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In re Qwest's Wholesale Service Quality Standards

April 13, 2004

IN THE MATTER OF QWEST'S WHOLESALE SERVICE QUALITY STANDARDS


Minnesota Public Utilities Commission Agency No. P-421/AM-00-849

Considered and decided by Randall , Presiding Judge, Harten, Judge, and Minge, Judge.

SYLLABUS BY THE COURT

1. The Minnesota Public Utilities Commission has the authority to impose benchmark wholesale service quality standards on an incumbent local exchange carrier.

2. The Minnesota Public Utilities Commission has the authority to impose an enforcement mechanism for benchmark wholesale service quality standards on an incumbent local exchange carrier.

The opinion of the court was delivered by: Harten, Judge

Affirmed

Concurring specially, Minge, Judge

OPINION

Respondent Minnesota Public Utilities Commission (MPUC) issued an order imposing on relator Qwest Corporation, the incumbent local exchange carrier, benchmark service quality standards and an enforcement mechanism for those standards affecting wholesale transactions between Qwest and respondents competitive local exchange carriers (CLECs). Qwest unsuccessfully moved for reconsideration and a stay of the order and appeals from the denial of these motions.*fn1

FACTS

Qwest agreed to "participate and cooperate in an expedited proceeding to establish permanent wholesale service quality (WSQ) standards" as a condition of MPUC approval of the merger of Qwest and U.S. West.*fn2 In July 2000, Qwest filed proposed WSQ standards that required parity between the services Qwest provided to the CLECs and the services Qwest provided to itself and its retail customers, but the proposed WSQ standards included no means of enforcing compliance. In December 2000, the CLECs and the Department of Commerce filed proposed WSQ standards that set benchmark levels of service and included an enforcement mechanism requiring Qwest to make payments to the CLECs or the state when Qwest's performance fell below the WSQ standards.

In March 2002, the MPUC rejected both sets of proposed standards and deferred action on the matter. In April 2002, the MPUC issued its own set of standards.

In July 2002, in connection with Qwest's petition to the Federal Communications Commission (FCC) for approval to offer certain long distance services, the MPUC adopted a Minnesota Performance Assurance Plan (MPAP) for Qwest that included parity WSQ standards. In August 2002, the MPUC asked Qwest and the CLECs to comment on the merits of the MPAP.

In October 2002, the CLECs proposed modifications to WSQ standards of the MPAP; these modifications included benchmark service levels and payments linked to failure to meet the benchmark service levels. Ultimately, over Qwest's objection, the MPUC adopted the CLECs' modifications to the WSQ standards included in the MPAP.

ISSUES

1. Does the MPUC have authority to impose benchmark WSQ standards on Qwest?

2. Does the MPUC have authority to impose an enforcement mechanism on Qwest?

ANALYSIS

Standard of Review

An agency exercises a legislative as opposed to a quasi-judicial function when it balances cost and noncost factors and makes choices among public policy alternatives. Arvig Tel. Co. v. Northwestern Bell Tel. Co., 270 N.W.2d 111, 116 (Minn. 1978). The agency acts in its legislative capacity in determining the extent to which competition should be permitted or limited. Id. at 116-17. When an agency exercises a legislative function, its decision is affirmed unless it is shown, by clear and convincing evidence, to be in excess of statutory authority or to have unjust, unreasonable, or discriminatory results. City of Moorhead v. Minn. Pub. Utils. Comm'n, 343 N.W.2d 843, 846 (Minn. 1984). This court ...


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