HEARING: December 15, Before Jacqueline T. Miller, Administrative Law Judge

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1 IL E ` ~. JUL 2010 BEFORE THE CORPORATION COMMISSION OF OKL O~RT Cl.ERK'S OFFICE - OK C CORPORATION COMMISSION APPLICATION OF SOUTHWESTERN BELL ) OF OKLAHOMA TELEPHONE COMPANY, d/b/a AT&T ) CAUSE NO. PUD OKLAHOMA FOR A LIMITED WAIVER OF ) OKLAHOMA ADMINISTRATIVE CODE ) 165 : (G). ) HEARING: December 15, Before Jacqueline T. Miller, Administrative Law Judge APPEARANCES: John W. Gray, Jr., Attorney representing Southwestern Bell Telephone, L.P. dfb/a AT&T Oklahoma J. David Jacobson, Attorney representing EasyTEL Communication s Carrier Corporation Don A. Schooler, Assistant General Counsel representing Public Utility Division, Oklahoma Corporation Commission Jack G. Clark, Jr., Attorney representing MCImetro Access Transmission Services LLC d/b/a Verizon Access Transmission Services, MC I Communications Services, Inc. d!b/a Verizon Business Services, Bel l Atlantic Communications, LLC, NYNEX Long Distance Company, an d Verizon Select Services, Inc. Elizabeth Ryan, Assistant Attorney General representing the Office of Attorney General, State of Oklahom a J. Fred Gist, Attorney representing Cimarron Telephone Company, Pottawatomie Telephone Company, and Salina-Spavinaw Telephon e Company, Inc. Kimberly K. Argenbright, Attorney representing Totah Communications, Inc., FairPoint Communications, Pine Telephone Company, Inc., and Grand Telephone Company, Inc. Ron Comingdeer, Mary Kathryn Kunc and Kendall W. Parrish, Attorney s representing the Rural Incumbent Local Exchange Companies 2 Marc Edwards, Attorney representing Cox Oklahoma Telcom, L.L.C. REPORT AND RECOMMENDATION OF ADMINISTRATIVE LAW JUDG E 1 Proposed Findings of Fact and Conclusions of Law were filed by various parties February 3, Atlas Telephone Company; Bixby Telephone Company, Inc. ; Canadian Valley Telephone Company; Carnegie Telephone Company ; Central Oklahoma Telephone Company; Cherokee Telephone Company ; Chickasaw Telephone Company, Chickasaw Long Distance; Chickasaw Telecommunications Services, Inc.; Craw Kan Telephone Cooperative, Inc.; Cross Telephone Company; Dobson Telephone Company; Hinton Telephone Company; KanOkla Telephone Association ; McLoud Telephone Company ; Medicine Park Telephone Company; Oklahoma Telephone and Telegraph, Inc.; Oklahoma Western Telephone Company; OpticTel Long Distance, LLC ; Ozark Telephone Company; Panhandle Telephone Cooperative, Inc. ; Pinnacle Communications; Pioneer Long Distance; Pioneer Telephone Cooperative, Inc.; Santa Rosa Telephone Cooperative, Inc. ; Seneca Telephone Company; Shidler Telephone Company; South Central Telephone Association ; Southwest Oklahoma Telephone Company; Terral Telephone Company; and Valliant Telephone Company.

2 Cause No. PUD ALJ Report and Recommendatio n Page 2 of 2 7 PROCEDURAL HISTORY Southwestern Bell Telephone Company d/b/a AT&T Oklahoma ( "AT&T Oklahoma", "AT&T", "AT&T OK") filed the above-entitled Cause and Motion to Establish Procedural Schedule on February 3, The Motion to Establish Procedural Schedule was continued by the Applicant as agreed to by the parties of record to June 25, Motions to Intervene were filed by and granted to EasyTel Communications Carrier Corporation, Inc. ("EasyTEL"), Cimarron Telephone Company, Pottawatomie Telephone Company, Salina-Spavinaw Telephone Company, Inc., Totah Communications, Inc., Chouteau Telephone Company d/b/a FairPoint Communications, Pine Telephone Company, Inc., Grand Telephone Company, Inc., the Rural Incumbent Local Exchange Companies ("Rural Telephone Companies","Rural ILECs","Rural LECs"), Verizon Regulated Companies ("Verizon"), Cox Oklahoma Telcom, LLC, Chickasaw Telephone Company, Chickasaw Long Distance, Chickasaw Telecommunications Services, Inc., OpticTel Long Distance, LLC, and Pioneer Long Distance. See Commission Order Nos , , , , , , , In addition, the Office of the Attorney General ("AG") filed an Entry of Appearance on February 18, AT&T Oklahoma's Motion to Establish Procedural Schedule was heard by the Administrative Law Judge ("ALJ") on June 25, Jason E. Constable prefiled Direct Testimony on behalf of AT&T Oklahoma on July 10, By agreement of the parties on July 23, 2009, revised dates were added to the Procedural Schedule that was approved by the Oklahoma Corporation Commission ("OCC", "Commission") in Order No The Rural Incumbent Telecommunications Service Providers ("Rural TSPsi4) filed a Motion to Dismiss Cause or in the Alternative Motion to Suspend Procedural Schedule ("Motion") on August 6, On August 7, 2009, Statements of Position were filed by Cimarron Telephone Company, Pottawatomie Telephone Company, Salina-Spavinaw Telephone Company, Inc., the Rural TSPs, Totah Communications, Inc., Chouteau Telephone Company d/b/a Fairpoint Communications, Pine Telephone Company, Inc. and Grand Telephone Company, Inc. ("Rural Telcos"). Specifically, on the same date, the Rural TSPs and the Rural Telcos included in their Statements of Position support of the Motion to Dismiss or in the Alternative to Suspend Procedural Schedule. Verizon filed a Motion for Leave to File Statement of Position Out of Time on August 27, Oral arguments to the Rural TSPs' Motion to Dismiss or in the Alternative to Suspend Procedural Schedule were heard by the ALJ on September 8, By agreement of the parties, a revised procedural schedule was presented to the ALJ and an order approving the amended procedural schedule was approved by the Commission on September 16, 2009, by Order No Verizon's Motion for Leave to File Statement of Position Out of Time was approved September 16, 2009, by Commission Order No On September 17, 2009, Verizon filed its Statement of Position. The Commission Staff ("Staff', "PUD Staff') prefiled testimony of Dexter Murphy on September 18, 2009, followed by the parties filing their respective Proposed Findings of Facts and Conclusions of Law regarding the Rural TSPs' Motion on September 21, Staff filed its Response to the Motion on September 21, The AG filed its Statement 3 Due to an imminent work force strike, AT&T continued the setting of this Cause for merit hearing. 4 Rural TSPs consist of Rural ILECS or Rural LECS including Chickasaw Long Distance, Chickasaw Telecommunications Services, Inc., OpticTel Long Distance, LLC and Pioneer Long Distance. Initially, however, the Rural ILECS filed separately from Chickasaw Long Distance, Chickasaw Telecommunications Services, Inc., OpticTel Long Distance, LLC and Pioneer Long Distance. Also proposed fmdings of fact and conclusions of law were filed by the Rural ILECS with the pleading title of Rural Telecommunications Service Providers. 5 The Motion was continued on the record by agreement of the parties from August 18, 2010 to September 8, 2010 for hearing.

