In the Matter of
Joint Application by SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell Communications Services, Inc. d/b/a Southwestern Bell Long Distance for Provision of In-Region, InterLATA Services in Kansas and Oklahoma
CC Docket No. ________
To: The Commission
BRIEF IN SUPPORT OF JOINT APPLICATION BY SOUTHWESTERN BELL
FOR PROVISION OF IN-REGION, INTERLATA SERVICES IN
KANSAS AND OKLAHOMA
JAMES D. ELLIS
PAUL K. MANCINI
MARTIN E. GRAMBOW
KELLY M. MURRAY
ROBERT J. GRYZMALA
JOHN DI BENE
175 E. Houston
San Antonio, Texas 78205
Counsel for SBC Communications Inc.
APRIL J. RODEWALD
Counsel for SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell Communications Services, Inc. ALFRED G. RICHTER, JR.
175 E. Houston, Room #1250
San Antonio, Texas 78205
Counsel for Southwestern Bell
October 26, 2000
With this application, Southwestern Bell seeks authority to provide long-distance telecommunications services to the citizens of Kansas and Oklahoma. Now that this Commission has granted such authority to Southwestern Bell in Texas and to Verizon in New York, the requirements of 47 U.S.C. § 271 are clear. As demonstrated in detail below and in the more than 140,000 pages of supporting materials, Southwestern Bell has satisfied the requirements for section 271 relief in both Kansas and Oklahoma. Accordingly, both the Kansas Corporation Commission (“KCC”) and the Oklahoma Corporation Commission (“OCC”), after more than two years of reviewing Southwestern Bell’s compliance with the requirements of section 271, have endorsed Southwestern Bell’s application to provide in-region, interLATA services in their respective States.
Both Kansas and Oklahoma are predominantly rural States and substantially less urban than Texas. Yet, the level of competitive entry in Kansas and Oklahoma – measured in terms of CLECs’ percentage of total available access lines – is, by some counts, even greater than the level achieved in Texas at the beginning of this year, on the eve of Southwestern Bell’s section 271 application.
Moreover, Southwestern Bell has duplicated in Kansas and Oklahoma the market-opening initiatives that were developed in Texas, in a lengthy collaborative process overseen by the Texas Public Utilities Commission (“Texas Commission”). The Kansas 271 Agreement and the Oklahoma 271 Agreement substantially track the Texas 271 Agreement, which goes beyond what federal law now requires and which was found by the Texas Commission, the Department of Justice (“DOJ”), and this Commission to satisfy all the requirements for section 271 relief. As this Commission explained, “SWBT has taken the statutorily required steps to open its local exchange and exchange access markets to competition.” Texas Order ¶ 1.1 That was true in Texas, and it is true in both Kansas and Oklahoma.
Not only are substantially the same interconnection agreements available to CLECs in both Kansas and Oklahoma, but the same systems and processes for pre-ordering, ordering, billing, and maintenance and repair are in place to ensure that CLECs have a meaningful opportunity to compete. Moreover, CLECs in Kansas and Oklahoma have access to the same change management process and performance penalty plans to ensure that Southwestern Bell lives up to the terms of its agreements. And CLECs can measure Southwestern Bell’s performance in the same way that they do in Texas; indeed, going forward, Kansas and Oklahoma CLECs will benefit from the new and improved performance measurements (Version 1.7) that gauge access to the new unbundled network elements (e.g., subloops, line sharing) that were not required at the time of the Texas application.
The data in Kansas and Oklahoma show that Southwestern Bell’s overall performance has been outstanding, comparable to (if not better than) the level of performance approved in Texas and New York. In Kansas, CLECs have demonstrated their ability to compete with Southwestern Bell by capturing at least 85,000 – and probably closer to 145,000 – lines in the Kansas business market, and they likewise serve more than 46,000 residential lines in Southwestern Bell territory in the State. Southwestern Bell has 100 approved interconnection and/or resale agreements with CLECs in Kansas, and at least 26 CLECs are currently providing facilities-based local service. These competing carriers have focused on serving businesses in the Kansas City, Topeka, and Wichita markets, but they are winning significant numbers of customers in smaller towns as well. In fact, CLECs serve 100 percent of Southwestern Bell’s calling areas in Kansas. CLECs are now serving anywhere between nine and thirteen percent of Kansas access lines.
