Interim Rules for Local Exchange Service Competition in California 1. PUBLIC POLICY PRINCIPLES AND OBJECTIVES A. It is the policy of the California Public Utilities Commission (Commission) that competition in the provision of local exchange telecommunications services is in the public interest. B. It is the policy of the Commission that, in an environment of competition for local exchange telecommunications services, telecommunications users shall receive adequate ongoing disclosure of the rates, terms and conditions of service and shall benefit from a clear and comprehensive set of consumer protection rules. C. It is the policy of the Commission that interconnection of the networks of Competitive Local Carriers (CLCs) and Local Exchange Carriers (LECs) should be accomplished in a technically and economically efficient manner. D. It is the policy of the Commission that, in the interim, LECs shall remain subject to appropriate regulations designed to safeguard against abuse of monopoly power. E. It is the policy of the Commission that number portability should be accomplished in a technically and economically efficient manner. F. It is the policy of the Commission that networks of dominant providers of telecommunications services should be unbundled in such a manner that a carrier does not have to purchase services or functions that it does not want in order to obtain those essential services or functions that it does want. G. It is the policy of the Commission that customer privacy rights and concerns be respected in an environment of local exchange competition. 2. SCOPE OF RULES These interim rules apply to the provision of wireline local exchange telecommunications services by CLCs, and where applicable, LECs. 3. DEFINITIONS A. Competitive local carrier (CLC) means a common carrier that was issued a Certificate of Public Convenience and Necessity after the effective date of this order, to provide wireline local exchange telecommunications service for a geographic area specified by such carrier. B. Local exchange carrier (LEC) means any incumbent carrier listed in Appendix C attached hereto. C. Market power and monopoly power mean the power to sustain a price above cost or to exclude competition for the service or function in question, and derives from economic or technical barriers to entry. D. Network component means a functional capability of a network, disaggregated from other network capabilities and made available to other carriers and end users separately from all other network capabilities. E. Nondominant interexchange carrier (NDIEC) means an interexchange carrier that is considered nondominant under the Commission's decisions. F. NXX Rating Point means the end office/wire center location designated in the Local Exchange Routing Guide as the assignment point for an NPA-NXX code. G. NXX Service Area means the geographically-bounded area designated as the area within which a LEC or CLC may provide local exchange telecommunication services bearing a particular NPA-NXX designation. H. Local telephone number portability means the ability of end users to retain their existing telephone numbers when remaining at a location, regardless of the LEC or CLC selected. I. Local exchange loop facility means a transmission path capable of transporting analog or digital signals from the network interface at a customer's premises to a distribution frame or similar demarcation point. J. A port is a mechanism allowing access to switching functions, including but not limited to dial tone generation, origination and termination of both local and interexchange calls. K. Nonfacilities-based CLCs are those which do not directly own, control, operate, or manage conduits, ducts, poles, wires, cables, instruments, switches, appurtenances, and appliances in connection with or to facilitate local exchange communications by telephone. L. Facilities-based CLCs are those which directly own, control, operate, or manage conduits, ducts, poles, wires, cables, instruments, switches, appurtenances, and appliances in connection with or to facilitate local exchange communications by telephone. 4. ENTRY, CERTIFICATION, AND REGULATION OF CLCs A. The Commission shall grant a Certificate of Public Convenience and Necessity (CPCN) to any applicant that possesses the requisite managerial qualifications, financial resources, and technical competence to provide local exchange telecommunications services. B. The Commission shall apply the following standards to the certification of CLCs: (1) All new applicants seeking CPCNs for authority to become facilities-based CLCs, as defined in this decision, shall demonstrate in their applications that they possess a minimum of $100,000 of cash or cash equivalent as defined below, reasonably liquid and readily available to meet the firm's start-up expenses. Such applicants shall also document any deposits required by local exchange companies or interexchange carriers (IECs) and demonstrate that they have additional resources to cover all such deposits. (2) All new applicants seeking CPCNs for authority to become nonfacilities-based CLCs, as defined in this decision, shall demonstrate in their applications that they possess a minimum