3 Cause No. PUD ALJ Report and Recommendation Page 3 of 2 7 of Position on September 28, Jason E. Constable prefiled Rebuttal Testimony on October 9, On November 5, 2009, parties filed summaries and exhibit lists. On December 4, 2009, the ALJ issued her Report and Recommendation regarding the Rural TSPs' Motion to Dismiss or in the Alternative to Suspend Procedural Schedule. The ALJ found that the Motion to Dismiss Cause was to be held in abeyance to be considered with the hearing on the merits. The ALJ further found that a determination regarding suspension of the Procedural Schedule was moot, because the AU had recommended the Motion to Dismiss be considered in conjunction with the merit hearing. The ALJ further found that pursuant to the rules of the Commission, amending the caption would require a new Cause to be filed and due to case efficiency, amending the caption and re-filing a new Cause was not recommended. No party opposed the ALJ's recommendations being issued in the final report of the ALJ. The Prehearing Conference occurred on December 8, The Hearing on the Merits occurred on December 15, 2009, and the merits were taken under advisement at the conclusion of the hearing. By agreement of Counsel for AT&T and the parties of record, proposed findings of fact and conclusions of law were submitted February 3, Testimony Summaries Staff Dexter Murphy SUMMARY OF EVIDENC E Southwestern Bell Telephone Company d/b/a AT&T Oklahoma filed Cause No. PUD with the Oklahoma Corporation Commission on February 3, AT&T Oklahoma is requesting a limited waiver of OAC 165 : (G),6 pursuant to the provision allowing for such relief found in OAC 165 : (Relief from Rules). The requested relief, if granted, will waive AT&T Oklahoma's obligation to comply with the Commission's Minimum Service Requirements for equal access and in doing so, provide AT&T Oklahoma with the opportunity to meet its Carrier of Last Resort ("COLR") obligation via an alternate technology, in limited circumstances, other than by traditional telephone landline services. Mr. Constable defined equal access in his direct testimony at page 2, line 19, as the ability for a subscriber to select and use the long-distance carrier of its choice by dialing l+ a ten digit long distance number. Prior to equal access, consumers reached the long distance provider of their choosing by dialing a specific number or by dialing a unique code assigned to each interexchange carrier. Staff is in agreement with Mr. Constable's definition. Staff reviewed AT&T Oklahoma's application, associated data request responses to Staff, and additional data requests and responses from interveners in the cause to AT&T Oklahoma. Staff also considered applicable Commission rules, Oklahoma statutes, Federal rules, the prefiled direct testimony of AT&T Oklahoma witness, Jason E. Constable, the Statements of 6 The application is improperly styled and should properly read OAC 165 : (a)(1)(G). 7 Whenever compliance with any requirement of this Chapter would result in unreasonable hardship upon or excessive expense to the telecommunications service provider, IXC or the end-user, or for other good cause shown, the Commission may, by order, waive or modify the requirements of this Chapter upon application of any interested person. The Commission may grant temporary relief pending hearing.

4 Cause No. PUD ALJ Report and Recommendation Page 4 of 2 7 Positions filed by several of the interveners, as well as various other documentation related to the subject matter of this cause. Staff does not necessarily oppose the relief AT&T Oklahoma is requesting in this application. However, because there is presently a limited record with uncertain limitations to that requested relief, Staff can only recommend the application's approval contingent upon the implementation of additional limitations which have been tentatively agreed to by AT&T Oklahoma during discussions with Staff and interveners. These necessary limitations are identified below. For purposes of this cause, AT&T Oklahoma will define "no facilities" or "where facilities do not exist within AT&T-OK's exchange"8 to mean that AT&T Oklahoma has no traditional landline facilities within a reasonable distance available to serve a customer requesting service. AT&T Oklahoma will not attempt to use alternative technology more than 50 times annually to meet its COLR obligation in response to a customer's request for service. AT&T Oklahoma will report to Staff annually on the number of customers that are being serviced by alternative technologies and the specific reasons AT&T Oklahoma determined it was uneconomical or unreasonable to serve those customers by traditional means. AT&T Oklahoma will contribute to state and federal funds for those customers that are being served by alternative technologies. AT&T Oklahoma must also satisfy the reasonable concerns expressed by Totah Communications, Inc., Chouteau Telephone Company dlb/a FairPoint Communications, Pine Telephone Company, Inc. and Grand Telephone Company, Inc. ("Rural Telcos") concerning intercarrier compensation arrangements as set forth in their August 7, 2009, Statement of Position. Those concerns are : If wireless facilities are used to serve the customer, will the intercarrier compensation be the same as landline intercarrier compensation (the LECs local calling area determines whether access charges or local reciprocal compensation applies) or will the wireless calling area (intramta) determine if access charges or local reciprocal compensation applies? If IP ("Internet Protocol") is used to serve the customer, will access charges apply? Will only interstate access charges apply? If not, what charges will apply? If intercarrier compensation does change as a result of the use of differing technologies, how will the interconnected ILECs be compensated for the loss of access revenues and the additional local reciprocal compensation expense? 0 AT&T Oklahoma will provision this waiver for Residential customers only. AT&T Oklahoma will provide affected customers with the alternate technology at the same tariffed rate as customers with landline services receiving similar services, plans, and options. 8 Application, page 1, line 16.

5 Cause No. PUD ALJ Report and Recommendation Page S of 2 7 AT&T Oklahoma will honor the commitments made in its testimony. Customers receiving the alternative technology must agree to the following : 1. To receive service via the alternative technology ; 2. That AT&T Oklahoma is their long distance provider of choice ; 3. Or, that to choose a long distance provider other than AT&T Oklahoma, the customer acknowledges he/she must either : "dial around ;" use a prepaid long distance card; or end present contract arrangements. If a customer insists on receiving traditional landline facilities and is willing to pay for the installation of those facilities, beyond the free quarter-mile, and AT&T Oklahoma thinks that it is uneconomical or impractical, it may seek a waiver of OAC 165 : (d) in accordance with OAC 165 :55-1-6, based upon "undue hardship." 9 In addition to the above, Staff suggests that the following issues should be taken into consideration by the Commission when considering this application : 1 Would the Commission be in violation of the prohibition of imposing restrictions on high speed internet providers, as set forth in 17 O.S (A)10 which is commonly referred to as ("The Broadband Bill"), if it grants the requested relief in this cause? 2. Is the requested relief by AT&T Oklahoma premature? Presently there are no factual statements or criteria presented by AT&T Oklahoma which may be properly considered by the Commission in this cause, other than a speculative situation that has not yet, and may never, occur. 3. Staff believes there may be unintended consequences with the Commission granting approval of the requested relief. Others share this concern and uncertainty over the scope and application of AT&T Oklahoma's requested relief in this cause, as expressed within their respective Entries of Appearance and Statements of Position. AT&T Oklahoma Jason E. Constable AT&T Oklahoma is seeking a limited waiver of the equal access minimum service standard in the limited circumstances where it is not economically feasible to deploy a traditional network and AT&T Oklahoma elects to use an alternative technology in order to serve a customer requesting service. In his testimony, Mr. Constable provided examples under which AT&T Oklahoma would use this waiver. He additionally testified that AT&T Oklahoma woul d 9 OAC 165 : refers to "unreasonable hardship". '0 17 O.S (A): The Oklahoma Corporation Commission shall not, by entering any order, adopting any rule, or otherwise taking any agency action, impose any regulation upon a provider of high speed Internet access service or broadband service in its provision of such service, regardless of technology or medium used to provide such service.

6 Cause No. PUD ALJ Report and Recommendation Page 6 of 2 7 still be bound by all other applicable minimum service standard rules, such as 911 and the requirement to price the service at uniform rates. Mr. Constable testified that under the waiver, consumers will receive service that exceeds the boundaries of typical plain old telephone service ("POTS"), but at prices and conditions of those of a landline customer. End-users will also benefit as they would be receiving new and enhanced services available with alternative technologies that may not be available with traditional landline services. AT&T Oklahoma should be allowed to serve customers in the most efficient and economically viable manner possible, which is the intent of AT&T Oklahoma's application. Further, this waiver would assist in protecting AT&T Oklahoma against sinking capital costs into facilities that it would likely not recoup its investment. Finally, Mr. Constable's testimony shows that AT&T Oklahoma has mitigated any concern over unintended consequences by clarifying the circumstances under which it intends to use its waiver and agreeing to the limitations set forth by both Staff and the Attorney General as conditions for their support. These conditions are fully set forth in Mr. Constable's rebuttal testimony and include, but are not limited to : 1) reporting to Staff on the number of times AT&T Oklahoma uses the waiver; 2) agreeing to limit the number of times that AT&T Oklahoma will use the waiver each year; 3) limiting the use of this waiver to instances where AT&T Oklahoma does not currently have traditional wireline facilities within a reasonable distance to the customer; 4) using the waiver for residential customers only ; and, 5) contributing to applicable state and federal funds for customers who are being served under this waiver. Totah, FairPoint, Pine and Gran d STATEMENTS OF POSITION Totah Communications, Inc., Chouteau Telephone Company d/b/a FairPoint Communications, Pine Telephone Company, Inc. and Grand Telephone Company, Inc. ("Rural Telcos"), assert that several issues arise as a result of AT&T Oklahoma's Application and requested relief, and these issues should be thoroughly investigated and sufficiently answered prior to the granting of AT&T Oklahoma's waiver request. These issues include the following : If wireless facilities are used to serve the customer, will the intercarrier compensation be the same as landline intercarrier compensation (the LECs local calling area determines whether access charges or local reciprocal compensation applies) or will the wireless calling area (intramta) determine if access charges or local reciprocal compensation applies? 2. If IP is used to serve the customer, will access charges apply? Will only interstate access charges apply? If not, what charges will apply?

