December 18, The Department has reviewed the parties Joint Motion and proposed agreement and files this response pursuant to OAH Rule

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1 December 18, 2006 Allan W. Klein, Administrative Law Judge 1 Heather Place St. Paul, MN Allan W. Klein, Administrative Law Judge Office of Administrative Hearings Suite Washington Square Minneapolis, Minnesota Re: In the Matter of the Complaint of PrairieWave Communications, Inc. against AT&T Communications of the Midwest, Inc. OAH Docket No Dear Judge Klein: The Department has reviewed the parties Joint Motion and proposed agreement and files this response pursuant to OAH Rule The Department was not a part of settlement discussions between PrairieWave and AT&T. On October 16, 2006, the Department was provided with a copy of what was represented to be a draft of a settlement between the parties. After its review, on October 24, 2006, the Department suggested to the parties that any settlement acknowledge that the parties are in compliance with the Commission s February 8, 2006 Order in this docket, which outlined certain legal responsibilities for each party both related to their past actions and their actions going forward. The Department also asked that the settlement agreement include a statement that there are no agreements, proposals, or understandings between the parties or their affiliates that relate to the purchase or sale of intrastate access services except as set forth in the agreement. The Department is concerned that, AT&T has repeatedly entered into unfiled agreements for switched access despite numerous Commission orders issued over a span of 10 years that required AT&T to comply with Minnesota tariffing requirements for the purchase and sale of intrastate tariffed switched access services. 1 To address this concern, the agreement should 1 For example, when AT&T requested a certificate of authority to provide local exchange services, AT&T claimed that Commission approval is not necessary for its tariffs, since AT&T is regulated as a telecommunications carrier. The Commission explicitly rejected that argument, stating: (Footnote Continued on Next Page)

2 Allan W. Klein, Administrative Law Judge December 18, 2006 Page 2 indicate that the parties are in compliance with Minnesota law and specify that there are no side deals that relate to Minnesota intrastate access services. Specifically, the Department recommended that the following language be included in the settlement agreement to address the public interest: The Parties represent that they have complied fully with the February 8, 2006 Order of the Minnesota Public Utilities Commission in this docket regarding the purchase and sale of tariffed intrastate access charges. The Parties represent that there are no agreements, proposals or understandings between them or between any of their affiliates, parents or subsidiaries that relate to the purchase or sale of Minnesota intrastate access services except as set forth herein. Thereafter, AT&T advised that the document provided to the Department was not a draft, and would not be changed to address the public interest concerns. After a month s delay, on December 4, 2006, the parties filed the instant Joint Motion and executed settlement agreement. The settlement agreement does not contain language to address AT&T s compliance with Minnesota tariffing laws. (Footnote Continued From Previous Page) the Commission disagrees with AT&T s analysis. As previously stated in this Order, Commission approval of tariffs will be a condition of certification. Minn. Stat (e) provides that a telecommunications carrier s local service will be subject the Minn. Stat. Ch. 237, Minn. Stat and require telephone companies to file their tariffs, which are subject to the requirement of being fair and reasonable. AT&T must therefore obtain Commission approval of its tariffs, and such approval is appropriately placed as a condition of certification. ITMO of the Application of AT&T Communications of the Midwest, Inc. for a Certificate of Authority to Provide Local Exchange Services, Docket No , Order Granting Certificate of Authority With Conditions, July 15, 1996, p. 7. The Commission, regarding AT&T s local services, has repeatedly held that the provisions of Minn. Stat. Ch. 237, which set standards for tariffed local services of telephone companies also apply to telecommunications carriers tariffed local services. See ITMO of the Application of AT&T Communications of the Midwest, Inc. for a Certificate of Authority to Provide Local Exchange Services, Docket No , Order Granting Certificate of Authority With Conditions, July 15, 1996, p. 7. In the Matter of the Joint Application of AT&T Corp. and MediaOne Group, Inc. For Approval to Transfer Control of MediaOne Telecommunications Corp. of Minnesota, Docket No. PA 442, 3123/PA , Order Accepting Stipulation, Approving Merger and Requiring Filings, Issued 12/20/99, at p. 3, n. 2. (Commission states that Minn. Stat , which refers to telephone company mergers and acquisitions, is applicable to CLECs by virtue of Minn. Stat ) In the Matter of the Joint Application of SBC Communications Inc. and AT&T Corp. for Approval, to the Extent Necessary, of Agreement and Plan of Merger, Docket No. PT-6432.PT-6433,PA , Order Approving Merger, Requiring Post-Merger Filing, and Requiring AT&T Communications of the Midwest, Inc and TCG Minnesota to Continue Operating Under Their existing Certificates of Authority, Issued: Aug. 1, 2005, pp. 2-3, (Commission states that a statute in Chapter 237 that applies telephone companies, , also applies to telecommunications carriers through , and the Commission s rules.)

