
opined
that
Verizon's
failure to advertise available collocation space does not harm
CLECs; that Verizon has a strong incentive to resell collocation
space and receive the income; that 97 percent of Verizon central
offices that had collocation space have returned collocation space
available.
Id. at 9.
These last points, Verizon stresses, show
that it has no incentive to prevent CLECs from learning about the
availabilty
of
returned
collocation
space.
Verizon
lastly
maintains that the extra time and expense necessary to provide the
information AT&T requests would not justify the benefits flowing to
AT&T.
Verizon claims that it would have to "devote far more
extensive
resources
to
maintain
1
and
post
returned
collocation
Verizon attached to its filing of April 12, 2004 the Reply Declaration
of Paul A. Lacouture in the Federal Communications Commission's WC Docket
02-3844. Mr. Lacouture's statements are the basis for many of Verizon's
arguments in this phase of Case No. 8913.
Mr. Lacouture's testimony
supports Verizon's claim that demand for new collocation spaces has
declined significantly.
For example, Mr. Lacouture stated that from
August through December 2003 Verizon received only five collocation
applications; the District of Columbia received one application and West
Virginia one application.
Lacouture Rep. Dec. at 60.
Verizon adds, in
its April 2004 filing, that it had only received four collocation
applications from January 1, 2003 to May 31, 2003. Id at 3.
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arrangement
information
than
it
devotes
to
determining
those
central offices that are completely occupied." Id at 8.
Discussion and Findings
Upon review of the record herein, this Hearing Examiner
concludes that AT&T's arguments are unpersuasive.
Three of those
arguments involve AT&T's request for notice of collocation space
availability.
While
such
notices
might
superficially
seem
to
benefit all parties and the market, the case for them is actually
weak.
Collocation space, whether returned or not, appears to be
widely available at Verizon's central offices.2
required
to
timely
and
accurately
respond
to
regarding whether collocation space is available.
Verizon is also
CLEC
inquiries
If AT&T is not
receiving timely and accurate collocation information its remedy is
not to require an additional report or reports from Verizon, but to
file a complaint with the relevant Federal or State Commission
stating that Verizon is not providing information as required.
The
CLECs should therefore take Verizon at its word and use to the
utmost their right to inquire into the availabilty of collocation
space.
CLECs are also free to inquire of other CLECs if those
CLECs have recently returned collocation space to Verizon.
2
As AT&T was willing to rely on the existing record, the Hearing Examiner
concludes that no significant change in collocation space utilization
rates occurred since its initial testimony was filed in May 2003.
7
The
Verizon
must
requests
in
Hearing
Examiner
rejects
undertake
the
order
"mitigate"
to
additional
losses
that
business
decision.
The
that
when
that
AT&T
returned
Verizon is not responsible
for CLECs returning collocation space to it.
make
argument
notification
CLEC
collocation space is not timely reused.
AT&T's
The CLECs themselves
responsibility
to
mitigate
"damages" flowing from that decision rests on them rather than on
Verizon taking additional measures, as proposed by AT&T.
Even if
the burden to mitigate were shared between Verizon and the CLECs,
Verizon's prompt and accurate responses to CLEC inquiries will
accomplish more mitigation than will extra reports, especially when
return collocation space is plentiful.
The Hearing Examiner also rejects AT&T's request that
Verizon use a 30 year depreciation rate in calculating refund
payments to CLECs whose returned collocation space is now in use.
Verizon's
argument
that
depreciation
in
the
telecommunications
industry is substantially faster than 30 years is convincing, and
is borne out by the widely acknowledged speed of technological
change in the industry over the past 20 years.
Also persuasive is
Verizon's employment of the federally approved 12 year depreciation
standard for telecommunications equipment.
Verizon's approach here
is therefore satisfactory and no change is called for on the basis
of this record.
IT IS, THEREFORE, this 15th day of July, in the year
Two Thousand Four,
8
ORDERED: (1) That AT&T's four proposals in its filing
of March 26, 2004 are hereby rejected and Case No. 8913 is closed
upon the docket of the Commission.
(2) That
this
Proposed
Order
will
become
a
final Order of the Commission on August 17, 2004 unless before that
date an appeal is noted with the Commission by any party to this
proceeding as provided in Section 3-113(d)(2) of The Public Utility
Companies
Article,
or
the
Commission
modifies
or
reverses
the
Proposed Order or initiates further proceedings in this matter as
provided in Section 3-114(c)(2) of The Public Utility Companies
Article.
Robert H. McGowan
Hearing Examiner
Public Service Commission of Maryland
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