7 Cause No. PUD ALJ Report and Recommendation Page 7 of If intercarrier compensation does change as a result of the use of differing technologies, how will the interconnected ILECs be compensated for the loss of access revenues and the additional local reciprocal compensation expense? 4. If IP or wireless is used to serve the customer, does AT&T still agree that the Commission has the authority to determine rates for the customers? 5. Will the compensation paid by AT&T to fund either the OUSF ("Oklahoma Universa l Service Fund") or OHCF ("Oklahoma High Cost Fund") change as a result of utilizin g different technologies to serve the customer? 6. If wireless service is utilized, how will AT&T meet the FCC's ("Federal Communications Commission") equal access requirement? The Rural Telcos issued data requests to AT&T Oklahoma on August 5, 2009, asking for responses to these questions, among others. Pursuant to the Procedural Schedule Order, Order No , issued July 31, 2009, AT&T Oklahoma's responses to these data requests were not due until ten (10) calendar days from receipt, or until August 15, 2009, which is a Saturday and therefore the responses will be due the following Monday, August 17, Other parties have also issued data requests with responses both pending and already provided by AT&T Oklahoma. However, in those instances where responses have been provided, it is the Rural Telcos' opinion that some of the responses given were incomplete or non-responsive.l l Given the very narrow scope of AT&T Oklahoma's Application and the very limited circumstances in which the requested relief would apply, Rural Telcos do not necessarily oppose the concepts or the rationale AT&T Oklahoma outlines in its Application and Direct Testimony filed by Mr. Constable on July 10, For example, Rural Telcos agree with the concept that customers should be served in the most efficient and effective methods available and such service provision should be allowed in the most reasonable operational, business and economical manner as is consistent with federal and state laws and regulations. However, Rural Telcos believe that under current OCC rules, AT&T Oklahoma can accomplish this goal without the granting of the broad and general relief it is requesting in this Cause. As a result, the Rural Telcos support the Motion to Dismiss Cause or in the Alternative Motion to Suspend Procedural Schedule filed herein by the Rural TSPs on August 6, 2009 ("Motion to Dismiss"). As previously stated, Rural Telcos assert that the relief requested by AT&T Oklahoma in its Application, already exists in current Oklahoma Corporation Commission rules, specifically, OAC 165: "Relief from rules," which provides AT&T Oklahoma the ability to seek a waiver of compliance with a Commission requirement, including its equal access obligation, where said requirement "would result in unreasonable hardship upon or excessive expense to the telecommunications service provider...." The rule provides further relief to AT&T Oklahoma in that it allows the OCC to "grant temporary relief pending hearing" should AT&T Oklahoma andlor its customer(s) need relief in a timeframe that necessitates the provisioning of servic e 11 Notwithstanding, a Motion to Compel was not filed in this proceeding.

8 Cause No. PUD ALJ Report and Recommendation Page 8 of 2 7 sooner than could be achieved through final OCC order granting a waiver. Additionally, relief exists for AT&T Oklahoma in current rule OAC 165 : "Extension of facilities," wherein a carrier of last resort (1) is not required to provide service beyond the '/4 mile absent payment for the construction to extend the facilities by the customer, (2) a carrier can request waiver of the rule if a premise owner denies access to the property, then later requests service, and/or (3) another LEC with facilities closer to the customer can provide service ; thus alleviating any unreasonable hardship and excess expense to serve. It should again be noted that nothing in either of these rules prevents AT&T Oklahoma from "seeking a limited waiver of the equal access minimum service standard in the limited circumstances where it is not economically feasible to deploy a traditional network and AT&T Oklahoma elects to use an alternative technology in order to serve a customer requesting service," as Mr. Constable describes AT&T Oklahoma's need for relief in his Direct Testimony filed at page 8, lines Rural Telcos would suggest that any additional relief to be gained by AT&T Oklahoma which is not currently available under the rules, would merely be the ability to orego seeking such relief on a case-by-case basis by receiving a blanket waiver of its equal access requirement to be used whenever and wherever it unilaterally determines necessary, rather than supporting the need for such waiver on a case-by-case basis. Rural Telcos believe a blanket waiver is not in the public interest, removes review and analysis of specific circumstances, oversight and possible jurisdiction from the OCC and could create unintended consequences, especially if granted without thorough investigation into the issues Rural Telcos raise above. Additionally, Rural Telcos assert that minimal, if any, burden is created for AT&T Oklahoma by the OCC's denial of a blanket waiver and continued requirement that AT&T Oklahoma seek waiver relief on a case-by-case basis as is currently required under the rules. AT&T Oklahoma acknowledges in its Application and direct testimony that the waiver, if granted, would only apply in limited factual circumstances and it would not make widespread use of the waiver as it would apply to a very small segment of its customers. Rural Telcos also support the position of Rural TSPs set forth in their Motion to Dismiss regarding the federal requirement to provide equal access to interexchange long-distance service (See, 47 C.F.R ) (see pg. 10 of this report for provision). As noted by the Rural TSPs, AT&T Oklahoma is also subject to this requirement and it is premature to request this Commission waive the intrastate requirement to offer toll dialing parity or equal access before a waiver of the federal requirement is granted by the FCC. As a result of the outstanding issues raised herein by Rural Telcos and those issues raised by other parties which are still outstanding, Rural Telcos reserve the right to supplement this Statement of Position, file Rebuttal andlor Sur-rebuttal as provided for in the Procedural Schedule Order, should the Commission deny Rural ILEC's Motion to Dismiss, and proceed with the processing of AT&T Oklahoma's waiver request.

9 Cause No. PUD ALJ Report and Recommendatio n Page 9 of 2 7 The Rural Telecommunications Service Providers The Rural Telecommunications Service Providers ("Rural TSPs") herewith submitted their Statement of Position in this cause as follows : On February 3, 2009, AT&T filed the instant cause requesting to be granted a limited waiver of OAC 165 : (a)(1)(G) "Equal access to interexchange long-distance service." OAC 165: provides : 165: Minimum service standard s (a) The purpose of this Section is to create a uniform standard governing the minimum component telephone services for all telephone end-users. (1) Each telecommunications service provider providing local exchange service shall make available to each local exchange end-user within its service territory the following service features : (A) Individual line service on a local access line at uniform rates for end-users of a given class within the exchange without mileage or zone charges ; (B) Dual tone multi-frequency signaling ; (C) The telecommunications service provider shall install ninety percent (90%) of the following circuits within ninety (90) days of the date of the service order : (i) Circuits necessary to provide interoffice capability at minimum speeds of fifty-six (56) kilobits per second; (ii) For RUS borrowers, for RUS loans executed after February 13, 1996, all new facilities will be required, as built or with additional equipment, to provide transmission and reception data at a rate no lower than one (1) megabit per second. The deployment of new facilities shall be scheduled in a way to where advanced services will be implemented in a uniform manner with both rural and nonrural areas receiving services at the same time. New facilities which do not use system powering shall be required to use an alternative powering source for voice telephone service during electrical utility power outages ; (D)Availability of custom calling features (e.g., call waiting, call forwarding, etc.) ; (E) Emergency telephone number services capable of automatic number identification, automatic location identification and call routing facilities to facilitate public safety response; e.g., Enhanced 911 Service, where the local government agency serving the end-user has in place a Public Safety Answering Point ; (F) Lifeline and Link-up Programs pursuant to OAC 165 : and 165 : ; (G) Equal access to interexchange long-distance service ; (H) Access to telecommunications relay services by dialing 711 ; (I) Access to Directory assistance service ; (J) Access to operator services; and (K) Access to 211 service, where available. (2) Any telephone company incapable of providing the technologies and service features listed in (a)(1)(f) and (a)(1)(g) of this Section at the date of the