In Oklahoma, Southwestern Bell has 79 approved interconnection and/or resale agreements with CLECs, and at least 27 CLECs are currently providing facilities-based local service. These competing carriers have focused on serving businesses in the Oklahoma City and Tulsa markets, but they also are serving customers in smaller towns. CLECs have won between 115,000 and 170,000 total access lines in Oklahoma. CLECs have captured, conservatively, more than 66,000 Oklahoma business lines, and they likewise serve at least 49,000 residential lines in SWBT territory in the State. And CLECs serve 94 percent of Southwestern Bell’s calling areas in Oklahoma.
To assist CLECs in winning and serving their customers, Southwestern Bell is providing every item on section 271’s 14-point competitive checklist. Southwestern Bell has provisioned thousands of unbundled local loops and hundreds of unbundled switch ports in both Kansas and Oklahoma. CLECs also can order “UNE Platforms,” which consist of a local loop pre-assembled with the necessary switching facilities. In Kansas, Southwestern Bell has installed more than 29,000 interconnection trunks to send calls to and receive calls from CLEC customers. These trunks carried nearly 375 million minutes of traffic since January 1997. Former Southwestern Bell customers have taken more than 84,000 Southwestern Bell telephone numbers with them to CLECs.
The Oklahoma experience is similar. Southwestern Bell has installed more than 39,000 interconnection trunks to send calls to and receive calls from CLEC customers. These trunks have carried nearly 730 million minutes in Oklahoma since January 1997. And former Southwestern Bell customers have ported more than 100,000 Southwestern Bell local telephone numbers to CLECs.
To order these items and deliver their service-related requests, CLECs in Kansas and Oklahoma can choose from the widest and best selection of electronic (or manual) operations support systems in the industry. These include industry-standard systems; customized systems that have not been required by regulators or industry standard-setting bodies, but that were developed by Southwestern Bell and offered to fit particular CLECs’ business plans; and proprietary systems used by Southwestern Bell’s own retail representatives. Southwestern Bell’s operations support systems have met other carriers’ needs by processing more than 560,000 CLEC orders specifically for Kansas and more than 486,000 CLEC orders for Oklahoma.
In addition to this commercial experience, the same Southwestern Bell systems, processes, and procedures used in Kansas and Oklahoma were subjected to a third-party test under the auspices of the Texas Commission. All the tested systems except one were already in commercial use; the one exception is now in commercial use as well. Nevertheless, the Texas Commission selected an independent technical expert, Telcordia Technologies, to assess the readiness and capabilities of Southwestern Bell’s systems for serving CLECs, as well as the accuracy of Southwestern Bell’s monthly reports on its performance. To make the test as realistic as possible, Southwestern Bell received “blind” service requests from actual CLEC systems. After nearly a year of cooperative planning and testing, with the participation of AT&T, MCI WorldCom, and other CLECs at every stage, Telcordia and the Texas Commission found that Southwestern Bell’s systems provide CLECs nondiscriminatory access at current demand levels, and have the capacity to handle forecasted CLEC demand.
This joint application reflects a “belt and suspenders” approach to numerous issues. For example, it shows in multiple ways that Southwestern Bell provides nondiscriminatory access to local loops for CLECs’ advanced services, such as digital subscriber line services and line sharing, even though CLECs in Kansas and Oklahoma have yet to take Southwestern Bell up on this offer. Likewise, in addition to meeting the pricing requirements of state and federal law, Southwestern Bell affirmatively promotes local residential competition in Kansas and Oklahoma by providing CLECs unbundled local loops for residential customers, and end-to-end residential services for resale, at prices that are 25 percent or more below the charges that would apply under statutory pricing rules.
The openness of the Kansas and Oklahoma local markets is verifiable, on an ongoing basis, through an extensive performance monitoring program. Southwestern Bell provides monthly reports on approximately 600 aspects of its wholesale service in both states, under plans developed with CLECs and DOJ during proceedings before the Texas Commission. More than 90 percent of the available results show that SWBT provides service at parity or benchmark, if not better, to CLECs in both states for the most recent three-month period in which results have been reported (July-September 2000).
It is undeniable that Southwestern Bell’s entry into the long-distance markets in Kansas and Oklahoma will be in the public interest. After only three months in the long-distance business in Texas, Southwestern Bell is already serving over a million long-distance lines. The Big Three interexchange carriers have responded with promotions, free gifts, and bundled service offerings. Since the Texas application was approved, AT&T reduced its long-distance rates in Texas by 50 percent – from 15 cents a minute to 7 cents a minute – and MCI WorldCom and Sprint have rolled out new long-distance offerings. The Big Three are also redoubling their efforts to provide local exchange service in competition with Southwestern Bell so that they, too, can offer one-stop shopping. The result has been a bonanza for consumers in Texas. And the same thing is happening in New York: “Bell Atlantic’s entry into long-distance – and the entry of AT&T and MCI among others, into local – has lowered costs and lowered rates for consumers, generally across the board.”2 This Commission should allow consumers in Kansas and Oklahoma to reap the same benefits.
