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					                                  Before the
                    FEDERAL COMMUNICATIONS COMMISSION
                             Washington, D.C. 20554


In the Matter of

Application by SBC Communications Inc.,       WC Docket No. 03-16
Michigan Bell Telephone Company, and
Southwestern Bell Communications Services,
Inc. for Provision of In-Region, InterLATA
Services in Michigan


To:    The Commission

          REPLY COMMENTS OF SBC IN SUPPORT OF ITS APPLICATION
          TO PROVIDE IN-REGION, INTERLATA SERVICES IN MICHIGAN
                  __________________________________________

JAMES D. ELLIS                               MICHAEL K. KELLOGG
PAUL K. MANCINI                              GEOFFREY M. KLINEBERG
MARTIN E. GRAMBOW                            LEO R. TSAO
JOHN T. LENAHAN                              KELLOGG, HUBER, HANSEN,
KELLY M. MURRAY                               TODD & EVANS, P.L.L.C.
ROBERT J. GRYZMALA                               1615 M Street, N.W.
RANDALL JOHNSON                                  Suite 400
TRAVIS M. DODD                                   Washington, D.C. 20036
JOHN D. MASON                                    (202) 326-7900
    175 E. Houston
    San Antonio, Texas 78205                 Counsel for SBC Communications Inc.,
    (210) 351-3410                               Michigan Bell Telephone
                                                 Company, and Southwestern Bell
Counsel for SBC Communications Inc.              Communications Services, Inc.

CRAIG A. ANDERSON
JOSEPH P. TOCCO
    444 Michigan Avenue, Room 1700
    Detroit, Michigan 48226
    (313) 223-8033

Counsel for Michigan Bell
    Telephone Company


March 4, 2003
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

                                   EXECUTIVE SUMMARY

       The vast majority of participants in this proceeding – 130 of the approximately 150

parties that filed comments – support SBC’s Application to provide interLATA services in

Michigan. These commenters support the conclusion reached by the Michigan Public Service

Commission (“MPSC” or “Michigan PSC”), after years of careful review and oversight, that the

requirements of the competitive checklist have been satisfied and that Michigan Bell should now

be allowed to compete in the interLATA market in Michigan.

       More than any other single factor, the level of CLEC entry in Michigan confirms that the

local market is irreversibly open to competition. With CLECs serving at least 26 percent (and,

more likely, 31 percent) of the total lines in Michigan Bell’s service area, there is simply no

doubt that the interfaces, systems, processes, and procedures designed to facilitate this

competitive entry are working. The evidence of actual, broad-based entry in a state through each

of the entry paths contemplated by Congress is particularly significant in determining whether

the local markets are open. As the Department of Justice (“DOJ”) recognized in its Evaluation,

“actual competitive entry” is the key determinant of whether a Bell company is entitled to long-

distance relief, “because the experience of competitors seeking to enter a market can provide

highly probative evidence about the presence or absence of artificial barriers to entry.”

       Moreover, it is also important to note what is not at issue in this proceeding: No

commenter has complained about the wholesale pricing of unbundled network elements. The

wholesale rates established by the Michigan PSC are among the lowest in the country, and

CLECs are clearly taking advantage of the opportunities these rates are offering them to compete

with Michigan Bell to serve residential and business customers.
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

       The issues identified by the DOJ and other commenters fall roughly into four categories:

       First, as DOJ notes, the CLECs’ complaints about the reliability of Michigan Bell’s

performance measurement data are based largely on the fact that the third-party metric review

being conducted by BearingPoint is not yet complete. However, as DOJ correctly recognizes,

the fact that the BearingPoint metric review is ongoing does not, by itself, mean that Michigan

Bell’s data are unreliable. Importantly, the DOJ has urged this Commission to review the other

evidence in the record that would justify confidence in the accuracy, reliability, and stability of

the performance data, including: Ernst & Young’s comprehensive audit of the performance

measurement process and its general conclusions that the data are reliable and accurate;

Michigan Bell’s implementation of both internal and external controls to ensure that the data are

accurate; the open and collaborative workshops through which the performance measurements

were developed; the availability of raw performance data available to the CLECs; Michigan

Bell’s willingness and ability to engage in data reconciliations with any CLEC that questions the

reported results; BearingPoint’s continuing review of the accuracy and reliability of Michigan

Bell’s measurements; and, perhaps most significant of all, the Michigan PSC’s commitment to

vigorous and continuous oversight of the performance measurement process. In light of these

indicia of reliability, this Commission should conclude that Michigan Bell’s excellent

performance measurement results accurately reflects the overall quality of Michigan Bell’s

provisioning of wholesale services, notwithstanding the face that BearingPoint’s test is not yet

complete.

       Second, the DOJ raises concerns about Michigan Bell’s adherence to its change

management processes. But Michigan Bell follows the same change management process that

SBC follows in each of its 13 states, and this Commission has reviewed and approved that



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                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
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process in six prior applications. Moreover, as part of its Transaction Verification and

Validation test, BearingPoint confirmed the adequacy and completeness of Michigan Bell’s

procedures for developing, publicizing, conducting, and monitoring change management. The

Michigan PSC found Michigan Bell’s change management to satisfy the requirements of

Checklist Item 2. It also concluded that certain improvements to the change-management

process could be made. Michigan Bell has since proposed a change management

communications improvement plan that will establish a process for notifying CLECs of any

changes to operations support systems that may reasonably be expected to impact them. This

plan, which is unprecedented in SBC’s region, responds directly to the complaints that CLECs

have raised and will likely eliminate the kinds of miscommunications that have recently

occurred.

       Third, the DOJ has focused attention on a few, discrete issues relating to SBC’s

operations support systems in the Midwest region. Several commenters have complained about

Michigan Bell’s performance in providing complete, timely, and reliable line-loss notifications.

While it is true that Michigan Bell did have problems with line-loss notifications some time ago,

it has devoted enormous resources to improving its systems, training its personnel, and ensuring

proper notification to CLECs when problems with line-loss notifications do arise. Thus,

Michigan Bell’s performance in this area has accordingly improved dramatically. Indeed, the

Michigan PSC was convinced that, while certain communications improvements could still be

made, Michigan Bell is now generally providing line-loss notifications in a manner consistent

with its obligations under Checklist Item 2.

       The DOJ also picks up on a complaint by AT&T and WorldCom regarding Michigan

Bell’s treatment of so-called “working service conflict” notifications. The commenters complain



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                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

that SBC fails properly to notify them of such a condition, thereby causing orders to be delayed

or canceled. But these complaints are completely misleading, for they fail to acknowledge that

SBC and the CLECs agreed to a process for handling these situations through the CLEC User

Forum and that it is the CLECs – not Michigan Bell – that are failing to follow the agreed-upon

procedure.

       Some commenters have also complained about billing accuracy and billing auditability.

For its part, the DOJ recognizes that these complaints are “short on specifics.” BearingPoint

conducted extensive reviews and transaction testing in six different areas related to daily usage

information, monthly bills and overall billing support to CLECs, and it found that SBC satisfied

98 percent of the applicable test criteria. In any case, none of the billing accuracy claims raised

by the CLECs reflect systemic wholesale billing problems that are likely to recur, and most

describe either outdated disputes over small amounts or problems that resulted from a one-time

system change that has no ongoing, competitive impact on CLECs. And with respect to billing

auditability, SBC provides its CABS bills in accordance with the industry standard Billing

Output Specification guidelines. There are, therefore, resources available from a number of third

parties that provide training, documentation and technical support to assist CLECs in

understanding these fully auditable bills. Moreover, Michigan Bell has submitted an

improvement plan to the Michigan PSC that will highlight the availability of these training

workshops and available reference materials as well as enhance the process for resolving billing

disputes.

       Finally, the DOJ and AT&T identify a concern about SBC’s OSS versioning process.

AT&T complains that SBC is deliberately interfering with AT&T’s ability to partner with data

providers in a line splitting arrangement by requiring the data provider to be on the same version



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                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
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of EDI as AT&T. Yet SBC’s versioning process is precisely the one that AT&T (and others)

demanded back in the summer of 2000. The software change that AT&T has now decided it

wants implemented immediately is extremely complicated and would require a substantial

redeployment of resources from other projects that CLECs and SBC have already agreed to

implement. AT&T is simply looking to SBC to solve a business problem of its own creation that

it is perfectly capable of resolving itself.

        Fourth, there are a number of additional CLEC complaints that do not fit into the broader

categories discussed above but that are nevertheless easily answered:

        For example, AT&T alleges that there is insufficient evidence that Michigan Bell can

process orders for line splitting. But BearingPoint concluded in its OSS test that Michigan Bell

had the capability and capacity to process such orders. AT&T also complains about the process

required for converting an end user from a line splitting arrangement to a UNE-P, arguing that

SBC requires three separate orders and that an end user could be left without service for up to

seven days. This is false. In the Midwest region, SBC provides a single-order process to convert

a customer from a line splitting arrangement to UNE-P, and the disruption to the customer is

momentary. Likewise, New Edge’s complaint about Michigan Bell’s provisioning of loops to

provide integrated digital subscriber line services is simply incorrect; Michigan Bell in fact

offers cooperative and acceptance testing for such loops.

        McLeodUSA argues that Michigan Bell fails to provide nondiscriminatory access to

loops served by integrated digital loop carrier systems and that the “alternative” loops that

Michigan Bell provides are somehow of lesser quality. But Michigan Bell is in full compliance

with this Commission’s prior orders relating to the unbundling of IDLC loops. In any case, the

percentage of IDLC facilities deployed in Michigan is very small, and alternative facilities are



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                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
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almost always available. Moreover, every loop that Michigan Bell makes available to CLECs

must satisfy state-imposed service quality standards, so there is simply nothing to McLeodUSA’s

suggestion that copper loops or loops served over universal digital loop carrier systems are less

acceptable.

       WorldCom complains that Michigan Bell’s tariffed rates for directory assistance listings

are based on a cost study that the Michigan PSC rejected as unlawful. This is not true. The

Michigan PSC never rejected Michigan Bell’s cost study for directory assistance listings.

Rather, it rejected the market-based rates that Michigan Bell originally contended were

appropriate for a competitive service such as directory assistance listings and subsequently

accepted the cost-based rates that were included in the tariff that Michigan Bell ultimately filed.

       New Edge complains that it has had to pay for the power capacity it has ordered for its

collocation arrangements and apparently disagrees that it should pay for the work required to

reduce such capacity should it decide to reconfigure its power arrangements as permitted under

its interconnection agreement. New Edge’s power arrangements, which were provisioned in

accordance with New Edge’s collocation applications and Michigan Bell’s then-current network

practice, have been in place for approximately three years. Yet New Edge has chosen to raise

this issue for the first time to this Commission in this section 271 proceeding.

       Z-Tel complains about SBC’s policy not to permit carriers to “opt in” to certain

reciprocal compensation arrangements under 47 U.S.C. § 252(i). But this Commission has held

in prior section 271 applications that this is not the proper forum to air this complaint. In any

case, this dispute is now moot because Michigan Bell and Z-Tel have negotiated an agreement

containing the precise reciprocal compensation language that Z-Tel had been seeking.

                                              *****



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                                                                           SBC Communications Inc.
                                                                       Michigan 271 Reply Comments
                                                                                      March 4, 2003

       The record in this proceeding demonstrates that SBC has done everything that Congress

and this Commission have asked of it in implementing the local competition provisions of the

1996 Act and opening the local market in Michigan. And the results are clearly evident: there is

more local competition in Michigan than in any state for which section 271 has been granted.

The Michigan PSC, one of the strongest and most respected public service commissions in the

country, has enthusiastically endorsed this Application. Under the standards set out in the Act

and this Commission’s prior orders, this Commission should grant this Application and authorize

SBC to provide interLATA services in Michigan.




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                                                                                                               SBC Communications Inc.
                                                                                                           Michigan 271 Reply Comments
                                                                                                                          March 4, 2003

                                                    TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................................. i

GLOSSARY OF 271 ORDERS ..................................................................................................... x

INTRODUCTION .......................................................................................................................... 1

DISCUSSION ................................................................................................................................. 4

I.      PERFORMANCE MEASUREMENTS DATA .................................................................... 4

          A.       Third-Party Audits ..................................................................................................... 6

          B.       Internal and External Data Controls ........................................................................ 11

          C.       Access to Raw Performance Data ............................................................................ 13

          D.       Availability of Data Reconciliations ........................................................................ 14

          E.       Oversight of the Michigan PSC ............................................................................... 15

II.     CHANGE MANAGEMENT PROCESS............................................................................. 17

III.    OPERATIONS SUPPORT SYSTEMS ............................................................................... 23

          A.       Line-Loss Notifications ........................................................................................... 24

          B.       Working Service Conflict Notifications .................................................................. 27

          C.       Billing ...................................................................................................................... 30

                     1.          Billing Accuracy ....................................................................................... 30

                     2.          Billing Auditability ................................................................................... 33

          D.       Versioning ................................................................................................................ 35

IV. MISCELLANEOUS ISSUES .............................................................................................. 38

          A.       Line Splitting ........................................................................................................... 38

          B.       Michigan Bell’s IDSL Loop Offering...................................................................... 41

          C.       Integrated Digital Loop Carriers .............................................................................. 42

          D.       Pricing ...................................................................................................................... 44

                     1.          Directory Assistance Listings ................................................................... 44


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                                                                                                           SBC Communications Inc.
                                                                                                       Michigan 271 Reply Comments
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                     2.         Pricing of Interconnection......................................................................... 48

          E.      Reciprocal Compensation ........................................................................................ 51

          F.      Public Interest .......................................................................................................... 52

CONCLUSION ............................................................................................................................. 54

Reply Appendix:                 Affidavits

         Tab 1.                 Scott J. Alexander
                                (Wholesale Policy Issues)

         Tab 2.                 Justin W. Brown
                                (Local Operations Center/Local Service Center)

         Tab 3.                 Justin W. Brown/Mark J. Cottrell/Michael E. Flynn
                                (Billing)

         Tab 4.                 Carol A. Chapman/Mark J. Cottrell
                                (Wholesale Provisioning of Advanced Services)

         Tab 5.                 Mark J. Cottrell/Beth Lawson
                                (OSS)

         Tab 6.                 William C. Deere
                                (Network Issues)

         Tab 7.                 Daniel Dolan/Brian Horst
                                (Ernst & Young Performance Measurement Audits)

         Tab 8.                 James D. Ehr
                                (Performance Measures)

         Tab 9.                 Kelly Ann Fennell
                                (Pricing)

         Tab 10.                Robin M. Gleason
                                (State Proceedings)

         Tab 11.                Deborah O. Heritage
                                (Local Exchange Competition)

         Tab 12.                John J. Muhs
                                (Network Provisioning and Maintenance/Repair)



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                                                                       SBC Communications Inc.
                                                                   Michigan 271 Reply Comments
                                                                                  March 4, 2003