10 Cause No. PUD ALJReport and Recommendation Page 10 of 27 amendment of this Section shall begin immediate efforts to attain compliance with this Section and shall file network development schedules with the Commission pursuant to this part. (3) Upon replacement of facilities incapable of providing the technologies and service feature listed in this Chapter at the date of the effectiveness of this Section, the telecommunications service provider shall replace such facilities with those technologies capable of providing Custom Local Area Signaling Services (CLASS). (4) Incumbent LECs that incur additional investment as a result of this Section may seek recovery through a general review of the company's rates for regulated telecommunications services. (5) A Less than Minimum Service Provider that seeks authority to offer service which does not comply with all of the minimum service standards set forth in this Section shall specifically state in its application for a certificate of convenience and necessity the minimum service standards with which it will not comply. (b) This Part is not intended to supersede the currently effective rates or prescribe prospective rates for telecommunications services affected by this Part. The Rural TSPs filed a Motion to Dismiss Cause or in the Alternative Motion to Suspend Procedural Schedule wherein they stated their position that this cause should either be dismissed or the Procedural Schedule should be suspended based on the following : The state requirement for AT&T Oklahoma is to provide equal access to interexchange long-distance service for intrastate, intralata and interlata calling. This requirement is also found in federal law. AT&T is also subject to the federal requirement to provide equal access or toll dialing parity as set forth in the Code of Federal Regulations at 47 C.F.R This section provides in part as follows : (a) A LEC shall implement throughout each state in which it offers telephone exchange service intralata and InterLATA toll dialing parity based on LATA boundaries. (b) A LEC shall implement toll dialing parity through a presubscription process that permits a customer to select a carrier to which all designated calls on a customer's line will be routed automatically. LECs shall allow a customer to presubscribe, at a minimum, to one telecommunications carrier for all InterLATA toll calls and to presubscribe to the same or to another telecommunications carrier for all intralata toll calls. (c) A LEC may not assign automatically a customer's intralata toll traffic to itself, to its subsidiaries or affiliates, to the customer's presubscribed InterLATA or interstate toll carrier, or to any other carrier, except when in a state that already has implemented intrastate, intralata toll dialing parity, the subscriber has selected the same presubscribed carrier for both intralata and interlata toll calls. In its response to the Rural TSPs Data Request No. 1.26, AT&T affirms that neither AT&T Oklahoma nor any of its affiliates have requested or received a waiver of making equal access available to its customers in any other jurisdiction. The Rural TSPs contend that until a

11 Cause No. PUD ALJ Report and Recommendation Page 11 of 2 7 waiver is granted of the Federal requirement to offer toll dialing parity, it is premature to request the Commission to waive the intrastate requirement to offer toll dialing parity or equal access. The granting of AT&T's request in the instant proceeding would be pointless if it is not also relieved of its obligation to offer interstate interlata equal access. Therefore, the Rural TSPs maintain that this case should be dismissed, or at a minimum the Procedural Schedule in the instant cause should be suspended until such time as AT&T receives a waiver of 47 C.F.R In further support of their position that this case be dismissed, or in the alternative suspended, the Rural TSPs assert that the relief AT&T is seeking is already available to it as is set forth in the Commission's Telecommunications Service Provider Rules. Specifically, OAC 165 : `Extension of facilities' provides in part : (a) A Carrier of Last Resort will extend its distribution plant to furnish permanent service to any applicant located within one-quarter (1/4) mile of its existing facilities without requiring a construction charge, provided that the amount of plant to be constructed does not exceed that amount deemed necessary to serve the end-user's location. When an end-user requests services requiring an excessive quantity of facilities which will have extremely little potential for reuse, should that end-user move or otherwise discontinue service, a construction charge based on the cost of the facilities would apply. (b) A Carrier of Last Resort shall extend its distribution plant to applicants in an area located more than one-quarter (1/4) mile from its existing facilities under the following conditions : (1) New extensions or reinforcement of existing line facilities required for furnishing access lines associated with the service offered by a Carrier of Last Resort shall be constructed under the following conditions, when application is by an individual end-user or a developer for service of a permanent nature : (A)An allowance of a one-quarter (1/4) mile, route measurement, per applicant will be made for such extensions without the application of a construction charge. (B) Where construction is required in excess of the allowance stated in subparagraph (b)(1)(a) of this Section, applicants for service may be required to pay a construction charge for all reasonable costs in excess of the free allowance. (C) A Carrier of Last Resort may make, at its option, an extension of its facilities above the free limit upon receipt of a lesser payment, or no payment, when the gross anticipated revenue from the extension will provide a Carrier of Last Resort with adequate return upon its investment pursuant to a formula approved by the Commission or contained in its approved terms and conditions of service. (D) Additional charges may be applicable where natural or other barriers are encountered which require undue circuitous routing or abnormal costs to be incurred by a Carrier of Last Resort. (E) When a Carrier of Last Resort requires a charge for the extension of facilities into an area more than one-quarter (1/4) mile from its existing facilities, the end-user(s) may apply to be provided telecommunications

12 Cause No. PUD AL,7 Report and Recommendation Page 12 of 2 7 services by a Carrier of Last Resort providing service an adjacent certified area, if the Commission so orders. This subparagraph shall be limited to situations where a Carrier of Last Resort will not provide service to an area located within its service territory without the payment of construction charges. (2) Nothing in this Chapter shall prohibit any RUS borrower from making extensions in compliance with RUS rules or terms and conditions contained in any loan documents. (c) In lieu of extensions of telephone service pursuant to subsection (a) of this Section, the Carrier of Last Resort may require a developer desiring an extension to a prospective real estate subdivision to post a surety bond or make a cash deposit or bank letter of credit (at the option of the developer) equal to the estimated total costs of the extension before the construction of the extension is commenced. Total cost of construction shall not include drops to individual users off the telephone distribution facilities. In the event the developer chooses to post a surety bond or bank letter of credit, there shall be added to the principal amount of the surety bond or bank letter of credit, an amount equal to the most recent average embedded debt cost of the Carrier of Last Resort on file with the Commission. At least annually, for a period of five (5) years, the Carrier of Last Resort shall give the developer a credit equal to the percentage which the number of installations made in said twelve (12) months period bears to seventy-five percent (75%) of the total number of installations contemplated by the developer and the Carrier of Last Resort for the completed subdivision. The credit referred to in this Chapter, in the case of deposit, shall be returned to the developer annually; with respect to a surety bond posted by the developer, the credit shall be in the form of an annual reduction of the face amount of the surety bond posted. Upon the developer receiving the applicable credit for each installation as set forth in this Chapter, the Carrier of Last Resort shall release or cause to be released the obligation of the developer and the surety, if a surety bond was posted; provided, however, if within five (5) years from the date of the surety bond or cash deposit, the proposed development area has not been developed in a sufficient amount for the developer to receive credit for the total cost of extension to the development as agreed upon, then the developer shall be obligated to pay the Carrier of Last Resort the total construction costs reduced by all credits previously allowed. In the event that said amount is not paid within sixty (60) days of the date due and a surety bond has been posted, the Carrier of Last Resort may declare a default and shall have the right to call upon the surety for payment of the remaining unpaid amount due. In the event of dispute over the circumstances requiring the posting of a surety bond or cash deposit, and/or the reasonableness of the face amount of such bond or cash deposit, a Carrier of Last Resort or the developer may apply to the Commission for an appropriate order resolving the dispute. (d) In the event the Carrier of Last Resort is denied access to a premises or property by the property or building owner, and is asked at a later date to fulfill the Carrier of Last Resort obligation with regard to that premises or property, the Carrier of Last Resort may request a Motion for Waiver of OAC 165 : if

13 Cause No. PUD ALJ Report and Recommendation Page 13 of 27 the costs associated with fulfillment of the Carrier of Last Resort obligation are deemed excessive by the Carrier of Last Resort. As set forth in the above Rule, AT&T is not required to provide service beyond the 1/4 mile absent payment for the construction to extend the facilities by the customer; and it may request a waiver of the rule if a premise owner denies access to the property, then later requests service. Further, another LEC with facilities closer to the customer can serve them. Additionally, OAC 165 : Relief from rules provides : "Whenever compliance with any requirement of this Chapter would result in unreasonable hardship upon or excessive expense to the telecommunications service provider, IXC or the end-user, or for other good cause shown, the Commission may, by order, waive or modify the requirements of this Chapter upon application of any interested person. The Commission may grant temporary relief pending hearing." AT&T witness, Jason E. Constable, states in his Direct Testimony filed herein on July 10, 2009, at page 8, lines 14-17, "AT&T Oklahoma is seeking a limited waiver of the equal access minimum service standard in the limited circumstances where it is not economically feasible to deploy a traditional network and AT&T Oklahoma elects to use an alternative technology in order to serve a customer requesting service." When factual circumstances arise that would trigger AT&T's obligation to provide services to potential customers where it is determined that it is not economically feasible to deploy a traditional network, the existing OCC rules cited above provide the relief AT&T is prematurely requesting in this cause. Nothing in said rules would prohibit AT&T from seeking such relief to enable it to employ the use of an alternative technology. Therefore, for all practical purposes, AT&T does not need the blanket waiver of providing equal access to fulfill their COLR obligations as requested in its Application, and such request serves no purpose other than to relieve AT&T of the obligation to present the limited factual circumstances if or when they may arise to the Commission for its review and approval on a case-by-case basis. As stated previously, the ability to seek relief of the requirement to provide equal access where economically infeasible already exists in the rules today, and the OCC should not grant the broad relief requested that may have unintended consequences. As set forth in AT&T's response to the Rural TSPs DR No. 1.4, AT&T claims that each case will be judged on its own merits, therefore admitting that each circumstance will be unique and a onesize fits all blanket waiver is inappropriate. The Rural TSPs also asserted that the requirement to seek a waiver each time a situation arises that creates unreasonable hardship or excessive expense, rather than granting a blanket waiver for any such circumstance which may arise in the future, would not create a burden on AT&T or its future customers. Mr. Constable, states in his Direct Testimony at page 2, lines 8-13, "AT&T Oklahoma is, asking for a limited waiver of the equal access requirement. The waiver would be limited to situations which, in order to meet its carrier of last resort obligation, AT&T Oklahoma has to extend its facilities to service a customer and the extension of the facilities is impractical or uneconomical. The application of the waiver would apply in limited factual circumstances." AT&T's response to the Rural ILEC's DRs essentially stated that AT&T cannot identify the criteria that would constitute "impractical or uneconomical" but that each