of $25,000 of cash or cash equivalent as defined below, reasonably liquid and readily available to meet the new firm's expenses. Such applicants shall also document any deposits required by IECs and demonstrate that they have additional resources to cover all such deposits. (3) Applicants for CPCNs as CLCs who have profitable interstate operations may meet the minimum financial requirement by submitting an audited balance sheet and income statement demonstrating sufficient cash flow, as we authorized in Decision (D.) 91-10-041 for NDIECs. (4) Applicants for CPCNs which currently hold CPCNs as IECs (U-5001-C to U____C and subsequent) should apply as prescribed herein to have their current authority expanded to include operating as a CLC. (5) Applicants for CPCNs which do not currently hold CPCNs as IECs, will be granted CPCNs as CLCs and assigned U numbers in the 5000 series. (6) If a CLC is 90 or more days late in filing the annual report required by General Order (GO) 104-A or in remitting the fees to fund Universal Lifeline Telephone Service (Public Utilities (PU) Code  879), the fees to fund telecommunications devices for the deaf (PU Code  2882), the California High Cost Fund (PU Code  739.3), or the user fees on intrastate revenues (PU Code  431-435), the Commission Advisory and Compliance Division (CACD) shall prepare a resolution for the Commission's consideration revoking the CLC's CPCN, unless the CLC has received written permission from CACD to file or remit late. (7) New applicants for CPCNs as CLCs shall be permitted to use any of the following financial instruments to satisfy the applicable unencumbered cash requirements established by this order. (a) Cash or cash equivalent, including cashier's check, sight draft, performance bond proceeds, or traveler's checks; (b) Certificate of deposit or other liquid deposit, with a reputable bank or other financial institution; (c) Preferred stock proceeds or other corporate shareholder equity, provided that use is restricted to maintenance of working capital for a period of at least twelve (12) months beyond certification of the applicant by the Commission; (d) Letter of credit, issued by a reputable bank or other financial institution, irrevocable for a period of at least twelve (12) months beyond certification of the applicant by the Commission; (e) Line of credit or other loan, issued by a reputable bank or other financial institution, irrevocable for a period of at least twelve (12) months beyond certification of the applicant by the Commission, and payable on an interest-only basis for the same period; (f) Loan, issued by a qualified subsidiary, affiliate of applicant, or a qualified corporation holding controlling interest in the applicant, irrevocable for a period of at least twelve (12) months beyond certification of the applicant by the Commission, and payable on an interest-only basis for the same period; (g) Guarantee, issued by a corporation, copartnership, or other person or association, irrevocable for a period of at least twelve (12) months beyond certification of the applicant by the Commission; (h) Guarantee, issued by a qualified subsidiary, affiliate of applicant, or a qualified corporation holding controlling interest in the applicant, irrevocable for a period of at least twelve (12) months beyond the certification of the applicant by the Commission. (8) The definitions of certain of the financial instruments listed in 4.B. (7) and our intent on nondiscriminatory application of these definitions are clarified as follows: (a) All unencumbered instruments listed in 7.a. through 7.h. above will be subject to verification and review by the Commission prior to and for a period of twelve (12) months beyond certification of the applicant by the Commission. Failure to comply with this requirement will void applicant's certification or result in such other action as the Commission deems in the public interest, including assessment of reasonable penalties. (See PU Code  581 and 2112.) (b) Applicants for CPCNs as nonfacilities based CLCs shall assure that every issuer of a letter of credit, line of credit, or guarantee to applicant will remain prepared to furnish such reports to applicant for tendering to the Commission at such time and in such form as the Commission may reasonably require to verify or confirm the financial responsibility of applicant for a period of at least twelve (12) months after certification of the applicant by the Commission. (c) All information furnished to the Commission for purposes of compliance with this requirement will be available for public inspection or made public, except in cases where a showing is made of a compelling need to protect it as private or proprietary information. C. The CACD shall on or before January 1, 1996 and at least one time each year thereafter, prepare a list of all current CLCs in good standing operating in California, including addresses, phone numbers, and the name of the responsible contact person at each such utility, and then disseminate that list to all other telecommunications utilities including the local exchange companies and IECs and will provide the list at the Commission's standard per page charge to any