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					                             STATE OF CONNECTICUT


                      DEPARTMENT OF PUBLIC UTILITY CONTROL
                             TEN FRANKLIN SQUARE
                             NEW BRITAIN, CT 06051



DOCKET NO. 01-02-09           DPUC INVESTIGATION OF TELEPHONE COMPANY
                              CONTRACT TERMINATION LIABILITY FEES AND OTHER
                              PRACTICES




                                        December 3, 2001

                                By the following Commissioners:


                                        Jack R. Goldberg
                                        Donald W. Downes
                                        John W. Betkoski, III




                                       DRAFT DECISION



This draft Decision is being distributed to the parties in this proceeding for comment. The proposed
Decision is not a final Decision of the Department. The Department will consider the parties’ arguments
and exceptions before reaching a final Decision. The final Decision may differ from the proposed
Decision. Therefore, this draft Decision does not establish any precedent and does not necessarily
represent the Department’s final conclusion.
                                              TABLE OF CONTENTS

I.   INTRODUCTION ...................................................................................................... 1
     A. SUMMARY ............................................................................................................ 1
     B. BACKGROUND OF THE PROCEEDING ....................................................................... 1
     C. CONDUCT OF THE PROCEEDING ............................................................................. 2
     D. PARTIES ............................................................................................................... 3

II. PETITION ................................................................................................................. 3

III. POSITIONS OF PARTIES ........................................................................................ 6
     A. THE ASSOCIATION OF COMMUNICATIONS ENTERPRISES ........................................... 6
     B. AT&T COMMUNICATIONS OF NEW ENGLAND ........................................................... 6
     C. AT&T W IRELESS .................................................................................................. 7
     D. ATTORNEY GENERAL OF THE STATE OF CONNECTICUT ............................................ 7
     E. CHOICE ONE COMMUNICATIONS ............................................................................ 8
        1. Introduction .................................................................................................. 8
        2. Termination Liability Penalties ..................................................................... 9
        3. Ancillary Issues .......................................................................................... 14
     F. CONVERSENT COMMUNICATIONS OF CONNECTICUT, LLC ...................................... 15
     G. COX CONNECTICUT TELECOM, L.L.C. .................................................................. 16
     H. CTC COMMUNICATIONS CORP. ............................................................................ 17
        1. Introduction ................................................................................................ 17
        2. Termination Liability Penalties ................................................................... 17
        3. Ancillary Issues .......................................................................................... 24
     I. OFFICE OF CONSUMER COUNSEL ......................................................................... 25
     J. THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY ......................................... 27
        1. Introduction ................................................................................................ 27
        2. Termination Penalties ................................................................................ 27
        3. Ancillary Issues .......................................................................................... 31
     K. VERIZON NEW YORK INC. .................................................................................... 34
     L. WORLDCOM, INC. ............................................................................................... 35

IV. DEPARTMENT ANALYSIS ..................................................................................... 35
    A. TERMINATION FEES ............................................................................................. 35
       1. Customer Contracts ................................................................................... 40
       2. Lines Left Behind and Common Block Charges......................................... 40
    B. WHOLESALE SERVICE OFFERINGS ....................................................................... 41
    C. CENTRALINK 1100.............................................................................................. 43
    D. VOICE MAIL AND INTERNET SERVICES .................................................................. 45
    E. MISCELLANEOUS................................................................................................. 45
       1. CLEC Service Issues ................................................................................. 45
       2. SNET America ........................................................................................... 47
       3. Tariff Charges ............................................................................................ 47
       4. Letter of Authorization Requirements ......................................................... 48
       5. Collocation Access..................................................................................... 49
       6. Wholesale Billing ........................................................................................ 49

V. FINDINGS OF FACT .............................................................................................. 50
VI. CONCLUSION AND ORDERS ............................................................................... 52
    A. CONCLUSION ...................................................................................................... 52
    B. ORDERS............................................................................................................. 52
                                              DECISION

I.      INTRODUCTION

A.      SUMMARY

       This Decision addresses the request of CTC Communications Corp (CTC) and
Partners Communications Group (PCG) that the Southern New England Telephone
Company (Telco or Company) cease and desist certain unlawful and anticompetitive
practices. In particular, CTC and PCG cited, inter alia, the Telco's refusal to allow the
assignment of contracts without the imposition of termination fees and the fact that the
Telco does not provide a wholesale intrastate toll offering available for resale. The
request for relief also contained several other areas of concern relating to the provision
of CentraLink service as well as other service provision issues.1 Specifically, CTC, PCG
and several other participants argued that these anticompetitive acts violated the
Telecommunications Act of 1996 (Telcom Act) and Connecticut state law.2 The
Department solicited comments and conducted hearings on CTC and PCG's request.
Several telecommunications providers participated in the filing of comments and/or the
hearing process

       The Department of Public Utility Control (Department) has determined that the
imposition of termination fees does not conflict with the terms and conditions of the
Telcom Act. Additionally, the Department has determined that the Telco must submit a
proposed retail resale tariff for its toll product. Additionally, the Department has
determined that since CentraLink, by definition is a competitive service, no "fresh look"
is warranted. Finally, the Department has determined that with the exception of access
to competitive local exchange company (CLEC) equipment in Telco property, the
remaining issues cited by CTC, PCG and the other participants have been addressed.

B.      BACKGROUND OF THE PROCEEDING

        By Petition for Declaratory Ruling, dated March 8, 1999, (Petition) CTC and PCG
(Petitioners), requested that the Department order the Telco to immediately cease and
desist its unlawful and anticompetitive practices. The Department established Docket
No. 99-03-17 Petition of CTC Communications Corp. and Partner Communications
Corp. Group LLC for a Declaratory Ruling, to investigate the Petition.

       In the Petition, CTC alleged, inter alia, that the Telco had refused to allow
customers to assign contracts to resellers, refused to provide copies of customer
contracts upon request, had required payment of additional common block charges, had
required migrating customers to leave lines behind, had unilaterally changed due dates,
had required unreasonable termination fees, did not provide a wholesale toll product or
did not adhere to its tariffs and failed to provide detailed itemized bills to the Petitioners.
CTC also argued that the Telco’s termination penalties were an unreasonable restriction

1 The remainder of the issues contained Petition for Declaratory Ruling is provided in Section II of this
   Decision.
2 A complete list of telecommunication providers and other entities that participated in this docket is
   contained in Section I D of this Decision.
Docket No. 01-02-09                                                                          Page 2


on resale and that they violated the Telcom Act. CTC further claimed that when
customers migrate to a reseller of Telco services, the Company continues to earn
revenues from that customer; and therefore, the Telco’s termination fees were
unreasonable.

       On January 28, 2000, the Department issued the second of two draft Decisions
in Docket No. 99-03-17 (Draft Decision) addressing the Petition. In that Decision, the
Department determined that contracts containing termination fees conflicted with the
goals of both state and federal telecommunications legislation. Therefore, the
Department directed that termination penalties would no longer be permitted to be
included in telecommunications contracts except in instances of recovery of expenses
associated with the installation of facilities or equipment. Additionally, the Department
would not order another “fresh look” period. Lastly, the Department found that
remaining issues raised in the Petition were resolved by the elimination of the
termination fees or on-going dockets before the Department.

       However, by Decision dated April 11, 2001 in that docket, the Department
determined that §4-176 of the General Statutes of Connecticut (Conn. Gen. Stat.)
provided that if an agency does not issue a Declaratory Ruling within 180 days, or within
such longer period agreed to by the parties, it shall be deemed to have decided not to
issue a ruling. Since no extension of time was authorized by the parties to Docket No.
99-03-17, and more than 180 days had passed since the filing of the Petition, the
Department, pursuant to the provisions of Conn. Gen. Stat. §4-176(i), dismissed the
Petition and closed Docket No. 99-03-17. The Department also indicated in the April
11, 2001 Decision that this issue was ripe for further investigation, and initiated the
instant docket to facilitate its investigation.

C.        CONDUCT OF THE PROCEEDING

        By Notice of Taking Administrative Notice dated May 18, 2001, the evidentiary
record of Docket No. 99-03-17 was incorporated into the instant proceeding. The
Department was of the opinion that because of the period of time that has transpired
since the Draft Decision was issued and the instant docket initiated, the evidentiary
record of Docket No. 99-03-17 should be updated. Accordingly, the Department
solicited written comments from interested parties and intervenors to update the record
of this proceeding to reflect any changes that may have occurred since issuance of the
Draft Decision.1 Specifically, the Department sought written comments addressing the
following issues: 1) any recent changes in federal or state law relative to the Petition; 2)
changes in industry practice; 3) the status of competition in Connecticut since Docket
No. 99-03-17 was initiated; 4) the status of the Telco’s wholesale service offerings and
billing systems; and 5) any other relevant evidence that would update the record of this
proceeding.2


1   See the Department’s Notice Request for Written Comments (Notice) dated May 18, 2001.
2    In response to the Notice, the Department received written comments from the Association of
      Communications Enterprises (ASCENT); AT&T Wireless Services, Inc. (ATTW); Choice One
      Communications of Connecticut Inc. (Choice One); CTC Communications Corporation (CTC); the
      Southern New England Telephone Company; and Verizon New York Inc (Verizon).                AT&T
      Communications of New England, Inc. (AT&T) submitted a letter instead of written comments.
Docket No. 01-02-09                                                               Page 3



      By Notice of Hearing dated July 26, 2001, the Department conducted a public
hearing in this matter on September 4, 2001, at the Department’s offices, Ten Franklin
Square, New Britain, Connecticut 06051. That hearing was continued to September 24,
2001 and September 28, 2001, at which time it was closed.

       The Department issued a draft Decision in this docket on December 3, 2001. All
parties and intervenors were provided an opportunity to file written comments to and
present oral arguments on the draft Decision.

D.    PARTIES

       The Department recognized the Office of Consumer Counsel, Ten Franklin
Square, New Britain, Connecticut 06051; Partner Communications LLC, 528
Washington Avenue, North Haven, Connecticut 06473; Cable & Wireless, USA, Inc.,
8219 Leesburg Pike, Vienna, Virginia 22182; WorldCom, Inc., 200 Park Avenue, New
York, New York 10166; Conversent Communications of Connecticut, LLC, 222
Richmond Street, Providence, Rhode Island 02903; Choice One Communications, 2
Pine West Plaza, Suite 205, Washington Avenue Extension, Albany, New York 12205;
Northeast Optic Network of Connecticut, Inc., 220 West Park Drive, Westborough,
Massachusetts 01581; AT&T Communications of New England, Inc., 11 Midland
Avenue, Bronxville, New York 10708; the Southern New England Telephone Company,
310 Orange Street, New Haven, Connecticut 06510; ASCENT, 1401 K St., N.W., Suite
600, Washington, D.C., 20005; CTC Communications Corporation, 360 Second
Avenue, Waltham, Massachusetts 02154; Verizon New York, Inc., 1095 Avenue of the
Americas, New York, New York 10036; NeTel, Inc., d/b/a Tel 3, 1020 N.W., 163 rd Drive,
Miami, Florida 33169; Cox Connecticut Telecom, LLC, 70 Comstock Parkway,
Cranston, Rhode Island 02921; RCN Telecom Services, Inc., 105 Carnegie Center,
Princeton, New Jersey 08540; XO Long Distance Services, Inc., 45 Eisenhower Drive,
Paramus, New Jersey 07652; New South Communications Corporation, 2 N. Main
Street, Greenville, South Carolina 29601; A.R.C. Networks, Inc. d/b/a InfoHighway,
1333 Broadway, New York, New York 10018; Connecticut Telephone &
Communications Systems, 1 Talcott Pl Hartford, Connecticut 06103; and American
Telecommunications Systems, Inc., 4450 Belden Village Street N.W., Canton, Ohio
44718.

II.   PETITION

       In Docket No. 99-03-17, CTC and PCG requested that the Department order the
Telco to immediately cease and desist its unlawful and anticompetitive practices.
Petition, p. 1. According to the Petition:

       The Telco refused to allow customers to assign their service agreements to the
Petitioners or other resellers at retail rates without the payment of burdensome
termination fees in violation of 47 U.S.C. §§ 251 and 252, Conn. Gen. Stat. §§ 16-247a
and 16-247b and the Telco’s resale tariff. The Petitioners argued that the Telco’s policy
forces customers to pay exorbitant termination fees based on the full balance of the
contract term if such customers choose to do business with a reseller, or otherwise
avoid termination fees altogether by remaining with the Telco as the service provider.
Docket No. 01-02-09                                                                  Page 4



1.    The Telco has refused to provide the Petitioners with copies of customer
      contracts and/or service records as requested, notwithstanding the fact that the
      customers in issue have executed valid letters of authorization for the Petitioners
      to obtain the information, in violation of 47 U.S.C. §§ 251 and 252 and Conn.
      Gen. Stat. §§ 16-247a and 16-247b since July, 1998. On the occasions when
      the Telco produces the contracts or customer service records, the start or end
      dates for any product are often not indicated thereon. Furthermore, at least one
      contract received by CTC from the Telco has been visibly altered.

2.    The Telco requires customers subscribing to its "CentraLink" centrex services
      wishing to migrate to the Petitioners' service offerings to "leave behind" a certain
      number of lines in a Telco account or be forced to pay termination liability for all
      lines.

3.    The Telco requires payment of a "common block" charge for all centrex lines,
      wherein customers migrating to a reseller are double billed for common block
      charges, once for the migrated lines and once for the lines which the Telco
      forced the customer to leave behind.

4.    Many existing Telco customers have expressed interest in Petitioners' centrex
      offerings, but ultimately have not been migrated due to the cost of leaving lines
      behind and common block charges.

5.    Since April, 1998, the Petitioners have experienced several instances where the
      Telco has provided a time interval for completion of migration and then not
      completed the migration within the time interval. Many due dates have been
      unilaterally changed by the Telco without notification to Petitioners.
      Consequently, Petitioners have begun billing customers prior to migration who
      are then double billed for services.

6.    Since April, 1998, many customers choosing a competitive service provider have
      had their service terminated by the Telco and had no service for 24 hours or
      more. These terminations have occurred despite the fact that all migrations
      should be transparent, requiring only a change of the customer record to the
      reseller.

7.    Since December, 1998, the Telco has been charging customers unreasonable
      "escalation fees" for expedited service requests, purportedly to accommodate the
      Telco’s system limitations regarding order entries. These escalation fees are
      imposed on any migration request outside of the Telco’s imposed time line.

8.    The Telco purportedly does not have a wholesale intrastate toll offering available
      for resale in Connecticut, which results in the billing of toll by the retail Telco and
      ultimately the receipt of two monthly bills by migrated customers. On information
      and belief, the Telco filed a tariff with the Department for a wholesale tariff
      offering in April, 1998 to which it is not adhering due to a purported inability of its
      system to separate wholesale toll service from retail toll service.
Docket No. 01-02-09                                                               Page 5


9.    Customers subscribing to the Telco’s retail intrastate calling plans who migrate to
      a CLEC have been discontinued from their calling plans and placed on full
      minute rounding at the most expensive retail rate, notwithstanding the Telco's
      continuation of billing for toll usage.

10.   Many customers continue to be billed by the Telco for full service after such time
      as service is being provided by a CLEC, purportedly due to "system error."
      Additionally, the Telco has refused to make available accurate backup billing
      information when requested by Petitioners.

11.   Most customers who subscribe to the Telco voice mail and/or Internet services
      who choose a competitive service provider are subject to disconnection of voice
      mail and/or Internet services by the Telco.

12.   The Telco’s refusal to provide resellers with a detailed itemized monthly bill for
      wholesale services impedes the effectiveness of local service resale as a
      financially viable competitive vehicle in Connecticut.

13.   The Telco's policies and practices as outlined above result in customer
      confusion, increased expense and act as a barrier to market entry and an
      impediment to competition and are in direct violation of 47 U.S.C. §§ 251 and
      252 and Conn. Gen. Stat. §§ 16-247a and 16-247b.

14.   The Telco's conduct imperils Petitioners' businesses and reputations in
      Connecticut and is anticompetitive and discriminatory.

      Petition, pp. 4-7.

       Accordingly, the Petitioners requested that the Department order the Telco to
immediately cease and desist its unlawful and anticompetitive practices.            The
Petitioners also requested that the Department enjoin the Telco from imposing
termination fees; from forcing customers to leave behind lines with the Telco when
migrating Centrex service; from double billing customers for common block charges;
from imposing unreasonable escalation fees for routine service orders; and from
continuing to bill customers after they have discontinued the Telco service. The
Petitioners further requested that the Department order the Telco to produce customer
contracts, backup billing information and service records when requested to verify
customer contractual obligations; to provide detailed itemized monthly bills for all
wholesale services; to meet migration intervals and due dates as promised so that
Petitioners may properly serve their customers on parity with the Telco's customers; to
charge migration fees based on the incremental administrative cost to the Telco; and to
allow Petitioners to assume customer contracts without impediment. Additionally, the
Petitioners requested that the Department order the Telco to refund all overcharges and
unlawfully collected charges. In the alternative, the Petitioners requested that the
Department conduct compulsory arbitration of these issues as mandated by 47 U.S.C. §
252(e)(5), resolving the issues raised in this Petition within 90 days. Lastly, the
Petitioners requested, once these issues were resolved, that the Department order the
commencement of a "fresh look" period for all services during which all consumers may
Docket No. 01-02-09                                                                 Page 6


select a reseller without penalty, in order to sustain the competitive environment.
Petition, pp. 9 and 10.

III.   POSITIONS OF PARTIES

A.     THE ASSOCIATION OF COMMUNICATIONS ENTERPRISES

         ASCENT disagrees with the Telco’s argument that termination liability charges
are lawful and that they are reasonable and pro-competitive. ASCENT also disagrees
with the Telco that its service contract policies are reasonable and pro-competitive.
ASCENT claims that the Telco attempts to place the Department on the defensive by
suggesting that it should reject the Company’s contract termination penalties because
such a prohibition would conflict with the pro-competitive policies that underlie Public
Act 94-83, An Act Implementing the Recommendations of the Telecommunications
Task Force (Connecticut Act) and would be inconsistent with the specific statutory
provisions cited in the Draft Decision. ASCENT also cites to the Minnesota Public
Utilities Commission (MPUC) Order in Docket No. P-421/AM-00-1165, In the Matter of
Qwest Corporation’s Refiling of its Proposed Tariffs Regarding Termination Liability
Assessments as Applied to Resale Arrangements (Minnesota Order) wherein the
MPUC found that terminating liability charges are not fair and reasonable, are anti-
competitive, and unreasonably restrict resale.