14 Cause No. PUD ALJReport and Recommendation Page 14 of 2 7 circumstance stands on its own facts. Similarly, in AT&T's response to Staff's DR No. 2, Mr. Constable states that AT&T cannot predict the future frequency when they may use an alternative technology, but that AT&T does not intend to make widespread use of the requested waiver; it would apply to a very small segment of AT&T's customers ; and the use of the waiver would be minimal. It should also be noted that OAC 165 : allows the Commission to provide temporary relief pending a hearing, thus insuring that AT&T nor the customer would suffer harm which arguably could be caused by the passage of time necessary to process a waiver request. Therefore, the Rural TSPs do not believe AT&T has provided sufficient facts or supportive rationale to warrant the granting by this Commission of a blanket waiver of AT&T's requirement to provide equal access to interexchange long-distance service in order for it to serve customers in the limited circumstances where it is not economically feasible to deploy traditional network given that such relief is currently available on a case-by-case basis. The granting of such relief is and would be redundant, unnecessary and contrary to public policy and the Commission's authority and obligation to investigate, review and approve where appropriate the waiver of its rules. Notwithstanding the Rural TSPs prior arguments, there are various issues that have not been sufficiently addressed by AT&T and the granting of their request may have unintended consequences. These include : Whether AT&T's response to the Rural TSPs DR Nos and 1.23 that the services provided via other technologies are not available for resale is in violatio n of 47 U.S.C. 251(b) and (c)(4) when it is their understanding the services will b e provided by AT&T the wireline entity. Whether there is sufficient evidence in the record to grant AT&T's request. In AT&T's responses to the Rural TSPs DR No. 1.4 it states that each case will be judged on its own merits but no specific details have been forthcoming by AT&T. Whether AT&T's response to the Rural TSPs DR No wherein Mr. Constable states that Lifeline service will be made available violates 4 7 C.F.R (d)(1) which addresses services offered by Eligible Telecommunications Carriers and their receipt of federal universal servic e funding. The Rule requires that carriers that offer the services that are supporte d by federal universal service support mechanisms under subpart B of this part an d section 254(c) of the Act, must provide the services either using its own facilities or a combination of its own facilities and resale of another carrier's service s (including the services offered by another eligible telecommunications carrier). The Rural TSPs question whether AT&T landline or AT&T Mobility will reques t reimbursement from the Universal Service Administrative Company ("USAC" ) for the offering of Lifeline. It is clear that only ETCs may request reimbursement and which entity would request reimbursement. Clearly AT&T Mobility is not a Competitive ETC in Oklahoma and AT&T wireline is. However, if AT&T wireline is offering this service on a pure resale basis, they are precluded from receiving reimbursement from USAC. AT&T wireline has not clarified how reimbursement, if any, would be sought. Whether the OCC has jurisdiction over the broadband services AT&T intends to

15 Cause No. PUD AL.I Report and Recommendation Page 15 of 2 7 utilize to provide service to customers. The Rural TSPs asked AT&T if the OCC were to enter an Order approving or denying AT&T's request, would it be in violation of 17 O.S that states, "The Oklahoma Corporation Commission shall not, by entering any order, adopting any rule, or otherwise taking any agency action, impose any regulation upon a provider of high speed internet access service or broadband service in its provision of such service, regardless of technology or medium used to provide such service." AT&T replied that the OCC order does not require the OCC to regulate internet access or broadband services, rather that the Commission issue a waiver of the archaic requirement that AT&T must provide equal access. Notwithstanding their answer, there is an issue that if AT&T provides service via another broadband technology whether the OCC has jurisdiction to regulate their provisioning and pricing of the service. Whether AT&T's request is in the public interest because customers will be precluded from choosing their interexchange long distance carrier. Mr. Constable, in his reply to the Rural TSPs DR No wherein AT&T was asked why Mr. Constable testified that customers today are less concerned about choosing their long distance provider and more concerned about choosing a company that provides packages of bundled services was based on his experience and knowledge of the communications industry. Not only is this response not based on fact, but there is no evidence that customers do not want to choose their long distance company. Not only is this an opinion, but it is anti-competitive. Long distance and competitive local exchange carriers will be adversely affected if AT&T does not allow them to provide their services to customers. The Rural TSPs contend that it is premature for AT&T to request this relief prior to receiving a waiver of 47 C.F.R ; and there could be many unintended consequences by granting their request. This is a question of first impression for the Commission and the Rural TSPs request the Commission to thoughtfully consider AT&T's request. Cimarron, Pottawatomie, and Salina-Spavinaw Cimarron Telephone Company, Pottawatomie Telephone Company, and Salina- Spavinaw Telephone Company, Inc. ("CTC, PTC and SST, aka the Interveners"), the Interveners in the above styled and numbered cause, hereby submit this Statement of Position, pursuant to the Procedural Schedule issued in this cause. At this time, the Interveners do not intend to present witnesses during the hearing on the merits in this cause. However, the Interveners reserve the right to participate in all aspects of this cause, including the examination of witnesses presented by all other parties to this cause. In the captioned cause, AT&T is seeking an order of this Commission granting AT&T what it calls a "limited waiver" of the Minimum Service Standards established by the Commission rules in OAC 165 : Specifically, AT&T is requesting a "limited waiver" of the rule that requires all telecommunications carriers offering local exchange service to provide Equal Access to interexchange long-distance service carriers.

16 Cause No. PUD ALJReport and Recommendation Page 16 of 2 7 The Equal Access requirement evolved from the Modified Final Judgment ("MFJ") which spelled out the terms of the divestiture of the Bell operating companies. Under the terms of the applicable court rulings and FCC orders, all long distance common carriers must have equal access for their long distance caller customers. This allows customers to access all long distance carriers by dialing "1" only. This requirement, along with several others listed in OAC 165: , were adopted by this Commission and they are imposed upon ALL telecommunications service providers that are providing local exchange service in Oklahoma. The Minimum Service Standards are extremely important, as they set the minimum requirements for the provision of telecommunications services in Oklahoma. The Commission should give careful consideration to any request for a waiver of any of the requirements, no matter how "limited" the request may be. AT&T has not presented any substantive evidence in this cause which would show that AT&T even needs the requested "limited waiver". AT&T's only witness, Mr. Jason E. Constable, states in his testimony that "There are occasions in which AT&T Oklahoma believes that this waiver could be both useful and practical." (Jason E. Constable Direct Testimony, page 3, line 11, emphasis added.) However, when asked by the PUD Staff for the number of occasions that AT&T has found it to be impractical and cost prohibitive to serve a customer with a traditional circuit-switched service, Mr. Constable states that AT&T does not know. In fact, they state in their response that they have not gathered or retained this information. This begs the question: How does AT&T know with sufficient certainty, supported by substantial evidence, that it has a problem that needs the remedy they are requesting? Mr. Constable further states that in some instances AT&T may want to use "an alternative method" to serve new customers. He describes the alternative methods as "alternative technology", such as wireless, Voice over Internet Protocol ("VOIP") or Wi-Fi. However, "alternative technology" is not defined. Furthermore, Mr. Constable does not cite a single example of an actual customer situation where such technology currently would be necessary in order for AT&T to meet its obligations as a Carrier of Last Resort. In responses to Data Requests in this case, Mr. Constable admits that none of AT&T's current Carrier of Last Resort obligations are being met via any such alternative technologies. He also acknowledged that AT&T does not expect to make widespread use of the waiver, if granted. Furthermore, Mr. Constable states that AT&T has not yet developed a criteria for determining when and if AT&T would use "alternative technology" to provide service to a customer. AT&T states that although they might wish to use this technology when installing a traditional landline to a customer would be a "significant expense", however, Mr. Constable admits that AT&T has not set any specific amounts or even a proposed formula for determining the meaning of "significant expense". Mr. Constable, in response to additional Data Requests, states that "Each case will be judged on its own merits. Factors will include, but not be limited to, the cost to the company and the customers, whether the area is a growth area and the nearest facilities." Based upon the AT&T testimony and responses to Data Requests, it is obvious that AT&T wants to address each customer situation on a case-by-case basis, but AT&T is requesting an unqualified and unconditional waiver of the Equal Access requirement of the Minimum Service Standards. This alone should be sufficient grounds for this Commission to deny the subject Application. At a minimum, AT&T should not be granted a waiver of any of the