other interested party having requested such list. D. CLCs shall be subject to the following tariff and contract filing, revision and service pricing standards: (1) Uniform rate reductions for existing services shall become effective on five (5) days' notice. (2) Uniform rate increases, except for minor rate increases as defined in D. (3) below, for existing services shall become effective on thirty (30) days notice, and shall require bill inserts, or a message on the bill itself, or first class mail notice to customers of the pending increased rates. (3) Uniform minor rate increases, defined as those which are less than both 1% of the CLC's total California intrastate revenues and 5% of the affected services's rates, shall become effective on not less than five (5) working days' notice. Increases shall be cumulative, such that if the sum of the proposed rate increase and rate increases that took effect during the preceding 12-month period for any service exceeds either parameter above, then the filing shall be treated as a major increase. Customer notification is not required for such minor rate increases. (4) Advice letter filings for new services and for all other types of tariff revisions, except changes in text not affecting rates or relocations of text in the tariff schedules, shall become effective on forty (40) days' notice. (5) Advice letter filings merely revising the text or location of text material which does not cause an increase in any rate or charge shall become effective on not less than five (5) days' notice. (6) Contracts shall be subject to GO 96-A rules. (7) CLCs shall file tariffs in accordance with PU Code Section 876. E. The following regulations shall apply to CLCs: (1) CLCs shall be required to serve all customers requesting service within their designated service area, but shall not be required to have the same service areas as LEC service areas; (2) Facilities-based CLCs shall at a minimum serve all customers who request service and whose premises abut the right-of-way occupied by the CLC's facilities provided that the CLC can reasonably obtain access to the point of demarcation on the customer's premises, but shall not be required to build out facilities to customers not abutting the CLC's facilities. (3) For any interexchange carrier which subscribes to a CLC's switched access services, the CLC is required to provide 1+ presubscription or 10XXX equal access consistent with the FCC rules on equal access. (4) CLCs are required to make all telecommunications service offerings available for resale, within the same class of service, without unreasonable discrimination; (5) CLCs shall not engage in unreasonable price discrimination with respect to end users and rates shall be just and reasonable per PU Code  453 and 451. (6) If the CLC is the sole local exchange telecommunications service provider in a given geographical area, the CLC must, in addition; (a) refrain from discontinuing service in that area until another carrier can provide service; and (b) provide unbundled interconnection to other LECs and CLCs at reasonable terms and conditions to the extent required of LECs. (7) CLCs shall provide 911 and/or E911 service subject to subsection 11(d) providing for access to LEC databases. (8) The CLC shall work with the LEC to ensure that qualified customers are provided with TDDs or other telecommunications equipment under the DEAF program. (9) LECs and CLCs shall develop a program to address the issues regarding the provision of 611 service to ensure its integration in the environment of local exchange competition. (10) CLCs shall be subject to the consumer protection rules contained in Appendix B. (11) CLCs shall provide the following reports to the Commission: (a) On a quarterly basis, a copy of all written notices provided to customers, in accordance with Rules 1, 2 and 6 of the consumer protection rules set forth in Appendix B; (b) By April 1 of each year a copy of the CLC's annual report; (c) On an annual basis, such reports regarding major service outages as the Commission may require; (d) Reports required in GO 133-B and GO 152; and (e) Such other reports required by the Commission. 5. REGULATION OF LECs A. Incumbent LEC shall have provider of last resort responsibilities in their service areas until the Commission determines otherwise. B. Any and all franchise obligations and exclusivity protections and Commission policies prohibiting competition for specific LEC local exchange services shall be reexamined during the transition period to local exchange competition. C. No LEC subject to NRF shall be granted any rate rebalancing or Z factor adjustment for purposes of maintaining "revenue neutrality" or for compensation for increased costs or revenue reductions or losses attributable to competitive entry into local exchange telecommunications services. D. The local exchange telecommunications services offered by LECs shall continue to be regulated in the manner in which they have been regulated prior to the entry of CLCs unless otherwise amended by the Commission. E. Any and all resale restrictions currently imposed by LECs with respect to their provision of local exchange telecommunications services, whether