                             GLOSSARY OF 271 ORDERS


Arkansas/Missouri Order       Joint Application by SBC Communications Inc., et al.
                              Pursuant to Section 271 of the Telecommunications Act
                              of 1996 To Provide In-Region, InterLATA Services in
                              Arkansas and Missouri, Memorandum Opinion and
                              Order, 16 FCC Rcd 20719 (2001), aff’d, AT&T Corp.
                              v. FCC, No. 01-1511, 2002 WL 31558095 (D.C. Cir.
                              Nov. 18, 2002) (per curiam)

BellSouth Five-State Order    Joint Application by BellSouth Corporation, et al., for
                              Provision of In-Region, InterLATA Services in
                              Alabama, Kentucky, Mississippi, North Carolina, and
                              South Carolina, Memorandum Opinion and Order, 17
                              FCC Rcd 17595 (2002)

California Order              Application by SBC Communications Inc., et al. for
                              Authorization to Provide In-Region, InterLATA
                              Services in California, Memorandum Opinion and
                              Order, 17 FCC Rcd 25650 (2002)

Georgia/Louisiana Order       Joint Application by BellSouth Corp., et al., for
                              Provision of In-Region, InterLATA Services In
                              Georgia and Louisiana, Memorandum Opinion and
                              Order, 17 FCC Rcd 9018 (2002)

Kansas/Oklahoma Order         Joint Application by SBC Communications Inc., et al.,
                              for Provision of In-Region, InterLATA Services in
                              Kansas and Oklahoma, Memorandum Opinion and
                              Order, 16 FCC Rcd 6237 (2001), aff’d in part and
                              remanded, Sprint Communications Co. v. FCC, 274
                              F.3d 549 (D.C. Cir. 2001)

Massachusetts Order           Application of Verizon New England Inc., et al., For
                              Authorization to Provide In-Region, InterLATA
                              Services in Massachusetts, Memorandum Opinion and
                              Order, 16 FCC Rcd 8988 (2001), aff’d, WorldCom,
                              Inc. v. FCC, 308 F.3d 1 (D.C. Cir. 2002)

New Jersey Order              Application by Verizon New Jersey Inc., et al., for
                              Authorization To Provide In-Region, InterLATA
                              Services in New Jersey, Memorandum Opinion and
                              Order, 17 FCC Rcd 12275 (2002)




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                                                                 SBC Communications Inc.
                                                             Michigan 271 Reply Comments
                                                                            March 4, 2003

Pennsylvania Order       Application of Verizon Pennsylvania Inc., et al., for
                         Authorization To Provide In-Region, InterLATA
                         Services in Pennsylvania, Memorandum Opinion and
                         Order, 16 FCC Rcd 17419 (2001), appeal pending sub
                         nom. Z-Tel Communications, Inc. v. FCC, No. 01-1461
                         (D.C. Cir.) (oral argument held on February 27, 2003)

Qwest Nine-State Order   Application by Qwest Communications International,
                         Inc. for Authorization To Provide In-Region,
                         InterLATA Services in the States of Colorado, Idaho,
                         Iowa, Montana, Nebraska, North Dakota, Utah,
                         Washington and Wyoming, Memorandum Opinion and
                         Order, 17 FCC Rcd 26303 (2002)

Texas Order              Application by SBC Communications Inc., et al.,
                         Pursuant to Section 271 of the Telecommunications Act
                         of 1996 To Provide In-Region, InterLATA Services In
                         Texas, Memorandum Opinion and Order, 15 FCC Rcd
                         18354 (2000), appeal dismissed, AT&T Corp. v. FCC,
                         No. 00-1295 (D.C. Cir. Mar. 1, 2001)

Vermont Order            Application by Verizon New England Inc., et al., for
                         Authorization To Provide In-Region, InterLATA
                         Services in Vermont, Memorandum Opinion and
                         Order, 17 FCC Rcd 7625 (2002), appeal dismissed,
                         AT&T Corp. v. FCC, No. 02-1152, 2002 WL
                         31619058 (D.C. Cir. Nov. 19, 2002)




                                      xi
                                   Before the
                     FEDERAL COMMUNICATIONS COMMISSION
                              Washington, D.C. 20554


In the Matter of

Application by SBC Communications Inc.,                  WC Docket No. 03-16
Michigan Bell Telephone Company, and
Southwestern Bell Communications Services,
Inc. for Provision of In-Region, InterLATA
Services in Michigan


To:    The Commission

           REPLY COMMENTS OF SBC IN SUPPORT OF ITS APPLICATION
           TO PROVIDE IN-REGION, INTERLATA SERVICES IN MICHIGAN
                   __________________________________________


                                      INTRODUCTION

       The local market is irreversibly open to competition in Michigan. CLECs currently have

captured between 26 and 31 percent of Michigan Bell’s total lines (i.e., between 1.5 million and

1.9 million lines). See Heritage Aff. ¶ 4 (App. A, Tab 16). And the Michigan PSC “firmly

believes that the overwhelming evidence shows that the competitive market is thriving in

Michigan.”1

       And the Michigan PSC is not alone in its support for this Application. Indeed, the

overwhelming majority of commenters in this proceeding are in favor of this Commission’s

granting SBC’s application for interLATA authority in Michigan. The Michigan Attorney




       1
        See Report of the Michigan Public Service Commission, In the Matter, on the
Commission’s Own Motion, to Consider SBC’s, f/k/a Ameritech Michigan, Compliance with the
Competitive Checklist in Section 271 of the Federal Telecommunications Act of 1996, Case No.
U-12320, at 3 (MPSC Jan. 13, 2003) (“Michigan PSC Consultative Report”) (App. C, Tab 133).
                                                                           SBC Communications Inc.
                                                                       Michigan 271 Reply Comments
                                                                                      March 4, 2003

General, Michael A. Cox, “supports Section 271 approval for SBC in Michigan because it will

enhance competition for long distance, and the bundling of telecommunications services.”

Comments of the Michigan Attorney General at 8. Many others recognize the obvious benefits

that section 271 relief will bring to the market for long-distance services. The Baker College of

Clinton Township argues that SBC’s “successful entry into the long distance market will lead to

a more vibrant, fully competitive telecommunications industry and expand our range of

communications service choices.”2 In light of the benefits enjoyed in other states where section

271 applications have been granted, “it is clear” to the Greater Port Huron Area Chamber of

Commerce “that business and residential customers benefit from the increased savings and

choice of providers.”3 And Operation Action UP believes that “SBC’s entry into the long

distance market can create cost savings for Upper Peninsula businesses by providing increased

choice and competition.”4




       2
         Comments of Baker College of Clinton Township at 1; see also Comments of Southeast
Michigan Community Alliance at 1 (“It is our sincere hope that this application is approved and
SBC is allowed to bring the same commitment to long distance service that they have
demonstrated in other services.”); Comments of Vista Maria at 1 (“As a private, nonprofit,
corporation, Vista Maria recognizes and welcomes the potential for lower long distance rates
created by SBC’s possible entry into the market.”).
       3
          Comments of Greater Port Huron Area Chamber of Commerce at 1; see also Mott
Community College Comments at 1 (“We look forward to being able to join our colleagues in
other states such as Texas, Pennsylvania, New York and Georgia and benefit from a fully
competitive telecommunications industry.”); Comments of Latin Americans United for Progress
at 1 (“We believe that SBC has worked very diligently to improve the quality of their services
and feel they are ready to enter the long distance market. We therefore strongly support SBC
Ameritech’s efforts to gain long distance approval in Michigan. It is time for Michigan to join
other states in the country where consumers are enjoying the many benefits of full
competition.”).
       4
        Operation Action UP Comments at 1; see also Comments of State Representative Julie
Dennis at 1 (“Allowing SBC to enter the long distance market will benefit our state’s


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                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

       The many supporters of this Application are also aware of the substantial competitive

benefits that SBC’s long-distance entry will bring to other markets.5 And others focus on SBC’s

good corporate citizenship in Michigan, emphasizing the positive contribution that SBC and its

employees have made to communities throughout the state.6

       In its formal evaluation of the Application, the Department of Justice (“DOJ”) was

careful to identify a number of issues – each of which is addressed in detail below – that it

believed merited further review by this Commission. The DOJ specifically recognized that the

substantial amount of CLEC entry into the local market, together with “the absence of evidence

that entry has been unduly hindered by problems with obtaining inputs from SBC lead the

Department to conclude that opportunities are available to serve business customers via facilities


telecommunications industry and increase competition, making consumers the ultimate
winners.”).
       5
         The National Grange “firmly believes that increased competition in the long distance
market is essential for the rollout of necessary and advanced telecommunications services that
will benefit rural communities in Michigan.” National Grange Comments at 1; see also
Comments of Don Williams (“[SBC’s] entry into the market will force other phone companies to
offer competitive prices and packages that include local and long distance service.”); Comments
of the Wyoming-Kentwood Area Chamber of Commerce at 1 (“Upon the entrance of SBC
Ameritech into the Long Distance market in Michigan . . . we feel that those same long distance
carriers will feel compelled to diversify their customer base and enter into the local telephone
business, thereby having the same positive effect for businesses and consumers alike there.”).
       6
          See, e.g., Comments of Saginaw Downtown Development Authority at 1 (“SBC’s
strong presence in downtown Saginaw, as well as the company’s continued support of
community and economic development efforts, must not be jeopardized through unnecessary
public regulation that limits competitive position.”); Comments of Southern Wayne County
Chamber of Commerce at 1 (“It’s only fair that a core business in Michigan be able to compete
on a level playing field with its competitors. SBC invests more in the state than any other
telecommunications company and has always exhibited a strong commitment to the community
and its customers.”); Comments of Greater Port Huron Area Chamber of Commerce at 1 (“SBC
is not only a major employer in our community, but a major supporter, whether through
corporate contribution or employee involvement. SBC has a reputation for making significant
contribution to the Port Huron Area.”).



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                                                                          Michigan 271 Reply Comments
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in Michigan” and that “residential entry through the UNE-platform, in particular, appears

noteworthy.” DOJ Evaluation at 5-6. While it believed that the record was not sufficient at the

time of its Evaluation to resolve all of its concerns, the DOJ did not “foreclose the possibility that

the Commission may be able to determine that these concerns have been adequately addressed

prior to the conclusion of its review.” Id. at 2. Indeed, the purpose of these Reply Comments

and the accompanying reply affidavits is to respond to the concerns raised by the DOJ and the

commenters opposing this Application so that this Commission can conclude that these concerns

have been “adequately addressed.”

                                              *****

       The remainder of these Reply Comments are organized as follows: Part I addresses the

stability and reliability of Michigan Bell’s performance measurements, explaining that the

combination of the Ernst & Young audit, the ongoing audit of BearingPoint, and the myriad

other indicia of reliability support this Commission’s reliance on those measurements for

purposes of evaluating Michigan Bell’s performance. Part II addresses various issues relating to

Michigan Bell’s change management process. Part III addresses specific issues concerning the

functioning of SBC’s operations support systems in the Midwest region. Finally, Part IV

addresses a number of miscellaneous issues relating to the provisioning of unbundled loops,

pricing, reciprocal compensation, and the public interest.

                                           DISCUSSION

I.     PERFORMANCE MEASUREMENTS DATA

       As Michigan Bell discussed in its opening brief (at 8-18), the performance measurements

in place in Michigan constitute a stable and reliable source of data with which to evaluate

Michigan Bell’s overall performance in provisioning wholesale services and facilities for



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CLECs. And, notwithstanding the mischaracterizations of various commenters, the Michigan

PSC expressly concluded that it can rely on the performance data in evaluating Michigan Bell’s

compliance with the requirements of section 271:

        The Commission concludes that sufficient support exists in the completed portions of the
        BearingPoint test, in the completed portions of the E&Y audit, in the actual market
        experience and in the responses provided by SBC to BearingPoint’s ongoing
        investigations to support a Section 271 approval at this time and for reliance on the June,
        July, and August 2002 performance metric results.

Michigan PSC Consultative Report at 22. To be sure, the Michigan PSC noted that the

performance measurement process had not yet “fully achieved a level of stability and

dependability which will be required in the post-Section 271 environment,” id., but this merely

recognizes – as the Michigan PSC does throughout its report – that the process will be improved

under the continued guidance and supervision of the Michigan PSC itself. AT&T’s suggestion

(at 36) that the Michigan PSC “found” that the performance reports “are not reliable, dependable,

or in certain cases accurate” completely distorts the Michigan PSC’s actual conclusion.

        In its Evaluation, the DOJ recognized that the CLEC complaints about “data reliability”

in Michigan are based largely on the fact that the BearingPoint audit of SBC’s performance

metric data is not yet complete and on the fact that Michigan Bell has submitted “an alternate

data integrity review by Ernst & Young, which the CLECs argue is less rigorous, to substitute for

the incomplete portions of BearingPoint’s test.” DOJ Evaluation at 14-15. Yet, just as Michigan

Bell had argued in its opening brief and supporting affidavits, the DOJ stressed in its Evaluation

that third-party testing is only part of the equation:

        The FCC has not required a completed audit as a condition of undertaking Section 271
        review. Instead, the FCC’s aim is to assure that the performance data can be relied upon,
        and an audit, completed or uncompleted, is one piece of evidence, albeit a highly
        regarded type of evidence, that is considered in making the determination of reliability.
        The fact that the BearingPoint audit is ongoing does not itself necessitate a finding that
        the performance measure data is generally unreliable. In its current investigation, the


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                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

       Commission should satisfy itself that there are sufficient other indicia of reliability to
       support the Michigan performance data.

Id. at 15 (footnotes omitted). Again, as Michigan Bell highlighted in its Application, the DOJ

described the kind of evidence this Commission considers relevant: “Besides third-party audits,

other indicia of reliability cited by the FCC include the BOC’s internal and external data

controls, open and collaborative metric workshops, the availability of the raw performance data,

the BOC’s willingness and ability to engage in data reconciliations, and the oversight of the state

commission.” Id. at 15 n.65. It is especially important to note, as did the Michigan PSC, that, in

the case of this Application, “actual market experience” provides strong evidence that the CLECs

are receiving nondiscriminatory access to all of the wholesale services and facilities that the law

requires. See Michigan PSC Consultative Report at 22. If Michigan Bell were not providing the

CLECs with wholesale services and facilities at the high level of quality and timeliness reported

in its performance results, the CLECs simply could not have achieved such a high degree of

success in capturing between 26 and 31 percent of Michigan Bell’s total lines.

       A.      Third-Party Audits

       Ernst & Young (“E&Y”) has comprehensively reviewed and verified the accuracy of

Michigan Bell’s performance measurement data. See Dolan/Horst Joint Aff. ¶¶ 8-24 (App. A,

Tab 8). In its October 18, 2002 “Compliance Report,” E&Y explained that it had tested the

accuracy and completeness of Michigan Bell’s reported performance measurements in

compliance with the applicable Business Rules for the months of March, April, and May 2002,

and that Michigan Bell had generally complied, in all material respects, with the Business Rules

during this period. Id. Attach. B.




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       In its Compliance Report, E&Y did identify 130 issues for which some corrective action

was considered appropriate.7 In three subsequent “Corrective Action Reports,” E&Y discussed

that it had tested the accuracy of Michigan Bell’s assertions regarding the steps Michigan Bell

had taken to address the issues noted in the Compliance Report. The three Corrective Action

Reports together verify that seven issues retain to be corrected as of February 28, 2003.8 See

Dolan/Horst Second Joint Aff. ¶¶ 7-10 (Reply App., Tab 7). Michigan Bell is scheduled to take

corrective action on these issues such that the February performance results – which Michigan

Bell reports in the third week of March – will reflect the modifications that E&Y has

recommended. See Ehr Reply Aff. ¶ 97 (Reply App., Tab 8).