17 Cause No. PUD ALJReport and Recommendation Page 17 of 2 7 Minimum Service Standards unless and until it provides the Commission and all affected parties with specific standards and parameters which would insure that the consumer will be protected. The Commission also should be concerned about the fact that in a response to a Data Request in this cause, AT&T states that if a customer insists upon traditional switched circuit service (which is not unreasonable when storms and other emergency situations are considered), the customer may have to incur the cost of deploying traditional facilities. This would be contrary to the intent of the Carrier of Last Resort obligations and regulations in the Commission rules. The Commission has a duty to determine whether the public interest will be served by the granting of AT&T's Application in this cause. The Interveners submit that the public interest would not be served by the approval of this Application by this Commission. It appears that AT&T wants to fulfill its Carrier of Last Resort obligations with currently unregulated services, such as wireless and VOIP. Granting the requested relief would leave consumers with less protection, and would give AT&T an unfair competitive advantage over other carriers. It also could have an adverse impact upon the Oklahoma Universal Service Fund. Absent substantial evidence supporting AT&T's broad and unsupported allegations, the Commission should deny the relief requested in AT&T's Application. The Interveners reserve the right to review discovery responses and responsive testimony by all parties and to amend and to supplement this Statement of Position as necessary. Verizon Regulated Companies Verizon's position is that COLR obligations are unnecessary given the highly competitive communications marketplace. Verizon, however, supports AT&T's request in this docket given the current law in Oklahoma. Under AT&T's request, the Commission will not regulate alternative technologies ; rather, if AT&T chooses to use an alternative technology to satisfy its COLR obligations, AT&T agrees to satisfy all conditions of the existing COLR laws except for the limited waiver it seeks here. Attorney Genera l The Attorney General filed his Statement of Position on September 25, In that statement, the Attorney General stated that he is satisfied that a waiver of equal access in limited circumstances is not a violation of the FCC's equal access requirement, as long as customers have the option to either choose or reject the proposed service. The Attorney General further states that he is not opposed to the granting of the relief requested by AT&T-OK, subject to the limitations set out in Staff's testimony, as amended by his Statement of Position. The amendments set out in the Statement of Position were that it be clear that receiving service by means of an alternative technology is to be at the customer's option, and that AT&T-OK should be allowed to provide service by an alternative technology, without economic justification, five (5) to ten (10) times annually, instead of the fifty (50) times that Staff recommended. Subsequent conversations and negotiations were held after the filing of the Statement of Position. At the hearing on the merits, the representative of the Attorney General announced that the Attorney General and AT&T Oklahoma had reached an agreement and further agreed that AT&T Oklahoma had accurately stated that

18 Cause No. PUD ALJ Report and Recommendation Page 18 of 2 7 agreement set forth in Mr. Constable's testimony. (See Rebuttal Testimony of Jason E. Constable, pg. 9, lines 14-18). Findings of Fact and Conclusions of Law The ALJ finds that the Commission has jurisdiction of this cause pursuant to the Oklahoma Constitution, Article IX, Section 18 ; 17 O.S. Sections 131, , ; 47 C.F.R. Section 254(c), 47 C.F.R. Section , 47 C.F.R. Section (d)(1); 47 U.S.C. Section 25 1 (b)(c)(4); 47 U.S.C. Section 332(c)(8) or other applicable law. The ALJ further finds that the notice requirements have been met. The ALJ takes judicial notice as set forth in the record herein. The ALJ finds that the summary of evidence incorporates by reference the entire record of the proceeding including the oral record of hearings and the filed record herein. The ALJ further finds that the Statements of Position will be considered only as argument and not as proof of any recitation of facts contained therein, pursuant to OAC 165 :5-13-3(j). The ALJ finds that the Statements of Position filed in this proceeding addressed issues of law, primarily. On February 3, 2009, AT&T Oklahoma filed an application, in accordance with OAC 165:55-1-6,12 respectfully requesting for good cause shown, a waiver of its minimum service obligations under OAC 165 : (a)(1)(G).1 3 AT&T Oklahoma alleged that: AT&T-OK, like all other TSPs, are required to meet the Commission's minimum service standards as outlined in OAC 165: (sic)14 when providing regulated telecommunications services. In addition, AT&T-OK as an incumbent TSP and an Eligible Telecommunications Service Provider, has a carrier of last resort ("COLR") obligation to serve any requesting customer located within AT&T-OK's local exchange territories. The COLR obligation also requires AT&T-OK to extend its facilities a quarter (1/4) mile, free of charge, to customers where facilities do not exist within AT&T-OK's exchange. Customers are responsible for all construction charges beyond the free '/4 mile. There are times, from a reasonable operational, business and economical standpoint, in which AT&T-OK would prefer to meet its COLR obligation via an alternativ e 12 OAC 165 : Whenever compliance with any requirement of this Chapter would result in unreasonable hardship upon or excessive expense to the telecommunications service provider, IXC or the end-user, or for other good cause shown, the Commission may, by order, waive or modify the requirements of this Chapter upon application of any interested person. The Commission may grant temporary relief pending hearing. ' OAC 165 : (a)(1)(G). Each telecommunications service provider providing local exchange service shall make available to each local exchange end-user within its service territory the following service features :...(G) Equal access to interexchange long-distance service...(although the caption in this Cause and certain references of AT&T refer to OAC 165 : , the proper reference is OAC 165: (a)(1)(G)). 14 OAC 165 : (a)(1)(G)

19 Cause No. PUD ALJReport and Recommendation Page 19 of 2 7 technology. Unfortunately, not all alternative technologies support equal access ; one of the Commission's minimum service requirements. Therefore, AT&T-OK requests a limited waiver of the (sic) OAC 165: (G) (sic)15 to the extent AT&T-OK elects to meet its COLR obligation via an alternative technology.t6 Regardless of technology AT&T-OK will continue to meet the remaining minimum service standards. On August 6, 2009, the Rural TSPs requested this Commission to dismiss, or in the alternative suspend, this cause based primarily upon three tenets, which are as follows : Not only does AT&T Oklahoma have a state requirement to provide equal access to interstate long distance service for intrastate, intralata and interlata calling under OAC 165:55-13(a)(1)(G), but it also has a federal requirement to provide equal access or toll dialing parity under Title 47 of the Code of Federal Regulations ("CFR"), Section As such, until AT&T Oklahoma has a waiver from its federal requirement to offer toll dialing parity it is premature to seek waiver of its state equal access requirement; 2. AT&T Oklahoma is seeking relief which is already set forth under Commission rules, specifically, OAC 165: and OAC 165 :55-1-6, wherein AT&T Oklahoma may petition the Commission for relief from its minimum standards obligations, on a case-by-case basis, when it believes it is "impractical or uneconomical" to provide services; and 3. AT&T Oklahoma has failed to provide sufficient facts or supportive rationale to warrant a blanket waiver of its requirement to provide equal access to interexchange long-distance service in order for it to serve customers in the limited circumstances where it is not economically feasible to deploy traditional network. Regarding the Motion, the parties took the following positions:17 the Rural Telcos supported the Motion presenting arguments similar to that of the Rural TSPs ; the Attorney General supported the Motion if customers would be denied the option of choosing between traditional, plain old telephone service and alternative technologies under the relief requested by AT&T Oklahoma in its Application; EasyTEL took no position on the Motion; and Verizon along with AT&T Oklahoma opposed the Motion. Verizon opposed the Motion, stating that the Rural TSPs primarily argued the merits of the Cause to support its Motion and that the Cause should proceed to merit hearing which is the appropriate forum. AT&T argued that the Cause should proceed to merit hearing because the Commission rules, specifically, OAC 165 : (a)(1)(G) and OAC 165 : allow AT&T Oklahoma to request such relief. Staff took the position of qualifying its support of the Motion. Staff set forth that if AT&T was allowed to proceed with certain limitations on its relief requested, the Motion may be unnecessary; if not, then Staff would not be in the position of supporting the application of AT&T Oklahoma. 15 "sic" indicates that "the" used in the quote should be omitted and that OAC 165 : (a)(1)(G) is the correct rule reference. 16 Application, Page 1, Lines The arguments are summarily presented, as they were considered in the merit hearing in this Cause.