        Accordingly ASCENT concludes that the Telco’s “pro-competitive” arguments
should be rejected, consistent with the Minnesota Commission’s decision. Additionally,
ASCENT urges the Department to adopt the Draft Decision to prohibit the Telco from
instituting termination liability provisions on long-term contract customers. ASCENT
October 17, 2001 Letter, pp. 1 and 2.

B.     AT&T COMMUNICATIONS OF NEW ENGLAND

         AT&T argues that termination liability provisions are not prohibited anywhere in
Connecticut legislation nor in the Telcom Act. AT&T also argues that termination
liability provisions, in and of themselves, are not a problem. Rather, the problem is their
use by a provider of monopoly services to thwart competition. According to AT&T,
termination liability provisions are a necessary and legitimate means of ensuring that
the pricing and other material business considerations given by a carrier to its
customers in fair negotiations are properly reflective of the term of the contract chosen
by the customer. AT&T maintains that the Department does not regulate the prices that
CLECs charge their customers; and therefore, it should not regulate the termination
provisions in CLEC contracts either.

         AT&T recommends that the Department restrict its prohibition of termination
liability provisions to providers of non-competitive services that possess market power
and the ability to condition the availability of lower prices and other more favorable
terms on the customer’s agreement to a long-term contract with substantial termination
penalties. The prohibition should be limited to the initial phase of introducing
competition into the market that was previously noncompetitive. It is in these
circumstances in the opinion of AT&T, where customers lack choice.
Docket No. 01-02-09                                                                  Page 7


      AT&T states that this not the circumstance in a competitive marketplace or where
a CLEC negotiates a contract term with a customer. In these situations, the customer
always has other options. The marketplace can and should regulate carrier conduct in
these situations. The market cannot be regulated in the noncompetitive situations
present in a monopoly market. If termination liability provisions are prohibited in
competitive situations, the Department is unnecessarily regulating. However, the
Department should prohibit the use of these provisions where there is market power.

      AT&T also states that the Draft Decision does the opposite of what should be
done.     It prohibits the use of termination provisions for all providers of
telecommunications services but allows them to remain in place in current ILEC
contracts. Thus, it regulates where no regulation is necessary and fails to regulate in
those situations where regulation is warranted. Therefore, AT&T suggests that the
Department reconsider its decision and issue an order in conformity with the comments
AT&T had submitted in the prior proceeding. AT&T July 2, 2001 Letter, pp. 2 and 3.

C.     AT&T WIRELESS

        ATTW supports the comments of AT&T and maintains that any limitations on
termination fees should apply only to monopoly providers who use such fee provisions
to thwart competition. ATTW understands that any limitations on termination fees would
not apply to the wireless carriers. ATTW claims that wireless carriers have used
termination fees for many years with no discernable adverse impact on the level of
competition or reduction in the traditionally high churn rates in the wireless industry.
ATTW also argues that even if the Department were to impose restrictions on wireless
carriers’ use of termination fees, it would be preempted from doing so by federal law.
According to ATTW, §332(c)(3) of the Communications Act prohibits states from
regulating the rates of wireless carriers. Clearly any attempt to restrict wireless carriers’
ability to use termination fees would directly affect the rates they charge for service, in
direct contravention of §332(c)(3) of that act. ATTW further notes that the Department
has acknowledged the close connection between rate levels and termination fees.
Finally even if it were within the scope of the Department’s jurisdiction, ATTW contends
that imposing limits on wireless carriers’ termination fees would represent a significant
departure from the Department's traditional “hands off” regulatory approach to wireless
carriers.

       Therefore, ATTW does not believe that any prohibition on the imposition of new
termination fees can or should extend to wireless carriers. ATTW July 2, 2001 Letter,
pp. 1-4.

D.     ATTORNEY GENERAL OF THE STATE OF CONNECTICUT

       The Attorney General of the State of Connecticut (AG) supports the
Department’s conclusion reached in the Draft Decision. The AG citing to the record of
Docket No. 99-03-17, notes that the current docket supports the finding that termination
penalties prevent or deny customer access to a lower priced, higher quality service and
that customers are, in effect, locked into their provider, pending the expiration of the
existing contract.
Docket No. 01-02-09                                                                Page 8


      The AG maintains that if the Telco is unreasonably restraining competition, then
the Antitrust Act and Conn. Gen. Stat. §35-24 et. seq., are triggered because
anticompetitive acts are a predicate element of various antitrust causes of action. The
AG also maintains that offense of monopoly, which includes unlawful monopoly
maintenance, is proscribed by Section 2 of the Sherman Act 15 U.S.C. §2, and Conn.
Gen. Stat. § 35-27.

       According to the AG, the Telco is a monopolist in Connecticut. The second
element of a Section 2 claim is the use of anticompetitive means to “foreclose
competition, to gain a competitive advantage, or to destroy a competitor.” The AG
asserts that the Telco’s insistence on onerous contractual provisions excludes the
Company’s rivals from many business opportunities and thus appears to satisfy the
element of willful maintenance of monopoly position. The AG states that antitrust law
encourages the defendant to assert business justifications in the face of allegations of
an anticompetitive practice. If the full restrictive impact of the challenged conduct on
competition is justified as necessary to further legitimate goals of lowering prices,
improving quality, or in other ways promoting or expanding consumer choice, then the
law is not violated. In the opinion of the AG, the record demonstrates that the Telco has
not justified the contractual practices at issue in this docket. When a company with
monopoly power acts in such a manner as to unfairly lock in its customers, trade is
unreasonably restrained. AG Brief, pp. 2-6.

E.    CHOICE ONE COMMUNICATIONS

      1.     Introduction

       Choice One argues that the Telco has not offered any compelling evidence in
this docket to suggest that the Department should reverse its termination penalty
conclusions reached in the Draft Decision. Choice One also argues that termination
penalties are no friend of telephone competition or the State of Connecticut, regardless
of how the end user is provisioned. Accordingly, Choice One recommends that the
Department affirm its Draft Decision and modify it only to provide further necessary and
requested relief to CLECs in the State. Choice One Brief, pp. 1 and 2.

         The immediate issue in this Docket according to Choice One is the imposition of
termination penalties by the Telco against customers choosing to migrate to either (i)
facilities-based CLECs, or to (ii) non facilities-based providers or resellers. Choice One
notes that the Department has already concluded in the Draft Decision that termination
penalties for facilities-based and resellers violate federal law and state statutes. Choice
One contends that nothing in this proceeding has been offered to compel the
Department to change course and permit these market barriers to continue.

       Choice One believes that the business and residential markets are dominated by
the Telco. In the opinion of Choice One, the Connecticut telecommunications market
lacks meaningful or effective competition. However, the competitiveness of the
Connecticut market (business or residential or both) has no bearing on the legality of
termination of service fees. According to Choice One, the Telcom Act and state
statutes prohibit termination penalties in contracts in all markets.
Docket No. 01-02-09                                                                 Page 9


       It is Choice One’s position that the Draft Decision is the “baseline” or the
minimum requirement for relief and it is obvious that more relief is needed and
warranted. Choice One further maintains that it and other carriers have offered
additional evidence in addition to the topic on termination penalties to establish the
following:

1.     The Telco’s evergreen clauses are harmful to Connecticut end users. The
       Telco’s so-called “notification program” is grossly inadequate and provides no
       relief to end user consumers or wholesale customers (CLECs) with regard to this
       issue;

2.     The Telco’s CentraLink left-in line requirements are unnecessary, create a
       financial windfall to the Telco, and provide no benefit to consumers. The left-in
       lines are ultimately harmful to competition and create a market barrier;

3.     The Telco’s unilateral Letter of Authorization (LOA) requirements (both contract
       LOA and customer service records (CSR) LOA) are unnecessary and result in
       delay, expense, and a market barrier to competition in Connecticut;

4.     The Department must require the Telco to establish a reasonable service
       initiation interval (i.e., 14 days) that is equal to its retail offerings, and create
       fines, penalties, and invectives so that the Telco meets these intervals and
       provides parity with its retail offerings;

5.     The Telco’s Access Tariff is much higher in cost than its FCC tariff, which is the
       real Telco motivation for forcing Choice One to purchase collocation out of that
       tariff. Any action preventing carriers from using the FCC Tariff 39 is illegal;

6.     The Telco’s coordinated cutover and line charges, UNE loop, and other
       associated charges, are excessive and require Department review and relief;

7.     The Telco has failed to produce alleged contracts to justify its termination
       charges; and

8.     The Telco has improperly applied the definition of a “Centrex” service to its
       “CentraLink 1100” offerings.

        Therefore, Choice One requests that the Department order the Telco to
immediately cease and desist from imposing unwarranted termination penalties when
customers migrate their service from the Telco to a competitive carrier for both facilities-
based and resellers. Choice One also requests that the Department grant the other
relief noted above. Choice One Brief, pp. 3-6.

       2.     Termination Liability Penalties

      Choice One notes that the Department has previously concluded that the Telcom
Act and state statutes prohibit the imposition of termination penalties for both facilities-
based and resale situations. According to Choice One, the evidence in this proceeding
more than adequately supports this conclusion while no compelling evidence has been
Docket No. 01-02-09                                                                   Page 10


offered to the contrary. Moreover, Choice One maintains §253 of the Telcom Act
provides the Department more expansive authority to deem such termination penalties
illegal for both facilities-based and resale situations, and to provide other assistance
regarding market barriers in this docket.

        In the opinion of Choice One, the Department has the authority pursuant to §253
of the Telcom Act to provide relief to facilities-based and resale service providers.
According to Choice One, §253 of the Telcom Act provides for the removal of barriers to
market entry for telecommunications services as identified in this proceeding. Choice
One argues that the Telcom Act, with the assistance of §253, in part, requires ILECs to
allow their competitors to access their facilities in three different ways:          (1)
interconnection; (2) unbundled network elements (UNE) and (3) resale. The Telcom Act
also set forth additional obligations that are applicable to all telecommunications
carriers, (i.e., §251(a), and all local exchange carriers, §251(b)). To facilitate rapid
transition from monopoly to competitive provision of local telephone service, Congress
set forth a process to ensure that the incumbent and competing carriers fulfill these
obligations in §252 of the Telcom Act.

        Choice One states that the core function of the Telcom Act is to “’provide for a
pro-competitive, deregulatory national policy framework . . . by opening all
telecommunications markets to competition.” To effectuate this goal, Choice One
claims that the Telcom Act, prohibits states and localities from sanctioning local service
monopolies or “’prohibiting the ability of any entity to provide . . . interstate or intrastate
telecommunications service.” Section 253 of the Telcom Act also requires the FCC,
subject to enumerated exceptions, to preempt the enforcement of any state or local
statute, regulation, or legal requirement that prohibits or has the effect of prohibiting the
ability of any entity to provide any interstate or intrastate telecommunications service.

        Choice One states that pursuant to §253(d) of the Telcom Act, any person may
petition the FCC for an order preempting enforcement of any state or local “statute,
regulation or legal requirement” that “prohibits or has the effect of prohibiting the ability
of any entity to provide any interstate or intrastate telecommunications service.”
Nothing in the plain language of that statute purports to confer exclusive jurisdiction with
the FCC over the types of §253 of the Telcom Act issues raised in the instant
proceeding. Accordingly, Choice One suggests that the Department has clear authority
to address termination penalties and other issues in this proceeding for facilities-based
and reselling competitors.

        Additionally, Choice One argues that §253 of the Telcom Act prevents state
commissions from adopting decisions, orders, rules, or other actions that prohibit or has
the effect of prohibiting the ability of any carrier to provide any interstate or intrastate
telecommunications service. Choice One contends that the Telco’s termination
penalties and other market barriers prohibit CLECs’ ability to provide interstate or
intrastate telecommunications services in Connecticut. Choice One also contends that
if not directly prohibiting CLECs’ ability, termination penalties and other market barriers
have the effect of prohibiting the ability of a CLEC to provide any interstate or intrastate
telecommunications services in the state.
Docket No. 01-02-09                                                                  Page 11


       Moreover, Choice One argues that, §253 of the Telcom Act specifically
empowers the Department to impose requirements necessary to preserve and advance
universal service, protect the public safety and welfare, ensure the continued quality of
telecommunications services, and safeguard the rights of consumers. According to
Choice One, its requested relief (i.e., termination penalty relief and other ancillary relief)
ensures the quality of telecommunications services and safeguards the rights of
consumers.

         Choice One claims that §253 of the Telcom Act requires state commissions to
impose such requirements on a competitively neutral basis. If the Department applies
relief for both facilities-based and resale CLECs in a generally consistent manner, then
it will not run afoul of the Telcom Act’s competitively neutral statutory mandate. Choice
One notes that the Department applied relief uniformly to both facilities-based and
resellers in the Draft Decision, and nothing in this proceeding calls for a different
conclusion on the law or the facts. Choice One Brief, pp. 6-11; Choice One Reply Brief,
pp. 3 and 4; 9-14.

        Choice One also claims that §251(b) of the Telcom Act provides the Telco with
the duty to not prohibit, and not to impose unreasonable or discriminatory conditions or
limitations on the resale of its telecommunications services. Choice One notes that
§251(c)(4) of the Telcom Act requires ILECs to offer for resale at wholesale rates “any
telecommunications service” that the carrier provides at retail to non-carrier subscribers.
This language makes no exception for promotional or discounted offerings, including
contract and other customer-specific offerings.

       Further, Choice One notes that in the FCC’s Implementation of the Local
Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98,
First Report and Order, released August 8, 1996, (Local Competition Order), it declared
that “resale restrictions are presumptively unreasonable.” Accordingly, Choice One
concludes that the Telco’s imposition of termination penalties constitute an
unreasonable restriction on resale in violation of the Telcom Act. Choice One further
concludes that in the Draft Decision, the Department ruled consistent with the FCC’s
determination. In the opinion of Choice One, nothing in the record of this proceeding
has been offered to warrant a change in the Department’s position. Choice One Brief,
pp. 11 and 12.

        In addition, Choice One argues that pursuant to Conn. Gen. Stat. 16-247a(a)(1),
the Telco’s practice of charging termination penalties to customers thwarts the General
Assembly's stated goal of ensuring the universal availability and accessibility of high
quality, affordable telecommunications services to residents and businesses in the
state. Choice One maintains that these termination penalties and other practices
effectively prevent end user customers from electing high quality, affordable competitive
services. In the opinion of Choice One, such termination penalties protect the Telco’s
incumbent position and insulate the Connecticut market for telecommunications
services from competition. According to Choice One, the end result is that these
penalties prevent Connecticut residents and businesses from having universal
availability and accessibility of high quality, affordable telecommunications services.
Docket No. 01-02-09                                                              Page 12


         Furthermore, Choice One maintains that pursuant to Conn. Gen. Stat. § 16-
247a(a)(2), the Telco’s practice of charging termination penalties thwarts the General
Assembly's stated goal of “promot[ing] the development of effective competition as a
means of providing customers with the widest possible choice of services.” According
to Choice One, these unwarranted termination penalties effectively prevent end user
customers from electing competitive service and pose an unreasonable restriction on
facilities-based and resale service, ultimately designed only to protect the Telco’s
incumbent position and insulate the Connecticut market for telecommunications
services from competition. Choice One concludes that it is very clear that residential
and business end users lack of choice and financial disincentive prevent the
development of effective competition and prevent customers from having the widest
possible choice of services.

       While acknowledging the Draft Decision’s conclusion that termination penalties
are not appropriate in today’s telecommunications’ market and “are inconsistent with
Conn. Gen. Stat. §§16-247a(1) and (2) . . . ” Choice One argues that this conclusion is
further supported by the record of this proceeding wherein the Telco’s policy of
imposing termination penalties on service contracts creates an insurmountable
economic disincentive for “contracted” customers (those end users under any
CentraLink contract) to consider competitive alternatives. In the opinion of Choice One,
the Telco’s termination penalties, in general, constitute unreasonable charges that
enable the Company to maintain its “monopoly” control of the Connecticut marketplace,
by “locking up” the majority of the market. Because of the pervasiveness of the Telco’s
term commitment tariffs and contracts, Choice One states that the Company has
erected an impregnable barrier to competition. Specifically, the Telco’s minimum line
contracts and contract termination penalties 1) violate the federal mandate to remove all
barriers to entry into local exchange markets, pursuant to §253 of the Telcom Act; and
2) undermine Connecticut’s pro-competitive statutes and policies.

        Choice One suggests that §§253, 251(b) and 251(c)(4)(b) of the Telcom Act
provide the Department with further and more federal authority to deem such
termination penalties illegal and to provide other assistance regarding market barriers in
this proceeding. In addition to the expansive federal authority under the Telcom Act, the
Department has wide authority under Conn. Gen. Stat. §§16-247a(1) and (2) to deem
such termination penalties illegal and to provide other assistance regarding market
barriers in this proceeding. Therefore, Choice One recommends that the Department
affirm its decision regarding termination penalties in its Draft Decision.

        Choice One states that as a policy matter, termination penalties are not
necessary for a CentraLink agreement. CentraLink termination fees are unnecessary
and constitute duplicative cost recovery for the Telco over and above its permitted rates
and/or its earnings constraints. Choice One claims that in most cases when an end
user leaves the CentraLink service, the end user does not leave entirely in most cases.
For example, when Choice One converts an end user to UNEs for services, it
compensates the Telco and the end user continues to generate revenue for the
Company, in addition to any termination fees currently collected to ensure a profit.
Choice One suggests that in some cases, this revenue may actually be more than the
retail equivalent revenue provided to the Telco (including nonrecurring charges, local
UNE, access charges, etc.). Therefore, Choice One recommends that the Department
Docket No. 01-02-09                                                              Page 13


clarify the Draft Decision so that it addresses all existing as well as new contracts.
Choice One Brief, pp. 12-17.

