Opinion ID: 786960
Heading Depth: 3
Heading Rank: 2

Heading: Operation Support Systems

Text: 17 In the CPUC's Second Cost Decision, it set the forward-looking non-recurring costs for Pacific's Operations Support System (OSS) gateways. See D.98-12-079 at 1 (Second Cost Decision). 3 An OSS gateway is a kind of UNE that allows CLECs to interconnect with the ILEC. Costs associated with OSS gateways consist of pre-ordering, ordering, provisioning, maintenance and repair, and billing functions supported by an incumbent LEC's databases and information. 47 C.F.R. § 51.319; see also Local Competition Order at ¶ 517-18. As noted by the FCC and the CPUC, an OSS gateway is vital to implementation of the Act, since it is only through such a gateway that a CLEC can efficiently gain access to an ILEC's network to provide service to end-users. See Second Cost Decision at 4-5. 18 Although the primary purpose of the CPUC was to set the non-recurring costs (NRCs) for the OSS gateway, it also received studies from Pacific addressing the need to recover recurring costs for the provision of OSS gateways. NRCs are one-time expenses associated with initiating or disconnecting a service, and include the labor necessary to effectuate the interconnection of a CLEC with an ILEC. Recurring costs, by contrast, are those necessary to maintain the OSS gateway. Compare Second Cost Decision at 12 with id. at 42-43. 19 The NRCs of providing OSS gateways depend, in part, on how much labor is required to effectuate the interconnection. For example, a CLEC might call in or fax an order to the ILEC requesting service, with a CLEC employee then implementing the request. This, of course, would involve high labor costs, increasing the NRC. Or, to provide another example, the CLEC and ILEC might interact electronically, with minimal employee involvement, leading to lower NRCs. See id. at 3-5. 20 In the proceeding before the CPUC to determine the OSS gateway NRCs, the interested parties submitted different proposed models to the CPUC for setting rates for the OSS gateways. Not surprisingly, MCI and AT & T assumed significant electronic interaction, leading to much lower NRCs. Id. at 19. Pacific, on the other hand, submitted a model with three variations, each with different levels of electronic interaction (and cost). Id. at 22-23. Ultimately, the CPUC adopted Pacific's model for determining NRCs, though with modifications. Id. at 30. It concluded that Pacific's model was the only one that included support for all of the UNEs specified by the CPUC and most of those specified by the FCC, and that accounted for variations in the ways that CLECs might choose to connect with the ILEC. Id. at 24-27. As required by the FCC, the CPUC required that the costs ultimately adopted be based on the most efficient technology currently available. That is, it selected the model that assumed a high level of electronic interaction. 21 With respect to the recurring costs of providing the OSS gateways, the parties were also in disagreement. MCI and AT & T contended that the recurring costs were so low as to be de minimis and thus should not be included in the cost of providing the OSS gateways. Id. at 43. Pacific, on the other hand, argued that these costs were significant and should therefore be passed on to the CLECs. Other parties responded that many of these recurring costs also supported Pacific's own retail operations, since the OSS gateways are also used by the ILEC in providing local telephone service to its own customers. Id. at 45. Based on the costs studies before it, the CPUC concluded that many of Pacific's proposed costs were retail-based, and further, that Pacific had failed to isolate costs that were unique to providing CLECs access to the OSS gateways: 22 We find merit in AT & T/MCI's ... assertions that Pacific's ... OSS functions provide benefits to[its] own retail operations. While Pacific attempts to identify discrete customer specific costs in its access port cost analysis, its showing fails to reflect that the underlying systems and databases are in place to serve both retail and wholesale customers and thus the costs cannot be attributed solely to CLCs. We find Pacific has not demonstrated that these costs should be recovered from competitors. 23 Id. at 45. 24 The CPUC concluded that Pacific had provided insufficient evidence to permit the CPUC to separate the retail-related recurring costs from the non-retail-related recurring costs as required by TELRIC. While concluding that the costs identified by Pacific should not be included in the price charged to CLECs, the CPUC did suggest that those costs might qualify as implementation costs, which were being considered in a separate proceeding. 4 Id. at 46. Pacific, apparently concluding that those costs were not implementation costs, declined to submit its cost studies at the separate proceeding and did not seek rehearing of the CPUC's decision in this proceeding.