       None of these seven issues is likely to have any material impact on the reported

performance measurements. Indeed, two of the modifications will actually improve Michigan

Bell’s reported results, by ensuring the exclusion of certain CLEC-caused and customer-caused

delays from the relevant performance measurements, as specified in the applicable Business

Rules.9 The remaining five issues involve computer programming code enhancements that are

likely to have only a negligible effect on Michigan Bell’s reported performance. For two of the

issues, the impact of the corrective action is expected to be immaterial because the number of



       7
         In the Second Corrective Action Report, dated January 14, 2003, Michigan Bell
disclosed three new issues that were not noted in prior reports, two of which had already been
corrected. As of January 14, 2003, 115 of 133 instances of material noncompliance noted by
E&Y had been corrected and 18 issues were pending corrective action. See Dolan/Horst Second
Joint Aff. ¶ 7.
       8
       An eighth issue was resolved in the most recent “six-month review” and will be
implemented consistent with the schedule approved by the Michigan PSC. See Ehr Reply Aff.
¶ 97.
       9
           See Ehr Reply Aff. ¶ 97 Table 9 (Sec. II, 8(ii) and Sec. IV, 30).



                                                   7
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orders affected is very small.10 And for the other three, the corrective action is expected to have

no material impact because the performance is already so strong that the changes will have no

practical effect on achieving the benchmark.11

       A number of commenters have criticized the methodology and independence of E&Y,

arguing that its test was flawed and that its conclusions are suspect. See generally AT&T

Comments at 43-47; AT&T’s Moore/Connolly Decl. ¶¶ 19, 100-145; TDS Metrocom Comments

at 11-17; WorldCom Comments at 13-19; WorldCom’s Lichtenberg Decl. ¶¶ 26-29. But these

criticisms are simply without merit and have already been rejected by this Commission. E&Y’s

review of Michigan Bell’s performance data here was similar to (although considerably more

expansive than) the audit it conducted on behalf of the Missouri Public Service Commission in

2000 as part of its review of Southwestern Bell’s section 271 application in Missouri. See Ehr

Aff. ¶ 203 (App. A, Tab 9); Dolan/Horst Second Joint Aff. ¶ 13. In the Missouri section 271

application, this Commission rejected almost identical complaints about the scope and

methodology of E&Y’s review. After finding “nothing sufficient to place in doubt either the

correctness of the methodologies employed, or the conclusions reached in Ernst &Young’s

reports,” this Commission recognized in particular that “AT&T has provided no evidence that



       10
          See id. (Sec. III, 10(ii)) (projects that had been improperly excluded from the measure
represent 1.05 percent or less of the total orders reported); id. (Sec. IV, 12) (estimating that
impact of small volume orders excluded is less than 1 percent of all orders reported),
       11
           See id. (Sec. IV, 22) (the effect will only be to move certain orders from one
submeasure to another, where both disaggregations report against the same benchmark); id. (Sec.
IV, 28) (reporting UNE-P trouble ticket completion notices separately from resale trouble ticket
completion notices will not affect performance because they will be both be measured against the
same benchmark, and performance has been consistently above 99 percent sent within one hour);
id. (Sec. IV, 31) (coding enhancement will include certain kinds of technician visits in the
measurement calculating the number of protectors that were not moved after a technician’s visit,
but Michigan Bell has not had a single failure in the past 12 months).


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SWBT or the Missouri Staff sought to limit the scope of testing deemed necessary by Ernst &

Young in their professional judgment to be able to render an independent opinion on SWBT’s

internal control environment and its compliance with applicable Business Rules/PM reporting

requirements.” Arkansas/Missouri Order ¶ 17 & n.39.

       Similarly, neither AT&T nor any other commenter has provided any evidence in this

record to suggest that Michigan Bell has somehow interfered with the independence of E&Y.

On the contrary, E&Y’s auditors have testified under oath that they exercised independent,

professional judgment and that, during the engagement, Michigan Bell “at no time sought to

limit the scope of testing deemed necessary by E&Y in its professional judgment to render

independent examination reports of [Michigan Bell’s] compliance with the applicable Michigan

Business Rules and of [Michigan Bell’s] related internal controls.” Dolan/Horst Second Joint

Aff. ¶ 12. As it did in the Arkansas/Missouri Order, this Commission should reject the baseless

attacks on the integrity of E&Y.

       Indeed, as explained in the Second Affidavit of Daniel Dolan and Brian Horst, E&Y’s

methodology was comprehensive and rigorous, and its conclusions are sound. See id. ¶¶ 15-36;

see also Ehr Reply Aff. ¶¶ 105-120. E&Y’s examination tested all significant systems used by

Michigan Bell for processing transactions and collecting performance measurement data as well

as the systems used for reporting performance measurement results. See Dolan/Horst Second

Joint Aff. ¶ 17. In addition, their examination included a review of Michigan Bell’s manual

processes for generating performance measures. The audit covered each of the 150 performance

measurements identified in the Business Rules. For each performance measurement, E&Y

reviewed the programming code containing the Business Rules within the front-end, intermediate

and reporting systems. Id. Moreover, E&Y reviewed the sources of the underlying data, the



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processing and control of such data, and the validity of data entering the source systems, in order

to ensure the accuracy and completeness of the reported data. Id. ¶ 19.

          Standing alone, E&Y’s audit is sufficient to satisfy this Commission’s interest in having a

third-party evaluation of Michigan Bell’s performance measurements. Similar kinds of audits –

whether by E&Y itself in Missouri, PricewaterhouseCoopers in California, or Telcordia in Texas

– have all been found sufficient by this Commission in reviewing other applications. But this

Commission has more than E&Y’s comprehensive evaluation on which to rely; it can also take

substantial comfort from the fact that both Michigan Bell and the Michigan PSC are committed

to completing and satisfying BearingPoint’s Performance Metrics Review (“PMR”). See

Michigan PSC Consultative Report at 15, 22. While it is true that all five test areas of the PMR

are not yet complete, it is also true that Michigan Bell is continuing to devote substantial

resources to ensuring that BearingPoint’s “observations” and “exceptions” are successfully

resolved. The existence of the ongoing BearingPoint test is, therefore, additional assurance that

the performance measurements are reliable and accurate and will remain so for the foreseeable

future.

          BearingPoint has so far issued a total of 29 Exceptions in its PMR. See Ehr Reply Aff.

¶ 31. Of these Exceptions, 14 have been closed as “Satisfied,” while 11 are currently being

retested. Only three Exceptions are “open” in that BearingPoint is waiting for a response from

SBC, but each of these was posted a little over two weeks ago. SBC will be responding to each

of these open issues in accordance with the established process. Id. Finally, there is only one

Exception that has been closed with a “Not Satisfied” status, but this has now become moot in

light of the decision reached by all parties in the most recent six-month review collaborative to

resolve an ambiguity in the Business Rules. Id. ¶¶ 94-95.



                                                  10
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                                                                          Michigan 271 Reply Comments
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       BearingPoint’s testing process has been extremely demanding and has required (and,

indeed, will continue to require) an enormous commitment of time and resources by SBC in

order to satisfy the test plan. See id. ¶¶ 22-95. But SBC has committed to the Michigan PSC

that it will continue to work with BearingPoint for as long as required in an effort to satisfy all of

the remaining test points. Michigan Bell’s performance measurement system – which has

already been comprehensively audited by E&Y – will thus become more precise and accurate as

time goes on. Certainly when combined with the other indicia of reliability that both this

Commission and the DOJ have identified, the third-party testing in this proceeding strongly

supports the reliability of the current performance measurement system and the data upon which

Michigan Bell relies in this Application.

       B.      Internal and External Data Controls

       SBC’s internal data controls are extensive. They include copying and storing both the

input and output files for performance data; using numerical control records in the header and

trailer of the input and output files to ensure that all records are processed; and processing data

more than one time and cross-checking the results for accuracy. See Ehr Aff. ¶ 276. In its effort

to resolve BearingPoint’s Exception 20, moreover, SBC has documented and implemented a

wide range of controls in its data transfer and performance measurement production processes.

See Ehr Reply Aff. ¶ 51. SBC has implemented these controls throughout the reporting process,

including both manual and mechanized processes. Michigan Bell’s data are also subject to

substantial “external” controls, such as the Michigan PSC’s approved performance remedy plan,

the mini-audits contained within that plan, the data reconciliation process available to CLECs,

and the annual audits that the Michigan PSC has authorized. Id.




                                                 11
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                                                                         Michigan 271 Reply Comments
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       Both AT&T and TDS Metrocom complain about the number of performance data

restatements, arguing that they prove that SBC’s internal controls are inadequate. See AT&T’s

Moore/Connolly Decl. ¶¶ 59-60; TDS Metrocom Comments at 19. However, this Commission

has rejected this precise line of argument in the past. See New Jersey Order ¶ 90 (“We reject the

arguments made by AT&T and other parties that challenge the reliability of Verizon’s data on

the basis of the sheer volume of the changes and corrections that Verizon made to its processes

for including the relevant data”); Georgia/Louisiana Order ¶ 17 (rejecting CLEC claims that “the

pattern of restatements of the data by BellSouth and BellSouth’s acknowledgements of problems

with certain metrics mean that the data is not stable enough to be relied upon”).

       Moreover, it is important to put the restatements into perspective. Every month,

Michigan Bell reports performance on approximately 150 performance measures, which are

disaggregated into more than 3,400 submeasures, which are in turn reported individually for over

120 CLECs in Michigan. Thus, Michigan Bell’s performance measurement reports include

hundreds of thousands of reported results each month. See Ehr Reply Aff. ¶ 48. With this many

reported results, it is not surprising that, on occasion, Michigan Bell discovers that a reported

result requires restatement. Michigan Bell has adopted a conservative restatement policy, in that

it restates results even when there was no “material” change to the previously reported results.

Id. ¶ 49. In addition, during BearingPoint’s testing, Michigan Bell often restated results simply

to facilitate the test, without any regard for whether the restatement made any practical

difference to the reported results. Defining a “material” change in a submeasure as one that

moves the reported result from a “pass” to a “fail” or vice versa, from “indeterminate/no data” to

“fail,” or from “fail” to “indeterminate/no data,” SBC’s restatements in the Midwest region

between June and December 2002 had a “material” effect on less than 1 percent of its previously



                                                 12
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                                                                          Michigan 271 Reply Comments
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reported results. Id. ¶ 49 & Table 5 (note). This extremely low percentage of material

restatements indicates that Michigan Bell’s results are accurate and reliable when first reported.

Moreover, the very existence of restatements demonstrates that there are processes in place to

detect errors, to correct the underlying root cause, and to ensure that reported results are accurate.

Id. ¶ 49.

        SBC has, in addition, implemented a number of initiatives to reduce the number of

restatements. For example, it has put together a team of subject matter experts (“SMEs”) to

analyze each restatement in order to determine the root cause and to develop preventive action

going forward; it has implemented a “materiality policy” to ensure that only restatements that

have a material effect on reported results are implemented; and it has provided enhanced training

for employees involved in the manual processes in order to reduce the likelihood of error. Id.

¶ 52.

        C.     Access to Raw Performance Data

        As explained in the Application, the accuracy and reliability of Michigan Bell’s

performance measurements are bolstered by the fact that CLECs have access to the raw data

underlying those measures and that, for the most part, they have not disputed their validity.

AT&T nonetheless complains that it finds it “cumbersome” to obtain raw performance data from

SBC in the Midwest region and that SBC has been unable to provide raw performance data upon

request. See AT&T Comments at 48-49. AT&T is wrong.

        First, for the past year, SBC has provided to AT&T on a monthly basis the raw

performance data associated with several measurements (together with associated

disaggregations within each measurement) that AT&T identified. See Ehr Reply Aff. ¶ 122.

AT&T has never complained to its Account Team or to the performance measurement



                                                 13
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                                                                                       March 4, 2003

management team that it has been harmed by delays in receiving its raw performance data. Id.

¶ 123.

         Second, Michigan Bell provides raw data to CLECs (including AT&T) in precisely the

format required by the approved Performance Remedy Plan: “pursuant to mutually agreeable

format, protocol, and transmission media.” Id. ¶ 124 & n.122 (citing Michigan Bell Performance

Remedy Plan, Section 1.1). Moreover, Michigan Bell has long been planning to implement a

raw data website, and it has already begun to do so. Id. ¶ 124. Under these circumstances, it is

remarkable that AT&T would state that “SBC has refused to make [a web-based process]

available” in the former Ameritech region. See AT&T Comments at 48.

         Finally, AT&T’s specific complaints about the raw performance data relating to PM 39

are fully rebutted by James D. Ehr. See Ehr Reply Aff. ¶¶ 125-132. In sum, Michigan Bell

provided AT&T exactly what it requested and continues to provide additional data in response to

AT&T’s additional requests. It is impossible to conceive how the facts of these particular data

exchanges support a credible argument that SBC is unresponsive to CLEC data requests.

         D.     Availability of Data Reconciliations

         The accuracy and reliability of Michigan Bell’s data are further ensured through the

availability of data reconciliations. See Ehr Aff. ¶ 270. At the time this Application was filed,

no CLEC had sought to reconcile the reported performance results with its own internal records,

despite the fact that some had requested and received raw performance data. See id. ¶ 267;

see also DOJ Evaluation at 15 n.65. Just prior to the filing of its comments on February 6, 2003,

however, AT&T requested for the first time a data reconciliation with respect to PM MI 13,

which measures the percentage of line-loss notifications sent within one hour of the completion

of the service order. See Ehr Reply Aff. ¶ 141. The parties conferred on February 19, 2003, and



                                                 14
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                                                                                        March 4, 2003

the efforts to reconcile the data continue. Nonetheless, the availability of this data-reconciliation

process clearly offers an additional safeguard to ensure that SBC’s performance data remain

reliable. Id. & n.140.

       E.      Oversight of the Michigan PSC

       The Commission has repeatedly looked to state-commission oversight to guarantee the

continued reliability of performance data. See, e.g., Georgia/Louisiana Order ¶ 19; BellSouth

Five-State Order ¶ 16. In its Consultative Report recommending approval of this Application,

the Michigan PSC was very clear that it would remain vigilant and continue to exercise

substantial oversight over Michigan Bell in the post-section 271 environment. After describing

the anti-backsliding requirements and the performance remedy plan, the Michigan PSC expressly

recognized that “[o]versight by this Commission will thus be an ongoing activity and the

Commission will remain vigorous in its ongoing enforcement efforts.” Michigan PSC

Consultative Report at 4; see also id. at 94 (“The Commission does not expect SBC to purposely

take steps that would inhibit competition, following Section 271 approval by the FCC, as

intimated by AT&T. Continued Commission oversight and existing remedy plans are meant to

specifically address these situations should they arise.”).

