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UNITED STATES v. WESTERN ELEC. CO.

May 8, 1990

UNITED STATES OF AMERICA, Plaintiff,
v.
WESTERN ELECTRIC COMPANY, INC., et al., Defendants


Harold H. Greene, United States District Judge.


The opinion of the court was delivered by: GREENE

A number of issues relating to the equal access obligations of the Regional Companies remain to be resolved although, as explained below, substantial progress toward equal access has been made, and the problems, when measured against the original requirements, are not of exceptional magnitude.

 I

 Introduction

 Section II(A) of the decree requires each Regional Company to provide to all interexchange carriers and information service providers access to its local network, subject to Appendix B, which is "equal in type, quality, and price to that provided to AT & T and its affiliates." In implementation, Appendix B, in turn, requires the Regional Companies, inter alia, (1) to provide equal access through at least one-third of their access lines by September 1, 1985, and, (2) upon a bona fide request to provide such access with respect to every end office by September 1, 1986. However, even the September 1, 1986 deadline is waived for nonconforming offices *fn1" as to which a Regional Company shows that for particular categories of services "such access is not physically feasible except at costs that clearly outweigh potential benefits to users of telecommunications services." Appendix B(A)(3) of the decree.

 The cost-benefit provisions of Section A(3) of Appendix B were incorporated into the decree in recognition of the difficulty and expense posed by conversion of some nonconforming end offices. Regional Companies are able to convert most conforming end offices to equal access merely by modifying the software that controls the switch and adding memory and processing capacity. However, conversion of nonconforming offices served by antiquated electromechanical switches often requires replacement of the existing switch with a new digital switch with equal access capability. *fn2" In any event, any denial of access must be for the minimum divergence in access necessary, and for the minimum time necessary to achieve such feasibility.

 By the September 1, 1986 deadline, nearly all conforming offices had been converted to equal access. This was not true, however, with regard to many nonconforming offices, and some of these are still not converted *fn3" -- at least not to the satisfaction of the interexchange carriers -- and the Court here deals with the issues arising from these nonconversions. In addition, in October 1988, the Court ordered the Regional Companies to submit plans for the conversion of pay telephones to equal access. These plans were filed on December 30, 1988, comments and responses were received in January 1989, and reply comments were filed on March 13, 1989. These plans raised yet new equal access concerns, which are also considered below. Finally, the Court here considers a dispute between AT & T and the Regional Companies concerning the costs of equal access and network reconfiguration.

  II

 Equal Access to Local Offices

 A. Background

 In 1984, the Regional Companies submitted equal access plans to the Department of Justice pursuant to section II(C) of the decree. These plans listed the numerous end offices scheduled for conversion in compliance with the deadlines contained in the decree. As to all of these end offices, the Regional Companies completed conversion to equal access as scheduled.

 In February 1986, MCI submitted a bona fide request, pursuant to Appendix B of the decree, for equal access with respect to some 1,400 end offices which had not been scheduled for conversion by September of that year. *fn4" As the deadline for conversion of offices subject to a bona fide requests approached, it became clear that the Regional Companies would not meet that deadline with respect to these offices.

 After some prodding by the Department of Justice, and finally pursuant to an order of the Court, the companies filed their requests for waivers of the September 1, 1986 deadline pursuant to section (A)(3) of Appendix B of the decree on August 1, 1986. Among other things, these filings set forth the conversion schedules of the various Regional Companies with respect to those offices that would not be converted by September 1, 1986. *fn5" The Department then filed a report to the Court concerning its view of the status and progress of equal access conversion. *fn6"

 In its report, the Department of Justice noted that the conversion schedules of several of the Regional Companies were dependent upon the use of alternative technologies. Instead of providing equal access by the replacement of existing switches, these alternative technologies were to modify existing arrangements, and on this basis, conversion to equal access could be achieved more economically and more quickly. Several of the interexchange carriers supported the use of alternative technologies, but only if they provided acceptable service quality, and the Department of Justice moved the Court to defer ruling on the proposed conversion schedules to give the parties time to test the quality and reliability of the alternative technologies. That motion was granted.

 Following completion of testing of the adjunct devices, the Regional Companies submitted a new round of filings in support of their conversion plans, and the Department of Justice submitted a new report in 1988. In response to that report, some of the interexchange carriers continued to object to the lengthy conversion schedules, as well as to the use of alternative technologies on the ground that they provided inferior service. After substantial briefing by all interested parties, it is now apparent that the disputes between the parties, as narrowed, involve essentially the questions of what constitutes a reasonable time for conversion of the nonconforming offices and whether the use of alternative technology is an acceptable means of providing equal access.

 III

 Reasonable Time for Conversion

 MCI, the largest non-AT & T interexchange carrier, maintains that any delay beyond September 1, 1986, the date specified in the decree, is unacceptable, regardless of when the request for conversion was made. The Court rejects that contention. It so happens that MCI made its request in February 1986 -- seven months before the proposed deadline. However, under MCI's theory, had it made its request for the conversion of a particular end office on August 31, 1986 instead, the Regional Company involved would have had to convert the end office the very next day. This obviously would have made no sense, and on this basis alone the Court does not accept the MCI rationale. The extensive briefing on this issue has persuaded the Court that conversion of these offices within the few months remaining under the decree would have entailed costs far outweighing the benefits of such conversion.

 The question remains, however, as to how much time in excess of the September 1, 1986 deadline is reasonable. Under the decree, each office delay must be considered and justified individually. However, because there are some 1,400 end offices and seven different Regional Companies subject to the MCI request, consideration of each office separately is impractical. Accordingly, the Court has fixed a period of conversion that is prima facie reasonable, and it will consider conversion delays in the context of that standard time period.

 Appendix B became effective, as did the remainder of the decree, in January 1984. As indicated, the Appendix gave the Regional Companies until September 1, 1986 to convert all end offices subject to a request for conversion to equal access. Thus, two and one-half years were provided, by the decree itself, for conversion of all of the end offices.

 This relatively lengthy time period constitutes an implicit recognition of the difficulties inherent in accomplishing such a conversion. Thousands of requests and thousands of end offices were involved. The work for the conversion required thousands of man hours of labor, both to replace switches and to ensure that the conversion was accomplished without disruption of telephone service to consumers. *fn7"

 According to the Regional Companies, the average time actually needed for the conversion of a non-conforming end office is eighteen to twenty-four months. Thus the time originally allotted in the decree is the maximum standard time. To complete all of the conversions requested by MCI in one-third of this time -- a mere seven months -- would have involved a huge and sudden expansion of the Regional Companies' workforce; tremendous, concentrated expenditures for the new switches; and potentially serious interference with customers' telephone service during the expedited conversion process. Balanced against these costs are, of course, the equal access benefits to the people serviced by these end offices. As indicated, the vast majority of these end offices, however, are very small, serving only relatively few lines. The Court concludes, as does the language of the decree itself, that the equal access ...


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