       Choice One also contends that the elimination of termination penalties will
resolve many of the ancillary issues raised in this docket. For example, the first issue
that would be resolved with the elimination of these penalties is the Telco’s CentraLink
product “left-in” line requirements. Choice One states that currently, the Telco's
CentraLink 1100 product tariffs requires one end user line to remain “left-in;” CentraLink
2100 product requires two left-in lines; and CentraLink 3100 requires 10 left-in lines for
an end user to be compliant with CentraLink contracts and thereby avoid termination
penalties (whether or not fully terminating the Telco service). While the Telco’s left-in
line requirements act as a competitive barrier, the elimination of termination penalties
would take the teeth out of the Telco’s left-in line requirements.

       A second issue that would be resolved is the Telco’s imposition of “evergreen” or
automatic renewal clauses in its service contracts. According to Choice One, evergreen
clauses have been harmful to competition and ultimately “lock up” the end user with the
incumbent carrier essentially forever. These clauses, in the opinion of Choice One,
especially in combination with termination penalties, exclude a majority of the market
from the benefits of competitive choice in Connecticut because they are predicated on
an end user’s insufficient comprehension of the evergreen provision’s deliberate effects.
While other states have statutory prohibitions or limitations against such clauses or
renewals, Connecticut currently has no such statutory prohibition or regulatory mandate.
Choice One prefers that the Department officially mandate this provision be stricken
from future contracts and deemed unenforceable in current contracts.

       Another issue suggested by Choice One that should be eliminated concerns the
Telco's requirement that it waive termination fees in instances where it is unable to
produce a contract within five days from the date of request. Choice One suggests that
a fourth issue that should be resolved by the elimination of termination penalties is the
issue over the Telco’s so-called “remorse policy” or “recovery policy.” According to
Choice One, such relief only provides minimal relief compared with an elimination of
termination penalties.

       Additionally, Choice One suggests that another issue which would be resolved by
the elimination of termination penalties is the issue over whether CentraLink 1100 is
plain old telephone service (POTS) disguised as Centrex. Choice One questions the
notion that CentraLink 1100 is a “Centrex” service. Choice One does not question the
fact that Centrex is a competitive service and for the Telco to raise this issue is a red
herring. However, Choice One contends that these CentraLink 1100 agreements are
nothing more than a method of “buttoning up the marketplace.” Such agreements do
not cover “unique” services, mainly they are POTS lines and features. According to
Choice One, the Telco has acknowledged that both CentraLink 1100 and POTS
services are typically provided using the same switching technologies (5ESS, DMS,
etc.). In the opinion of Choice One, the Telco's "CentraLink 1100" service is actually
nothing more than 1-FB with vertical features. It is clear from the record in this
proceeding that the Telco has merely re-labeled 1-FB service with vertical features to
have the service statutorily classified as “competitive.” However, this issue should be
Docket No. 01-02-09                                                              Page 14


rendered moot as a result of the Department’s decision to eliminate contract termination
penalties. Choice One Brief, pp. 17-20.

      3.     Ancillary Issues

       Choice One also argues that there are various other ancillary issues raised in this
docket that will require Department relief besides the elimination of termination
penalties. These include:

             a.     The Telco Unilateral LOA Requirements

       Choice One states that the Telco has recently agreed to not require the LOA to
be on customer letterhead for CSRs. However, the Telco currently requires that for end
user contract information, such contract requests be presented on customers’ letterhead
or business card to demonstrate end user “verification.” Choice One requests that the
Department eliminate this requirement and specifically prohibit a letterhead requirement
on either LOA request (contract or CSR).

             b.     Excessively Long Service Initiation Intervals

       Choice One claims that the Telco has offered it “due dates” for service initiation
(or service activation) with a 6-week interval or longer. Such intervals are for
coordinated hot cuts. According to Choice One, the Telco claims this delay is the result
of a “resource issue” because it did not anticipate the volume of coordinated hot cuts
that the Company is experiencing. Choice One also claims that the Telco has been
unable to provide an estimated timeframe when these intervals will return to “industry
standard,” or customary activation intervals of 5-7 days. Choice One understands that
the Telco and Choice One negotiated a uniform time of 14 days from when it submitted
the CSR to when the Company turns up the end user so long as the CSR is not
“rejected” for supplemental information. According to Choice One, more than 64% of
the time the Telco has failed to meet this 14-day commitment; therefore, it requests that
the Department establish a standard service initiation/activation interval of 14-days, or
other shorter period which is consistent with the Company’s treatment of its retail
customers. Choice One recommends that the Department establish as an incentive to
comply with such times, a 200% rebate for any coordinated cutover fees or $1,000 fine
per missed deadline payable to the aggrieved CLEC.

             c.     Physical Collocation Pricing

       Additionally, Choice One is concerned with the Telco’s requirement that pricing
for physical collocation come from the Company’s Connecticut Access Service Tariff
(CAST) even though price quotes given to Choice One from the Telco since 1999 reflect
lower pricing contained in the Company’s FCC Tariff 39. Choice One claims to have
received numerous collocation invoices charging the rates from the CAST instead of
those provided in the price quotes from the federal tariff. According to Choice One, the
Telco claims that the previous rate quotes were not from the FCC Tariff 39, but were
from the proposed CAST (pending the Department’s approval). Choice One has
disputed payment between the difference in these charges (difference between federal
and state tariffs), with the disputed amounts totaling more than $21,000 per month.
Docket No. 01-02-09                                                                   Page 15



        Choice One maintains that it should be able to purchase all elements for physical
collocation from the FCC Tariff 39. Choice One also states that it orders services out of
both the FCC Tariff 39 and the CAST in Connecticut and complies with federal and
state law that requires that interstate service must be ordered out of the FCC tariff and
intrastate service must be taken out of state tariff. Where traffic or services are
jurisdictionally mixed, Choice One claims to have the ability to order out of either the
FCC tariff or the CAST pursuant to applicable law.

        Choice One also argues that §§253(b) and (c) of the Telcom Act permit the FCC
and state commissions to enforce §203 of the Telcom Act. In those case where a
carrier fails to file a charge for service under tariff, the carrier forfeits the charge or the
charge is incorporated into other previously-filed tariff charges (e.g., initial payment for
collocation build). Therefore, Choice One requests that the Department clarify this
issue in this proceeding and require the Telco to permit Choice One to order out of
either tariff.

              d.     Nonrecurring Port Charges

        Choice One also disputes the Telco’s charges for DS0 trunking. According to
Choice One, in its written comments submitted in this proceeding, the Telco indicated
that it would review Choice One’s billing for non-recurring port charges and make any
appropriate adjustments. Accordingly, Choice One reserves comment on this issue
pending the Telco’s review and anticipated adjustments.

              e.     Collocation Access and Pre-cut Issues

        Choice One maintains that it has encountered difficulties with access to its
collocation cages at the Telco’s central offices or other locations. Choice One claims
that the security badges or cards its technicians are issued often do not permit its
personnel to obtain necessary access to its equipment within the Telco’s buildings.
Choice One further claims that it has also encountered issues with “pre-test conversion
measures,” (i.e., pre-test dial tone) prior to client conversion. Accordingly, Choice One
requests the Department initiate an investigation into this matter and offer relief. Choice
One further requests that the Department review FCC and previous Department
directives and take the appropriate actions to prevent the Telco from hampering its
collocation access and pre-test conversion issues. Choice One Brief, pp. 20-27; Choice
One Reply Brief, pp. 15-20.

F.     CONVERSENT COMMUNICATIONS OF CONNECTICUT, LLC

       Conversent Communications of Connecticut, LLC (Conversent) agrees with
Choice One and strongly urges the Department to order the Telco to immediately cease
charging CLECs extra for “coordinated cut-over” service. Conversent argues that the
Telco’s charges for coordinated customer service are unreasonably high when
compared to those of other ILECs and constitute an impermissible barrier to entry.
According to Conversent, the Telco currently charges either $131.40 or $337.48 for
each service order involving a coordinated cut-over, depending on whether the CLEC
orders simple or complex loops. Conversent notes that this is in addition to the
Docket No. 01-02-09                                                             Page 16


customary migration charge of either $29.42 for simple loops or $179.01 for complex
loops.

       Conversent maintains that neither Verizon nor SBC’s affiliates outside of
Connecticut charge CLECs extra for performing coordinated hot-cuts. According to
Conversent, if the Telco were prohibited from charging extra for coordinated cut-over
service, CLECs would be required to pay the applicable electronic or non-electronic
service order charge and the applicable installation charges. Absent the excessive
migration charges for the Telco’s complex loops, Conversent asserts that the
Company’s rates appear to be in line with the rates changed by its affiliates outside
Connecticut.

        Conversent also asserts that it should not be required to choose between paying
unreasonable rates for coordinated cut-over service or use a baseline process that
results in the disruption of service to its customers. Therefore, Conversent urges the
Department to order the Telco to immediately stop imposing excessive, unwarranted
charges for coordinated cut-over service in Connecticut. Conversent October 17, 2001
Letter, pp. 1 and 2.

G.    COX CONNECTICUT TELECOM, L.L.C.

         Cox Connecticut Telecom, L.L.C. (Cox) disagrees with the Telco that there is no
basis, either legally or in public policy, to prohibit the continued use of termination
liability provisions, and no reason to prohibit just one competitive provider from
continuing to use them in its contract. In the opinion of Cox, the use of termination
liability provisions by the predominant provider of telecommunications services creates
an anti-competitive situation. Cox argues that over the years, the Telco has been able
to lock customers into long-term contracts at a time when no alternatives existed.
Those same customers could not switch providers without incurring termination
penalties and other practices, significant enough to dissuade customers from exploring
their competitive options. Cox concludes that as a result, the Telco has been able to
thwart competition by preventing large sections of the market from switching service
providers simply by virtue of its historic market position. Cox also concludes that it is
not the use of termination liability provisions in and of themselves that creates a
problem but rather their use by the Telco. Therefore, Cox disagrees with the Telco and
notes that this situation provides adequate grounds for the Department, on a legal and
policy basis, to prohibit the Company from using the termination liability provisions at
issue in this docket.

       Accordingly, Cox recommends that the Department make a distinction between
the use of termination liability provisions by the Telco and those used by CLECs.
CLECs offering competitive services or not holding predominant market position should
be allowed to use termination liability provisions to protect their nascent investment.
Cox states that customers are often offered lower rates or other more favorable terms in
long-term contracts. In such circumstances, the termination liability provisions ensure a
certain revenue stream in exchange for negotiated terms sufficient to allow the CLEC to
recover its investment in serving the customer.
Docket No. 01-02-09                                                                  Page 17


       Cox notes that the Department initiated this docket to investigate the Telco’s use
of contract termination liability fees and other practices. Cox claims that there is no
showing on the record that the use of termination penalties by CLECs is problematic for
consumers. Cox therefore concludes that any limitation on liability termination
provisions should apply only to the Telco.

        Finally, Cox requests that the Department order a "fresh look" opportunity.
According to Cox, a "fresh look" opportunity would provide customers in long-term
contracts with the Telco an opportunity to switch providers without incurring termination
fees. If termination liability provisions are prohibited on a prospective basis only,
customers with contracts that currently contain termination penalties will not receive
relief. Cox also states that a fresh look opportunity would allow customers to reevaluate
contracts and take advantage of other more recently available competitive services
without penalty. If the Draft Decision only prohibits future termination liability provisions,
only partial relief will be provided to customers. Customers would be prohibited from
entering into long-term contracts in the future where benefits could be offered, but
remain locked into less favorable contracts that already contain termination liability
provisions. In the opinion of Cox, a fresh look opportunity could establish a level playing
field benefiting competition in Connecticut. Without a fresh look opportunity, the Draft
Decision will fall short of solving the actual problem. Cox October 17, 2001 Letter, pp.1-
3.

H.     CTC COMMUNICATIONS CORP.

       1.     Introduction

       CTC maintained throughout Docket No. 99-03-17 and continues to assert in this
proceeding, that end user customers of resellers should not be assessed termination of
service fees because: (1) the end user customer, in migrating to a reseller of Telco
service, does not actually terminate from the Company as the underlying carrier or from
Telco service; (2) the end user's contractual obligation to the Telco is being assumed by
the reseller, who becomes financially responsible for the full term of the end user's
contract with the Telco; and (3) an end user's migration to a reseller involves nothing
more than an administrative change in billing records. CTC's position throughout
Docket No. 99-03-17 and this proceeding has focused on the issue of end user
customers electing resold Telco service, as such instances do not involve any
termination or disconnection of service.

       CTC also claims that it and PCG demonstrated during the course of Docket No.
99-03-17 how the Telco utilizes termination of service fees as the springboard for a
plethora of problems and service issues which cause end user customer confusion,
service interruption and trouble, and serve to prevent customers from switching to their
provider of choice.

       2.     Termination Liability Penalties

      According to CTC, little has changed since the filing of the Petition. Through the
use of termination of service fees, the Telco has successfully managed to prevent
consumers from switching their service, has created an administrative and practical
Docket No. 01-02-09                                                               Page 18


nightmare for CLECs seeking to obtain Connecticut customers and has severely
damaged the goodwill and business reputations of its CLEC competitors. In the opinion
of CTC, the Telco has utilized termination of service fees over the course of the last 2½
years to accomplish its anticompetitive goals despite the Department's findings in the
Draft Decision. That is, that termination of service fees are anti-competitive, harmful
and unlawful. CTC contends that there remains a lack of meaningful competition in the
Connecticut market as a direct result of the Telco's anti-competitive practices.
Moreover, the Telco has done nothing to improve its service quality or wholesale
offerings, despite its testimony to the contrary.

       CTC argues that through the use of termination of service fees, inadequate
wholesale offerings and deficient billing, the Telco has effectively prevented the advent
of competition at its most nascent stage. Primary amongst these is termination of
service fees, which deny consumer choice and create a substantial barrier to CLEC
market entry, growth and financial viability by denying access to customers. CTC
maintains that customers cannot or will not pay these penalties, and because they will
not, they are forced to remain with the Telco regardless of the price and the service
benefits available to them through other carriers. CTC also asserts that without access
to customers, CLEC market entry and growth is crippled and their ability to build a
resale customer base, build their business and execute the three-phase business plan
in any reasonable time frame is jeopardized or rendered unattainable.

       CTC contends that the magnitude of the impact of these termination of service
fees is demonstrated by its payment to the Telco in excess of $700,000 in termination of
service fees. To break even at only a 6% margin on these fees, CTC maintains that it
would have to earn 15 times the $700,000 in revenue, or $2.8 million in new customer
growth. This, according to CTC, is a huge obstacle and market barrier for any
competitor to overcome.

        Unlawful termination of service fees also deny CLECs access to consumers and
substantially dampen or directly compromise the financial viability of CLEC market
entry. CTC asserts that if Connecticut is to realize its goals of effective competition and
advanced infrastructure, the Department must end these practices immediately. CTC
Brief, pp. 1-5.

         In addition, CTC claims that one of the fundamental misunderstandings in Docket
No. 99-03-17, which has carried over to this docket, is the difference between resellers
and facilities-based providers. In making a determination as to the lawfulness and
appropriateness of allowing application of termination of service fees to end users who
switch service providers, CTC argues that it is critical to recognize the difference
between such categories of service providers. CTC also argues that resellers and
facilities-based carriers are not "similarly situated" relative to the imposition of
termination penalties.

        CTC states that it has never requested as part of Docket No. 99-03-17 or this
proceeding to eliminate all termination of service fees. CTC recognizes that such fees
may be appropriate in the context of a migration to a new facilities-based provider as
compensation for lost revenue or special construction undertaken under a contract or
tariff. CTC notes, however, that even in the context of a facilities-based migration, the
Docket No. 01-02-09                                                                              Page 19


Telco continues to receive some revenue from the customer. CTC maintains that
whether the facilities-based provider is leasing the local loop or the switch component of
service or some other combination of UNEs, there is still some revenue flowing to the
Telco from the provision of service to that end user customer. Accordingly, CTC
believes that termination of service fees as set forth in the Telco's contracts for a switch
to a facilities-based provider represent an over-recovery of fees by the Company.

       The heart of CTC's migration dispute with the Telco is the misapplication of
termination provisions and fees to resellers when there is no termination of service to
the end user customer to trigger such provisions. CTC urges the Department to deal
separately with the issue of termination of service fees as applied to end user
customers who migrate to resellers, versus those applied to end user customers who
switch to a different facilities-based provider.3 CTC asserts that such termination of
service fees applied to resellers are blatantly illegal. Although the Department may
reach a different or varying conclusion with respect to the application of such fees to
end user customers who switch to facilities-based providers, such a conclusion requires
an independent legal analysis. CTC Brief, pp. 6-10.

        CTC maintains that there has been no change in federal or state law since the
filing of the Petition and that termination of service fees applied to end user customers
of resellers remain violative of §§251 and 253 of the Telcom Act and Conn. Gen. Stat.
§§16-247a and 16-247b because they are an illegal barrier to market entry and impose
a restriction on resale. The FCC's rulings regarding the illegality of termination of
service fees assessed on resellers remain in effect. Additionally, CTC maintains that
those state rulings which have ruled against the prohibition on the assumption of
contracts by resellers absent termination of service fees remain in force today.

        In the opinion of CTC, case law supports its contention that termination penalties
assessed on customers who choose to migrate to resellers constitute an unreasonable
restriction on resale and violate the Telcom Act. CTC also contends that the FCC has
ruled that the resale provisions of Section 251(c)(4) of the Telcom Act apply to contract
and other customer-specific offerings. Additionally, CTC asserts that the FCC has
concluded that resale restrictions are presumptively unreasonable. CTC argues that the
Telco's imposition of termination of service fees on end user customers who migrate to
resellers constitutes an unreasonable restriction on resale and violates the Telcom Act.

       CTC further argues that the burden to justify a restriction on resale falls squarely
on the Telco. According to CTC, federal regulations provide that an incumbent LEC
may impose a restriction only if it proves to the state commission that the restriction is
reasonable and nondiscriminatory. CTC therefore concludes that the Telco must prove
to the Department that its restriction on resale in the form of termination of service fees
is both reasonable and nondiscriminatory. CTC contends that the Telco has offered no
reasonable or nondiscriminatory purpose for the imposition of termination of service
fees imposed on end user customers of resellers. Instead, the Telco has acknowledged


3   CTC argues that the two types of providers must be separately evaluated and that the illegality of such
     fees when a customer moves to a reseller of Telco service is beyond challenge. CTC Reply Brief, p.
     4.
Docket No. 01-02-09                                                                Page 20


that its true purpose for imposing termination penalties in the context of a resale
migration was to preserve future marketing and revenue opportunities.