20 Cause No. PUD ALJ Report and Recommendation Page 20 of 2 7 The ALJ further finds that in summary, AT&T Oklahoma is seeking a limited waiver of OAC 165: (a)(1)(G) which is the requirement to provide equal access to interexchange long-distance service. The Rural TSPs also raised the fact that the caption filed by AT&T incorrectly references OAC 165 : (a)(1)(G) as OAC 165 : (G) and that AT&T should be compelled to refile its Application. AT&T acknowledges that the rule as referenced in the caption is incorrect and was an inadvertent mistake. The ALJ finds that pursuant to OAC 165:5-9-2(d), amending a caption would require the additional expense of filing a new application which will receive a new cause number. The ALJ finds that considerable filing has been made in the current cause and case efficiency would not require the additional expense and time required by filing a new cause. The ALJ further finds that much of the rationale in support of the Motion to Dismiss or in the Alternative Motion to Suspend Procedural Schedule is actually argument regarding the merits of granting or denying the Application. One such predicate for the Rural TSPs Motion is contained in the statement found on page 7 of the Motion : Therefore, the Rural TSPs do not believe AT&T has provided sufficient facts or supportive rationale to warrant the granting by this Commission of a blanket waiver of AT&T's requirement to provide equal access to interexchange long-distance service in order for it to serve customers in the limited circumstances where it is not economically feasible to deploy traditional network given that such relief is currently available on a case-by-case basis. The granting of such reliefis and would be redundant, unnecessary and contrary to public policy and the Commission's authority and obligation to investigate, review and approve where appropriate the waiver of its rules. The ALJ further finds that the conclusion that the Commission should not ultimately grant the relief requested goes to the merits of the Application in this Cause. The ALJ further finds that the assertion of the Rural TSPs that relief may be available under alternative methods (i.e. case-by-case basis) is a more appropriate argument for the merits of the Cause as it directly challenges the direct testimony of Jason E. Constable filed in this Cause, July 10, The ALJ further finds that portions of the Motion reference the direct testimony of AT&T Oklahoma including discovery requests and responses which are more appropriately presented in a hearing on the merits where each party has an opportunity to respond to the direct testimony through witness testimony and to present discovery. For the foregoing reasons, the ALJ found that the Motion to Dismiss Cause was to be held in abeyance to be considered with the hearing on the merits. The ALJ further found that determination of the suspension of the procedural schedule was moot, as the ALJ had recommended the Motion to Dismiss be considered in conjunction with the merit hearing. The ALJ further found that pursuant to the rules of the Commission, amending the caption would require a new Cause to be filed and due to case efficiency, amending the caption and refiling a new Cause was not recommended.

21 Cause No. P UD ALJ Report and Recommendation Page 21 of 2 7 The ALJ further finds that in the instant cause AT&T is requesting to be granted a limited waiver of OAC 165 : (a)(1)(G) "Equal access to interexchange long-distance service" in order to meet its COLR obligations via the use of other technologies such as wireless and VOIP. The ALJ further finds that the intrastate requirement for AT&T Oklahoma is to provide equal access to interexchange long-distance service for intrastate, intralata and interlata calling. The ALJ further finds that AT&T is also subject to the federal requirement to provide equal access or toll dialing parity as set forth in the Code of Federal Regulations at 47 C.F.R This section provides in part as follows : (a) A LEC shall implement throughout each state in which it offers telephone exchange service intralata and InterLATA toll dialing parity based on LATA boundaries. (b) A LEC shall implement toll dialing parity through a presubscription process that permits a customer to select a carrier to which all designated calls on a customer's line will be routed automatically. LECs shall allow a customer to presubscribe, at a minimum, to one telecommunications carrier for all InterLATA toll calls and to presubscribe to the same or to another telecommunications carrier for all intralata toll calls. (c) A LEC may not assign automatically a customer's intralata toll traffic to itself, to its subsidiaries or affiliates, to the customer's presubscribed InterLATA or interstate toll carrier, or to any other carrier, except when in a state that already has implemented intrastate, intralata toll dialing parity, the subscriber has selected the same presubscribed carrier for both intralata and interlata toll calls. The ALJ further finds that by its own acknowledgement, AT&T argued that dialing parity is only applicable for POTS, so no waiver of the federal requirement is necessary because providers of wireless service are not required to provide equal access as set forth in 47 U.S.C. 332(c)(8) and 47 C.F.R The applicability of the federal parity or equal access requirement may be disputed on a case-by-case basis. AT&T's position assumes no dispute and therefore no waiver requirement. It is unclear whether AT&T must seek a waiver of the federal dialing parity requirements. This would become more clear if a specific fact case was presented by AT&T for review. The ALJ further finds that by its own acknowledgement, the relief requested by AT&T would seldom be used. AT&T witness, Jason E. Constable, states in his Direct Testimony filed herein on July 10, 2009, at page 8, lines 14-17, "AT&T Oklahoma is seeking a limited waiver of the equal access minimum service standard in the limited circumstances where it is not economically feasible to deploy a traditional network and AT&T Oklahoma elects to use an alternative technology in order to serve a customer requesting service." The ALJ further finds that when factual circumstances arise that would trigger AT&T's obligation to provide services to potential customers where it is determined that it is not economically feasible to deploy a traditional network, the existing OCC rules cited above, currently provide adequate relief to AT&T, and therefore, the relief AT&T is seeking in this Cause is premature.

22 Cause No. PUD ALI Report and Recommendation Page 22 of 2 7 The AU further finds that when factual circumstances described above actually arise, nothing in the Commission's rules would prohibit AT&T from seeking the relief it requests herein, thus enabling AT&T to employ the use of an alternative technology on a case-by-case basis where appropriate. Therefore, for all practical purposes, AT&T does not need the blanket waiver of providing equal access to fulfill their COLR obligations as requested in its Application herein, and such request results in relieving AT&T of the obligation to present the limited factual circumstances if and when they may arise to the Commission for approval. The ALJ further finds that once AT&T offers to provide telecommunications service to an applicant for service in accordance with its tariff and the Commission rules, and then the applicant refuses to accept service as offered, AT&T has met its COLR obligation and then AT&T may offer to provide service via some alternative technology not regulated by this Commission. For example, OAC 165: `Extension of facilities' provides in part, (b)(1)(b) Where construction is required in excess of the allowance stated in subparagraph (b)(1)(a) of this Section, applicants for service may be required to pay a construction charge for all reasonable costs in excess of the free allowance. (E) When a Carrier of Last Resort requires a charge for the extension of facilities into an area more than one-quarter (1/4) mile from its existing facilities, the end-user(s) may apply to be provided telecommunications services by a Carrier of Last Resort providing service an adjacent certified area, if the Commission so orders. This subparagraph shall be limited to situations where a Carrier of Last Resort will not provide service to an area located within its service territory without the payment of construction charges. (d) In the event the Carrier of Last Resort is denied access to a premises or property by the property or building owner, and is asked at a later date to fulfill the Carrier of Last Resort obligation with regard to that premises or property, the Carrier of Last Resort may request a Motion for Waiver of OAC 165 : if the costs associated with fulfillment of the Carrier of Last Resort obligation are deemed excessive by the Carrier of Last Resort. As set forth in the above Rules, AT&T is not required to provide service beyond the '/4 mile extension of facilities absent payment for the construction from the customer ; and it may request a waiver of the rule if a premise owner denies access to the property, then later requests service. The ALJ further finds there is no evidence with regard to how the waiver will be used in connection with the 1/a mile requirement to provide POTS or landline service. Upon review of AT&T's case in chief, it appears AT&T may intend to utilize this waiver in instances where the customer is within the 1/4 mile ; however, specific case facts or specific rationale to grant the requested relief have not been provided.