3 Allan W. Klein, Administrative Law Judge December 18, 2006 Page 3 Minnesota Statutes , subd. 2 states that the Commission may accept a settlement upon a finding that to do so is in the public interest and is supported by substantial evidence. Minn. Stat , subd. 2 also allows the Commission to modify a settlement, subject to the approval of the parties. The omission of a provision in the settlement agreement in which the parties acknowledge that there are no side deals between them involving Minnesota intrastate switched access services except as set forth in the agreement raises a concern for the Department as to whether the settlement is in the public interest and is supported by substantial evidence. AT&T may suggest that the public interest concern is addressed in that the Joint Motion contains a statement at paragraphs 6 and 8 that is similar to the Department s recommended language. The Joint Motion is a merely a filing by counsel, however, which, by itself creates no obligation or commitment by the parties. Moreover, under the settlement s terms, statements in the motion do not, by themselves, supersede or even supplement the settlement agreement, which states that [t]his Agreement may be modified or amended only by written agreement executed by authorized representatives of each party. The motion is not such a written agreement. To ensure that there is compliance with the Commission s orders and there are no undisclosed side deals about intrastate switched access services, the Department recommends that that the settlement agreement be approved, and that the Commission s Order specifically state that the settlement is subject to the requirement that: 1) the February 8, 2006 Order issued by the Commission in this docket, which has not been vacated, reconsidered, dismissed or otherwise altered, remains in effect with respect to the parties and that the parties are complying and shall comply with that Order; 2) that there are and shall be no other agreements, understandings, or proposals between the parties or their affiliates, parents, or subsidiaries that relate to the purchase or sale of Minnesota intrastate access services except as set forth in the settlement agreement or as otherwise authorized by the Commission; and 3) that any present or future agreements of the parties concerning Minnesota intrastate switched access services shall comply with Minnesota law. As an alternative to the Department s recommendation, the Commission may also modify the settlement, subject to the agreement of the parties, or disapprove the settlement, as allowed by Minn. Stat , subd. 2. Very truly yours, LINDA S. JENSEN Assistant Attorney General Enclosure cc: Attached Service List AG (651)

4 AFFIDAVIT OF SERVICE Re: In the Matter of the Complaint of PrairieWave Communications, Inc. against AT&T Communications of the Midwest, Inc. OAH Docket No STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) Pat Silberbauer, being first duly sworn, deposes and says that at the City of St. Paul, County of Ramsey, State of Minnesota, on the 18th day of December, 2006, she served the attached letter to Allan W. Klein, dated December 18, 2006 from Linda S. Jensen, by depositing in the United States Mail at said city, a true and correct copy thereof, properly enveloped, with prepaid first class postage, and addressed to: All persons on the attached service list Pat Silberbauer Subscribed and sworn to before me on December 18, Notary Public

5 PrairieWave /AT&T OAH Allan W. Klein (original) 1 Heather Place St. Paul, MN Burl W. Haar, Executive Secretary MN Public Utilities Commission 350 Metro Square Bldg th Place East Allan W. Klein, ALJ Administrative Hearings Office 100 Washington Square, #1700 Minneapolis, MN Linda Chavez MN Department of Commerce 85 7th Place Suite Linda S. Jensen Attorney General s Office-TED 1400 NCL Tower 445 Minnesota Street Rebecca B. DeCook Holland & Hart Suite East Crescent Parkway Greenwood Village, CO William P. Heaston, Gen. Counsel PrairieWave Telecommunications 5100 Broadband Lane Sioux Falls, SD Patrick J. Mastel, Senior Counsel PrairieWave Telecommunications, Inc Broadband Lane Sioux Falls, SD Letty S.D. Friesen AT&T Room B East 40th Avenue Denver, CO Curt Nelson [Interested Party] Attorney General s Office-RUD 900 Bremer Tower 445 Minnesota Street Janet Shaddix Elling [Interested Party] Shaddix & Associates Suite W. Bloomington Freeway Bloomington, MN Wauneta Brown AT&T West 145th Street Olathe, KS Leslie Lehr Gray, Plant, Mooty 500 IDS Center 80 South Eighth Street Minneapolis, MN Greg Merz Gray, Plant, Mooty 500 IDS Center 80 South Eighth Street Minneapolis, MN 55402