       The Telco's stated purpose in the opinion of CTC amounts to the attempted
preservation of market dominance and the obstruction of competition by nullifying the
congressional intent and statutory authority which establishes resale as a competitive
entry model under the Telcom Act. CTC notes that the Telco has admitted that its
termination penalties have no relation to cost recovery in a resale context, but rather
serve as compensation for speculative lost profits beyond the customer's contract
obligation with the intended effect of insulating customers from competitors. By
conceding that the essential purpose of its termination penalties is to bind customers to
it, CTC maintains that the Telco has conceded that these penalties violate the Telcom
Act. Such a purpose has been rejected by the FCC, as well as by other state
commissions.

       Citing Docket No. 99-03-17, CTC claims that the Department has ruled that
termination of service fees are a violation of state and federal telecommunications law.
Termination of service fees must be declared void in the Telco's existing contracts, and
not merely prospectively. CTC also maintains that the Telco's resale restrictions are
just as unreasonable under state law as they are under federal law. Additionally, the
Telco's practice of charging termination penalties to customers who elect resold service
thwarts the General Assembly's stated goal of promoting the development of effective
competition as a means of providing customers with the widest possible choice of
services. Therefore, CTC recommends that the Department adopt the reasoning of the
Draft Decision with respect to termination of service fees under state law.

        Moreover, CTC asserts that the Telco’s termination of service fees fail to comport
with its own tariffs. CTC notes that based on the Telco's own definitions, migration to a
reseller is not a termination, and therefore, resale of the Telco service should not trigger
termination of service fees. CTC therefore argues that it has the right to assume an end
user customer's account, commence purchasing services from the Telco and resell to
the end user customer whose account CTC has assumed. According to CTC, Conn.
Gen. Stat. §16-247f vests the Department the power and obligation to review the
Company’s polices and tariffs in a manner designed to foster competition and protect
the public interest. CTC asserts that the Company has defined what is meant by the
term "migration," a definition that has been accepted by the Department. In light of this
definition of a resale migration, CTC concludes that the termination liability clauses of
the Telco's CentraLink contracts do not apply to resale migrations, inasmuch as
termination is defined to constitute the entire removal or change to another type of
telephone service excluding the Telco service. CTC Brief, pp. 10-21.

       While acknowledging that the Draft Decision determined that with resale the
imposition of termination penalties conflicted with the telecommunications goals of the
state and with federal law, CTC claims that the proposed remedy would allow the Telco
to continue to charge termination of service fees to end user customers currently under
contract who choose to migrate to resellers. CTC contends that permitting the
imposition of termination of service fees is devastating to the Connecticut marketplace
and is in direct contradiction with the finding that such penalties are contrary to state
and federal law. Contract provisions which conflict with laws and regulations are
Docket No. 01-02-09                                                             Page 21


unenforceable. According to CTC, exemption of existing contracts from resale and the
relevant provisions of the General Statutes, the Telcom Act and FCC rulings as
contemplated by the Department in the Draft Decision would contravene this
established common law principle.

       CTC maintains that it is black letter law that contracts that are legal when made,
but made illegal by subsequent law, are unenforceable. This principle, in the opinion of
CTC, has deep roots in Connecticut and federal law. CTC also argues that under
established common law precedent, a contract which violates the laws of the United
States and contravenes public policy as expressed in those laws is unenforceable.
CTC states that the Department has adhered to this fundamental principle when it has
ruled, for example, that contract provisions which violate the spirit and purpose of the
law are unenforceable. CTC further claims that the Department has held that
contractual provisions which contain language that serves to defeat state policy and are
contradictory to state law are unenforceable, void and without effect. It has been held
that a contract which violates statutes and a corresponding regulatory scheme is void
and no action can be brought to enforce it.

        Therefore, CTC argues that as termination penalties have been found in the Draft
Decision to violate specific provisions of the Telcom Act and Title 16 of the Connecticut
General Statutes, the termination clauses contained in any contracts, current and
prospective, must be voided. The Department cannot forbid future violations of law
while allowing current violations of law to continue. CTC also argues that only
prohibiting termination of service fees on a prospective basis is also inconsistent with
the relief ordered by other state commissions with respect to the same issue.

       Additionally, CTC states that the termination of service terms in the Telco's
CentraLink contracts specify that, in the event of termination of the contract, the end
user is liable to pay the Telco a termination of service fee based on the maximum
number of lines in service during the contract period. However, the Telco testified at
hearing in this proceeding that termination of service fees should only be based on the
number of lines in service at the time of termination. CTC recommends that the
Department hold the Telco to its testimony and order that any customer who has paid
such excessive termination of service fees be immediately refunded. CTC notes that
the need for any Department orders dealing with this issue on a going-forward basis are
obviated by the elimination of termination of service fees. CTC Brief, pp. 22-28.

       The elimination of termination of service fees will, according to CTC eliminate
many of the customer service and other problems cited by the parties to this
proceeding, including lines left behind, duplicate common block charges, production of
customer contracts, automatic renewal clauses, and inappropriate customer contact.
However, if termination of service fees are not eliminated for all contracts, including
current and prospective contracts, these problems will continue, and in fact will grow
larger. While acknowledging that the Telco has introduced new "solutions" to the
ancillary problems associated with termination of service fees, CTC claims that CLECs
are experiencing more problems. Specifically, CTC is facing more administrative
problems now than when it initially filed the Petition. In the opinion of CTC, the
remedies proposed by the Telco are inadequate and serve only to continue to hamper
CLECs in their acquisition of customers. Prohibiting termination of service fees in
Docket No. 01-02-09                                                               Page 22


current, as well as prospective contracts, would easily moot most, if not all, of these
issues.

       CTC notes that in order to avoid expensive termination of service fees but still
receive the benefit of choice, many customers have chosen to leave one or two lines in
service with the Telco. This results in a simple downsizing of the Telco contract, which
does not trigger termination liability. CTC also notes, however, that this practice has
resulted in a host of administrative and billing problems which make customers leery of
switching service providers. By leaving lines behind with the Telco, CTC contends that
customers must receive two separate bills for service, one from the Telco for the lines
left behind and one from their provider of choice for the migrated lines. The lines left
behind are also disassociated from the remaining lines and thus rendered almost
useless. In being disassociated from the CLEC lines, the Telco sets up a separate
common block, for which it charges the end user, in addition to the common block set
up for the CLEC lines. CTC also contends that the issue of lines left behind is a direct
cause of the ongoing dispute over "partial migrations" in another docket. In the opinion
of CTC, these problems would all be eliminated if termination of service fees were
prohibited, as there would be no reason to leave lines behind and customers could be
migrated whole. CTC Brief, pp. 28-31.

        CTC states that another recurring theme from Docket No. 99-03-17 is the Telco's
production of contracts within five business days of a request. While acknowledging the
Telco's testimony that it has put considerable time and effort into improving this process,
CTC maintains that little has changed since Docket No. 99-03-17. For example,
although the Telco has placed all contracts into a computerized database, CTC argues
that this database is only searchable by billing telephone number and not by customer
name. According to CTC, the Telco currently has no plans to make the database
searchable by customer name. The result, in the opinion of CTC, is that customers who
move locations or for other reasons change their billing telephone numbers will not have
their contracts readily accessible. CTC also argues that the database is not updated to
reflect changes in customer name or billing telephone number and merely retains the
incorrect information. Similarly, CTC is not persuaded by the Telco’s claim that it
increased staffing and made the contract database searchable by various employees in
the field offices to make contract production more efficient. CTC notes that upon cross-
examination it was revealed that staffing has not increased and there still remains only
one employee with some temporary backup help responsible for responding to CLEC
requests for contracts.

       CTC asserts that the importance of the Telco's failure to readily produce
contracts revolves around its commitment to not assess termination of service fees in
those instances where it is unable to produce a contract within the five-business day
window. CTC states that despite the Telco's testimony that this is its policy, CTC, PCG,
Choice One and the public commenters in this proceeding and in Docket No. 99-03-17
all presented evidence that the Telco does in fact charge termination of service fees in
instances where it cannot produce a contract. CTC argues that irrespective of whether
a customer incorrectly assessed termination of service fees is ultimately credited by the
Telco, once the fees are assessed, the damage has been done. CTC says it has lost
customers because of this issue.
Docket No. 01-02-09                                                                Page 23


        Regarding the Telco’s “remorse period," whereby end users who have been
misled into believing they will not incur termination liability can return to the Telco with
no penalty within 60 days of receiving notice of termination liability, CTC maintains that
no carrier is aware of this policy. In the opinion of CTC, such a remorse period is unfair
in that it is the Telco making its own rules concerning customer migration.

        CTC concludes that the problems the Telco faces in producing contracts and
those encountered when termination of service fees are assessed when no contract has
been produced all disappear with the elimination of termination of service fees.
Nevertheless, CTC notes that a larger and potentially more serious problem of
inappropriate customer contact for purposes of win-back campaigns also disappears if
CLECs are not forced to request contracts from the Telco retail. Specifically, the
Telco’s practice of having its salespeople contact those Company customers for whom
CLECs have inquired as to whether a contract exists, is inappropriate. CTC disagrees
with the Telco’s testimony that it would consider it an anticompetitive activity to lower a
contract price, extend a contract term or otherwise make a deal with a customer in order
to entice that customer to remain with Company service.

        CTC contends that by using termination of service fees to force CLECs to inquire
of the Telco's retail organization whether a contract exists gives the Telco a "heads up"
that a customer is considering migrating to another service provider. CTC argues that
the Telco then has, at a minimum, five business days while a CLEC is awaiting a
response on the contract issue to attempt to "win-back" that customer even before the
migration has taken place.          CTC believes that such win-back attempts are
anticompetitive, unfair and unlawful. CTC also believes that an order directing the Telco
to refrain from engaging in any win-back activities for a seven day period after customer
migration has taken place should be considered by the Department. CTC recommends
that the Department consider these anticompetitive actions and impose standards to
prevent such occurrences. CTC also recommends that the Department prescribe
suitable penalties for such actions to be imposed on the Telco for each occurrence, in
order that the Company institute more definitive and substantial punishments for its
employees and agents who engage in this kind of behavior. Nevertheless, while CTC
acknowledges that the problem of inappropriate win-back attempts upon request of a
contract will disappear with the elimination of termination of service fees, it recognizes
that the problem remains as to CLEC disparagement by the Telco agents and
employees. CTC Brief, pp. 31-36.

       Additionally, CTC is concerned with the automatic renewal clauses contained in
the Telco's contracts and asserts that they substantially compound the problems
associated with termination of service fees. These clauses ensure that the portion of
the market already locked into the Telco remains absent extraordinary planning and
action on the part of the end user. Further, automatic renewal clauses essentially give
the customer one day on which to switch service providers without suffering some kind
of harm. In the opinion of CTC, such a practice is costly, administratively burdensome
and acts as a disincentive to movement in the marketplace.

       Regarding the Telco's proposed resolution, (e.g., the mailing out of contract
expiration notices 120, 60 and 30 days prior to contract expiration), CTC notes that
these notices are provided only to CentraLink 1100 customers and there is no plan to
Docket No. 01-02-09                                                               Page 24


implement any notice procedure for CentraLink 2100 or 3100 customers. CTC argues
that there is no tracking method and no guarantee that customers receive these notices.
Moreover, if a customer can prove that it did not receive such a notice, the Telco still
holds that customer to the renewed contract term.

       CTC also takes issue with the language of the Telco's contract expiration notice.
CTC notes that these notices do not mention automatic renewal, contract termination
fees, or advise customers that they must notify the Telco in writing if they do not want to
renew their contracts. In the opinion of CTC, these notices simply describe the Telco's
products and services and invite the customer to contact a sales representative to
determine which the Company’s product will best suit that customer's needs in the
future. Such a marketing piece hardly constitutes notice of contract rights and
responsibilities.

        Additionally, CTC does not accept the Telco’s proposal to modify its automatic
renewal policy so that contracts will only automatically renew for 12 months. Whether a
contract renews for one year or five years, CTC argues that the same administrative
burdens in switching service providers are encountered. CTC concludes that the end
result is that customers cannot freely choose to change providers when they want. CTC
also concludes that automatic renewal clauses substantially prohibit movement in the
marketplace. CTC further concludes that the entire problem of automatic renewal
clauses and adequate notice would be eliminated with the elimination of termination of
service fees. CTC Brief, pp. 36-39.

      3.     Ancillary Issues

        Finally, CTC notes that the issue of retail toll was raised in the Petition. CTC
states that the Draft Decision incorrectly determined that the Telco's wholesale bulk toll
product is adequate to suit CLEC needs and dismissed CTC's claim that the Telco's
retail toll products must be resold. CTC argues that such a finding conflicts with the
mandates of the Telcom Act and the Department's conclusions with respect to resale in
other Department proceedings.

       CTC also notes that the FCC has ruled that the resale provisions of §251(c)(4) of
the Telcom Act apply to any telecommunications service. CTC states that contrary to
the Telco's proffering of its wholesale bulk toll offerings, the Company still has not
provided a viable toll service offering for resale. In the opinion of CTC, the wholesale
bulk toll offering proffered during Docket No. 99-03-17 does not satisfy the resale
requirements of the Telcom Act nor does it satisfy CTC's needs.

        CTC asserts that the FCC has issued rulings which directly contradict the Telco's
interpretation of the Department's Decision which it has relied on for not offering those
services subject to resale. In the opinion of CTC, the anti-competitive result of
exempting retail toll from resale requirements is that end user customers of resellers
face higher costs, which creates additional barriers to CLECs, serving as another form
of a switching penalty or termination of service fee. This type of toll termination penalty
is a direct violation of the Telcom Act and FCC pronouncements. Therefore, CTC urges
the Department to issue an appropriate ruling on this matter that retail toll products must
be made available for resale. CTC Brief, pp. 39-42.
Docket No. 01-02-09                                                               Page 25



I.    OFFICE OF CONSUMER COUNSEL

       The Office of Consumer Counsel (OCC) recommends that the Department hold
that the Telco’s business contract termination penalties are an unreasonable restriction
on resale and violate state and federal laws. The OCC also suggests that termination of
service fees be declared void in all existing contracts and not merely those made
prospectively.    The OCC asserts that contracts, renewed automatically or by
negotiation, should be prohibited from including provisions for the imposition of
termination penalties. OCC Brief, p. 2.

       According to the OCC, the Telco’s termination of service penalties are not only
anticompetitive on their face based on the Company’s market power, but they violate
§251 of the Telcom Act and the Connecticut Act. While acknowledging the Telco’s
claim that the Connecticut Act required competitive services to be mildly regulated, the
OCC notes that the FCC and state commissions have determined these types of
penalties violate pro-competitive statutes by forming market barriers to competition.
The OCC also claims that explicit in these determinations is that termination of service
fees establish market barriers in the form of an express penalty specifically preventing
ILEC customers from switching to potential competitors.

       The OCC further states that while marketing and financial devices such as
termination penalties could be considered hindrances in a truly competitive market, the
law controlling the behavior of ILECs and prevailing market conditions dictate otherwise.
According to the OCC, this is a classic example of the dangers foreseen by pro-
competition state and federal statutes prohibiting unfair infringements on the abilities of
potential competitors to reach ILEC customers. By compromising the ability of potential
competitors to acquire customers and build a revenue base, profits that will eventually
finance facility-based infrastructure are denied.

        The OCC while concurring with the Telco that Centrex service has been deemed
competitive by statute, disagrees with the Company that in so doing does not mean that
it is practically so. The OCC notes that the Telco while claiming this service to be
intensely competitive, has not provided any record evidence (other than data illustrating
the Company has lost Centrex access lines during recent periods for a number of
reasons) supporting this claim.

        Additionally, the OCC argues that the Telco was unable to satisfactorily
demonstrate how large telecommunications service providers such as AT&T or
WorldCom, Inc. and their ability to bundle services would provide for greater competition
for most local business services. In the opinion of the OCC, there is no question that an
incumbent provider such as the Telco has the opportunity to provide a far wider range of
products and services for a potential customer for local business telecommunications
services. Furthermore, the OCC noted that the Telco omitted the financial troubles of
large interexchange carriers such as AT&T which have been losing market share and
capital value on a daily basis, as well as the fact that the central parties to this
proceeding are two little-known resale companies. OCC Brief, pp. 3-6; OCC Reply
Brief, pp. 3-7.
Docket No. 01-02-09                                                                            Page 26


       Accordingly, the OCC recommends that termination of service fees be eliminated
in current and prospective contracts.4 The OCC also recommends that contracts
renewed automatically or by negotiation should be prohibited from including provisions
for the imposition of termination penalties. The OCC bases this recommendation on its
belief that contracts entered into after the enactment of the Telcom Act and the
Connecticut Act were done so in violation of those acts and are therefore
unenforceable.

       Moreover, the OCC states that since most of the contracts in the Connecticut
market involve the Telco as service provider, elimination of termination penalties on
prospective contracts only will have the most immediate effect on potential competitors
seeking new end user customers. The OCC acknowledges that after time the Telco’s
existing contracts would begin to lose termination penalties, but the lop-sided effect on
CLECs would have already caused its damage.

       While noting that existing contracts may have been predicated on cost and profit
models based on collection of termination penalties as needed, the OCC asserts that
costs are fully recovered with contribution to profit. The OCC is not persuaded by the
Telco’s claim that it has much to lose by the elimination of termination of service
services because the Company will continue to receive its full revenue due under the
contract, less avoided costs, when a customer migrates to a new service provider. The
OCC concludes that charging a termination of service fee for migration is not only
anticompetitive due to the Telco’s market power, but totally unwarranted since the Telco
has no loss upon which to base such a penalty. The OCC states that the resellers have
no such opportunity to cover costs let alone earn a profit after they have lost a
customer.

       The OCC therefore recommends that wholesale penalties be eliminated for all
contractual obligations of reseller and facilities-based carrier customers of other
carriers, and not just for end users. Failure to order a complete ban on contract
termination liability penalties will leave open the opportunity for one entity to load
charges on another carrier which might not be passed through to the actual cost causer.
The OCC maintains that this situation would be made moot by eliminating termination
penalties.