contained in a LEC's tariffs or elsewhere shall be removed. The resale restrictions shall be reexamined during the transition period to local exchange competition. All telephonic or network service offerings shall be available for resale, within the same class of service, without unreasonable discrimination. F. Any and all use or user restrictions, other than those discussed in subsection (e) of this Section, currently imposed by LECs with respect to their provision of local exchange telecommunications services, whether contained in LEC tariffs or elsewhere, will be examined in the OANAD proceeding. G. Whether or not specific LEC services have been reclassified to Categories II or III, existing pricing safeguards and protections against discrimination, price squeezes and cross subsidization must be maintained. 6. NUMBERING RESOURCES AND NUMBER PORTABILITY A. A LEC serving as numbering administrator in a serving region shall directly assign numbers and otherwise make available numbering resources to CLCs in the same manner and upon the same terms and conditions as such assignment and other resources are made available to itself and to other LECs. Consistent with the FCC s proposal in CC docket No. 92-237 to transfer the administration of the North American Numbering Plan, including NXX codes, to a third party, any such LEC may be required, in the future, to transfer its numbering administration responsibilities to an independent, neutral third-party administrator. B. In the interim, local number portability shall be provisioned by Remote Call Forwarding, Direct Inward Dialing (DID), or other equivalent means. CLCs are required to arrange for transport facilities to the central office where portability is sought. CLCs should reciprocate by offering portability to the LECs. C. CLCs will be able to purchase remote call forwarding from the LECs at a price equal to Direct Embedded Cost (DEC). D. In the long term, local number portability shall be provisioned by means of a database, accessed by SS7 links and queried by all LECs, CLCs and interexchange carriers terminating traffic in a local calling area in which there are multiple certificated local exchange service providers, that associates each telephone number with the service provider and network serving the end user. Number portability shall also provide equivalent service quality and features to the customers of both LECs and CLCs when remaining at the same location or changing their location within the initial geographical area served by the initial carrier's serving central office. E. All LECs, CLCs, and interexchange carriers shall cooperate and use their best efforts to design, develop and deploy the local number portability database(s) and associated SS7 connections. A full-scale trial of local number portability shall be implemented within one year of the effective date of these Interim Rules, with permanent implementation of a database solution to occur as soon thereafter as possible. Parties involved in the trial should provide monthly updates of the trial's progress. F. The costs associated with development and deployment of a local number portability database shall be recovered from all LECs and CLCs. G. Once the local number portability database is developed and deployed, administration of the database shall be the responsibility of an independent, neutral third-party administrator. The costs of maintaining and administering the database shall be recovered via an equal charge per database query, billed to the carrier making the database query. 7. UNBUNDLING OF LEC NETWORKS TO ACCOMMODATE LOCAL EXCHANGE SERVICES COMPETITION A. At a minimum the following six network components should be unbundled by 1/1/96 as part of the OANAD proceeding: (1) subscriber loops; (2) line side ports; (3) signaling links; (4) signal transfer points; (5) service control points; and (6) dedicated channel network access connections The unbundled components enumerated above are the interim unbundled components that can be implemented by 1/1/96. No use end-user restrictions shall apply to subscriber loops and line side ports. The need for additional unbundling will be determined in the OANAD proceeding. B. The OANAD proceeding will determine the method that CLCs will use to request unbundling of additional elements if any. C. THE OANAD proceeding will address the issue of reciprocal unbundling, and appropriate costing and pricing methodologies. 