       Moreover, in issuing the January 2003 Compliance Order,12 the Michigan PSC confirmed

that it would play a critical role in ensuring that Michigan Bell’s systems continue to improve.

See Gleason Reply Aff. ¶ 28 (Reply App., Tab 10). The Michigan PSC committed, for example,

that it “will vigorously pursue completion of all [outstanding] portions of the BearingPoint and



       12
         Opinion and Order, In the Matter, on the Commission’s Own Motion, to Consider
SBC’s, f/k/a Ameritech Michigan, Compliance with the Competitive Checklist in Section 271 of
the Federal Telecommunications Act of 1996, Case No. U-12320, at 1 (MPSC Jan. 13, 2003)
(“January 2003 Compliance Order”) (App. C, Tab 134).


                                                 15
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Ernst & Young tests.” January 2003 Compliance Order at 4.13 In addition, the Michigan PSC

emphasized that its consideration of the outstanding issues in the performance measurement

docket (Case No. U-11830) “will include a particular emphasis on the Commission’s ongoing

oversight and monitoring activity to assure that backsliding in the post 271 environment will be

prevented and immediately addressed. This will again include the potential assessment of

additional remedies, penalties, and/or fines should this be required.” Id. at 5; see also Michigan

PSC Consultative Report at 144.

                                              *****

       In its Evaluation, the DOJ “recommend[ed] that the Commission satisfy itself that a

stable and reliable performance measure system will be in place to assure that the Michigan

market remains open after the application is approved.” DOJ Evaluation at 16. In BellSouth’s

Five-State Application, this Commission found that BellSouth’s data were stable, accurate, and

reliable based on “extensive third party auditing, the internal and external data controls,

BellSouth’s making available the raw performance data to competing carriers and regulators,

BellSouth’s readiness to engage in data reconciliations, and the oversight and review of the data,

and of proposed changes to the metrics, provided by state commissions.” BellSouth Five-State

Order ¶ 16 (footnotes omitted). For precisely the same reasons, this Commission should

conclude that Michigan Bell’s performance data likewise are and will remain “accurate, reliable,

and useful.” Id.




       13
         Michigan Bell filed its compliance and improvement plan proposals as required by the
January 2003 Compliance Order on February 13, 2003. See Ex Parte Letter from Geoffrey M.
Klineberg, Kellogg, Huber, Hansen, Todd & Evans, P.L.L.C., to Marlene H. Dortch, FCC,
Attach. A (Feb. 19, 2003) (“Compliance and Improvement Plans”).



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II.    CHANGE MANAGEMENT PROCESS

       SBC Midwest14 satisfies all aspects of this Commission’s test for an adequate change

management process (“CMP”).15 See Cottrell/Lawson Joint Reply Aff. ¶ 18 (Reply App.,

Tab 5); see also California Order ¶ 96. As the Michigan PSC recently concluded, “SBC’s

change management process complies with Section 271 requirements and SBC complies with the

terms of that process.” Michigan PSC Consultative Report at 76. That conclusion is confirmed

by BearingPoint’s third-party test, which tested the adequacy and completeness of SBC

Midwest’s procedures for developing, publicizing, conducting, and monitoring change

management, and found that Michigan Bell performs those functions satisfactorily. See

Cottrell/Lawson Joint Reply Aff. ¶ 12. Indeed, in its Evaluation, the DOJ does not raise any

concerns over the adequacy of SBC Midwest’s CMP or SBC Midwest’s adherence to the CMP

when implementing new OSS releases. See DOJ Evaluation at 6 (SBC “apparently . . .

compl[ies] with its formal change management process for major changes, such as new OSS

releases”). Rather, the DOJ’s change management concern is limited to SBC Midwest’s

performance in “inform[ing] the CLECs of . . . changes in processes, procedures, and policies

that significantly affect their operations.” Id. As SBC Midwest demonstrates below, even that

remaining claim is without foundation.



       14
        “SBC Midwest” refers to the five state local exchange carrier operations of Illinois Bell
Telephone Company, Indiana Bell Telephone Company, Inc., Michigan Bell Telephone
Company, The Ohio Bell Telephone Company, and Wisconsin Bell, Inc.
       15
          Indeed, SBC Midwest’s CMP is the same process that was in place when this
Commission reviewed and approved Pacific Bell’s California and Southwestern Bell
Telephone’s Arkansas/Missouri applications. See Cottrell/Lawson Joint Reply Aff. ¶ 18. It is
also the same process relied upon in Nevada Bell’s pending section 271 application. No party
has objected to the CMP process in that proceeding.



                                               17
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                                                                          Michigan 271 Reply Comments
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       CLECs point to several incidents where SBC Midwest purportedly violated change

management principles by making unannounced changes to its systems. See, e.g., AT&T

Comments at 12-13; TDS Metrocom Comments at 28; see also DOJ Evaluation at 6-7;

Cottrell/Lawson Joint Reply Aff. ¶¶ 18-38. Only one of those instances involved a violation of

change management, however, and even that single incident was isolated and minor in nature.

See id.; see also Qwest Nine-State Order ¶ 148 (“We reject claims that Qwest’s actions over the

course of the past few months demonstrate that Qwest does not adhere to its CMP. Qwest, in

fact, agrees that one of the instances cited . . . was a violation of its CMP, but persuasively argues

that isolated instances of noncompliance with CMP are not sufficient to undercut the overall

strong performance Qwest has demonstrated.”) (footnotes omitted).

       The only example cited by AT&T that raises CMP-compliance issues involves the

PIC/LPIC field on the local service request (“LSR”). See Cottrell/Lawson Joint Reply Aff. ¶ 23.

Specifically, in LSOG 4.02, a CLEC could send PIC/LPIC information on an LSR even if no

change from the current selection was requested. See id. That changed in versions LSOG 5 and

higher, however, so that CLECs thereafter could populate the PIC/LPIC field only if there were a

change from the current selection. See id. This change was appropriately handled through the

CMP. See id. SBC determined that on November 20 2002, however, it inadvertently applied

this change to LSOG 4.02. See id. ¶ 24.

       AT&T advised SBC Midwest on November 25, 2002, that its LSRs were being rejected,

and, only two days later, SBC Midwest implemented a programming change to bypass the edit

for LSOG 4.2. See id. SBC recognizes that, in this instance, it should have followed the CMP




                                                 18
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                                                                       Michigan 271 Reply Comments
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when making this change. See id. ¶ 24 & n.20.16 A single deviation from the CMP, however,

does not establish that SBC Midwest does not comply with its change management obligations

or that CLECs are denied a meaningful opportunity to compete. See id.

       As explained in detail in the Joint Reply Affidavit of Mark J. Cottrell and Beth Lawson,

the other examples cited by AT&T, while not literally CMP violations, occurred in areas where

SBC Midwest believed the changes would have had no impact on CLECs. See id. ¶¶ 26-38.

For instance, several examples cited by AT&T did not even involve changes to any systems, and

therefore did not implicate change management notification requirements. See id. ¶¶ 32, 37 &

n.25. Still other examples involved changes where the impact on CLECs was unanticipated. See

id. ¶¶ 33, 36; see also BellSouth Five-State Order ¶ 205 (“changes that do not affect OSS

interfaces are not necessarily required to be part of the change management process”). Still,

SBC Midwest recognizes the importance of informing CLECs of system changes, and in an

effort to improve communication between SBC Midwest and CLECs regarding CLEC-impacted

changes that might otherwise not fall within the scope of the CMP, SBC Midwest will begin

distributing a “courtesy accessible letter” to inform CLECs of such system changes. See

Cottrell/Lawson Joint Reply Aff. ¶ 39; BellSouth Five-State Order ¶ 206.17 Overall, however, it




       16
          AT&T also relies on this example as evidence of the impact that unannounced changes
may have on CLECs, claiming that SBC Midwest erroneously rejected AT&T’s attempt to
supplement the orders. But contrary to AT&T’s allegations, the reason why resolution of this
issue was delayed is largely AT&T’s own fault. See Cottrell/Lawson Joint Reply Aff. ¶ 25.
After receiving rejects as a result of the PIC/LPIC edit, AT&T sought to supplement those orders
during the Thanksgiving holiday – a time when SBC Midwest had notified CLECs that SBC
Midwest’s systems would be down. See id.
       17
         See Compliance and Improvement Plans Attach. F; see also Cottrell/Lawson Joint
Reply Aff. ¶¶ 40-41.



                                               19
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is clear that none of the examples cited by AT&T demonstrates that SBC Midwest fails to adhere

to its CMP. See Qwest Nine-State Order ¶ 148.

       Test Environment. As it explained in its opening brief (at 57), SBC Midwest provides

CLECs with a stable test environment, see Cottrell Aff. ¶¶ 219-223 (App. A, Tab 6), that

“affords competitors a meaningful opportunity to compete,” California Order ¶ 98. BearingPoint

also conducted a comprehensive test of SBC’s testing environment, and found all criteria to be

satisfied. Nonetheless, AT&T complains about certain restrictions SBC places on its test

environment in which CLECs can test their own systems. See AT&T Comments at 26. AT&T

claims that it should be permitted to perform repetitious and duplicative testing within the test

environment. See Cottrell/Lawson Joint Reply Aff. ¶ 69. But once a transaction is submitted

correctly, the test environment will return the exact same response to AT&T every time the

transaction is submitted. See id. ¶¶ 74, 77. Such testing is not only unnecessary, but also

deprives others in the CLEC community of test environment resources. See id. ¶¶ 73-74.

       It should be noted that, at any given time, between 7 and 15 CLECs are conducting

testing in SBC Midwest’s region. See id. ¶ 73. As set out in the 13-State CLEC Joint Test Plan,

SBC will work with CLECs to agree upon the parameters of the CLEC test, including the length

of the test case and number of test cases. See id. ¶ 71. SBC Midwest will also attempt to

minimize the amount of unnecessary duplication in the test plan. See id. ¶ 73. Thus, if the test

plan contains numerous tests of the same conditions, or proposes to run the same test case

redundantly, no purpose is served, and SBC Midwest will negotiate with the CLEC to reduce the

duplication. See id. ¶ 74. This ensures that SBC Midwest has adequate resources to support not

only that CLEC, but other CLECs seeking to test as well. See id.




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                                                                        Michigan 271 Reply Comments
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       AT&T, on the other hand, apparently believes that it should be allowed to test without

any such limits. For example, a recent test plan submitted by AT&T sought to test 24 different

transaction types 40 times each, for a total of 960 submissions. See id. ¶ 77. As explained

above, however, duplicative testing to this extent is unnecessary. See id. ¶¶ 74, 77. Moreover,

to the extent AT&T seeks to test its own back end systems, AT&T should develop, manage and

pay for its own internal testing systems – just as SBC has done – instead of imposing those costs

on SBC and the rest of the CLEC community. See id. ¶¶ 70, 78. AT&T also apparently believes

that it is not required to submit a test plan for such testing. See id. ¶ 75. Contrary to AT&T’s

suggestion, SBC Midwest has never sanctioned unauthorized and unsupervised testing by

CLECs without a test plan. See id. ¶ 76.

       LSOG 4 & LSOG 5 Implementation. AT&T also complains that SBC Midwest failed to

comply with change management in connection with the LSOG 4 and LSOG 5 releases. See

AT&T Comments at 27. Contrary to AT&T’s assertion, however, SBC Midwest did not miss

any of the agreed upon change management notification dates for LSOG 4 implementation.18

See Cottrell/Lawson Joint Reply Aff. ¶ 55; see also Cottrell Aff. ¶¶ 226-228. Although several

changes were made to the final requirements after they were released, these changes were the

result of additional collaborative walkthrough sessions, which were held at the request of the

CLECs. Those requirements were updated in compliance with the agreed upon CMP. See

Cottrell/Lawson Joint Reply Aff. ¶ 56; Cottrell Aff. ¶ 231. SBC Midwest adhered to the CMP

exception process in announcing those changes. See Cottrell/Lawson Joint Reply Aff. ¶ 56.



       18
         Indeed, this Commission has already reviewed SBC’s implementation of LSOG 5 and
found that “[SBC’s] change management process provides the documentation and support
necessary to provide competitive LECs nondiscriminatory access to [SBC’s] OSS.” California
Order ¶ 96; see also Cottrell/Lawson Joint Reply Aff. ¶ 57.


                                                21
                                                                           SBC Communications Inc.
                                                                       Michigan 271 Reply Comments
                                                                                      March 4, 2003

Moreover, throughout the March 2001 release process, SBC Midwest adhered to the precepts

and timelines agreed to in the CMP, as well as to the notification requirements of the Plan of

Record CMP that was used on an interim basis pending completion of the CMP negotiations.

See id.

          Post to Bill Notifications. Finally, AT&T raises an issue with SBC Midwest’s provision

of post to bill (“PTB”) notifications, which provides CLECs with notice that the order has been

updated to SBC Midwest’s billing systems. See AT&T Comments at 16-17. Moreover, the DOJ

specifically expresses a concern about this issue under change management, asserting that SBC

Midwest did not provide timely notice of this problem. See DOJ Evaluation at 7. A complete

review of the underlying facts, however, confirms that SBC Midwest behaved prudently and

responsibly.

          SBC Midwest discovered on December 5, 2002, that some PTB notifications were not

being sent. See Cottrell/Lawson Joint Reply Aff. ¶ 125. While SBC first recognized that there

was a potential problem in December, the issue was very complex and the root cause was not

identified and confirmed until January 15. See id. At that point, SBC moved to determine the

scope of impact, the specific CLECs involved and what re-flow capability existed. See id.

Immediately after determining all of those items, SBC sent the Accessible Letter on January 29,

2003, that explained the problem, revealed the root cause and solution, and offered to re-flow the

affected PTB notifications. See id. ¶ 126.

          AT&T exaggerates the impact of this error. As AT&T acknowledges, SBC Midwest

provides PTBs only in response to orders submitted by CLECs who use LSOR 5. See id. ¶ 127.

Thus, those CLECs (including some local AT&T business units) using LSOR 4.02 do not receive

a PTB; instead, they receive a service order completion notice (“SOC”), which notifies them that



                                                22
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

the requested service has been physically completed. See id. ¶¶ 127-128. Following the receipt

of the SOC, in the case of a migration order, the customer effectively has been migrated to the

new local service provider. See id. ¶ 127. In most cases, the customer service inquiry (“CSI”) is

updated within 24 hours of service order completion, unless there is an error in the end user’s

account. See id. Once the “owner” of the account on the CSI designates the provisioning CLEC,

that CLEC has the ability to submit change orders against that account. See id. This is the same

process used by AT&T for the last six or seven years that AT&T has done business as a local

service provider. See id. ¶ 128. While SBC Midwest regrets the error that led to AT&T’s not

receiving PTB notifications for the period in question, AT&T’s argument that it “needs” a PTB

notice is overblown. See id. ¶ 129.

III.   OPERATIONS SUPPORT SYSTEMS

       Based on extensive proceedings and exhaustive reviews of SBC Midwest’s OSS, as well

as the results of BearingPoint’s comprehensive third-party test, the Michigan PSC concluded that

SBC Midwest’s OSS satisfy the requirements of Checklist Item 2. See Michigan PSC

Consultative Report at 50-76. Nothing in the CLEC comments calls that judgment into question.