        The OCC is also concerned with the recovery of costs resulting from the
installation of facilities or equipment for the direct provision of service to a customer
versus embedded costs or utilization of existing plant to provide new services.
Specifically, the OCC is troubled by the possibility of exaggerated or double-counted
costs or a return to the current paradigm in which hefty termination penalties are
imposed to recover facilities installation costs. Therefore, if the Department allows
reimbursement of such expenses through customer contracts, the OCC suggests that it
may be prudent to order providers to recover these costs as a nonrecurring installation
cost at the time of establishment of the contract. The OCC also recommends that the
Department be clear as to what expenses may be reimbursed to avoid litigation later.

4   Choice One concurs and argues that all contracts, those renewed automatically or by negotiation,
     should be prohibited from including contract termination penalty provisions. Choice One Reply Brief,
     p. 20.
Docket No. 01-02-09                                                               Page 27



        Relative to the Telco’s remorse period, letters of notification to customers
regarding expiration dates, and new database access requirements, the OCC claims
that the Company is attempting to blunt the intense reaction to its termination penalties
and to stave off elimination of these fees. The OCC also claims that the Company has
deferred implementing policies aimed at enhancing consumer satisfaction because the
fate of these penalties has been unclear for nearly two years. According to the OCC,
elimination of termination fees will render this effort by the Telco unnecessary and will
clear up all remaining confusion as to its policies. OCC Brief, pp. 6-11; OCC Reply
Brief, pp. 7-10.

J.    THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY

      1.     Introduction

         The Telco argues that this docket concerns the question of whether the
Department should restrict one competitive provider of statutorily classified competitive
services in a market that is robust with competition. According to the Telco, the focus of
this proceeding has narrowed to the Company’s practices for provisioning Centrex
services to a segment of customers who are the focus of the bulk of competitive activity
in the state. The Telco contends that its term contracts for these competitive services
are consistent with state law, industry practice and clearly have not impeded the
development of competition for the relevant services. Conn. Gen. Stat. §16-247b(b)
requires the Telco to provide reasonable nondiscriminatory access to all equipment,
facilities and services necessary to provide telecommunications services to customers.
The Telco also claims to make available for resale, its retail telecommunications
services including services that are provided under contract. The Company states that
contrary to the CTC and Choice One assertions, this provision does not preclude the
Telco from imposing termination charges pursuant to a contract. The Telco asserts that
its experience in pricing its resale products at a reduced price offers the CLECs an
attractive marketing strategy that shows how attractive that strategy is as evidenced by
the high level of competition in the business market. Accordingly, the Telco concludes
that the Department should find that the Company provides reasonable and
nondiscriminatory access to all its services pursuant to Conn. Gen. Stat. §16-247b(b).
Telco Brief, p. 4.

      2.     Termination Penalties

        While noting that the Connecticut Act found that all providers’ retail offerings of
Centrex, WATS, and 800 services are competitive, the Telco contends that under that
act, all providers of competitive services are to be treated the same in their provision of
those services. Therefore, the Company must be regulated in the same manner in its
provision of competitive services as all other providers of the same or equivalent
services. Accordingly, there is no reason for the Department to treat the Telco’s
Centrex offerings differently than other providers’ offerings under Conn. Gen. Stat. §16-
247f(b) or to disregard legally enforceable terms and conditions in the Company’s
contracts to further competition in the relevant markets. The Telco claims that these
termination and assignment provisions have always been in the Company’s CentraLink
Docket No. 01-02-09                                                                             Page 28


contracts and the inclusion of termination provisions is an industry standard. Telco
Brief, pp. 5-8; Telco Reply Brief, pp. 3-7.

       The Telco notes that despite the competitive Connecticut business market, CTC
and Choice One have requested that the Department single the Company out from all
other competitive providers and regulate its provision of competitive services. In the
opinion of the Company, this relief is extraordinary and unnecessary. The Telco
suggests that the Department need not do anything to spark competition for these
services because competition exists today and has existed since 1994. The CTC and
Choice One requested relief would, according to the Telco, be tantamount to providing
these parties a sanctioned competitive edge in the market.

       The Company argues that despite the validity of its contract terms, the Telco,
unlike any other competitive provider, has established several customer-affecting
policies and procedures to assist its end user customers. These procedures inherently
are between the Telco and its retail end users and are for competitive services. As
such, the Telco contends that they should not be subject to Department review and
approval. However, these procedures provide the added assurance to the Department
that the Telco’s contract terms are not a “barrier” to competition and that the business
end user is adequately protected.

      The Telco also argues that a prohibition on termination fees will undeniably affect
the Company’s ability to offer attractive, creative product and service choices for its
competitive services. Further, the Telco contends that without a commitment from the
end user, no carrier can offer any differentiation in its products and services based on
market, volume, term and/or bundling. Moreover, to prohibit the Telco from using
termination fees would preclude the Telco from seriously competing in the business
market.

       The Telco concludes that the services at issue in this proceeding are competitive
with their associated terms and conditions governing their provision be regulated only
by the marketplace.5 It says that termination liability provisions are valid industry
standards in the competitive marketplace and their inclusion in telecommunications
service contracts appears to be good business practice for all other competitive
providers in the industry. In the opinion of the Telco, there is no basis, either legally or
in public policy, to prohibit their continued use, and clearly no reason to prohibit just one
competitive provider from continuing to use them in its contracts. Telco Brief, pp.8-18.

       Regarding the contract liability provision, the Telco claims that termination
provisions in telecommunications contracts cannot legally be prohibited and benefit
customers and further competition. The Telco contends that it is critical to understand
that the services in question are marketed in a sophisticated, competitive business
market. The Telco reiterates that the issues presented in this proceeding must be
considered in the context of the competitive nature of these services and the customers


5   CTC disagrees. According to CTC, the Telco’s focus on the competitiveness of Connecticut’s
     marketplace is a red herring and is irrelevant to the illegality of termination of service fees under
     federal and state telecommunications law. CTC Reply Brief, pp. 5-7.
Docket No. 01-02-09                                                                               Page 29


who purchase them, who have been considering competitive service options, beginning
with toll and private line services.

       The Telco therefore concludes that termination liability provisions are consistent
with the goals of Conn. Gen. Stat. §16-247a(a)(1). In the opinion of the Telco, nothing
in the legislative history of Conn. Gen. Stat. §16-247a, et seq., supports a finding that
the statute prohibits termination liabilities.6 In addition, the Telco maintains that while
the Connecticut Act was being negotiated, contracts with termination liability provisions
were in use in the marketplace and known to the Legislature, and the Legislature took
no action to prohibit them. In support of its position, the Company cites to past
Department Decisions wherein it interpreted Conn. Gen. Stat. §16-247a and recognized
the validity and necessity of agreements and service offerings designed with a
termination liability component. The Telco also cites to the Legislature’s confirmation of
the Department the 1999 session, at a time when Docket No. 99-03-17 was ongoing
and when it considered and declined to adopt provisions that would have expressly
addressed the issue of term contracts.7

        Moreover the Telco argues that termination fees are consistent with §§251(b)(1)
and 251(c)(4)(B) of Telcom Act as they are not a “condition” or “limitation” on resale. As
required by the Telcom Act, the Company asserts that all of its retail
telecommunications services, including services under contract, are available for resale
at a wholesale discount. The Telco maintains that termination liability provisions are
between the end user customer and the Company where the CLEC is not a party.
Requiring the Telco to eliminate these provisions in its future contracts is equivalent to
requiring the Company to modify or change its service offerings. Nothing in the plain
language of the Telcom Act or the legislative history find termination fees inconsistent
with that act. Additionally, the Telco claims that the FCC has not determined
termination fee provisions to be contradictory to the Telcom Act. Similarly, no other
jurisdiction outside of Connecticut has ordered an outright prohibition on the future use
of termination charge provisions. Therefore, the Company concludes that it is
imperative, in assessing whether the Telco should be prohibited from including
termination liabilities in its contract, to recognize that both CTC and Choice One assess
these charges.

         Furthermore, the Telco maintains that termination liability provisions remain
consistent with state contract law. All of the Telco’s contracts contain assignment and
liability provisions that are legally enforceable. The Telco’s assignment provision allows
assignment only upon the written consent of the Company. Connecticut case law

6 In the opinion of Choice One, the record in this proceeding clearly establishes that the Telco’s conduct
    and termination penalties harm competition, competitive offerings in Connecticut, consumers and run
    contrary to the goals in Conn. Gen. Stat. §16-247a(a). Choice One Reply Brief, p. 8.
7 CTC claims that there are two problems with the Telco’s argument. First, when the General Assembly
    was considering the Connecticut Act it had no reason to predict the role that termination of service
    fees imposed by the Telco would have in obstructing competition. CTC also maintains that when the
    General Assembly took another look at Conn. Gen. Stat. § 16-247a, et seq., in 1999, it was well aware
    of the pendency of Docket No. 99-03-17 at the Department and that the issue of termination fees was
    being addressed in that proceeding. CTC concludes that under the circumstances, it would be foolish
    to read into the legislative history of Conn. Gen. Stat. § 16-247a, et seq., that the General Assembly's
    silence was in any way an indication of support for termination of service fees. CTC Reply Brief, p. 7.
Docket No. 01-02-09                                                                Page 30


upholds as enforceable assignment provisions in a contract that prohibits assignment
without the consent of the other party. In the event that a party assigns a contract
without that consent as required by the assignment provision, the Connecticut Supreme
Court has held the assignment void. Without the consent of the other party, a valid
agreement does not exist between the original party and the entity to which the contract
was assigned.

        Consistent with these holdings, the Telco is of the opinion that the provisions that
permit assignment with the consent of the Company are valid. Assigning a contract
without consent of the Telco is an invalid assignment and thus, there would be no valid
agreement between the Company and the party to whom the contract was assigned.
All of the Telco’s contracts contain assignment provisions and termination liability
provisions. In the event that a customer breaches the contract, the Telco enforces
termination liability in accordance with this provision. Additionally, the Telco argues that
its ability to contract is supported by United States Constitution. In the absence of any
articulated overriding public interest, an outright prohibition on termination liabilities
would place unreasonable restrictions on contracts. Telco Brief, pp. 18-24.

         Further, the Telco claims that it has voluntarily instituted several end user
affecting contract improvements since Docket No. 99-03-17 was initiated. For example,
the Telco has continued committing to retrieve customer contracts for CLECs
authorized by retail customers to gain access to those contracts. Due to increased
demand for contracts, the Company has added personnel, instituted a contract
database, and designated a retail single point of contact to meet its commitment to
respond to a proper contract request within five business days. In the event the
Company fails to respond within five business days, the Telco will waive any termination
liability on the retail end user.

       Since January 2000, the Telco also has instituted a notification process for
CentraLink contracts to notify retail end users of the impending expiration of their
contracts. This process is intended to assist retail end users in making the right choices
to meet their telecommunications needs. Additionally, the Telco has instituted a policy
to allow for cure of a default of a contract. This policy, according to the Company, was
designed to allow a retail end user who was misled by a CLEC or by the customer’s
own belief as to his/her liability for termination fees to return to the status quo.

       Finally, the Telco has offered proposed changes to its auto renewal or
“evergreen” clauses in its contracts. Specifically, the Telco proposes on a going forward
basis to limit the auto renewal clauses in any contracts that renew to a one-time twelve-
month period, thus allowing retail end users who did not negotiate the alternative
provision of his/her service additional time to investigate his/her options while retaining
the current rate and product structure.

       Nevertheless, the Telco argues that it is important to recognize that it has valid
and enforceable contracts with its retail end users. The Telco also argues that as such,
these policies must be viewed in the light they were meant to be viewed, as an
additional benefit to the retail end user. Moreover, these policies/procedures focus on
those retail end users that purchase CentraLink services from the Telco. Telco Brief,
pp. 24-35; Telco Reply Brief, pp. 9 and 10.
Docket No. 01-02-09                                                              Page 31



        In addition, the Telco asserts that the evidence regarding the Telco’s application
of its tariffs and contractual language regarding its CentraLink service as well as the
evidence regarding the nature of the Telco’s CentraLink 1100 product has not changed,
and the Department’s analysis in its Draft Decision should remain. For example,
regarding the leave-behind lines and common block charge issue, the Telco maintains
that the tariffs approved by the Department for each of the CentraLink products provide
for a minimum line size, which is reasonably related to the line range associated with
the particular product. The Company states that as long as the customer maintains the
minimum line size, the customer will not incur termination liability. The Company also
states that this enables a customer to select the product that best fits its needs at a
beneficial term rate without concern that if its business undergoes fluctuation it will be
forced to maintain unnecessary lines. Therefore, the minimum line size associated with
the competitive CentraLink product line represents a significant customer advantage
that enhances customer flexibility and choice and is clearly not anti-competitive. The
Telco’s tariffs and contracts define CentraLink minimum line sizes. Customers who
wish to migrate to a new local service provider may either breach their contract and
move all lines or continue to abide by their contractual agreement and leave the
minimum number of lines in service with the Telco. Neither the Petition nor the parties
in this proceeding raise any legitimate claim with respect to this issue.

       The Telco also notes that the Petition complains that the Company imposes a
common block charge for those lines migrated to the new provider. The Telco argues
that the evidence regarding common blocks has not changed since Docket No.
99-03-17; and therefore, the Department’s analysis and conclusions regarding the
common block continue to be correct.

        Furthermore, the Telco notes that the Petition challenged the competitive
designation for the Company’s CentraLink 1100 Service. The Telco claims that during
Docket No. 99-03-17, it provided a number of definitions for Centrex service to show
that its CentraLink 1100 Service in fact meets the definitions of Centrex service. The
Company notes that in the Draft Decision, the Department found that CentraLink 1100
Service satisfies the Centrex service definitions and, that CentraLink is a Centrex
service. The Company maintains that the definitions and functionality of the service
remain the same as during the pendency of Docket No. 99-03-17. No party presented
any new or contrary evidence. Telco Brief, pp. 35-38.

      3.     Ancillary Issues

       The Company contends that the issues raised in the Petition regarding the
Telco’s provisioning of certain wholesale services were either cared for during the
pendency of Docket No. 99-03-17 or in other Department proceedings. For example,
regarding missed or unilaterally changed due dates, the Telco maintains that during
Docket No. 99-03-17, the Company responded to all of the specific complaints. The
Telco also notes that the Department is in the process of promulgating wholesale
performance regulations in Docket No. 99-07-27, DPUC Promulgation of Performance
Standards and Performance Based Reporting Requirements Regulations for
Connecticut Telephone Companies. The Telco therefore concludes that there is no
Docket No. 01-02-09                                                             Page 32


issue for the Department to address in the instant docket on the Company’s
provisioning of its baseline wholesale services.

        Relative to the intervals and fees being charged by the Telco for Enhanced
Provisioning Services (EPS), specifically coordinated hot cuts, the Company states that
it filed EPS wholesale and retail tariffs on April 27, 2001, in compliance with the
Department’s December 15, 1999 Decision in Docket No. 99-02-07, Petition of MCI
WorldCom, Inc. for a Declaratory Ruling Regarding the Southern New England
Telephone Company’s Non-Recurring Charges.              Because of the uncertainty
surrounding the scheduling and coordination of a variety of Telco work forces for
coordinated hot cuts, the Company maintains that the interval is negotiated each time
an order is placed to account for the complexity of the service. In a normalized
environment, the Telco’s objective would be a 14-day benchmark. However, that
activity today is not normalized. According to the Company, CLECs cancel 40% of the
hot cuts scheduled on a due date. As a result, 40% of the Telco’s capacity is held up
when it could have been available to another CLEC. In the event the Telco is unable to
provide the service on the date it committed to, the CLEC is not billed the service
charge.

        The Company contends that it is important to recognize that in its Decision in
Docket No. 99-02-07, the Department found EPS to be premium wholesale service
offerings. The Company also contends that based on the Decision’s claimed
jurisdiction, the Department only has authority to ensure the Telco’s EPS tariffs do not
discriminate among potential or actual users or providers. There is no evidence in this
proceeding of any discrimination in the provision of these services among providers. All
requests for these services funnel into the same group for assignment and are treated
on a first come first served basis.

        Regarding Choice One’s withholding payment of $21,000 from its monthly
invoices from the Telco, the Company argues that Choice One is not authorized to order
Expanded Interconnection from the Telco’s FCC Tariff 39. The Company claims that
this tariff restricts the use of Expanded Interconnection to the purchase of InterLATA
Special and Switched Access Services, Sections 6 and 7 of the tariff respectively. The
Company also asserts that Choice One does not purchase InterLATA Switched or
Special Access Services from the Telco; therefore, Choice One must obtain its
collocation from the Telco’s Connecticut Access Services Tariff. In Docket No. 99-08-
05, Application of the Southern New England Telephone Company for Approval of a
Tariff for Collocation, the Department has recently approved the Telco’s collocation
rates and terms and conditions. Once the new physical collocation tariff was approved
and implemented in the Connecticut Access Tariff, the new rates went into effect for all
CLECs as of March 9, 2000. There was no grandfather clause in this tariff revision;
thus, existing arrangements, including Choice One’s, were automatically updated to
reflect the new rates. Accordingly, the Telco suggests that Choice One’s improper use
of the FCC Tariff be condemned, and that it be ordered to immediately pay the Telco for
all outstanding charges for collocation.

       Additionally, the Telco argues that its line charges and nonrecurring port charges
have been approved by the Department. Regarding Choice One’s allegation that the
Telco’s line charges and nonrecurring port charges are unjustified, the Company claims
Docket No. 01-02-09                                                                               Page 33


that these allegations are without basis. The Company states that these charges were
approved by the Department in its June 29, 2000 Decision in Docket No. 00-03-19,
DPUC Review of The Southern New England Telephone Company’s Studies of
Unbundled Network Elements Non-Recurring Costs. The Telco also states that its
nonrecurring port charges are also part of the Company’s Department-approved tariffs.

       Furthermore, the Telco notes that certain parties have asserted that the
Company’s monthly bill for wholesale service is inadequate. The Company also notes
that the Department has recently initiated Docket No. 01-05-25, DPUC Investigation of
the Southern New England Telephone Company Billing System, for the purpose of
investigating the Telco’s wholesale bill. Therefore, the Company recommends that the
alleged issues regarding the Telco’s bill be addressed in that proceeding.