23 Cause No. PUD ALJReport and Recommendation Page 23 of 2 7 The ALJ further finds that it is unclear from the Applicant when it would be uneconomical to provide service or what a reasonable distance would be for AT&T to provide landline service. Rather, AT&T has stated it will determine the question of economics on a caseby-case basis. The ALJ further finds that it is AT&T's position that when it determines, unilaterally, that it is uneconomical to provide wireline service to customers within or outside of the free '/a mile, and the customer does not want service via an alternative technology, that rather than provide wireline service, the matter will be mediated by this Commission's Consumer Services Division ("CSD"), then if no resolution is reached, AT&T Oklahoma may seek a formal waiver from the Commission. AT&T advised that the CSD stated it would be willing to act as a mediator, with the understanding that service will be offered at the same rate as landline service and that the alternative technology service will be reliable under prevailing rules. (Rebuttal Testimony of Jason E. Constable at page 8) The ALJ finds that this further emphasizes the existing relief available through Commission rules and existing processes. The ALJ further finds that when factual circumstances exist, the Commission's rules currently provide AT&T a remedy at OAC 165 : Relief from rules : "Whenever compliance with any requirement of this Chapter would result in unreasonable hardship upon or excessive expense to the telecommunications service provider, IXC or the end-user, or for other good cause shown, the Commission may, by order, waive or modify the requirements of this Chapter upon application of any interested person. The Commission may grant temporary relief pending hearing." The ALJ further finds that in the Testimony of Commission Staff witness, Mr. Dexter Murphy, Staff conditionally recommended approval of AT&T 's request if AT&T Oklahoma will not attempt to use alternative technology more than 50 times annually to meet its COLR obligation in response to a customer 's request for service as set forth in Jason E. Constable 's Rebuttal Testimony at page 9. The ALJ further finds that at the Hearing on the Merits, AT&T's witness Mr. Constable confirmed that use of alternative technology for a multi-unit dwelling would be counted as a single use of the waiver instead. of the number of times alternative technology is provided on a unit/customer basis. Due to counting multi-unit use as a single use of the waiver, AT&T' s agreement to limit the use to 50 times may be of minimal effect, and does not provide the requisite level minimal use safeguard to warrant granting the waiver. The ALJ further finds that Staff witness, Mr. Dexter Murphy, also stated that Staff would conditionally approve AT&T's request if AT&T agrees to the following limitations : For purposes of this cause, AT&T Oklahoma will define "no facilities" or "where facilities do not exist within AT&T-OK's exchange" to mean that AT&T Oklahoma has no traditional landline facilities within a reasonable distance available to serve a customer requesting service. AT&T Oklahoma will not attempt to use alternative technology more than 50 times annually to meet its COLR obligation in response to a customer's

24 Cause No. PUD ALJ Report and Recommendation Page 24 of 27 request for service. 0 AT&T Oklahoma will report to Staff annually on the number of customers that are being serviced by alternative technologies and the specific reasons AT&T Oklahoma determined it was uneconomical or unreasonable to serve those customers by traditional means. AT&T Oklahoma will contribute to state and federal funds for those customers that are being served by alternative technologies. AT&T Oklahoma must also satisfy the reasonable concerns expressed by the Rural Telcos concerning intercarrier compensation arrangements as set forth in their August 7, 2009, Statement of Position. Those concerns are : If wireless facilities are used to serve the customer, will the intercarrier compensation be the same as landline intercarrier compensation (the LECs local calling area determines whether access charges or local reciprocal compensation applies) or will the wireless calling area (intramta) determine if access charges or local reciprocal compensation applies? If IP is used to serve the customer, will access charges apply? Will only interstate access charges apply? If not, what charges will apply? If intercarrier compensation does change as a result of the use of differing technologies, how will the interconnected ILECs be compensated for the loss of access revenues and the additional local reciprocal compensation expense? ~ AT&T Oklahoma will provision this waiver for Residential customers only. AT&T Oklahoma will provide affected customers with the alternate technology at the same tariffed rate as customers with landline services receiving similar services, plans and options. AT&T Oklahoma will honor the commitments made in its testimony. Customers receiving the alternative technology must agree to the following : o To receive service via the alternative technology ; o That AT&T Oklahoma is their long distance provider of choice ; o Or, that to choose a long distance provider other than AT&T Oklahoma, the customer acknowledges he/she must either : "dial around ;" use a prepaid long distance card ; or end present contract arrangement s A customer should retain the right to insist on receiving traditional landline facilities if he/she is willing to pay for the installation of those facilities beyond the free, initial quarter-mile, however, if AT&T Oklahoma determines it

25 Cause No. PUD AL.I Report and Recommendation Page 25 of 27 is uneconomical or impractical to provide the service through traditional landline facilities, it may seek a waiver of OAC 165 : (d) in accordance with OAC 165 :55-1-6, based upon "undue hardship.i1 8 The AU further finds that Commission Staff witness, Mr. Dexter Murphy, stated on the record at the Hearing on the Merits that the limitations did not resolve Staff s concerns, but merely mitigated the same unintended consequences from granting the waiver that could result. The AU further finds that Staff does not support the waiver absent AT&T fulfilling the limitations and AT&T has not fulfilled the limitations. The AU further finds that AT&T has not resolved the concerns of the Rural Telcos regarding the affect on intercarrier compensation, etc. as set forth above. The ALJ further finds that the use of alternative technology may necessitate a change in the treatment and characterization of traffic, i.e. landline to wireless, intramta, intermta, and whether it is local or toll, thus changing the intercarrier compensation levels carriers receive today. The ALJ further finds that granting the waiver may impact intercarrier compensation. However, the parties and the nature of the impact are unknown and unidentifiable. The ALJ further finds that Rural ILECs may experience revenue loss and increased costs as a result of the granting of this Application and the nature of the loss is unknown and unidentifiable. The ALJ further finds that one of Staff's limitations is that AT&T will report to Staff annually the number of customers that are being served by alternative technologies, and the specific reasons AT&T Oklahoma determined it was uneconomical or unreasonable to serve those customers by traditional means. Due to the uncertainty of the specific cases that may arise, neither Staff nor AT&T could describe in detail the reporting format, the information to be contained therein, nor the review and evaluation process. The ALJ further finds that in addition to the above conditions, Commission Staff witness, Mr. Dexter Murphy, stated in his Prefiled Testimony that Staff had 3 separate concerns regarding the application that the Commission should consider, those being : 1) Whether the Commission would be in violation of 17 O.S or the Broadband statute by taking affirmative action in the case; 2) Whether the requested relief is premature and whether there is sufficient factual statements for the Commission to properly grant the requested relief ; and 3) Could there be any unintended consequences by the Commission granting the relief requested. 1 8 OAC 165 : refers to "unreasonable ha rdship".

26 Cause No. PUD ALJ Report and Recommendation Page 26 of 2 7 The ALJ further finds that when landline customers are served by alternative technologies, AT&T's reporting obligations for contribution to the state and federal universal service funds may necessarily change. Not all providers of communications services contribute to the same funds in a like manner and therefore, carrier contributions and fund levels will be impacted; and the impact on specific funds, such as the High Cost Fund and Oklahoma Universal Service Fund by the granting of the AT&T's request relief cannot be determined. The ALJ further finds that in AT&T's response to Staff's DR No. 2, Mr. Constable states that AT&T cannot predict the future frequency when they may use an alternative technology, but that AT&T does not intend to make widespread use of the requested waiver ; it would apply to a very small segment of AT&T's customers ; and the use of the waiver would be minimal. The ALJ notes that OAC 165 : allows the Commission to provide temporary relief pending a hearing, thus insuring that neither AT&T nor the customer would suffer harm if immediate relie f is necessary. The ALJ further finds that without specific facts, there was not sufficient information to determine if the Commission would retain jurisdiction over the services AT&T would provide via other technologies, but continue to brand as AT&T wireline services. Title 17, Section of the Oklahoma Statutes provides, "The Oklahoma Corporation Commission shall not, by entering any order, adopting any rule, or otherwise taking any agency action, impose any regulation upon a provider of high speed Internet access service or broadband service in its provision of such service, regardless of technology or medium used to provide such service." In Mr. Constable's direct testimony at page 7, he addresses whether the Commission will lose its ability to regulate AT&T Oklahoma and he replies, "No. Although the OCC only has authority to regulate traditional landline services, AT&T Oklahoma, as a company, has COLR and minimum service standard obligations. Those obligations are upon AT&T Oklahoma and are independent of the technology that AT&T Oklahoma chooses to meet those obligations. Therefore, if AT&T Oklahoma chose to use an alternative technology in order to meet its COLR obligation, AT&T Oklahoma would still have all of the COLR and minimum service standard obligations placed upon it, with the exception of equal access, if this limited waiver is granted." The ALJ finds this statement problematic because Mr. Constable appears to imply that the Commission will continue to regulate AT&T regardless of the technology used to provide service. However, Mr. Constable does not directly and unequivocally state that this Commission will regulate the service utilized by AT&T to meet its COLR obligations. The ALJ finds that a clear answer must be provided as to whether the OCC will retain jurisdiction over non-pots services branded as AT&T wireline service. The ALJ further finds that it would be more sufficient if specific factual circumstances were presented to support the Application; however, since such is not present, AT&T can only provide broad concepts and subjective criteria as to when AT&T will determine it is in their best interest to meet their COLR obligations via alternative technologies. The ALJ further finds that AT&T has filed its case in chief, presented its case during the hearing on the merits, however, since no specific case facts are present, AT&T has not met its burden of proof in demonstrating why a blanket waiver of OAC 165 : (a)(1)(G) is necessary in order for it to meet its COLR obligations. The ability to seek relief of the requirement to provide equal access where economically infeasible already exists in the rules