       As SBC Midwest demonstrated in its opening brief (at 38-57), SBC Midwest offers

competing carriers nondiscriminatory access to its OSS. See Cottrell Aff.; Flynn Aff. (App. A,

Tab 12); Brown Aff. (App. A, Tab 2). Moreover, data from September 2002 through January

2003 confirm that SBC Midwest’s OSS are handling commercial volumes of CLECs orders and

are meeting or exceeding nearly all of the performance standards established by the Michigan

PSC. See Ehr Reply Aff. ¶¶ 3-6. Although the DOJ has raised specific concerns with four

discrete aspects of SBC Midwest’s OSS – line-loss notifications, working service conflict

notifications, billing, and versioning – their concerns fall far short of rebutting SBC Midwest’s



                                                23
                                                                          SBC Communications Inc.
                                                                      Michigan 271 Reply Comments
                                                                                     March 4, 2003

showing of checklist compliance. Moreover, as discussed below, and in more detail in SBC

Midwest’s reply affidavits,19 the concerns of private commenters likewise fail to demonstrate

that CLECs in Michigan have been denied a meaningful opportunity to compete.

       A.      Line-Loss Notifications

       As explained in the opening brief (at 50-51), SBC Midwest currently provides CLECs

with nondiscriminatory access to line-loss notifications (“LLNs”). SBC Midwest provides

CLECs with the same LLNs, containing the same information, that SBC Midwest’s retail

organization receives when it loses a customer to a CLEC. See Cottrell Aff. ¶ 178. Moreover,

BearingPoint tested SBC Midwest’s LLN process and was satisfied that CLEC line-loss activity

was reported correctly and timely. See id. ¶ 192; Cottrell/Lawson Joint Reply Aff. ¶ 116.

       SBC Midwest has experienced certain discrete problems with delivering line-loss

notifications in the past, but those issues have been addressed. See Cottrell/Lawson Joint Reply

Aff. ¶¶ 98-115. Indeed, the Michigan PSC concluded in its Consultative Report that “SBC has

become extremely proactive in trying to immediately address line loss issues” and that no

“critical issues remain unaddressed at this time.” Michigan PSC Consultative Report at 69.

Even the DOJ has confirmed that “SBC has made progress in this area.” DOJ Evaluation at 10.

Nonetheless, the DOJ and commenters have continued to raise LLNs as an issue in this

proceeding. For several reasons, those concerns are unfounded.

       First, and most importantly, SBC Midwest’s recent performance in providing LLNs has

been excellent. Indeed, over the past six months (August 2002 through January 2003), SBC

Midwest has transmitted more than 719,000 LLNs. See Cottrell/Lawson Joint Reply Aff. ¶ 96.



       19
         See Cottrell/Lawson Joint Reply Aff. (electronic OSS); Brown/Cottrell/Flynn Joint
Reply Aff. (Reply App., Tab 3) (billing); Brown Reply Aff. (Reply App., Tab 2) (manual OSS).


                                               24
                                                                           SBC Communications Inc.
                                                                       Michigan 271 Reply Comments
                                                                                      March 4, 2003

Even assuming that everything AT&T, WorldCom, and Z-Tel state in their comments is true,

during this same six-month period, SBC Midwest has failed properly to transmit a total of

approximately 13,250 LLNs, meaning that only 1.8 percent of the total number of LLNs were

incorrect in the past six months. Id.20 Such a small number of missing or incorrect LLNs does

not deprive CLECs a meaningful opportunity to compete. See, e.g., Pennsylvania Order ¶ 52.

       Second, although LLN issues have been raised in the past, SBC Midwest has

demonstrated that each of those issues has been resolved with no meaningful competitive impact

on CLECs. See Cottrell/Lawson Joint Reply Aff. ¶¶ 97-115. Almost all of the issues raised by

CLECs involved isolated incidents, resulting from a human error or a one-time system change.

See id. ¶ 97. The root cause of each of the specific problems identified by the CLECs was

unique and generally unrelated to any other. See id. In some cases, the problem impacted only a

single CLEC or involved a very small volume of LLNs. And, in each instance, SBC Midwest

responded quickly to correct the problem and offered to reflow any affected LLNs. See id.21

       As explained in detail in the Joint Reply Affidavit of Mark J. Cottrell and Beth Lawson,

SBC Midwest has promptly resolved each incident as it arose. See Cottrell/Lawson Joint Reply

Aff. ¶¶ 99-113. This is particularly so of the recent issues that CLECs have identified. For



       20
          AT&T asserts that SBC’s “OSS adversely affected 10,000 of AT&T’s line-loss records
during the last five months of 2002 alone.” AT&T’s DeYoung/Willard Decl. ¶ 131. WorldCom
reported experiencing difficulty interpreting “over 3,000” LLNs in late January/early February.
See WorldCom’s Lichtenberg Decl. ¶ 21. Z-Tel reports two incidents – one in
August/September 2002 and another in November 2002 – that impacted 274 and 68 LLNs,
respectively. See Z-Tel’s Walters Decl. ¶ 6.
       21
            See also Georgia/Louisiana Order ¶ 163 (noting that BellSouth fixed several problems
with LLNs and that the problems were not indicative of checklist noncompliance); Pennsylvania
Order ¶ 52 (“While Verizon notes that a line-loss reporting error did occur in the past, Verizon
represents that it notified the industry, fixed the problem and provided [CLECs] with corrected
files in a timely manner.”).


                                               25
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

example, in December 2002, AT&T experienced a problem with LLNs resulting from AT&T’s

conversion from LSOR 4.02 to LSOR 5.02. See AT&T’s DeYoung/Willard Decl. ¶¶ 126-127.

As a result of a table update issue, approximately 3,000 LLNs were sent to AT&T in LSOR 4.02

format rather than in the new LSOR 5.02 format. See Cottrell/Lawson Joint Reply Aff. ¶ 108.

AT&T notified SBC Midwest on the afternoon of December 16, 2002, and SBC Midwest took

corrective action by the morning of the next day. See id. ¶ 111. AT&T was the only CLEC

affected by this mistake, and the problem was fixed in less than one day. See id. ¶ 109.

       WorldCom complains of an LLN problem that began on January 31, 2003. See

WorldCom’s Lichtenberg Decl. ¶¶ 20-22. SBC Midwest determined that approximately 3,000

LLNs had been transmitted to WorldCom in a format it apparently could not read. See

Cottrell/Lawson Joint Reply Aff. ¶ 111. SBC Midwest determined that the problem arose after

WorldCom had requested a change to the delimiters in the test environment for LSOG 5.22

During the process of changing WorldCom’s profile for the test environment, a SME in SBC’s

testing group inadvertently made a similar change to the delimiters in WorldCom’s production

profile. As a result, approximately 3,000 WorldCom LLNs were impacted. See Cottrell/Lawson

Joint Reply Aff. ¶ 113.

       WorldCom and SBC Midwest discussed the issue on a conference call. Despite SBC

Midwest’s offer to reflow the affected LLNs, WorldCom chose to reflow the line-loss

notifications internally. See id. ¶ 111. On a conference call two days later, SBC explained what

had happened, and the delimiters were changed back to their original values. See id. To ensure

that this error does not recur, SBC Midwest has removed the ability of SBC’s testing group from



       22
          A delimiter defines a series within a transaction, separating EDI data so they can be
interpreted. See Cottrell/Lawson Joint Reply Aff. ¶ 111 n.47.


                                                26
                                                                              SBC Communications Inc.
                                                                          Michigan 271 Reply Comments
                                                                                         March 4, 2003

making any changes to CLEC production profiles. See id. ¶¶ 112-113. Such changes can now

be made only by a very small group of SBC SMEs. See id. ¶ 112. Although this incident was

certainly unfortunate, it does not represent a systemic issue, and only one CLEC was affected by

the error. See id. ¶ 113.23

       Finally, the DOJ expressed some concern about a decision by the Illinois Commerce

Commission (“ICC”) apparently supporting Z-Tel’s complaint regarding line-loss notifications.

See DOJ Evaluation at 9-10; see also Z-Tel Comments at 3. Z-Tel nowhere mentions, however,

that on September 12, 2002, the ICC reached the exact opposite conclusion, specifically finding

that the LLN problems raised in its prior decision no longer existed. See Cottrell/Lawson Joint

Reply Aff. ¶ 119. Although the DOJ recognized that the ICC had “lifted its order for emergency

relief” in September, see DOJ Evaluation at 10, that decision was not “based on SBC’s plan to

fix its systems,” id. (emphasis added), but rather on SBC’s having already implemented the fix,

as reflected in the evidence and data presented to the presiding Administrative Law Judge, see

Cottrell/Lawson Joint Reply Aff. ¶ 123.

       B.      Working Service Conflict Notifications

       CLECs have raised an issue concerning SBC Midwest’s working service conflict

(“WSC”) notification process. See AT&T Comments at 13-14; WorldCom Comments at 6-8.

In addition, the DOJ has expressed a concern that the fact that SBC Midwest faxes the WSC

notifications, and cancels the order if no response is received, “creates a potential for significant



       23
          In response to the Michigan PSC’s January 2003 Compliance Order, Michigan Bell has
submitted a Line Loss Notifier Communications Improvement Plan. See Compliance and
Improvement Plans Attach. D. This Plan responds to the Michigan PSC’s recognition that
improvements could be made both in the way in which CLECs are notified of problems arising
with line-loss notifications and in the way such problems get reported to the state commission.
See Michigan PSC Consultative Report at 69.


                                                 27
                                                                               SBC Communications Inc.
                                                                           Michigan 271 Reply Comments
                                                                                          March 4, 2003

problems.” DOJ Evaluation at 12. Both the DOJ’s concern and the CLECs’ complaints are

unfounded. Indeed, as the DOJ correctly anticipated, “[i]nformation about how and why this

procedure was instituted in the first place [does] shed light on its impact,” id., and confirms that

SBC Midwest’s use of a faxed WSC process is not a problem at all.

       A WSC notification is required when a CLEC orders new residential service for a

location that is already receiving local service. See Cottrell Aff. ¶ 196. In this instance, it is

unclear whether the service should be installed as an additional line or as primary service. See

Cottrell/Lawson Joint Reply Aff. ¶ 43. Prior to the development of the WSC notification

process, SBC Midwest would install the service as an additional line. See id. Because this

resulted in CLECs having to terminate these facilities, with delays to their end users, CLECs

requested that SBC Midwest develop a process to enable the primary line to be reused and

eliminate the need for a dispatch on new residential service. See id. This required SBC Midwest

to develop a process to determine whether service at the premise had been abandoned or whether

an additional line, in fact, had been ordered. See id. In collaboration with CLECs, and in

accordance with CLEC User Forum guidelines, SBC Midwest developed a procedure for

providing WSC notifications. See Cottrell Aff. ¶ 196; Cottrell/Lawson Joint Reply Aff. ¶ 44.

After conducting a three-month trial with a CLEC, SBC Midwest introduced the WSC process at

the July 2002 Midwest CLEC User Forum regional meeting and explained in detail the

requirements for the process. See Cottrell/Lawson Joint Reply Aff. ¶¶ 39, 42. Although

numerous CLECs, including representatives from AT&T and WorldCom, attended the meeting,

no one raised any objections to this process.24 See id. ¶¶ 44, 47. In any event, as the DOJ notes,



       24
         AT&T attempts to portray as improper SBC Midwest’s use of the CLEC User Forum
to implement the WSC process. See AT&T Comments at 12-13. But there is nothing improper


                                                  28
                                                                          SBC Communications Inc.
                                                                      Michigan 271 Reply Comments
                                                                                     March 4, 2003

any concerns over the current manual process will be eliminated in September 2003, when SBC

Midwest anticipates it will implement a mechanized jeopardy notification for WSC to replace the

current fax process. See DOJ Evaluation at 12; Cottrell/Lawson Joint Reply Aff. ¶ 49.

       AT&T also raises an issue about the WSC process itself, complaining that AT&T was not

prepared to respond to the WSC notifications once SBC Midwest began faxing them. See AT&T

Comments at 14. AT&T’s argument is baffling. Despite having sent representatives to the User

Forum in July 2002, where the WSC process was introduced and discussed in detail, AT&T

apparently never trained its employees or adapted its systems to handle the WSC notifications it

knew were coming. See Cottrell/Lawson Joint Reply Aff. ¶¶ 44, 47. But rather than seek a

solution to its own failure to follow the established processes by ignoring more than 5,000 WSC

notifications sent by SBC Midwest, AT&T instead approached SBC Midwest in “full complaint

mode,” demanding that SBC Midwest change the process. See id. ¶ 47; Brown Reply Aff. ¶ 2.

Although not required to do so, SBC Midwest assisted AT&T in clearing almost the entire

backlog of orders by December 15, 2002.25 See Cottrell/Lawson Joint Reply Aff. ¶ 48; Brown

Reply Aff. ¶ 3.

       WorldCom also raises issues concerning the WSC process, arguing that the WSC form is

unnecessary because “as a general matter, the CLECs would not generally have any information


about using the CLEC User Forum for this purpose. The WSC process did not involve any
system changes that would have required implementation through the CMP. See
Cottrell/Lawson Joint Reply Aff. ¶¶ 44, 45. Indeed, at CMP and User Forum meetings, AT&T
raised the question which forum was the appropriate one to manage the WSC process, but no
other CLEC supported moving the WSC process to the CMP. See id. ¶ 46.
       25
          Amazingly, AT&T now claims that SBC Midwest’s assistance to AT&T was
insufficient. According to the agreement of the parties, SBC Midwest offered to process the
backlog by December 15, 2002. See Brown Reply Aff. ¶ 3. With only a few exceptions, SBC
Midwest processed the orders appropriately by the December 15, 2002 target date. See id. ¶¶ 3,
6-8.


                                               29
                                                                              SBC Communications Inc.
                                                                          Michigan 271 Reply Comments
                                                                                         March 4, 2003

that would help SBC determine whether a dispatch is necessary.” WorldCom’s Lichtenberg

Decl. ¶ 13. This is not accurate. SBC Midwest has no means of resolving a WSC for the CLEC,

other than by making direct contact with the CLEC’s end user, which SBC Midwest does not

believe would be appropriate. See Cottrell/Lawson Joint Reply Aff. ¶ 45. Instead, CLECs are

expected to contact their own end users – just as SBC Midwest does when resolving working

conflicts for itself on the retail side – because the CLEC is in the best position to gather such

information from its own customer.26 See id.

       C.      Billing

       As demonstrated in the Application, and as confirmed by BearingPoint’s third-party test

and the Michigan PSC Consultative Report (at 74), SBC Midwest provides CLECs with a

“meaningful opportunity to compete” by supplying wholesale bills that are accurate, complete,

timely, and auditable. SBC Midwest’s performance in fulfilling these functions has been

outstanding. Indeed, no commenter takes issue with SBC Midwest’s timely provisioning of

daily usage file data, nor does anyone seriously challenge the timeliness of Michigan Bell’s

wholesale bills. See Brown/Cottrell/Flynn Joint Reply Aff. ¶ 8. Both the DOJ and some

commenters, however, raise claims concerning the accuracy and auditability of SBC Midwest’s

wholesale bills. See DOJ Evaluation at 10-12; CLEC Association Comments at 11-12; TDS

Metrocom Comments at 24-27; WorldCom Comments at 12-13. Their claims, however, fall well

short of rebutting SBC Midwest’s showing of checklist compliance.