       Relative to CTC’s allegation that all Telco services are not available for resale,
the Company argues that there is no evidence that the Telco is not fulfilling these
obligations. With specific regard to a wholesale toll product, the Telco notes that the
Department determined in the Draft Decision that the Company offers a wholesale bulk
toll service to CLECs via tariff to provide intrastate toll services. The Company
maintains that this offering meets its resale obligation.8 Therefore, the Company
concludes that as the Department has determined, the Telco is in compliance with its
resale obligations and no further deliberation is necessary.

       Relative to Choice One’s allegation that it has had difficulty accessing collocation
space, the Company indicates that there have been instances where access to Telco
buildings was a problem for all individuals, including Telco employees, due to
equipment or system problems. When these situations have arisen, a report was made
immediately to dispatch someone to correct the problem. Since there is no way to know
if a building is having an access problem without someone making an attempt to gain
access to the building, the Telco maintains that all complaints are dealt with on an
individual case basis and rectified as soon as possible. The Company contends that
efforts are ongoing to improve access to all Telco buildings where CLECs have
collocated. Telco Brief, pp. 38-45.

       Additionally, the Telco argues that the facts remain the same regarding the
Department’s previous conclusions on its toll service continuity; voice mail and Internet.
For example, the Telco notes that the Petition claimed that customers who migrate to a
CLEC have been discontinued from their Telco toll plans and placed on the Telco’s
default toll plan. The Company maintains that it has put into place the necessary
procedures to follow when it receives notification from a CLEC that its end user has
selected the Telco as its long distance carrier. These procedures according to the
Company, address the specific circumstances that may arise depending on the choices
made by the individual customer and the toll service plan that that customer selects.

8   CTC states that because the Telco continues to refuse to provide retail toll products for resale as
     required by the Telcom Act, the issue of retail toll remains of great concern and should be addressed
     by the Department in its Decision in this proceeding. CTC also states that the Draft Decision
     incorrectly finds that the Telco’s wholesale bulk toll product is adequate to suit CLECs’ needs and
     incorrectly rejects CTC's claim that the Telco’s retail toll products must be resold. CTC believes that
     those findings run contrary to the Telcom Act's resale requirements and the Department's own
     conclusions regarding resale in other proceedings. CTC Reply Brief, pp. 9-13.
Docket No. 01-02-09                                                                 Page 34


The Telco states that it is committed to provide excellent customer service to all of its
toll customers and again has put in place a retail service manager whose sole
responsibility is CLEC relations and to communicate to the CLECs the steps necessary
to provide Customer Account Record Exchange (CARE) notification.

        Regarding Voice Mail Service, the Company notes that the Petition claimed that
most customers subscribing to Telco VMS were subject to disconnection of the service
if they chose a new local service provider. The Telco cites to the Draft Decision where
the Department’s findings continue to be dispositive of the issue. Specifically, the
Department held that Voice Mail is not a telecommunications service and is thus not
subject to the resale requirements. These facts have not changed.

       Lastly, regarding Internet service, the Company notes that the Petition contends
that most customers that subscribe to the Telco’s Internet Service were subject to
disconnection of the service if they chose a new local service provider. The Company
asserts that a customer may subscribe to SNET Internet Service irrespective of the
customer’s local service provider. Thus, there is no issue with respect to SNET Internet
Service. Telco Brief, pp. 44-46.

K.     VERIZON NEW YORK INC.

      Verizon has focused on whether telecommunications services providers should
be precluded from including termination fees in contracts with customers. According to
Verizon, the inclusion of termination liability provisions in such contracts is a reasonable
and lawful business practice which should not be prohibited in the competitive
telecommunications environment that has developed in this state.

       Verizon maintains that the inclusion of termination liability provisions in contracts
has been a standard practice in virtually all types of business. Liability provisions are, in
the opinion of Verizon, a necessary adjunct to term and volume discount contracts
which permit a purchaser to receive a discount from standard pricing terms. The
offering of term and volume discount contracts by telecommunications service providers
developed as all segments of the telecommunications market became increasingly
competitive. Verizon also maintains that in the case of ILECs, term and volume
discount contracts provide them some measure of needed flexibility to compete with the
ever-growing number of non-regulated and lightly regulated firms that have entered
various niches in the telecommunications market.

         Additionally, Verizon contends that term and volume discount contracts provide
real and substantial benefits to both providers and purchasers of goods and services,
which is why all businesses that operate in competitive markets offer such contracts.
These benefits can be realized only if the providers can include liability provisions for
early termination. Verizon notes that customers need not enter into term and volume
discount contracts. Rather, these customers always have the option of purchasing
ILEC services according to standard contract terms. A decision to purchase pursuant to
a term and volume discount contract in the opinion of Verizon reflects a weighing by
customers of the costs and benefits to them of such contracts, including any termination
liability provisions, as opposed to the costs and benefits of standard tariffed services. A
regulatory edict barring the inclusion of termination liability provisions would be the
Docket No. 01-02-09                                                                 Page 35


death knell of term and volume discount contracts, in effect reducing consumer choice
in Connecticut.

       Further, Verizon disagrees with the notion that the inclusion of liability provisions
in customer contracts is inconsistent with either the Telcom Act or Connecticut Act.
Rather, the pro-competitive, deregulatory policies that are reflected in both federal and
state legislation would be frustrated by the issuance of a Department Decision which
would effectively prohibit the offering of term and volume discount contracts to
Connecticut customers by prohibiting the use of termination liability provisions. Verizon
claims that it would be unreasonable if the Department were to prohibit the ILECs from
using liability provisions in contracts, while allowing other providers of
telecommunications services to use such provisions. Therefore, Verizon recommends
that the Department allow all telecommunications services providers the same flexibility
to compete effectively as competitive markets offer providers of other goods and
services. Verizon October 10, 2001 Letter, pp. 1-4.

L.     WORLDCOM, INC.

       WorldCom states that in a fully competitive environment, service agreements and
termination liabilities are an acceptable business practice that can provide benefits to
both the customer and the service provider. WorldCom quickly notes however, that
Connecticut is hardly a fully competitive environment, and the difference is the use of
termination liabilities by a regulated monopoly (i.e., the Telco) to limit customer choice in
their provision of telecommunications services. In the opinion of WorldCom, to the
degree that termination penalties are used by the incumbent to discourage competition
and to perpetuate its monopoly grasp on the market, such penalties are contrary to law
and public policy and should not be permitted.

       WorldCom also notes that while some parties have asked that the Department
permit the incumbent to continue to impose termination penalties on end users as they
move to facilities-based providers, such an approach would not only discourage
customers from moving from the Telco or the Telco to facilities-based carriers, it would
also be discriminatory and contrary to the competitive environment the Department
hopes to foster in Connecticut. Accordingly, WorldCom urges the Department to reject
such requests. WorldCom October 10, 2001 Letter, pp. 1 and 2.

IV.    DEPARTMENT ANALYSIS

       In Docket No. 99-03-17, CTC and PCG requested that the Department order the
Telco to immediately cease and desist its unlawful and anticompetitive practices.
During the instant docket, Choice One also requested that the Department address
additional issues. The Department’s analysis of these issues is as follows.

A.     TERMINATION FEES

       Since the passage of the Telcom Act and the Connecticut Act, the Department
has issued a number of Decisions outlining its policies and developing procedures as a
means of promoting telecommunications competition in Connecticut. The Telcom Act
has established certain terms and conditions under which local competition is to be
Docket No. 01-02-09                                                                 Page 36


promoted and developed within the states. These include the requirement that all local
exchange carriers not prohibit nor impose unreasonable or discriminatory conditions or
limitations on the resale of their telecommunications services. Telcom Act, §251(b)(1)
and §251(c)(4). Additionally, Conn. Gen. Stat. §16-247a seeks to ensure the universal
availability and accessibility of high quality, affordable telecommunications services to
all residents and businesses in the state, as well as promote the development of
effective competition as a means of providing customers with the widest possible choice
of services. Conn. Gen. Stat. §16-247a(1) and (2). Lastly, Conn. Gen. Stat. §16-
247f(b) provides the classification of services, which moves the Department’s regulatory
oversight away from the provider of the service directly to the service itself.

       In the Draft Decision, the Department initially determined that the imposition of
termination liability charges conflicted with the provisions of the Telcom Act and with the
goals of the Connecticut Act. The Department is aware of the parties’ arguments that
termination liability charges conflict with §§251(a) and (b) and 253 of the Telcom Act
and §§16-247a and 16-247b of the Connecticut Act. See for example, Choice One
Brief, pp. 6-17; CTC Brief, pp. 10-21. However, as further discussed below, various
parties have supported the use of termination liability charges in one form or another.
(See for example AT&T’s July 2, 2001 letter and WorldCom’s October 10, 2001 Letter.

       Based on further review of those statutes, the Department finds that the plain
language of the Telcom Act does not prohibit the imposition of these charges. In
particular, §251 of the Telcom Act outlines the overall terms and conditions which
telecommunications carriers and ILECs must satisfy for purposes of interconnection.
Moreover, §§ 251(a) and (b) of the Telcom Act provides the general duties of
telecommunications carriers (§251(a)) and the obligations of all ILECs (§251(b)) in
moving toward a competitive local market. No where in that language does the
prohibition of these charges exist. While some parties have suggested that §251(b)(1)
of the Telcom Act prohibits the application of termination penalties, the Department is of
the opinion that the CLECs’ provision of service has not been limited nor has the
application of charges resulted in conditions that have prevented the CLECs from
offering service in the state. A reading of §251 of the Telcom Act indicates that this
statute merely applies to the relationship between the incumbent local exchange carrier
and the CLEC, which differs from the relationship between the service providers and
their end users which is what is associated with the termination penalties. Thus, the
Department concludes that the application of these charges does not conflict with these
portions of the Telcom Act.

        Similarly, the Department is not persuaded by the carriers’ claims that
termination fees conflict with the provisions of the Connecticut Act. No where in that
statute is there a prohibition of termination liability charges. In addition, while it is the
goal of the state to “(1) ensure the universal availability and accessibility . . . in the
state,” and (2) promote the development of effective competition . . . widest possible
choice of services,” based on the record of this proceeding, the Department concludes
that these goals have not been compromised by the Telco’s use of termination penalties
in its contracts for competitive services. These charges have only been applied to
contracts for services that have been deemed to be competitive. While the carriers
have been critical of the Telco’s claims concerning the number of competitors in
Connecticut and its loss of access lines that it is experiencing in the market, no carrier
Docket No. 01-02-09                                                                        Page 37


has demonstrated the losses in access lines that they experienced due to the Telco’s
imposition of these charges.

        The Department also believes that the imposition of termination liability charges
are not prohibited by the Telcom Act nor the Connecticut Act as evidenced by the
support for these fees has been proffered by various parties in this proceeding. See for
example, AT&T’s statement that “termination liability provisions are a necessary and
legitimate means off ensuring that the pricing and other material business
considerations given by a carrier to its customers in fair negotiations are properly
reflective of the term of the contract chosen by the customer.” AT&T’s July 2, 2001
Letter, p. 2. WorldCom states that “in a fully competitive environment, service
agreements and termination liabilities are an acceptable business practice that can
provide benefits to both the customer and service provider.” WorldCom October 10,
2001 Letter to the Department, p. 1.

       The Department interprets these parties’ positions to mean that termination fees
are only permissible when service providers do not maintain a dominant position in the
market or when the market has become fully competitive. Specifically, AT&T and
WorldCom supported the use of such charges by all providers with the exception of the
incumbent (in this case the Telco) until such time as the market has fully moved to a
competitive environment and the incumbent has lost its dominant position. As further
discussed below, the Connecticut Act has satisfied the competitive market concerns
expressed by AT&T and WorldCom through the classification of telecommunications
services into three service classes.

        In particular, Conn. Gen. Stat. §16-247f(b) has deemed as competitive several
telecommunications services including, but not limited to, centrex or digital centrex
services. As indicated above, these competitive services have presumably met the
requirements that local exchange carriers must satisfactorily demonstrate when
reclassifying telecommunications services as outlined in Conn. Gen. Stat. §16-247f(d),
(1) through (8).9 In addition, because of Conn. Gen. Stat. §16-247f(b), competitive
services for regulatory purposes have been treated differently than those considered to
be noncompetitive or emerging competitive since 1994.10 See for example, Docket No.
94-10-05, DPUC Investigation of the Southern New England Telephone Company
Affiliate Matters Associated with the Implementation of Public Act 94-83, the March 13,
1996 Decision in Docket No. 95-03-01, Application of the Southern New England
Telephone Company for Financial Review and Proposed Framework for Alternative
Regulation, pp. 19 and 20, 22 and 23, and Conn. Gen. Stat. §16-247f(e).

       As one of the goals of the state is to utilize forms of regulation commensurate
with the level of competition in the relevant telecommunications service market (Conn.
Gen. Stat. §16-247(a), and Conn. Gen. Stat. §16-247f requires the Department “to

9 The Department has found message toll services (MTS) to be competitive by its evaluation of the MTS
   market served by the Telco in light of those requirements. See the November 27, 1996 Decision in
   Docket No. 96-06-23, Application of the Southern New England Telephone Company for Approval to
   Reclassify Message Toll Service From Noncompetitive to Competitive.
10 Although Conn. Gen. Stat. §16-247f provides for three service classifications, telecommunications
   services are presently classified only as noncompetitive and competitive. No services have been
   classified as emerging competitive.
Docket No. 01-02-09                                                               Page 38


regulate the provision of telecommunications services in the state in a manner designed
to foster competition and protect the public interest,” for all intents and purposes,
competitive services have been “lightly” regulated (i.e., less regulatory intervention by
the Department). This is true regardless of the provider of the competitive services
(e.g., CLECs, resellers and the Telco). In the opinion of the Department, Conn. Gen.
Stat. §16-247f has moved its regulatory oversight away from the carrier to the service
and provided for the regulatory treatment of those services. That is, Conn. Gen. Stat.
§16-247f requires that all providers of services be treated the same in their provision of
those services. It is for this reason that the Department disagrees with the arguments
presented by AT&T and WorldCom that the incumbent provider’s provision of
competitive services must be regulated differently than those competitive services
offered by the new entrants or that the market be fully competitive before the incumbent
can impose these charges. Both parties have supported the use of termination
penalties in a fully “competitive market” or by those service providers that do not
maintain a dominant position in the market. The Department concludes that these
conditions have been satisfied because termination penalties have been applied only on
contracts for those services that have been deemed competitive by the Connecticut Act
or determined to be competitive by the Department pursuant to the service classification
criteria outlined in Conn. Gen. Stat. §16-247f(d)(1) through (8). Therefore, the
Department finds that imposition of termination liability charges is appropriate.

       Because      Conn.     Gen.    Stat.   §16-247f(e)     has    differentiated  how
telecommunications services will be regulated, the Department is of the opinion that its
regulatory oversight over competitive services must also be limited, including the terms
and conditions under which they are offered. As termination penalties are a part of
those contracts that are associated competitive services, the Department does not
believe it is appropriate to intervene at this time nor prohibit their use. Rather, the
Department is of the opinion that market forces will influence the conditions under which
service contracts will be drafted and how these charges will be imposed by the provider.
Since the Draft Decision was issued in January 2000, the Telco has, absent the
Department’s intervention, attempted to address end users’ interests (e.g., through the
advanced notification of the impending expiration of contracts and its limiting of auto
renewal clauses in contracts) and minimize consumer liability. While there appears to
be a legitimate requirement for the inclusion of termination liability charges within
service contracts, the Department expects that over time, market forces will require the
Telco to continue developing programs/processes that will lessen end user liability and
reduce the number of instances when those termination liability charges would be
applied.

       Therefore, with the exceptions noted below, the Department will minimize its
involvement in the Telco’s contract process for competitive services. This is not the first
time the Department has refrained from intervening into the contracts between the Telco
and its retail customers for competitive services. In the June 25, 1997 Decision in
Docket No. 94-10-05 for example, the Department refrained from ordering a “fresh look”
for competitive services. In that Decision, the Department also determined that such
contracts represent duly negotiated arrangements and preservation of those
agreements was in the best interests of the signatory parties. Additionally, the
Department indicated that it would respect the terms and conditions set forth in those
contractual arrangements governing the provision of competitive services (e.g., centrex,
Docket No. 01-02-09                                                                            Page 39


digital centrex, wide area telephone services and “800” services) and not subject them
to any fresh look provisions.11 June 25, 1997 Decision, Docket No. 94-10-05, p. 61.

        Regarding the Telco’s procedures to reduce consumer liability (i.e., advanced
subscriber notification of pending contract expiration; changes to the auto renewal
clauses in its contracts and to provide a cure for those customers that may have been
misled with information in reaching their decision to terminate their contracts), the
Department finds that the Company has made progress since Docket No. 99-03-17 was
initiated. However, further advances on the part of the Company in this area are
necessary. For example, regarding the notification provided to subscribers in advance
of their contract expiration, the Department believes that notification should be provided
to all CentraLink customers. Such notification should also begin no later than six
months prior to the date the contract is expected to expire. That notification should also
provide to the end users a clear and concise explanation of any customer impact that
would be associated with service termination fees and an expanded discussion of what
actions are required by the customer to either continue or discontinue service.
Additionally, customers should be provided with a sufficient period of time in order to
make an informed decision on moving to another service provider without concern of
the imposition of any termination penalty. In the opinion of the Department, the Telco’s
notifications must be revised clearly to describe to customers, their rights and
responsibilities associated with their service contracts.

        The Telco has also amended the application of auto renewal clauses in its
contracts to a one-time, twelve-month period in response to its retail customers. While
progress in this area has been made, the Department believes that additional effort on
the part of the Telco in this area is also necessary. In the opinion of the Department,
automatic renewal clauses offer the current service provider a competitive advantage
over its competitors. The Company has made the first step toward their elimination by
providing for an automatic renewal period of 12 months. Nevertheless, the Department
will require on a going forward basis that these clauses be eliminated from all contracts.
Moreover, the Department will require all telecommunications carriers to delete these
provisions from their end user service contracts on a going forward basis as well.
Eliminating renewal clauses from retail end user service contracts should provide for a
greater level of competition in the Connecticut market, is in the public interest and will
be ordered below.

