TEXALTEL Conference - December 2005 Stability of the T2A2 Agreements: Term, Change in Law, and Opt In Bradford W. Bayliff Casey, Gentz & Magness, L.L.P.

TEXALTEL Conference - December 2005 Stability of the T2A2 Agreements: Term, Change in Law, and Opt In What is different from the T2A? Term of the Agreements Intervening Law/Change in Law  What is a Change in Law?  What is the Change in Law process?  What federal law changes could affect the T2A2?  Will changes in Texas law affect these agreements? Opting In  May a CLEC opt into a agreement that is different from its initial agreement?  What are the opt in procedures?

TEXALTEL Conference - December 2005 What is different from the T2A? Term of the Agreements  The T2A term was less than 4 years  New agreements range from 3 – 5 years Intervening Law/Change in Law  Original T2A had no formal Change in Law provision It did have an amendments provision  The new agreements include Change in Law provisions and a process for Change in Law amendments Opting In  Different process for amended agreements

TEXALTEL Conference - December 2005 Term of the Agreements CLEC Coalition, KMC, and Xspedius  3 years and 90 days Birch  3 years CLEC Joint Petitioners  5 years MCI  5 years Superseding Amendment affects Recip Comp, POIs, and Trunking Terms  Expires June 30, 2007

TEXALTEL Conference - December 2005 Intervening Law/Change in Law What is a change in law? Legally binding decision by a court of competent jurisdiction Amendment of the FTA Amendment of PURA or other applicable Texas statute Federal or state regulatory action, rule regulatory action Other legal action that materially revises, reverses, modifies or clarifies the meaning of the Act, an applicable Texas statute or any of the rules, regulations, Orders, or judicial decisions which otherwise materially affect the Agreements.

TEXALTEL Conference - December 2005 Intervening Law Process CLEC Coalition and CJP  Legally binding decision by a court of competent jurisdiction The relevant action has not been stayed No request for a stay is pending Any deadline for requesting a stay has passed  Renegotiation Either party may request if it believes a Change in Law has occurred Request must be in writing  Negotiations end if  Renegotiation is not concluded within 90 days after notice  The parties don’t negotiate for a period of 15 business days  The non-requesting party refuses to renegotiate on the ground that there has been no Change in Law sufficient to require renegotiation  If negotiations are not successful Dispute resolution procedures will apply

TEXALTEL Conference - December 2005 Intervening Law Process MCI  Intervening laws may not modify or supersede the Superseding Amendment  If an action invalidates, modifies, or stays the enforcement of laws or regulations that were the basis or rationale for any provisions of the agreement, the affected provision(s) are invalidated, modified or stayed upon the written request of either party The MCI ICA does not include a legally binding requirement  The parties have 60 days to negotiate conforming modifications  If the parties are unable to agree, disputes shall be resolved pursuant to the dispute resolution process in the agreement

TEXALTEL Conference - December 2005 Changes in Federal Law What federal law changes may affect the T2A2?  House IP and Broadband Services Bill  Recip Comp FNPRM  VoIP NPRM  TRRO Appeal  Qwest Forbearance Petition The Qwest Petition will not affect the T2A2 A similar AT&T or Verizon Petition could affect the T2A2

TEXALTEL Conference - December 2005 House IP and Broadband Services Bill What has been said about updating the FTA?  Rep. Joe Barton, Chair of the House Energy and Commerce Committee "Our nation’s telephone laws are based upon the principles of common carriage and the belief that only incumbents can truly own the facilities that connect Americans." "The notion behind America’s cable laws is that competition doesn’t exist, and since no competitive forces check the actions of a monopoly distributor of multichannel programming in many markets, that responsibility must fall to government." "That is what brings us here today. The advance of technology has left the law behind. The statute no longer reflects the technological and competitive reality. Congress has a responsibility to update our communications laws and to ensure that Americans benefit from competitive forces and innovation." "Updating the communications laws is one of my highest priorities."

TEXALTEL Conference - December 2005 House IP and Broadband Services Bill What has been said about updating the FTA?  Ed Whitacre, Chairman and CEO, SBC Communications, Inc. "Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using." "Why should they be allowed to use my pipes? The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo or Vonage or anybody to expect to use these pipes free is nuts."  Earl Comstock, President and CEO, COMPTEL "The proposed House bill remains fundamentally flawed. The revised draft legislation released last week resolved previous ambiguities in a way that will create Internet gatekeepers. As SBC's Ed Whitacre made perfectly clear in a recent Business Week article, the Bell companies have every intention of extracting a fee for Internet content sent over their networks. The Bells and cable companies have a long history of blocking competitive access to their facilities. Allowing this proposed bill to advance any further will undermine the Internet and pave the way for the Bell companies to remonopolize the nation's communications networks."