8. INTERCONNECTION OF LEC AND CLC NETWORKS FOR TERMINATION OF LOCAL TRAFFIC A. The interconnection of LEC and CLC networks for the termination of local traffic involves not only the construction and maintenance of the interconnecting facilities, but also the throughput of local terminating traffic across those interconnecting facilities. Local exchange networks shall be interconnected so that customers of any local exchange carrier can seamlessly receive calls that originate on another local exchange carrier's network and place calls that terminate on another local exchange carrier's network without dialing extra digits. CLCs shall be interconnected with LECs in a manner that gives the CLCs seamless integration into and use of the LECs' signaling and interoffice networks equivalent to that of the LECs, at reasonable rates, including access to switches, databases, signaling systems and other facilities or information associated with originating and terminating communications or otherwise facilitating interoperability for any communication carried by the LECs' facilities. B. A LEC shall be required to interconnect with a CLC at as many points as described in this subparagraph as are specified by the CLC. At a CLC's election, interconnection with a LEC shall occur at any point where LEC switching occurs, or at any other point that is between LEC and CLC switching points. C. A CLC shall have the right to construct and maintain all or some portion of the interconnecting facility. The interconnecting LEC shall have the responsibility to construct and maintain any portion of the interconnecting facility not constructed and maintained by the CLC. Interconnecting facilities shall be constructed and maintained according to sound telecommunications engineering principles. The cost of constructing and maintaining the interconnecting facilities shall be shared equally between a LEC and a CLC, unless the parties mutually agree to other arrangements. D. Virtual or physical collocation interconnection arrangements are not precluded, and may be implemented by mutual agreement, but shall not be a mandatory form of LEC-CLC interconnection. E. Local traffic shall be terminated by LECs for CLCs and by CLCs for the LECs over the interconnecting facilities described in this Section. F. At the onset of local exchange competition, LECs and CLCs shall have the right to engage in reciprocal compensation --to charge each other for terminating calls on their respective networks. CLCs and LECs shall develop nondiscriminatory rates for terminating access. Without supporting cost data, CLCs should not be allowed to charge more than the amount the LEC currently charges for terminating access. As competition develops, mutual compensation for traffic exchange should be reviewed. 9. JOINT LEC/CLC PROVISIONING OF SWITCHED CARRIER ACCESS SERVICES CLCs and LECs shall establish meet-point billing arrangements to enable CLCs to provide Switched Access Services to third parties via LEC access tandems, in accordance with the Meet-Point Billing and Provisioning Guidelines adopted by the Ordering and Billing Forum, subject to the following requirements: A. CLC and LEC shall arrange for CLC to subtend the LEC access tandem which the LEC's own end offices that serve the same NXX Service Area subtend for the provision of Switched Access Services. B. At CLC's election, the meet-point connection for the tandem subtending arrangement shall be established at the CLC's NXX Rating Point, at a collocation facility maintained by the CLC (or the CLC's chosen transport vendor) at the LEC access tandem, or at any point mutually agreed to by CLC and LEC. C. Common channel signaling shall be utilized in conjunction with meet-point billing arrangements to the extent available. D. CLC and LEC shall maintain provisions in their respective Federal and State access tariffs sufficient to reflect this meet-point billing arrangement and meet-point billing percentages. E. CLC and LEC shall exchange all call detail records associated with switched access traffic provided via the meet-point billing arrangement in a timely fashion, as necessary to accurately and reliably rate and bill third parties for such traffic. LECs shall produce carrier access bills for the CLCs' meet-point traffic, using the single bill format, unless the LEC has been specifically authorized by the FCC to employ the multiple bill method. 10. INFORMATION SERVICES A. Whenever a LEC operates an information services platform (e.g., 976 service) over which information services are delivered to its own end users located within an area also served by one or more CLCs, the LEC shall purchase originating access service and billing and collection service from each CLC in the area. Such access, billing and collection service shall be identical to the access, billing and collection services the CLC provides to interexchange carriers for the delivery of calls to interexchange carriers' 900 information service platforms. B. To the extent a CLC offers an information service platform over which information service providers may offer information services, the LEC shall offer, and the CLC shall purchase arrangements analogous to those described in (a) above. C. If a CLC provides access to an information services platform (e.g., 976 and 900 services), the CLC must conform to the rules in D.91-03-021 as identified for interexchange carriers. 