       Finally, the Company has instituted a policy of providing a cure for those
customers that may have been misled (i.e., Telco remorse policy). While the
Department notes that this policy is new since Docket No. 99-03-17 was initiated, the
record indicates that no carrier or end user was aware that such a policy existed. Tr.
9/24/01, pp. 392 and 393. Additional Company publicity discussing and defining this
policy is necessary to ensure that it is implemented in an equitable manner.
Accordingly, the Department recommends that the Telco further refine this policy and


11   Cox has requested that the Department order another fresh look opportunity. As indicated in the June
     25, 1997 Decision in Docket No. 94-10-05, the Department declined to include competitive services in
     those services that would be subject to the fresh look. Neither Cox nor any other party to this
     proceeding has presented new evidence or justification warranting a change from that Decision.
Docket No. 01-02-09                                                                          Page 40


incorporate it (or references to the remorse policy) in the customers’ rights and
responsibilities required above.

         1.      Customer Contracts

       During Docket No. 99-03-17, CTC questioned the “other documentation” that the
Telco relied on to substantiate the existence of a contract. CTC also claimed that the
Telco refused to specify what might constitute that other evidence. Docket No.
99-03-17, CTC August 19, 1999 Brief, p. 19, fn 64. In some instances when the Telco
was requested to provide copies of customer contracts, it was unable to do so. In those
cases where the Telco was unable to produce a contract within five business days, the
Telco would not hold the customer responsible for termination penalties should the
customer choose to leave the Telco for another product or service. The Telco indicates
however, that it would rely on other documentation to substantiate the existence of a
contract such as a CSA filed with the Department or correspondence between the
account team and the customer that references the agreement. With that clarification,
the Department finds that the Telco has satisfactorily defined the other documentation it
would rely on to substantiate a contract. Accordingly, CTC’s claims concerning the
Telco’s imposition of termination penalties when it is unable to produce a contract are
addressed.

        Since Docket No. 99-03-17 was initiated, the Telco has attempted to improve its
ability to produce customer contracts within five business days through the installation
of an electronic contract retrieval system.12 During the instant docket, CTC complained
that the Telco’s current contract database is only searchable by billing telephone
number and not by customer name, nor is the database updated to reflect changes in
customer name or billing telephone number. CTC Brief, p. 31. Additionally, the Telco
witness testified that this arrangement was no longer operating for the purpose of
insuring adequate information for the customer to make competitive choices. Therefore,
the Telco is currently pursuing the use of its Customer Information Window (CIWIN) and
Mechanized Service Access Platform (MSAP) systems as a means of making the
contract retrieval process more efficient. Telco Comments, p. 25; Telco Brief, p. 30.
The Department is cognizant of the Company’s efforts to make the contract retrieval
process more efficient. The use of the Company’s CIWIN and other MSAP systems
should expedite the responses to CLEC requests for customer contracts and appears to
be more efficient than the current process. The Department recommends, however,
that the Telco solicit the CLECs’ input in its development of CIWIN and MSAP systems
for purposes of contract retrieval. Once these systems have been equipped to provide
for the contract retrieval process, they should at a minimum, be searchable by customer
name and updated on a regular basis.

         2.      Lines Left Behind and Common Block Charges

       In Docket No. 99-03-17, the Petitioners objected to the Telco’s requirement that
migrating end users leave behind a minimum number of lines when moving to another
service provider. Petition, p. 5. The Department finds that the Telco has not required

12   In those cases when the Telco is unable to produce a contract within five business days of a valid
     request, the Company does not hold the customer responsible for termination liability.
Docket No. 01-02-09                                                                Page 41


migrating end users to leave behind lines when they move from the Telco to another
provider. Rather, the migrating end users have maintained a minimum number of lines
with the Telco as a means of avoiding the termination penalties that they accepted to
incur should they terminate service prior to the expiration of the contract. The
Department believes that these customers made a conscious decision to accept any
penalty should they fail to maintain the agreed levels of lines subscribed to with the
Telco. Therefore, the Department hereby rejects that portion of the Petitioners’
complaint.

        Relative to the Petitioners’ complaint that the Telco imposes a common block
charge for those lines migrated to the new provider, (Petition, p. 5), the Department
notes that when an end user maintains lines with the Telco and other service providers,
multiple common blocks are required. For example, common blocks are required to
differentiate service between end user station lines providing the capability to associate
various switch features and functionality with end user needs or when providing a
unique toll routing to specific PIC choices for both intrastate and interstate toll for a
common set of end user station lines. In this situation, common blocks provide the
ability for the end user to differentiate service between its station lines, again providing
the capability to associate various switch features and functionality with end user needs.
Docket No. 99-03-17, Tr. 5/13/99, pp. 246 and 247.

        The record indicates that a single common block for end users with multiple
providers would be impractical and not permitted by the Telco’s tariff. Docket No.
99-03-17, Tr. 5/13/99, p. 250. Additionally, the Department notes that the Telco’s
switches do not have the functionality that provides this capability. Similarly, the Telco’s
billing system cannot accommodate common block charges in a multiple local service
provider environment. Id., pp. 482 and 483. Finally, there are maintenance and repair
issues that must be addressed to resolve the Petitioners’ complaint. Id., p. 484. As
evidenced above, multiple common blocks are necessary when end users receive
service from more than one provider. As the Telco provided service in the form of a
common block to end users and resellers of its wholesale services, it should be
compensated. Therefore, the Department will not require the Telco to cease imposing a
common block charge on those customers that are served by multiple providers during
the transition to termination penalty-free contracts.

       No new evidence was entered into the record of the instant proceeding by any
party. Accordingly, the Petitioners’ request that the Telco not be permitted to impose
common block charges is hereby denied.

B.     WHOLESALE SERVICE OFFERINGS

       During Docket No. 99-03-17, the Petitioners complained of the unavailability of a
Telco wholesale intrastate toll offering for resale. According to the Petition, the Telco
does not have a wholesale intrastate toll offering available for resale in Connecticut.
The Petitioners also state that on information and belief, the Telco filed a tariff with the
Department for a wholesale tariff offering in April 1998, which it is not adhering to due to
a purported inability of its system to separate its wholesale service from retail.
Moreover, CTC asserts that the Telco has refused to make its retail toll plan available
for resale. CTC comments that it only seeks to be treated on parity with and receive the
Docket No. 01-02-09                                                                Page 42


same retail toll for resale which the Telco makes available to SNET America Inc. (SAI).
Petition, p. 6; Docket No. 99-03-17, CTC August 19, 1999 Brief, p. 21.

       During the pendency of the instant docket, CTC reaffirmed its concern over the
inadequacy of the toll service products that are available for resale. According to CTC,
the Telco still has not provided a viable toll service offering for resale. CTC also claims
that the wholesale bulk toll offering proffered during Docket No. 99-03-17 does not
satisfy the resale requirements of the Telcom Act nor the needs of CTC. Accordingly,
CTC urges the Department to require the Company to make its retail toll products
available for resale. CTC Brief, pp. 40-42. In response the Telco claims that it is in
compliance with its resale obligations. Telco Brief, p. 45.

       In the March 25, 1997 Decision in Docket No. 95-06-17, Application of the
Southern New England Telephone Company for Approval to Offer Unbundled Loops,
Ports and Associated Interconnection Arrangements – Reopened, the Department
found that the obligations to resell services under Section 251 of the Telcom Act did not
require the Telco to make available for resale services approved by the Department as
market trials or promotions of 90 days or less, packages comprised of only competitive
services and/or discount rate plans for competitive services. March 25, 1997 Decision
Docket No. 95-06-17, p. 37. However, upon further review of the Telcom Act and the
records of the instant proceeding and Docket No. 99-03-17, the Department has
reconsidered that Decision. The Department finds that §251(c)(4) of the Telcom Act
requires that incumbent LECs offer for resale at wholesale rates any
telecommunications service that the carrier provides at retail to subscribers who are not
telecommunications carriers. Telcom Act, §251(c)(4). The Department also finds that
the FCC has determined that the resale provisions of §251(c)(4) of the Telcom Act
apply to any telecommunications service.13 It is noted that the Decision in Docket No.
95-06-17 was predicated on the Connecticut Act, which defined the types of
telecommunications services that could be offered in the state. While the Connecticut
Act has provided for differing levels of regulatory treatment for telecommunications
services, the Telcom Act is explicit and makes no distinction between such services.
Therefore, the Telcom Act is clear in its requirement that ILECs offer for resale any
telecommunications service that the carrier provides at retail. (emphasis added).
Accordingly, the Department finds that the Telco must develop a retail toll service resale
product that meets the requirements of CTC. The Company will be directed below to
submit a proposed retail resale tariff to the Department no later than January 1, 2002.

       The Petitioners have also objected to the Telco’s imposition of full minute
rounding on retail intrastate calling plans for those subscribers migrating from Telco
calling plans to a CLEC. According to the Petition, customers who migrate to a CLEC
have been discontinued from their calling plans and placed on full minute rounding at
the most expensive retail rate, notwithstanding the Telco’s continuation of billing for toll
usage. Petition, p. 6. In response, the Telco maintains that the toll customer’s local
service provider must notify the Telco that the customer has presubscribed to its toll
service(s) in order that its toll choice is implemented. The Telco also states that these
customers may select a standard or customized calling plan. However, in the event the
customer does not sign up for such a plan, then the general tariff offering applies. The

13   Local Competition Order, ¶948.
Docket No. 01-02-09                                                                      Page 43


general tariff offering includes full minute rounding. Docket No. 99-03-17, Telco
Response to Interrogatory TE-17. The Telco continues to review and refine its
processes and procedures governing toll plans to meet customer expectations. Id.
Specifically, the Company has put into place the necessary procedures to follow when it
receives notification from a CLEC that its end users has selected the Telco as its long
distance carrier. Telco Comments, p. 35. Accordingly, the Department finds that this
issue has been addressed.

C.     CENTRALINK 1100

       CTC and Choice One claim that the Telco’s CentraLink 1100 service is actually
nothing more than 1-FB service with vertical features. CTC also notes that the Telco
has admitted that its CentraLink tariffs do not refer to centrex, nor does CentraLink fit
any of the standard definitions for traditional centrex service. According to CTC, the
Telco has merely re-labeled 1-FB service with vertical features to have the service
statutorily classified as competitive, and therefore, exempt from any fresh look period
mandated by the Department. CTC therefore recommends that the Department reject
the Telco’s claim that CentraLink 1100 is centrex service and immediately order a fresh
look period for all CentraLink 1100 contracts. Docket No. 99-03-17, CTC August 19,
1999 Brief, p. 22; CTC August 26, 1999 Reply Brief, pp. 10 and 11. The Telco
disagrees and contends that CentraLink 1100 provides features that are standard with
its centrex offering and is not the same as Flat Business or Per-Call Business services.
Rather, these services are an alternative to CentraLink 1100, offering a unique solution
to customers permitting them to select exactly what they require and purchase the
services separately, in combination, or all together. Docket No. 99-03-17, Telco August
19, 1999 Brief, p. 11.

       Centrex service is defined in a number of ways. For example, the US
Government, Department of Commerce (DOC) defines centrex service as a service
offered by Bell Operating Companies that provides functions and features that are
comparable to those provided by a private branch exchange (PBX).14 Docket No.
99-03-17, Telecommunications: Glossary of Telecommunication Terms, August 7,
1996, Tr. 8/5/99, pp. 710 and 711. Telecordia Technologies15 (Telecordia), defines
centrex as a hardware/software service whereby the switching and control functions are
centralized (central exchange) in a part of the central office itself. Docket No. 99-03-17,
Late Filed Exhibit No. 15. Lucent Technologies (Lucent) claims that with centrex,
telecommunications systems are located and maintained at the service provider’s
central office, facilitating growth potential and economies of scale, while providing public
network reliability.        GTE Corporation (GTE) defines centrex as a private
communications system that consists of a wide variety of features, provided by central
office software and extended to the customer’s premises via local distribution facilities.
Id. Finally, the Telco indicates that centrex is a sophisticated telecommunications
service that provides a business customer with the most advanced capabilities for voice
and data communications from a switch in a Telco central office. The Telco also

14 The DOC defines a PBX as a subscriber-owned, telecommunications exchange that usually includes
   access to the public switched network. Telecommunications: Glossary of Telecommunication Terms,
   Docket No. 99-03-17, August 7, 1996, Tr. 8/5/99, pp. 710 and 711.
15 Formerly known as Bellcore.
Docket No. 01-02-09                                                                                  Page 44


indicates that this switch provides every connected telephone station with access to a
complete selection of office communications features that is at parity with most PBX
products today. Id.

        The Telco introduced its CentraLink service as part of its Centrex Product Line
approved by the Department in February 1996. Late Filed Exhibit No. 14. CentraLink
1100 is available as a flat rate business service that is furnished, subject to availability
of facilities by means of 5ESS, 1AESS, EWSD, and DMS central offices and customer
provided telephone equipment. Id. The Department notes that Flat Rate and Per-Call
subscribers are served by these types of facilities as well. In addition, CentraLink 1100
standard features incorporates a subset of 9 of the 22 features available with the
Telco’s CentraLink 2100 service.16 Id., Attachment A, pp. 1, 4; Late Filed Exhibit No.
12. A comparison of the Telco’s CentraLink 1100 service with its CentraLink 2100
indicates that of the 22 station features available, CentraLink 1100 subscribers have 15
features available and CentraLink 2200 subscribers have 18, while Flat Rate and Per-
Call business subscribers have 14 available. Late Filed Exhibit No. 12.

        The Department believes that CentraLink 1100 satisfies the centrex service
definitions noted above. Specifically, CentraLink 1100 provides functions and features
that are comparable to those provided by a PBX (e.g., hunting, 3-way calling, call
forwarding etc.). (DOC Definition). CentraLink 1100 is also a software service whereby
the switching and control functions are centralized in the Telco’s the central office.
(Telecordia and Lucent Definitions). Additionally, CentraLink 1100 is a private
communications system with central office software features that have been extended
to the customer’s premises via local distribution channels. (GTE Definition). In the
opinion of the Department, CentraLink 1100 is a centrex service.

       The Department also believes that CentraLink 1100 is an alternative to the
Telco’s Flat Business and Per-Call services, offering subscribers bundled service
features, which permits subscribers to choose those functions and features that satisfy
the customer’s needs. While Flat Business and Per-Call service subscribers would
have to purchase these features on an ala carte basis, these functions and features are
part of the CentraLink 1100 service package. Therefore, in light of the above, the
Department finds that CentraLink 1100 is a competitive service by virtue of Public Act
94-83.

       No party to the instant proceeding has introduced any new evidence that
warrants a change from the Department’s analysis initially provided in the Draft
Decision. Accordingly, the Petitioners’ request that the Department order a fresh look
period for all CentraLink 1100 contracts is hereby denied.




16   These features include Direct Inward Dialing, Direct Outward Dialing, Hunting, 3-Way Calling,
     Consultation, Call Forwarding-All Calls; Call Forwarding-Busy Line; Call Forwarding-Don’t Answer;
     Call Waiting; Speed Calling; Bridged Station; Station to Station Calling; Call Transfer; Pickup; Nite
     Answer; Call Hold; Auto Call Back; Toll Restricted Station; Full Restriction Station; Distinctive Ringing;
     Telephone Number Reservation; and Call Forwarding All Add’ Paths. Docket No. 99-03-17, Late Filed
     Exhibit No. 12, p. 2.
Docket No. 01-02-09                                                             Page 45



D.    VOICE MAIL AND INTERNET SERVICES

      The Petitioners contend that most customers that subscribe to Telco voice mail
and Internet services who choose a competitive service provider are subject to
disconnection of voice mail and/or Internet services by the Telco. Petition, p. 7.

        These services are not telecommunications services that are subject to resale
pursuant to the Telcom Act, §251(c)(4) because the Telco does not provide them at
“retail to subscribers who are not telecommunications carriers.” The Department has
previously addressed the issue of the competitive offering of voice mail services in
Connecticut. In particular, in the March 25, 1998 Decision in Docket No. 98-02-21,
Application of New York Telephone to Withdraw Voice Messaging Service to Residence
and Small Business, the Department approved the New York Telephone Company’s
request to withdraw the offering of Voice Messaging Service for residential and small
business customers because it was not a telecommunications service. Additionally, in
Docket No. 98-05-17, Application of Teleport Communications Group Connecticut for
Investigation of the Southern New England Telephone Company’s Voice Messaging
Services Practices, the Department reaffirmed its March 25, 1998 Decision in Docket
No. 98-02-21, by denying Teleport Communications Group Connecticut’s request that
the Department require the Telco to resell its voice messaging service offering. Docket
No. 98-05-17, June 24, 1998 Letter to Glenn T. Carberry, Esquire and Kathleen A.
Carrigan, Esquire. Nevertheless, during the June 1, 1999 hearing in Docket No.
99-03-17, the Petitioners were directed to file a petition for reconsideration to address
this issue. Docket No. 99-03-17, Tr. 6/1/99, p. 508. Consequently, no additional action
is required in this proceeding.

E.    MISCELLANEOUS

      1.     CLEC Service Issues

       The Petitioners argue that since December 1998, the Telco has been charging
customers unreasonable “escalation fees” for expedited service requests. The
Petitioners also state that these escalation fees are imposed on any migration requests
outside of the Telco’s imposed time line. Further, these fees can be three to four times
the normal charge for similar migrations, although “normal” charges are often not
defined or provided. Petition, p. 6. Docket No. 99-02-07, was established to investigate
the Telco’s Enhanced Provisioning Services, including those charges imposed on
customers requesting an earlier installation than that proffered by the Telco. In the
December 15, 1999 Decision in that proceeding, the Department permitted the Telco to
price these services at their respective total service long run incremental cost and
limited the markup for these services to 25%, pending the Department’s approval of
revised joint and common cost studies filed pursuant to the September 8, 1999 Decision
in Docket No. 98-04-03, Application of the Southern New England Telephone Company
Regarding the Study of Joint and Common Costs. Those cost of service studies have
been completed and filed with the Department.