               1.        Billing Accuracy




       26
           These and other claims raised by CLECs concerning the WSC process are discussed in
detail in the Joint Reply affidavit of Mark Cottrell and Beth Lawson. See id. ¶¶ 42-50.



                                                 30
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

       Most of the commenters’ claims concerning billing accuracy are so lacking in detail that

SBC has been unable to determine whether a billing error has even occurred. Even the DOJ has

acknowledged that “[t]he CLECs’ Comments are short on specifics.” DOJ Evaluation at 10.

This Commission has rejected such vague comments under analogous circumstances before. See

New Jersey Order ¶ 126 (noting that, without concrete evidence, the Commission “cannot . . .

find that the parties have demonstrated systemic inaccuracies in [the BOC’s] wholesale bills that

would require a finding of checklist noncompliance”).27

       The only specific issue raised with respect to billing accuracy relates to the lingering

effects of the UNE-P conversion discussed in the opening Affidavit of Michael E. Flynn. See

Flynn Aff. ¶ 6. In October 2001, SBC Midwest completed a conversion process to consolidate

billing for UNE-P charges into SBC Midwest’s Carrier Access Billing System (“CABS”).28 See

Brown/Cottrell/Flynn Joint Reply Aff. ¶ 17. During the August-October 2001 conversion period

(i.e., the period during which SBC Midwest migrated the embedded base of UNE-P switch ports

from RBS to CABS), the posting of new UNE-P service order activity into CABS was held until

the conversion was completed. See id. ¶ 19. After the conversion, the service orders that had

been held were released for mechanical posting to CABS. See id. Because the volume of

service orders that had been held was large, a substantial number could not post to CABS

mechanically and, therefore, many fell out for manual handling. See id. At the same time,



       27
         The Joint Reply Affidavit of Justin W. Brown, Mark J. Cottrell, and Michael E. Flynn
nonetheless addresses each CLEC complaint (as best as can be discerned) relating to rates in
interconnection agreements, rate tables, backbilling, and the billing-dispute process. See
Brown/Cottrell/Flynn Joint Reply Aff. ¶¶ 24-54.
       28
          Prior to the conversion, UNE-P switch port charges were billed out of the Resale
Billing System (“RBS”), while UNE-P loop charges were billed out of CABS. See
Brown/Cottrell/Flynn Joint Reply Aff. ¶ 17 n.14.


                                                31
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

service order activity on UNE-P circuits that were not impacted by any posting errors continued

to post to and be billed by CABS. See Brown/Cottrell/Flynn Joint Reply Aff. ¶ 23.

       SBC Midwest continued to deal with the manual fallout from the posting of held service

orders into the spring and summer of 2002.29 See Brown/Cottrell/Flynn Joint Reply Aff. ¶ 20.

At that point, SBC determined that certain CABS UNE-P records contained inaccuracies, and it

designed a plan to reconcile the inventory of UNE-P billing records contained in CABS with the

inventory of UNE-P provisioning records contained in the Ameritech Customer Information

System (“ACIS”). Id. Because UNE-P service orders post to CABS after first posting to ACIS,

the purpose of this comparison was to correct any differences between the UNE-P services that

have been provisioned (as reflected in the ACIS records) and those that are being billed (as

reflected in the CABS records). See id. ¶ 17. This database reconciliation was extremely

complicated and took months to plan and execute correctly. It was completed in January 2003,

see Flynn Aff. ¶ 9 n.6, and most of the results of the reconciliation appeared in CLEC bills for

February 2003, see Brown/Cottrell/Flynn Joint Reply Aff. ¶ 18.

       As a result of the reconciliation, approximately 76,000 UNE-P circuits were added to

CABS and 62,000 UNE-P circuits were deleted, affecting 37 CLECs operating in Michigan. See

id. The addition and deletion of UNE-P circuits resulted in the issuance of $9.3 million in credits

and $7.6 million in debits (with a net impact of $1.7 million in credits) to the impacted CLECs.

See id. SBC Account Team representatives have contacted the affected CLECs to provide the

results of the reconciliation and to work with them to resolve any outstanding issues. See id.



       29
          See Accessible Letter CLECAM02-163 (Apr. 26, 2002) (App. H, Tab 28) (“Due to
tremendous growth in the volume of UNE-P orders and Ameritech’s conversion to the CABS
billing system, SBC Ameritech has accumulated billing orders, which have not yet been
processed fully through the billing system.”).


                                                32
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

       The CABS/ACIS reconciliation was a one-time event, designed to correct any

inaccuracies in the CABS database resulting directly from the consolidation of UNE-P billing

into CABS. See id. ¶ 19. Before the reconciliation, the provisioning (ACIS) and billing (CABS)

records for the “added” and “deleted” UNE-P circuits did not match. See id. ¶ 21. Because

these records did not match, new service order activity on those circuits would often fall out for

manual handling. See id. Now that the ACIS and CABS records have been synchronized, future

service order activity for these UNE-P circuits should post without the need for manual handling.

See id. Billing inaccuracies that have resulted from the lack of synchronization between ACIS

and CABS on these UNE-P circuits should no longer occur. See id.

       Finally, it is important to remember that BearingPoint tested CABS and concluded that it

produces accurate and complete bills for UNE-P. See id. ¶ 22. In tests that BearingPoint

conducted in Illinois, Ohio and Wisconsin after the conversion of UNE-P billing to CABS,

BearingPoint determined that SBC Midwest posts UNE-P service orders to CABS in a timely

manner and that UNE-P billing produced by CABS is accurate. See id. Specifically, the results

for the test conducted between August and October 2002, measured against BearingPoint’s 95

percent benchmark, were that Illinois achieved a 97.1 percent rate while both Indiana and

Wisconsin reached a 100 percent rate for completed orders being posted within two bill cycles.

See id. Because the systems are the same, these results apply equally to Michigan. In fact, for

its Ohio Test Report, BearingPoint relied on the results of testing in Illinois, Indiana and

Wisconsin in making its determination that the Ohio test for UNE-P service order billing

timeliness had been satisfied. See id. (citing BearingPoint’s Interim OSS Status Report – Ohio at

1026 (App. L, Tab 46)).

               2.      Billing Auditability



                                                 33
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

       As with the CLEC comments concerning billing accuracy, their allegations regarding

billing auditability are virtually indecipherable. The DOJ recognized in its Evaluation that,

although CLECs may complain that their bills are unauditable, they “provide insufficient

information” for the DOJ, or anyone else, “independently to evaluate these assertions or their

potential impact on competition.” DOJ Evaluation at 12 n.52.

       SBC Midwest provides its electronic Billing Data Tape in accordance with the industry

standard Billing Output Specification (“BOS”) guidelines. See Flynn Aff. ¶ 14.30 There are,

therefore, resources available from a number of third parties that provide training, documentation

and technical support to assist CLECs in understanding these bills. See Brown/Cottrell/Flynn

Joint Reply Aff. ¶ 9. Moreover, SBC Midwest provides CLECs with training classes,

documentation, and other resources to assist them in understanding their wholesale bills. Id.

¶ 11. SBC also offers operational meetings on a weekly and/or monthly basis to discuss any

issues or questions that the CLEC may have, including those related to billing. Id. To the extent

that CLECs have not taken advantage of these resources, it is difficult to see why Michigan Bell

is to blame.31

       Pursuant to the Michigan PSC’s January 2003 Compliance Order, SBC Midwest has

submitted a Bill Auditability Improvement Plan, which includes several measures designed to

help ensure that CLECs are familiar with the billing support that is available to them from SBC



       30
           As part of its third-party test, BearingPoint confirmed that SBC Midwest’s wholesale
bills are clear and auditable and that SBC Midwest’s bills conform to the detail and format of the
BOS specifications. See Brown/Cottrell/Flynn Joint Reply Aff. ¶ 12.
       31
           Z-Tel complains (at 6) about the auditability of its bills, yet Z-Tel never attended any
of the billing training classes offered by SBC Midwest last year. See Brown/Cottrell/Flynn Joint
Reply Aff. ¶ 11. Once Z-Tel attends the training, SBC Midwest’s Account Team will be better
able to provide support to answer any remaining questions Z-Tel may have. Id.


                                                34
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

Midwest.32 See Brown/Cottrell/Flynn Joint Reply Aff. ¶ 13. For example, SBC Midwest

Account Managers will remind their clients, as appropriate, of the ongoing availability and value

in attending the SBC CLEC billing workshops. See id. ¶ 14. SBC Midwest will also identify

additional available support options for the CLECs, including the availability of bill auditability

training sessions offered by external vendors. See id. These proposals will be the subject of a

CLEC collaborative scheduled for early March 2003. See id.

       D.       Versioning

       AT&T alleges in its comments (at 21) that SBC’s versioning policy “creates an enormous

barrier to competition” because the versioning policy requires that all LSRs submitted by or on

behalf of a CLEC be sent using the same LSOG version. SBC’s versioning policy requires that a

CLEC (identified by its Operating Company Number (“OCN”)) use the same LSOG version to

submit LSRs over the EDI interface. According to AT&T, because its trading partners may not

have always implemented the same version as AT&T itself, they may be unable to submit orders

on AT&T’s behalf. See AT&T Comments at 22-23, 52-53; AT&T’s DeYoung/Willard Decl.

¶¶ 136-157. AT&T’s suggestion that SBC’s versioning policy is actually intended to impede

CLECs’ opportunities to compete, rather than to assist them in doing so, is simply wrong.

       First, the very fact that AT&T is even complaining about SBC’s versioning policy is

difficult to understand, especially given the fact that AT&T (along with other CLECs) requested

the very versioning policy that is now in place. See Cottrell/Lawson Joint Reply Aff. ¶ 59.

Acceding to CLECs’ requests, SBC agreed to support three versions of its software at all times,

including at least two LSOG versions. See id. SBC has invested a tremendous amount of time



       32
            See Compliance and Improvement Plans Attach. G.



                                                 35
                                                                          SBC Communications Inc.
                                                                      Michigan 271 Reply Comments
                                                                                     March 4, 2003

and resources to implement versioning according to these requirements. See id. SBC’s

versioning policy – which this Commission has previously approved in both the

Arkansas/Missouri and California 271 proceedings – was developed at the request of and with

the agreement of AT&T and other CLECs. See id. It is preposterous for AT&T now to describe

SBC’s versioning policy as unreasonable or uniquely “restrictive.” See AT&T Comments at 21.

       Second, AT&T’s suggestion that its problem was somehow created by SBC is completely

baseless. AT&T’s problem arises solely as a result of its business decisions, and cannot be

traced back to any shortcomings in SBC’s versioning policy. See Cottrell/Lawson Joint Reply

Aff. ¶ 63. Indeed, the decision to use the OCN for versioning purposes was originally based on

the fact that the OCN was the most logical choice for meeting the requirements that CLECs were

demanding. See id. ¶¶ 60-62. Notably, during the CMP collaboratives, CLECs never expressed

any need for the type of versioning flexibility that AT&T now seeks. See id. ¶ 63. Rather,

CLECs emphasized the need for SBC to maintain multiple versions of its software to

accommodate the need of each CLEC to transition to a new version on its own timeline. See id.

And that is precisely what SBC delivered.

       Third, although AT&T would like to impose the costs of solving its own business

problems onto SBC, AT&T could easily solve this problem for itself. See id. ¶ 64. Indeed, SBC

has suggested several alternatives to AT&T and Covad, AT&T’s line splitting business partner.

For example, Covad could use LEX – which is version independent – to submit LSRs on

AT&T’s behalf. See id. Covad could also use a Service Bureau Provider to submit its orders in

the correct EDI format, or modify its systems to submit this one type of order using the same

version as AT&T. See id. Finally, AT&T could simply submit the line splitting order on behalf

of Covad. See id. Instead of adopting one of the reasonable solutions to this issue suggested by



                                               36
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

SBC (all of which require some effort by either AT&T or its business partner), AT&T instead

seeks to place the burden of solving its problem on SBC. See id. ¶ 65.

       Notwithstanding the unfairness of AT&T’s position, SBC has agreed to consider its

request, although the coding changes that would be necessary to change the versioning process

would take months to design and implement. See Cottrell/Lawson Joint Reply Aff. ¶¶ 65-66.

SBC estimates that altering the versioning scheme – which is a fundamental part of the CMP and

of the system design – to provide what AT&T has requested would take between 9 and 12

months, and require a huge expenditure of resources for SBC. See id. ¶ 65. This diversion of

resources would necessarily impact other critical enhancements, including items such as SBC’s

Business Rules Plan of Record, LSOG 6, flow through enhancements and many others. See id.33

       In sum, there is no problem with SBC’s versioning policy, as this Commission has

consistently found in reviewing that identical process in prior applications. Rather, AT&T and

its business partners are faced with a business issue of their own creation, and they are

attempting to leverage this section 271 application to obtain from SBC a solution for which they

do not have to pay. AT&T’s business problem is not a proper issue for resolution in the context

of a section 271 application.




       33
          Given the tremendous effort required to implement such a change, as well as the added
complexity such a change would create for an already complex environment, SBC proposed that
in exchange, the versioning policy might be simplified to support only the three most recent
versions of software available. This option would require CLECs to migrate off older LSOG
versions more quickly and thereby simplify considerably SBC’s operating environment. See
Cottrell/Lawson Joint Reply Aff. ¶ 66. Because all parties were unable to reach a consensus, the
issue was tabled for further discussions in 2003. Id.



                                                37
                                                                           SBC Communications Inc.
                                                                       Michigan 271 Reply Comments
                                                                                      March 4, 2003

IV.    MISCELLANEOUS ISSUES

       A few additional issues that commenters have raised do not fit into the broader categories

discussed above. None of these issues is meritorious or calls into question Michigan Bell’s

compliance with the requirements of section 271.

       A.      Line Splitting

       In Michigan, one or more CLECs can engage in line splitting; that is, they may offer a

combination of voice and data services over a single UNE loop. See Chapman Aff. ¶¶ 82-88

(App. A, Tab 5). Michigan Bell offers CLECs the ability to engage in line splitting using the

exact same mechanisms that this Commission considered and approved in its Texas Order as

well as in its Kansas/Oklahoma Order and its Arkansas/Missouri Order. Specifically, CLECs

can order an unbundled loop terminated to a voice or data CLEC’s collocation cage, together

with cross connects and an unbundled switch port. See id. ¶¶ 82-84. Moreover, CLECs can

establish a new line splitting arrangement, or convert any existing UNE-P customer to a line

splitting arrangement, by means of a single LSR. Id. ¶ 87; Chapman/Cottrell Joint Reply Aff. ¶ 5

(Reply App., Tab 4).

       AT&T alleges, however, that SBC is not currently able to provision line splitting orders.