11. ADDITIONAL INTERCOMPANY ARRANGEMENTS A. LECs shall put into place a service ordering and implementation scheduling system for use by CLCs which is equivalent to that used by the LECs and their affiliates. Data pertaining to service and facility availability shall be made available to CLCs in the same manner as it is provided to the LECs. In addition to the GO 133(b) requirement to report held orders for end user service, LECs shall separately report held orders related to orders placed by CLCs. B. LECs and CLCs shall provide each other with both answer and disconnect supervision to allow for proper billing of customer calls, as well as all available call detail information necessary to allow both LECs and CLCs to bill their customers properly. C. LECs shall be required to enter into mutual billing and collection agreements so that each telecommunications service provider can accept another service provider's telephone line number and other non-proprietary calling cards and can bill collect on third party calls to a number served by another provider. D. Access to databases: (1) CLCs shall compensate the LECs for their cost of including the CLCs customers in the directory assistance database and for any other related maintenance cost of directory assistance database in the provisioning of 411 services for the CLCs. (2) CLCs shall have access to 911/E911 and 611 connectivity provided by the LEC under the same terms and conditions enjoyed by the LEC. CLCs shall compensate the LECs for the LECs cost of providing access to 911/E911 and 611 connectivity and for any other related maintenance cost of the 911/E911 and 611 databases. (3) CLCs shall be provided access to all LEC service databases, e.g. 800, Line Information Data Base (LIDB), and Advanced Intelligent Network (AIN). CLCs access to and use of such databases shall be through signaling interconnection, with functionality and quality equal to that received by LECs and their affiliates at nondiscriminatory tariffed rate. E. LECs shall make available access to all signaling protocols and all elements of signaling protocols used in the routing of local and interexchange traffic, including signaling protocols used in the query of call processing databases, and shall make available all signaling resources and information necessary for the routing of local and interexchange traffic. LECs shall be prohibited from interfering in the transmission of signaling information between customers and interconnected carriers, and may not claim proprietary right to signaling protocols or elements of signaling protocols. F. LECs shall be required to enter into agreements with CLCs for the interoperability of operator services between networks, including but not limited to the ability of operators on each network to perform such operator functions as reverse billing, line verification, and call interrupt. LECs shall be required to offer access to LEC-provided operator services for CLCs at nondiscriminatory rates. G. LECs and CLCs shall develop mutually agreeable and reciprocal arrangements for the protection of their respective customer proprietary network information. H. With respect to the publishing of telephone directories, the following provisions shall apply to LECs: (1) LECs shall provide nondiscriminatory access (i.e., access on the same terms and conditions and price available to the competitive businesses of the LECs or their affiliates) to LEC subscriber information associated with publishing and telephone directories, subject to the requirements of PU Code  2891 and 2891.1. (2) LECs shall include CLCs' customers' telephone numbers in their "White Pages" and directory listings associated with the areas in which the CLC provides local exchange telecommunications services to its customers, except for CLC customers who desire not to have their telephone numbers appear in such listings and databases, at no charge to the CLC or its customer. (3) For any listing beyond a basic listing in the "White Pages," CLC customers must pay a nondiscriminatory rates established by the LEC or its affiliate. (4) Each CLC shall provide the LEC with its directory listings and updates to those listings in a format required by the LEC, which format shall be provided to the CLC by the LEC on a magnetic tape or computer disc. (5) CLC customers shall have the right to be listed and purchase advertising in the LEC's "Yellow Pages" under the same terms and conditions as the LEC's customers. (6) LECs shall distribute the local "White" and "Yellow Pages" directories to all CLC customers in a given service area at no charge. (7) LECs shall include in the section of the "White Pages" that precedes customer listings, information concerning each CLC on the same basis that it includes the information for itself or its LEC affiliates offering local-exchange telecommunications service in the geographic area covered by the relevant "White Pages" at the rates established in D.94-09-065. I. LECs shall allow CLCs to connect to the LEC 911 tandems, routers, and other switching points serving the areas which CLCs provide local exchange telecommunications services, for the provision of 911 and E911 services and for access to all sustaining Public Safety Answering Points. J. LECs and CLCs shall cooperate in the provision of their repair service and reporting so that trouble reports are directed to the correct carrier or carriers. 12. NONDISCRIMINATORY ACCESS TO RIGHTS OF WAY LECs shall allow nondiscriminatory access by CLCs to essential facility rights of way, conduits, pole attachments, and building entrance facilities. 13. UNIVERSAL LIFELINE SERVICE PROVISIONING For the purpose of the Interim Rules, Universal Lifeline Telephone Service shall be provided exclusively by the LEC. (END OF APPENDIX A)