      Additionally, the Petitioners allege that the Company has unilaterally changed
due dates to migrate end user lines from the Telco to the Petitioners. Further, they
Docket No. 01-02-09                                                             Page 46


complain that the Telco has continued to bill for full service after service has been
provided by a CLEC due to a system error. Petition, pp. 5 and 6. Moreover, CTC
suggests that the Department required the Telco to develop, provide and implement a
comprehensive training program for those employees who deal with wholesale accounts
and migrations along with its proposed plan to remedy the plethora of human errors.
Lastly, CTC recommends that the Department impose penalties to discourage the Telco
from continuing its anti-competitive practices. Docket No. 99-03-17, CTC August 19,
1999 Brief, p. 19.

       The record indicates that in those cases where a change in customer migration
due dates occurred were caused by a variety of reasons, some within the Telco’s
control, some outside. The Telco argues that these missed due dates represent
approximately one half of one percent of all of the orders that were processed by the
Telco’s local exchange carrier center for complex services during the August 1998-
August 1999 time frame. Docket No. 99-03-17, Tr. 5/13/99, pp. 261 and 262. While
these numbers may be insignificant when compared to the Telco’s overall service
provisioning performance, to the Petitioners, such a performance can be damaging.
The Department notes that Docket No. 99-07-27, DPUC Promulgation of Performance
Standards and Performance Based Reporting Requirements Regulations for
Connecticut Telephone Companies, was initiated to consider the adequacy of current
policies, procedures and protocols adopted by telephone companies to satisfy
competitive providers’ state and federal obligations and requirements.           In that
proceeding, the Department will consider the need to impose additional requirements
upon Connecticut telephone companies, including any rules and regulations deemed
necessary to ensure fair competition and protect the interests of the public and service
providers. Specifically, the Department intends to promulgate regulations addressing
among other things, service provisioning and billing measurements as part of Docket
No. 99-07-27. In the opinion of the Department, once these regulations have been
promulgated, the Telco’s performance will be measured, and if warranted, penalties
would most likely be imposed on the Company if its performance falls below established
standards. Clearly, the regulations ultimately promulgated in that proceeding will
address the service provision complaints noted by the Petitioners. It is for these
reasons that the Department does not believe that the Telco should be ordered to
implement a comprehensive training program at this time because its performance in
meeting the established service provisioning standards will dictate whether one is
actually required. Accordingly, the Petitioners’ request that the Telco develop an
employee training program and impose penalties to discourage anticompetitive behavior
is hereby denied.

        Choice One is also critical of the long time intervals associated with service
activation (i.e., coordinated hot cuts). Specifically, Choice One criticizes the Telco’s
inability to provide an estimated timeframe when these intervals will return to “industry
standard,” or customary activation intervals of five to seven days. According to Choice
One, it has understood that it has a negotiated agreement with the Telco for a uniform
time period of 14 days from the time it submits a request for service to the time that
service is provided. Choice One claims that the Telco has failed to meet this 14-day
commitment; and therefore, requests that the Department: 1) establish a standard
service initiation/activation interval of 14-days or less, that is consistent with the
Company’s treatment of its retail customers; and 2) establish an incentive for the Telco
Docket No. 01-02-09                                                              Page 47


to comply such as a 200% rebate for any coordinated cutover fees or $1,000 fine per
missed deadline payable to the aggrieved CLEC. Choice One Brief, p. 21.

        In Docket No. 99-02-07, the Department determined that the Company’s EPS
(including coordinated hot cuts) were not essential to CLECs’ service offerings, but of a
premium nature. December 15, 1999 Decision, Docket No. 99-02-07, pp. 1, 16.
Presently, the Company does not have a standard time interval for coordinated hot cuts
because they are negotiated on a case-by-case basis and are limited to the availability
of Telco resources. Tr. 9/28/01, p. 703. The Company is working toward developing a
standard coordinated hot cut interval and is currently reviewing its processes in order to
improve its procedures in order to offer the CLECs the opportunity to provide for more
coordinated hot cuts. Id., pp. 704 and 705. Since coordinated hot cuts are of a
premium nature and nonessential to CLECs’ service offerings, the Department will not
establish a standard time interval at this time. Nevertheless, despite the Company’s
effort thus far, the Department emphasizes that the Telco must ensure that the time
periods for the coordinated hot cuts for its wholesale customers are in parity with those
of its retail customers. With the exception of that requirement, the Department will not
address Choice One’s requests at this time.

      2.     SNET America

       CTC has recommended that the Department investigate the Telco’s dealings with
SAI to ensure that consumers’ rights to a competitive marketplace are not being
stymied. The Department does not believe that the Petitioners have satisfied their
burden of proof by demonstrating that such an investigation is warranted. While CTC
has made several allegations throughout this proceeding concerning the Telco and its
relationship with SAI, the Department finds that CTC has failed to substantiate those
allegations by providing any supporting evidence. The Department has developed
several policies and implemented numerous procedures to ensure that all transactions
between the Telco and SAI are above board. (See for example, the Department’s June
25, 1977 Decision in Docket No. 94-10-05, pp. 68-71). CTC is free to Petition the
Department for such an investigation when it possesses a sufficient amount of evidence
to support its claims. Accordingly, the Department hereby dismisses CTC’s request
without prejudice.

      3.     Tariff Charges

       Choice One argues that it should be able to purchase all elements for physical
collocation from the Telco’s FCC Tariff 39 (rather than the Company’s Connecticut
Access Service Tariff (CAST)) because of the difference in charges for the same
service in the two tariffs. Choice One claims to have disputed payment of these
charges totaling approximately $21,000 per month and has withheld monthly payment
from the Telco for these services. Choice One Brief, pp. 22-26; Tr. 9/28/01, p. 714.

       The Telco’s FCC Tariff 39 limits the use of physical collocation to the purchase of
interLATA Special and Switched Access Services. Tr. 9/28/01, p. 708; FCC Tariff 39, p.
18-1. Choice One does not meet the requirements of the Company’s interstate tariff
since it does not purchase interLATA Special or Switched Access Services from the
Telco in any of its Connecticut locations. Id., p. 715. Because Choice One has not met
Docket No. 01-02-09                                                             Page 48


the subscription requirements outlined in the Company’s FCC Tariff 39, it must
purchase collocation services from the Telco’s CAST at the rates and charges approved
by the Department in Docket No. 99-08-05. Accordingly, Choice One is hereby directed
to remit payment to the Telco for all outstanding charges associated with its collocation
services. Nevertheless, should Choice One continue to dispute these charges, it should
follow the procedures outlined in the Choice One/Telco interconnection agreements.

      Choice One also claims that the Telco’s coordinated cutover and line charges,
UNE loop, and other associated charges are excessive and require Department review
and relief. Choice One Brief, p. 5. In addition, Choice One has disputed the Telco’s
charges for DS0 trunking. Id., p. 26. Similarly, Conversent has objected to the Telco’s
charges for coordinated cut-over service for migrating customers from the Company to
Conversent. Therefore, Conversent has requested that the Department order the Telco
to immediately cease charging CLECs extra for coordinated cut-over service.
Conversent October 17, 2001 Letter, pp. 1 and 2.

       The Department finds that the rates and charges objected to by Choice One and
Conversent have been approved by the June 29, 2000 Decision in Docket No.
00-03-19, DPUC Review of the Southern New England Telephone Company’s Studies
of Unbundled Network Elements Non-Recurring Costs. These approved rates and
charges have been set based on a forward looking costing methodology that has been
determined to be consistent with the Telcom Act, the General Statutes of Connecticut
and previous Department directives. In the opinion of the Department, Choice One has
not introduced any evidence in this proceeding that would warrant a change to those
services’ existing rates. Accordingly, Choice One’s complaint is hereby dismissed.

       Regarding the concerns over the Telco’s charges for coordinated cut-over
service expressed by Conversent, as noted above, the Department has determined that
these EPS services are not essential for the provisioning of telecommunications
services by the CLECs. The Department has therefore permitted the Company to price
its EPS services with markups that exceed those for essential services. December 15,
1999 Decision, Docket No. 99-02-07, p. 18. Consequently, Conversent’s request that
the Telco be directed to immediately cease charging CLECs for coordinated cut-over
service is hereby denied.

       Lastly, the Department notes that Choice One has disputed the Telco’s charges
for DS0 trunking. In response, the Company has indicated that it would review Choice
One’s billing for non-recurring port charges and make any appropriate adjustments.
Choice One Brief, p. 26. Consequently, Choice One has reserved comment on this
issue pending the Telco’s review. Id. Therefore, pending the completion of the Telco’s
ongoing review of this dispute, Choice One will be required to report the results of the
Telco’s review and any concerns resulting from that evaluation to the Department.
Based on review of the Telco’s results and Choice One’s response, the Department will
act accordingly.

      4.     Letter of Authorization Requirements

       Choice One contends that the Telco’s LOA policy is unilateral and places a
barrier on CLECs to obtain properly authorized information. Therefore, Choice One
Docket No. 01-02-09                                                                Page 49


requests that the Department direct the Telco to cease and desist its requirements that
CSR requests and/or contract requests be on customer letterhead in order to be
processed by the Company. Choice One Brief, p. 20; Choice One Reply Brief, pp. 15
and 16.

       This proceeding has been well-represented by the CLEC community, yet only
Choice One has objected to the Telco’s LOA policy. The Department notes that CTC
has not taken issue with this requirement. In fact, the CTC witness indicated that it is a
practice that CTC has used for ten years and supported the requirement. According to
the CTC witness, he viewed the LOA requirement “as a confirmation that the customer
has taken the time to move forward with the process, and it’s more of a commitment.”
Tr. 9/24/01, p. 461.

      The record of this proceeding is devoid of any evidence from other CLECs
concerning the impact that the Telco’s LOA requirements have in the Connecticut local
market. Based on this lack of evidence, the Department will not order the Company to
cease its LOA requirements at this time. Accordingly, Choice One’s request is hereby
denied.

       5.     Collocation Access

       Choice One claims to have encountered difficulties with access to its collocation
cages at the Telco’s central offices and other locations. Choice One also claims to have
encountered issues with pre-test conversion measures prior to client conversion.
Therefore, Choice One requests that the Department review FCC and previous
Department orders and take appropriate actions to prevent the Telco from hampering
Choice One’s collocation access and pre-test conversion issues. Choice One Brief, pp.
26 and 27. The Telco concurs with Choice One that there have been times where
access to the Company’s buildings was a problem for all individuals due to equipment
or system problems. The Telco states that efforts are ongoing to improve access all
Telco buildings where CLECs have collocated. Telco Brief, p. 44.

       The Department is aware of the Company’s efforts to improve access to its
buildings where CLECs have collocated. Nevertheless, the Department is concerned
that the Telco may not be meeting FCC and Department directives relative to
collocation access. Accordingly, the Telco will be required to investigate this matter and
provide a report to the Department detailing how access has been improved and the
time frame by which these activities are to be completed on a Company location where
CLEC equipment/facilities are situated. Based on the results of the Company’s
investigation and report, the Department will act appropriately.

       6.     Wholesale Billing

        Lastly, the Petitioners claim that the Telco has failed to provide detailed itemized
bills. Petition, p. 1. The Department has initiated Docket No. 01-05-25, for the purpose
of investigating the Telco’s wholesale bill. The Department believes that this issue
would be more appropriately addressed in that docket. Accordingly, the Department will
defer ruling on this issue pending the completion of its investigation in that proceeding.
Docket No. 01-02-09                                                           Page 50


V.    FINDINGS OF FACT

1.    The Telcom Act has established certain terms and conditions under which local
      competition is to be promoted and developed within the states.

2.    The Telcom Act requires that all local exchange carriers not prohibit nor impose
      unreasonable or discriminatory conditions or limitations on the resale of their
      telecommunications services.

3.    Conn. Gen. Stat. §16-247a seeks to ensure the universal availability and
      accessibility of high quality, affordable telecommunications services to all
      residents and businesses in the state, as well as promote the development of
      effective competition as a means of providing customers with the widest possible
      choice of services.

4.    The plain language of the Telcom Act does not prohibit the imposition of
      termination penalty charges.

5.    Section 251 of the Telcom Act outlines the overall terms and conditions under
      which telecommunications carriers and ILECs must satisfy for purposes of
      interconnection.

6.    Sections 251(a) and (b) of the Telcom Act provides the general duties of
      telecommunications carriers (§251(a)) and the obligations of all ILECs (§251(b))
      in moving toward a competitive local market.

7.    Conn. Gen. Stat. §16-247f(b) has deemed as competitive, several
      telecommunications services including, but not limited to, centrex or digital
      centrex services.

8.    The Telco has instituted procedures to reduce consumer liability through
      advanced subscriber notification of pending contract expiration and changes to
      the auto renewal clauses in its contracts and to provide a cure for those
      customers that may have been misled with information in reaching their decision
      to terminate their contracts.

9.    The Telco is currently pursuing the use of its CIWIN and MSAP systems as a
      means of making the contract retrieval process more efficient.

10.   The Telco has not required migrating end users to leave behind lines when they
      move from the Telco to another provider. Rather, the migrating end users have
      maintained a minimum number of lines with the Telco as a means of avoiding the
      termination penalties that they accepted to incur should they terminate service
      prior to the expiration of the contract.

11.   When an end user maintains lines with the Telco and other service providers,
      multiple common blocks are required to differentiate service between end user
      station lines providing the capability to associate various switch features and
Docket No. 01-02-09                                                              Page 51


      functionality with end user needs or when providing a unique toll routing to
      specific PIC choices for both intrastate and interstate toll for a common set of end
      user station lines, versus another combination of interstate PIC choices for a
      different set of end user station lines.

12.   A single common block for end users with multiple providers would be impractical
      and not permitted by the Telco’s tariff.

13.   Section 251(c)(4) of the Telcom Act requires incumbent LECs offer for resale at
      wholesale rates any telecommunications service that the carrier provides at retail
      to subscribers who are not telecommunications carriers.

14.   The FCC has determined that the resale provisions of §251(c)(4) apply to any
      telecommunications service offered on a retail basis.

15.   The Telco introduced its CentraLink service as part of its Centrex Product Line
      approved by the Department in February 1996.

16.   CentraLink 1100 is available as a flat rate business service that is furnished,
      subject to availability of facilities by means of 5ESS, 1AESS, EWSD, and DMS
      central offices and customer provided telephone equipment.

17.   CentraLink 1100 meets the definition of a centrex service, and as such, is
      competitive by virtue of Public Act 94-83.

18.   Voice mail and Internet services are not telecommunications services that are
      subject to resale pursuant to the Telcom Act, §251(c)(4) because the Telco does
      not provide them at retail to subscribers who are not telecommunications
      carriers.

19.   The December 15, 1999 Decision in Docket No. 99-02-07 investigated the
      Telco’s Enhanced Provisioning Services and established the terms and
      conditions under which these services would be priced.

20.   In the December 15, 1999 Decision in Docket No. 99-02-07, the Department
      determined that the Company’s EPS (including coordinated hot cuts) were not
      essential to CLECs’ service offerings, but of a premium nature.

21.   The Company does not have a standard time interval for coordinated hot cuts
      because they are negotiated on a case-by-case basis and are limited to the
      availability of Telco resources.

22.   Docket No. 99-07-27 has been initiated to consider the adequacy of current
      policies, procedures and protocols adopted by telephone companies to satisfy
      competitive providers’ state and federal obligations and requirements.

23.   The Telco’s FCC Tariff 39 limits the use of physical collocation to the purchase of
      interLATA Special and Switched Access Services.
Docket No. 01-02-09                                                             Page 52



24.   Choice One does not purchase interLATA Special or Switched Access Services
      from the Telco in any of its Connecticut locations.

25.   The rates and charges objected to by Choice One and Conversent have been
      approved by the June 29, 2000 Decision in Docket No. 00-03-19. The approved
      rates and charges have been set based on a forward looking costing
      methodology that has been determined to be consistent with the Telcom Act, the
      General Statutes of Connecticut and previous Department directives.

26.   Choice One has encountered difficulties with access to its collocation cages at
      the Telco’s central offices and other locations.

VI.   CONCLUSION AND ORDERS

A.    CONCLUSION

       The Telcom Act and the Connecticut Act have separately established terms and
conditions under which telecommunications competition is to be developed and
promoted. Based on the record of this proceeding, the Department does not believe
that the imposition of termination charges conflicts with the terms and conditions of
those acts. Regarding the Telco’s wholesale service offerings, the Telcom Act is explicit
in that all telecommunications services offered by ILECs on a retail basis must be
offered for resale. While the Connecticut Act has provided for different classes of
telecommunications services (with a varying degree of regulatory oversight), such
service classes do not excuse the Company from offering its services for resale.
CentraLink 1100 service is a centrex service, which by virtue of Public Act 94-83 is a
competitive service. Accordingly, no fresh look as requested by the Petitioners is
warranted. Lastly, with the exception of access CLEC equipment and facilities located
on Company property, the remaining issues raised by the Petitioners and Choice One
have been addressed.

B.    ORDERS

      For the following Orders, please submit an Original and five copies of the
      requested material, identified by Docket Number, Title and Order Number to the
      Executive Secretary.

1.    No later than January 31, 2002, the Telco shall submit a proposed toll wholesale
      tariff to the Department.

2.    The Telco shall revise its notification procedures to end users providing a clear
      and concise explanation of any customer impact associated with service
      termination fees as discussed in Section IV. A.

3.    The Telco and all service providers shall eliminate automatic renewal clauses
      from end user contracts for competitive service providers.
Docket No. 01-02-09                                                            Page 53


4.    The Telco shall ensure that the time periods for the coordinated hot cuts for its
      wholesale customers are in parity with those offered to its retail customers.

5.    No later than February 28, 2002, the Telco shall provide a report to the
      Department detailing how access to its central offices and locations where CLEC
      collocation cages and other facilities are located.
DOCKET NO. 01-02-09      DPUC INVESTIGATION OF TELEPHONE COMPANY
                         CONTRACT TERMINATION LIABILITY FEES AND
                         OTHER PRACTICES

This Decision is adopted by the following Commissioners:




                   Jack R. Goldberg


                   Donald W. Downes


                   John W. Betkoski, III




                            CERTIFICATE OF SERVICE

        The foregoing is a true and correct copy of the Decision issued by the
Department of Public Utility Control, State of Connecticut, and was forwarded by
Certified Mail to all parties of record in this proceeding on the date indicated.




                             Louise E. Rickard                      Date
                             Acting Executive Secretary
                             Department of Public Utility Control

				
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