See AT&T Comments at 49. AT&T essentially makes three claims. First, AT&T alleges that

“testing by BearingPoint does not provide reliable evidence of SBC’s ability to handle line

splitting orders.” Id. at 51. Second, AT&T claims that SBC’s “improper versioning policy

prevents AT&T from partnering effectively with any [data CLEC].” Id. at 52. Finally, AT&T

claims that when an “AT&T voice/DSL customer elects to drop the DSL service, AT&T must

submit three orders,” and that a “customer that drops only the DSL service will lose voice

service for up to seven days.” Id. at 53. AT&T is wrong on all counts.



                                               38
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

       BearingPoint tested the process by which Michigan Bell would provision the conversion

of UNE-P to line splitting and concluded that Michigan Bell’s provisioning of these service

orders was satisfactory. BearingPoint’s detailed results for ordering and provisioning of

unbundled xDSL loops and unbundled switch ports are included in the BearingPoint report in

both its ordering and provisioning tests. Thus, contrary to AT&T’s assertion, BearingPoint’s

OSS testing does provide a reliable indication of the capability and capacity of Michigan Bell’s

OSS to process line splitting orders. See Chapman/Cottrell Joint Reply Aff. ¶¶ 15-18.

       As discussed above, AT&T’s claims about improper versioning are not a function of

SBC’s policy at all. See supra Part III.D. Rather, AT&T’s business problem is a function of its

own decision to partner with a data CLEC that submits orders using a different EDI version.

       With respect to the issue of disconnection of DSL service in a line splitting scenario,

CLECs in Michigan have processes and procedures available to them through which an end user

customer can smoothly discontinue its DSL service while retaining the same telephone number.

It is important to realize that, once Michigan Bell delivers the unbundled loop and switch port to

the CLEC collocation space, it has no additional involvement in the process of provisioning

voice and data services to the end user. That is wholly within the control of AT&T and its data

CLEC partner. Accordingly, if AT&T’s customer discontinues the DSL service, AT&T or its

DLEC partner can simply disconnect the unbundled loop from the splitter and reconnect it to the

switch port without involving Michigan Bell and without the need to place even a single order to

Michigan Bell. See Chapman/Cottrell Joint Reply Aff. ¶ 7.

       This can be accomplished with little disruption in the customer’s voice service and the

customer retains its telephone number. Alternatively, if AT&T wants to convert its customer

back to UNE-P, it can submit to Michigan Bell a single “REQ Type M, Activity V,” in which



                                                39
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

case Michigan Bell will disconnect the unbundled loop and switch port from the CLEC’s

collocation arrangement, and then reconnect the switch port to a new voice grade loop. Id. ¶ 9.

This conversion will cause minimal disruption in the customer’s voice service; because the

existing switch port is used, the customer retains the same telephone number. Id. AT&T’s

assertion that it must submit three separate orders when a line splitting customer discontinues its

DSL service is based on a fundamental misunderstanding of Michigan Bell’s offerings. See id.

¶ 9 n.14.

       Finally, AT&T’s oblique discussion of the Michigan PSC’s October 3, 2002 decision is

misleading at best. See AT&T Comments at 51. As Carol A. Chapman explained in her initial

affidavit, the Michigan PSC has held that, when a CLEC wins the voice customer in a line

sharing arrangement, that CLEC is entitled to the existing loop even though that loop may be

shared with a data provider. See Chapman Aff. ¶ 90. Because the FCC has determined that, in

that same situation, Michigan Bell must permit the data CLEC to purchase the specific loop over

which it has been engaged in line sharing, Michigan Bell faces inconsistent federal and state

regulatory directives. See Line Sharing Order ¶ 72;34 Line Sharing Reconsideration Order

¶ 22.35 Accordingly, Michigan Bell has filed suit in the U.S. District Court for the Western



       34
          Third Report and Order in CC Docket No. 98-147 and Fourth Report and Order in CC
Docket No. 96-98, Deployment of Wireline Services Offering Advanced Telecommunications
Capability, 14 FCC Rcd 20912 (1999) (“Line Sharing Order”), vacated and remanded, United
States Telecom Ass’n v. FCC, 290 F.3d 415 (D.C. Cir. 2002), petition for cert. pending,
WorldCom, Inc. v. United States Telecom Ass’n, No. 02-858 (U.S. filed Dec. 3, 2002).
       35
          Third Report and Order on Reconsideration in CC Docket No. 98-147, Fourth Report
and Order on Reconsideration in CC Docket No. 96-98, Third Further Notice of Proposed
Rulemaking in CC Docket No. 98-147, Sixth Further Notice of Proposed Rulemaking in CC
Docket No. 96-98, Deployment of Wireline Services Offering Advanced Telecommunications
Capability, 16 FCC Rcd 2101 (2001) (“Line Sharing Reconsideration Order”).



                                                40
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

District of Michigan seeking a declaration that the Michigan PSC’s determination is contrary to

federal law.36 See Chapman/Cottrell Joint Reply Aff. ¶ 12. Because the district court has not yet

ruled on that request, Michigan Bell has also filed a plan with the Michigan PSC to bring its

offering into compliance with the Michigan PSC’s determination, and the Michigan PSC has

approved this plan and concluded that Michigan Bell satisfies its line splitting obligations. Id.

¶ 13. Michigan Bell is simply a stakeholder on the question whether the data or voice CLEC

should have a superior right to the loop currently serving the end user customer in these

circumstances, and it has plainly acted reasonably in seeking a definitive statement of its legal

obligations.

       B.      Michigan Bell’s IDSL Loop Offering

       Michigan Bell provides nondiscriminatory access to xDSL-capable loops and related

services in full compliance with its obligations under Checklist Item 4. As this Commission

recognized as early as its Texas Order, IDSL service is not compatible with certain DLC systems

used to provision traditional ISDN service. Texas Order ¶ 301. To address this issue, which

arose because CLECs sought to use standard ISDN/BRI loops to provision a service that these

loops were not designed to support, Michigan Bell worked closely with CLECs to develop a new

IDSL loop offering that is available at the 77 central offices where CLECs primarily had been

ordering BRI loops. See Chapman Aff. ¶ 49; Chapman/Cottrell Joint Reply Aff. ¶ 41. Michigan

Bell additionally upgraded its testing equipment in a number of central offices so that it could

perform cooperative acceptance testing on these IDSL loops.




       36
          See Complaint, Michigan Bell Tel. Co. v. Chappelle, No. 5:03CV0015 (W.D. Mich.
filed Feb. 4, 2003).



                                                41
                                                                           SBC Communications Inc.
                                                                       Michigan 271 Reply Comments
                                                                                      March 4, 2003

       New Edge appears to conflate Michigan Bell’s separate IDSL and ISDN/BRI loop

offerings. See New Edge Comments at 4-5 (referring to Michigan Bell’s “ISDN/IDSL capable

loops”). As in SBC’s Southwestern region, Michigan Bell voluntarily offers cooperative and

acceptance testing for its IDSL-capable loop offering. See Chapman/Cottrell Joint Reply Aff.

¶ 40. In neither region, however, does SBC offer standard acceptance testing on stand-alone

ISDN/BRI loops. Id. Instead, for those central offices where the IDSL-capable loop is not

available, Michigan Bell will work with CLECs to resolve any provisioning issues that may

arise. See id. ¶ 42. This Commission has never required anything more.

       C.      Integrated Digital Loop Carriers

       McLeodUSA argues that Michigan Bell fails to provide nondiscriminatory access to its

unbundled loops served by integrated digital loop carrier (“IDLC”) facilities. See McLeodUSA

Comments at 17-19. According to McLeodUSA, when a Michigan Bell customer currently

served by an IDLC loop switches to a CLEC, “[t]he customer can experience a substantial

degradation in service quality, for both voice and dial-up data applications such as fax machines,

modems and credit card validation machines.” Id. at 18. McLeodUSA demands, therefore, that

Michigan Bell somehow be required to “unbundle” the IDLC loops themselves rather than

switch the end user to a connected-through copper loop or a universal digital loop carrier

(“UDLC”) system.

       Although it is true that this Commission found in the Local Competition Order that it is

“technically feasible to unbundle IDLC-delivered loops,” it described that such unbundling

might be accomplished by using “a demultiplexer to separate the unbundled loop(s) prior to




                                                42
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

connecting the remaining loops to the switch.” Local Competition Order ¶ 384.37 That is

precisely what Michigan Bell does when moving a loop from an IDLC to a UDLC facility. See

Deere Reply Aff. ¶ 9 (Reply App., Tab 6).

       Three years after the Local Competition Order, moreover, this Commission

acknowledged that other methods of unbundling IDLC facilities “have not proven practicable.”

UNE Remand Order ¶ 217 n.418.38 That is because there is simply no reasonable way to

separate a loop from the switch in an IDLC arrangement; the switch performs the control

functions normally performed by the host terminal in the central office. See Deere Reply Aff.

¶ 4. If a CLEC requests an unbundled loop that is currently served by IDLC technology,

Michigan Bell moves the requested unbundled loop to a spare, existing physical pair or to a

UDLC unbundled loop. Id. ¶ 5. Although it is true that Michigan Bell can do this only where

there are existing copper or UDLC loops available at the same location, only approximately

1 percent of all IDLC loops in Michigan are in locations where there are no alternative loops

available – this represents approximately 0.04 percent of Michigan Bell’s total loops. Id. ¶ 6 n.3.




       37
         First Report and Order, Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, 11 FCC Rcd 15499 (1996) (“Local Competition Order”)
(subsequent history omitted)
       38
          Third Report and Order and Fourth Further Notice of Proposed Rulemaking,
Implementation of the Local Competition Provisions of the Telecommunications Act of 1996,
15 FCC Rcd 3696 (1999) (“UNE Remand Order”), petitions for review granted, United States
Telecom Ass’n v. FCC, 290 F.3d 415 (D.C. Cir. 2002), petition for cert. pending, WorldCom,
Inc. v. United States Telecom Ass’n, No. 02-858 (U.S. filed Dec. 3, 2002). This Commission
expressly rejected the argument that McLeodUSA makes here – that an incumbent should be
required to provide access to IDLC loops through other technologies – because, “despite their
future potential, these methods do not now substantially reduce the competitive LECs’ need to
pick up IDLC customers’ traffic before it is multiplexed.” UNE Remand Order ¶ 217 n.417.



                                                43
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

       McLeodUSA is also wrong that customers generally experience a degradation in service

quality for both voice and data applications as a consequence of shifting from an IDLC loop to

either a copper loop or to a UDLC arrangement. The same transmission characteristics are

provided on each of the three types of loops, and all of them must satisfy state-established

quality of service standards. Customers usually do not know which technology is being used to

provide their service, and they likely would not notice any difference. Id. ¶ 7.

       In any case, any relative degradation in service would be experienced disproportionately

by Michigan Bell’s own customers, approximately 96 percent of whom are served over copper or

UDLC facilities. See id. ¶ 8. Whether Michigan Bell serves a particular customer over IDLC

depends on that customer’s location and on the facilities deployed there, not on whether that

customer uses high-speed modems or some other specific equipment. Id.

       D.      Pricing

       This is one of the rare applications for section 271 relief that does not involve a serious

dispute over the propriety of the rates for unbundled network elements. Even AT&T has had to

concede that the “Michigan PSC has established cost-based prices for access to SBC’s critical

unbundled network elements” and that, in this respect, “Michigan is a success story.” AT&T

Comments at 1, 2. Nevertheless, WorldCom and New Edge each have raised a discrete pricing

concern – one relating to the rates for directory assistance listings and another regarding the rates

for providing power to collocation arrangements. Neither has merit.

               1.      Directory Assistance Listings

       First in its comments and then in a separate ex parte letter, WorldCom argues that “Qwest

[sic] does not provide directory assistance listings (“DAL”) at TELRIC rates, as the Michigan

PSC’s own rulings make clear.” WorldCom Comments at 20; Ex Parte Letter from Keith L.



                                                 44
                                                                              SBC Communications Inc.
                                                                          Michigan 271 Reply Comments
                                                                                         March 4, 2003

Seat, WorldCom, to Marlene H. Dortch, FCC, at 3 (Feb. 26, 2003) (“SBC’s position is that it has

responded to the MPSC finding that the cost studies are inadequate by tariffing rates that are the

same (or very slightly higher) than those ostensibly justified by the cost studies!”).39

       WorldCom is mistaken. The Michigan PSC never rejected Michigan Bell’s cost study for

directory assistance listings. See Fennell Reply Aff. ¶¶ 4-6 (Reply App., Tab 9). WorldCom has

confused directory assistance listings with directory assistance services. They are distinct

products. Directory assistance services are operator-assisted services that offer an end user a

listed telephone number corresponding to a particular residence or business. This service is

offered on both a retail and wholesale basis, and the Michigan PSC required Michigan Bell to

make this service available to CLECs on an unbundled basis at TELRIC rates. See Nations Aff.

¶ 14 (App. A, Tab 19); Fennell Reply Aff. ¶¶ 7-8. In August 2000, the Michigan PSC concluded

“there should be one [cost] study for all DA services. It is not permissible to compute different

costs depending upon who is purchasing the service.”40

       In contrast to directory assistance services, directory assistance listings are data that

include customer published name, address, and telephone number (or an indication of “non-

published status”) that are updated daily and made available to CLECs through bulk downloads

(either in magnetic tape format or through electronic transmission). See Nations Aff. ¶ 12.



       39
          In their comments, the Competitive Local Exchange Carrier Association of Michigan,
the Small Business Association of Michigan, and the Michigan Consumer Federation
(collectively, “CLEC Association”) “endorse the WorldCom position” with respect to the pricing
of directory assistance listings, see CLEC Association Comments at 12-13, but they do not
present an independent argument.
       40
         Opinion and Order, In the Matter, on the Commission’s Own Motion, to Consider the
Total Service Long Run Incremental Costs for All Access, Toll, and Local Exchange Services
Provided by Ameritech Michigan, Case No. U-11831, at 11 (MPSC Aug. 31, 2000) (“Second
Cost Order”) (App. L, Tab 10).


                                                 45
                                                                              SBC Communications Inc.
                                                                          Michigan 271 Reply Comments
                                                                                         March 4, 2003

directory assistance listings allow a CLEC to provide directory assistance services from its own

operators, facilities, and databases. See Fennell Reply Aff. ¶ 8. Once a CLEC receives the base

file of data, it then receives regular updates electronically to enable it to maintain the accuracy of

its own database with which it provides its own directory assistance services. Id.

       WorldCom’s entire argument turns on a misunderstanding of the Michigan PSC’s Second

Cost Order. Contrary to WorldCom’s claims, this order required Michigan Bell to modify its

cost study with respect to directory assistance services, not listings. The complete discussion of

the issue is contained in the following two paragraphs:

               MCI WorldCom objects to the advanced dialing parity DA listings study. The
       Staff says that there should be only one study for all DA services. Ameritech Michigan
       says that DA is not a UNE that it must offer at TSLRIC.

               The Commission agrees with the Staff that there should be one study for all DA
       services. It is not permissible to compute different costs depending upon who is
       purchasing the service. However, this proceeding does not provide the opportunity to
       resolve Ameritech Michigan’s recent claim that DA services are not UNEs and need not
       be priced as such. Therefore, Ameritech Michigan shall offer and price DA services as a
       UNE until the issue is resolved in some other proceeding.