TEXALTEL Conference - December 2005 House IP and Broadband Services Bill Committee Staff has circulated a proposed staff discussion draft for comment The draft creates three new regulatory regimes  Broadband internet transmission services (BITS)  Voice over internet protocol (VoIP) services  Broadband video services (BVS)

TEXALTEL Conference - December 2005 House IP and Broadband Services Bill The staff discussion draft creates common regulatory definition for broadband Internet transmission services (BITS) which includes  Digital Subscriber Line (DSL)  Cable modems  Other broadband services. Ensures network neutrality to prevent broadband providers from blocking subscriber access to lawful content Provides a uniform, federal regulatory framework for BITS, VoIP, and BVS providers  Except in some areas where state or local rules still apply, such as rights-of-way Authorizes the FCC to determine that VoIP providers can be required to contribute to the Universal Service Fund Develops a streamlined franchising process for broadband video providers Applies many current cable video requirements to broadband video providers Allows municipalities to develop and deploy BITS, VoIP and BVS  Municipalities cannot provide preferential treatment for these services  Must comply with all regulations governing private-sector providers. Ensures that VoIP subscribers have access to 9-1-1

TEXALTEL Conference - December 2005 Recip Comp FNPRM CC Docket No The FNPRM seeks comment on reform proposals or principles submitted by the telecommunications industry and interest groups  The FNPRM begins the process of replacing the myriad existing intercarrier compensation regimes with a unified regime designed for a market characterized by increasing competition and new technologies  Likely to address access charges and recip comp

TEXALTEL Conference - December 2005 Recip Comp FNPRM The FCC stated that any new approach to Intercarrier Compensation should  Promote economic efficiency Encourage the development of efficient competition  Preserve universal service  Be competitively and technologically neutral  Address the impact on network interconnection rules How and where carriers interconnect Allocation of responsibilities for facilities to interconnect

TEXALTEL Conference - December 2005 VoIP NPRM WC Docket No The NPRM asks broad-reaching questions about  IP-enabled services Categorization of IP-enabled services Jurisdiction over such services Regulatory classification of such services  Other regulations that would be impacted Universal service Access to telecommunications for the disabled Access charges VoIP issues that may affect the T2A2 ICAs  VoIP Interconnection with the PSTN  Carrier Compensation

TEXALTEL Conference - December 2005 TRRO Appeal DC Circuit CLECs are appealing  Impairment test for high-cap loops  Elimination of unbundling for DS1  Nationwide finding of non-impairment for mass market local switching  Local switching rate increase

TEXALTEL Conference - December 2005 Qwest Forbearance Petition WC Docket Qwest sought relief from statutory and regulatory obligations that apply to it as an ILEC  Relieved of Section 251(c)(3) unbundling obligations for transmission facilities where intermodal deployment is extensive  Relieved Qwest of the obligation to provide UNEs to competitors in 9 of Qwest's 24 wire center service areas in the Omaha MSA Six-month transition period permits carriers that use UNEs in the 9 wire centers to migrate existing customers to alternative facilities or arrangements  Retained other Section 251(c) requirements Interconnection Interconnection-related collocation obligations  Retained Section 271 obligations to provide wholesale access to local loops, local transport, and local switching at just and reasonable prices

TEXALTEL Conference - December 2005 Changes in Texas Law Will changes in Texas law affect these agreements?  Revisions to PURA Recent revisions to PURA will not require amendments  PUC Rule Revisions and Orders Rule revisions unlikely to require amendments unless they are implementing FTA revisions Interpretation Orders unlikely to require amendments  Appeals of Docket No Cbeyond, CJP, Logix, and XO all have pending appeals

TEXALTEL Conference - December 2005 Opting In A CLEC may file a "short form" adoption of one of five ICAs that were approved in Docket No  The "short form" is available on CLEC Online  Provide general CLEC info Name, OCN, notices, etc.  Identify which ICA is being adopted  Identify which Recip Comp option is selected MCI contract has option of Superseding Amendment  The CLEC must take the ICA in its entirety  If the CLEC has a Superseding Amendment, it must be incorporated into the adopted ICA for the duration of the Superseding Amendment

TEXALTEL Conference - December 2005 Opting In This "short form" process shall apply to each of the five ICAs for so long as the ICA remains as originally approved by the Commission  If an ICA is subsequently amended, the ICA will no longer be available under the "short form" process  AT&T will process an adoption request for those ICAs using its standard contract processing guidelines and Commission rules

TEXALTEL Conference - December 2005 Opting In May a CLEC opt into an agreement that is different from its initial agreement?  A CLEC with a T2A2 may opt into another ICA  If a CLEC has executed a Superseding Amendment, the amendment must be incorporated into the ICA it opts into for the duration of the Superseding Amendment

TEXALTEL Conference - December 2005 Internet Resources House Broadband Bill   ing.htm Recip Comp FNPRM  FCC VoIP NPRM  Qwest Forbearance Petition  Triennial Review Resources  PUC Rulemaking Projects  CLEC Online 