To further the public interest in ensuring that Southwestern Bell continues to provide its current high level of service to competing carriers, Southwestern Bell has proposed a plan under which it would pay affected CLECs, as well as the Kansas and Oklahoma state treasuries, if Southwestern Bell fails to meet those standards. In the event of deficient performance in Kansas, for example, Southwestern Bell’s payments to CLECs and the Kansas State Treasury could be as much as $45 million per year. In Oklahoma, the plan allows for annual payments of as much as $44 million. Such liability, together with this Commission’s powers to rescind or limit interLATA authority or otherwise impose penalties for violations of legal duties, make “backsliding” after Southwestern Bell enters the interLATA market in Kansas and Oklahoma inconceivable. Southwestern Bell has an overwhelming incentive to fulfill all the obligations described in this joint application, if for no other reason than its performance in both states will be subject to repeated review when SBC seeks section 271 relief elsewhere. In fact, in Texas, there has been no evidence of backsliding after Southwestern Bell received 271 relief, even though the volume of CLEC activity has increased substantially.
Southwestern Bell, the KCC, the OCC, and CLECs have worked together to make the local markets in Kansas and Oklahoma fully and irreversibly open to competition. This Commission should now do its part and open the long-distance markets in both states to the same, free competition.
TABLE OF CONTENTS
EXECUTIVE SUMMARY 2
I. THE KANSAS PROCEEDINGS 3
II. THE OKLAHOMA PROCEEDINGS 9
SWBT IS ELIGIBLE TO SEEK INTERLATA RELIEF
UNDER SECTION 271(c)(1)(A) 13
SWBT HAS IRREVERSIBLY OPENED ITS LOCAL MARKETS 18
A. SWBT Offers CLECs Nondiscriminatory Access to its OSS 19
Ordering and Provisioning 27
Maintenance and Repair 36
SWBT Exceeds the 1996 Act’s Requirements in Offering CLECs Access to Pre-Combined Network Elements and Has Satisfied the FCC’s New UNE-Related Requirements 39
SWBT Provides CLECs Nondiscriminatory Access to Unbundled
Loops for Their Advanced Services 46
III. SOUTHWESTERN BELL’S ENTRY INTO THE INTERLATA SERVICES MARKET IN KANSAS AND OKLAHOMA WILL PROMOTE COMPETITION AND FURTHER THE PUBLIC INTEREST 57
Consumers in Texas and New York Are Clearly Benefiting from Bell
Company Entry into the In-Region, InterLATA Market 58
SWBT Is Subject to Comprehensive Performance Reporting and
Monitoring Requirements 62
IV. SOUTHWESTERN BELL WILL PROVIDE INTERLATA SERVICES IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 27266
SOUTHWESTERN BELL’S KCC- and OCC-APPROVED AGREEMENTS
SATISFY ALL REQUIREMENTS OF THE COMPETITIVE CHECKLIST 71
A. Checklist Item 1: Interconnection 74 1. Interconnection Trunking 75
2. Collocation 77
3. Pricing for Interconnection and UNEs 84
B. Checklist Item 2: Access to Network Elements 86
C. Checklist Item 3: Poles, Ducts, Conduits, and Rights-of-Way 87 D. Checklist Item 4: Unbundled Local Loops 87 E. Checklist Item 5: Unbundled Local Transport 98 F. Checklist Item 6: Unbundled Local Switching 101 G. Checklist Item 7: Nondiscriminatory Access to 911, E911,
Directory Assistance, and Operator Call Completion Services 103
H. Checklist Item 8: White Pages Directory Listings 106
I. Checklist Item 9: Nondiscriminatory
Access to Telephone Numbers 107 J. Checklist Item 10: Nondiscriminatory Access to
Databases and Associated Signaling Necessary for
Call Routing and Completion 108 K. Checklist Item 11: Number Portability 109 L. Checklist Item 12: Local Dialing Parity 112 M. Checklist Item 13: Reciprocal Compensation
for the Exchange of Local Traffic 113
N. Checklist Item 14: Resale 116
ATTACHMENTS Attachment 1: Required Statements
Attachment 2: Certifications
Attachment 3: Status of Federal Court Challenges Under 47 U.S.C. § 252(e)(6)
Attachment 4: Detailed List of Appendices (Separately Bound)