Second Cost Order at 11-12. It is clear from this discussion that the Michigan PSC’s focus was

on directory assistance services and that its reference to “the advanced dialing parity DA listings

study” in the second paragraph was simply a recitation of WorldCom’s argument.

       Michigan Bell accordingly understood this order to mean that it had to modify its

Operator Services/Directory Assistance cost study by breaking out the directory assistance

portion and performing a separate cost study. See Fennell Reply Aff. ¶ 10. Michigan Bell never

understood this order to require it to make any modifications to the TELRIC-based, directory

assistance listings cost study, and the Michigan PSC subsequently confirmed this understanding.

See id. ¶¶ 10-11. But Michigan Bell continued to believe that directory assistance listings were




                                                 46
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

not UNEs and therefore should be priced at market rates rather than in accordance with the

TELRIC-based cost study that it had submitted.41

       In December 2001, the Michigan PSC rejected the market-based prices that Michigan

Bell had proposed for directory assistance listings, concluding that “the requirement to provide

nondiscriminatory access to [directory assistance listings] requires that it be provided at cost-

based rates.”42 The market-based rates that Michigan Bell was offering at the time – $0.04 per

initial record, $0.06 per update – were not the rates that resulted from the TELRIC-based cost

study. See Fennell Reply Aff. ¶ 6 n.5. The cost-based rates – $0.028 per initial record, $0.028

per update – were the ones that Michigan Bell incorporated into its tariff filing in April 2002 in

compliance with the MPSC’s December 2001 order. See id. The tariffed rates, therefore, reflect

rates for directory assistance listings that were derived from the same directory assistance listings

cost-study that the Michigan PSC had reviewed in August 2000. See id. ¶ 11. In its January

2003 Consultative Report, the Michigan PSC expressly concluded that the rates contained in

Michigan Bell’s April 2002 tariff filing are “now compliant with the [MPSC’s] requirements in

this area.” Michigan PSC Consultative Report at 109.




       41
          See Reply Affidavit of Jan D. Rogers ¶¶ 21-25, In the Matter, on the Commission’s
Own Motion, to Consider Ameritech Michigan’s Compliance with the Competitive Checklist in
Section 271 of the Federal Telecommunications Act of 1996, Case No. U-12320 (MPSC filed
July 30, 2001) (App. C, Tab 46, at 489-91).
       42
        Opinion and Order, In the Matter, on the Commission’s Own Motion, to Consider
Ameritech Michigan’s Compliance with the Competitive Checklist in Section 271 of the Federal
Telecommunications Act of 1996, Case No. U-12320, at 16 (MPSC Dec. 20, 2001) (App. C, Tab
55).



                                                 47
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

       Finally, this matter is currently pending before the Michigan PSC as part of WorldCom’s

petition for review. See Fennell Reply Aff. ¶ 4.43 As this Commission has recognized many

times, “new interpretative disputes concerning the precise content of an incumbent LEC’s

obligations to its competitors, disputes that our rules have not yet addressed and that do not

involve per se violations of the Act or our rules, are not appropriately dealt with in the context of

a section 271 proceeding.” Pennsylvania Order ¶ 92; see also Arkansas/Missouri Order ¶ 83 &

n.257; Massachusetts Order ¶ 10; Texas Order ¶ 23. Indeed, the Commission has never before

concluded that directory assistance listings had to be offered at TELRIC-based rates as a

prerequisite for section 271 approval. As Michigan Bell explained in vain to the Michigan PSC,

this Commission approved section 271 applications for Arkansas, Kansas, Missouri, and

Oklahoma on the basis of interconnection agreements that offered directory assistance listings at

market-based rates. While Michigan Bell is in full compliance with the Michigan PSC’s order

that it provide directory assistance listings at cost-based rates, Michigan Bell does not concede

that such a requirement is either lawful or relevant to compliance with section 271.

               2.      Pricing of Interconnection

       New Edge argues that the rates it pays for power in its collocation arrangements in

Michigan are too high because Michigan Bell bills carriers for the power capacity made available

rather than the power actually drawn and because Michigan Bell somehow requires that separate

power cables be installed for individual bays. See New Edge Comments at 2-4. New Edge’s

complaints are meritless.



       43
        Michigan Bell’s response to WorldCom’s Petition for Rehearing was submitted to this
Commission as an attachment to the Ex Parte Letter from Geoffrey M. Klineberg, Kellogg,
Huber, Hansen, Todd & Evans, P.L.L.C., to Marlene H. Dortch, FCC (Feb. 24, 2003).



                                                 48
                                                                                SBC Communications Inc.
                                                                            Michigan 271 Reply Comments
                                                                                           March 4, 2003

        First, it is important to recognize that New Edge has never raised this issue with the

Michigan PSC. See Alexander Reply Aff. ¶ 4 (Reply App., Tab 1). In stark contrast, when this

Commission considered this same issue in prior section 271 applications, it recognized that the

matter was then pending before the applicable state commissions. See Massachusetts Order

¶ 200; Pennsylvania Order ¶ 108. New Edge has had every opportunity to present this issue to

the Michigan PSC, yet it has chosen to raise the issue for the first time to this Commission. As

this Commission acknowledged in the Pennsylvania Order, “the Act authorizes the state

commissions to resolve specific carrier-to-carrier disputes arising under the local competition

provisions, and it authorizes the federal district courts to ensure that the results of the state

arbitration process are consistent with federal law. Although we have an independent obligation

to ensure compliance with the checklist, section 271 does not compel us to preempt the orderly

disposition of intercarrier disputes by the state commissions.” Pennsylvania Order ¶ 108

(emphasis added). New Edge has not even sought the “orderly disposition” of its issue with the

Michigan PSC.

        Second, New Edge is essentially arguing that, although it ordered redundant power

capability, it should not have to pay for it. New Edge claims that it would only draw power over

the second cable when the first cable has failed, but its practice of ordering such redundant

capacity requires that the entire capacity of both cables be made available for New Edge’s use.

Moreover, some CLECs do use both of their power “leads” at the same time, so there is no basis

for New Edge to claim that the second lead is always used only as a backup. See Alexander

Reply Aff. ¶ 8. The fact that New Edge may not continuously draw power from the second lead

that it has ordered does not relieve it from its obligation to pay for the power capacity it has

ordered. Id. ¶ 9.



                                                   49
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

       Third, New Edge’s complaint that Michigan Bell requires it to install separate power

cables to each equipment bay is outdated. It is true that, in January 2000, when New Edge first

submitted its collocation requests, Michigan Bell’s direct-current (“DC”) power provisioning

practice was to provide a dedicated power feed to each bay of cageless collocation. Id. ¶ 11.

Although a collocator was not required to purchase multiple power leads to each bay

(redundancy was optional), Michigan Bell’s practice at the time – a practice applicable both to

Michigan Bell’s own equipment as well as to collocators’ equipment – was to require at least one

dedicated power feed for each bay and to prohibit the distribution of power between bays. Id.

¶ 11 & n.14. After the SBC/Ameritech merger, SBC began to adopt standard network practices

throughout its entire region. As a result, Michigan Bell subsequently changed this practice, and a

CLEC is now able to distribute power among its collocated bays. New Edge’s current

interconnection agreement reflects such provisions, permitting it to distribute power among its

collocated bays using a CLEC-provided power panel. Id. & Attach. A.

       Finally, notwithstanding the current power configuration that New Edge has deployed,

New Edge is free to request the reconfiguration of its DC power arrangements to bring them

more closely in line with its present demands. Indeed, Michigan Bell has processed numerous

collocation power reconfiguration requests for CLECs. Id. ¶ 13. Michigan Bell has informed

New Edge that it may request the reconfiguration of its power arrangements, which would be

priced on an individual case basis in accordance with the parties’ interconnection agreement.

But New Edge has demanded that the reconfiguration be accomplished at no charge and that

Michigan Bell make a retroactive adjustment of its monthly power charges dating back to the

time of its original collocations. Id. ¶ 14 & Attach. C. Michigan Bell is committed to working

with New Edge to resolve this issue, and, if necessary, the parties can address this issue through



                                                50
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

the dispute-resolution procedures available under their interconnection agreement. It is obvious,

however, that this dispute does not belong in the first instance before this Commission as part of

a section 271 application. See, e.g., New Jersey Order ¶ 159 (“dispute[s] concerning conflicting

interpretations of an interconnection agreement should be resolved by the [state commission]”);

Pennsylvania Order ¶ 118.

       E.      Reciprocal Compensation

       Z-Tel argues that Michigan Bell has violated 47 U.S.C. § 252(i) by refusing to let Z-Tel

“opt into” the reciprocal compensation arrangements of the AT&T Agreement. See Z-Tel

Comments at 7-8. Michigan Bell’s position has consistently been that, in light of the ISP

Reciprocal Compensation Order,44 the reciprocal compensation provisions of the AT&T

Agreement are not available for adoption under section 252(i) and that CLECs such as Z-Tel

would instead need to negotiate their own reciprocal compensation provisions with Michigan

Bell. See Alexander Reply Aff. ¶ 24. Indeed, that is now precisely what has happened, as

Michigan Bell and Z-Tel have reached an agreement as to the reciprocal compensation rates,

terms, and conditions to be included in their Michigan agreement on a negotiated basis. Further,

those terms are substantively identical to those contained in the AT&T Agreement. See id. ¶ 25.

The final agreement has now been filed with the MPSC. Id.

       Z-Tel nevertheless continues to insist – notwithstanding the fact that the parties have now

reached an agreement on this issue – that it was entitled to “MFN” into the reciprocal



       44
          Order on Remand and Report and Order, Implementation of the Local Competition
Provisions in the Federal Telecommunications Act of 1996; Intercarrier Compensation for ISP-
bound Traffic, 16 FCC Rcd 9151, ¶ 82 (2001) (“ISP Reciprocal Compensation Order”),
remanded, WorldCom, Inc. v. FCC, 288 F.3d 429 (D.C. Cir. 2002) (remanding but not vacating
order), petition for cert. pending, Core Communications, Inc. v. FCC, No. 02-980 (U.S. filed
Dec. 23, 2002).


                                                51
                                                                             SBC Communications Inc.
                                                                         Michigan 271 Reply Comments
                                                                                        March 4, 2003

compensation provisions of the AT&T Agreement and that it should not have had to expend the

time and resources negotiating a separate agreement. This Commission has considered this

argument in a number of section 271 proceedings, and each time it has rejected the argument as a

basis for denying the application. Most recently, in the California Order, this Commission

rejected the identical argument that Z-Tel makes here, concluding that “this dispute is a local

arbitration decision for the California Commission in the first instance.” California Order ¶ 120.

Likewise, in the Arkansas/Missouri proceeding, the Commission explained that similar

allegations were

       best resolved before the appropriate state commission. We note that while we have an
       independent obligation to ensure compliance with the checklist, section 271 does not
       compel us to preempt the orderly disposition of intercarrier disputes by state
       commissions. Here, e.spire presents no evidence that it has pursued its claims before the
       appropriate state commission. We have confidence in both the Missouri and Arkansas
       Commissions’ ability to resolve these allegations consistent with our rules.

Arkansas/Missouri Order ¶ 115 (footnote omitted). This Commission should reach the same

conclusion here.

       F.      Public Interest

       In its initial filing, Michigan Bell demonstrated in detail the massive public interest

benefits that would flow from approval of this Application. As it has in the other states, Bell

company interLATA entry will increase long-distance competition and further stimulate local

entry in Michigan even beyond that which exists today. Notwithstanding these obvious benefits,

a few CLECs argue that granting this Application would be inconsistent with the public interest

on the basis of isolated disputes. While Michigan Bell responds to most of these vague and

unsupported assertions in the Reply Affidavit of Robin M. Gleason (¶¶ 4-37) (Reply App.,

Tab 10), Michigan Bell will address here one issue raised by the CLEC Association – namely,




                                                52
                                                                            SBC Communications Inc.
                                                                        Michigan 271 Reply Comments
                                                                                       March 4, 2003

that Michigan Bell has proposed increases in UNE rates such that they raise “price squeeze”

concerns. See CLEC Association Comments at 22-23.

       Michigan Bell’s recent request for approval of revised cost studies is entirely consistent

with the Michigan PSC’s direction that Michigan Bell “file revised costs studies as it deems

appropriate.”45 See Fennell Reply Aff. ¶ 20. Michigan Bell is not, therefore, “challeng[ing]

Commission-established pricing methodologies and costs,” CLEC Association Comments at 23,

but rather complying with the Michigan PSC’s established procedures to ensure that wholesale

rates remain cost based.

       In any case, these recent filings have no effect whatsoever on the rates currently in place

and on which Michigan Bell is relying in support of its Application. No one has challenged

these rates as either inconsistent with the requirements of Checklist Item 2 or with the public

interest. As this Commission has concluded in numerous orders, “a BOC’s submission of new

cost data in an ongoing rate case does not prove that existing rates are outside a TELRIC range.

Additionally, we do not find that the existence of a pending UNE rate investigation alters our

analysis of [the BOC’s] section 271 application.” California Order ¶ 41 (footnotes omitted); see

also Georgia/Louisiana Order ¶ 96.46




       45
         Opinion and Order, In the Matter, on the Commission’s Own Motion, to Consider the
Total Service Long Run Incremental Costs for All Access, Toll, and Local Exchange Services
Provided by Ameritech Michigan, Case No. U-11831, at 40 (MPSC Nov. 16, 1999) (App. L, Tab
8).
       46
          Moreover, the CLEC Association does not come close to satisfying the demanding
standards that this Commission has imposed for establishing the existence of a price squeeze.
See BellSouth Five-State Order ¶¶ 281, 285; Vermont Order ¶¶ 66-71.



                                                53
                                                                      SBC Communications Inc.
                                                                  Michigan 271 Reply Comments
                                                                                 March 4, 2003

                                      CONCLUSION

       The Application should be granted.

                                                 Respectfully Submitted,


                                                 ________________________________
JAMES D. ELLIS                                   MICHAEL K. KELLOGG
PAUL K. MANCINI                                  GEOFFREY M. KLINEBERG
MARTIN E. GRAMBOW                                LEO R. TSAO
JOHN T. LENAHAN                                  KELLOGG, HUBER, HANSEN, TODD
KELLY M. MURRAY                                    & EVANS, P.L.L.C.
ROBERT J. GRYZMALA                                    1615 M Street, N.W.
RANDALL JOHNSON                                       Suite 400
TRAVIS M. DODD                                        Washington, D.C. 20036
JOHN D. MASON                                         (202) 326-7900
    175 E. Houston
    San Antonio, Texas 78205                     Counsel for SBC Communications Inc.,
    (210) 351-3410                               Michigan Bell Telephone Company, and
                                                 Southwestern Bell Communications
Counsel for SBC Communications Inc.              Services, Inc.

CRAIG A. ANDERSON
JOSEPH P. TOCCO
    444 Michigan Avenue,
    Room 1700
    Detroit, Michigan 48226
    (313) 223-8033

Counsel for Michigan Bell
    Telephone Company

March 4, 2003




                                            54

				
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