F IELD L AW G ROUP, PLLC

Transcription

1 F IELD L AW G ROUP, PLLC Gary L. Field Gary A. Gensch Hai Jiang Of Counsel: Norman C. Witte Joy L. Witte Matthew G. Davis 915 N. Washington Avenue Lansing, Michigan Telephone ( Facsimile ( glfield@fieldlawgroup.com October 3, 2008 Mary Jo Kunkle Executive Secretary Michigan Public Service Commission 6545 Mercantile Way P.O. Box Lansing, MI Paperless E-filing Re: In the matter of the joint emergency complaint and request for declaratory ruling of Quick Communications, Inc. and Zenk Group, Ltd. against AT&T Michigan regarding AT&T s refusal to process Quick s acquisition of Zenk Group s T1 customer base. Case No. U Dear Ms. Kunkel: Enclosed for filing in the above referenced matter is the Reply of Quick Communications, Inc. and Zenk Group, Ltd. to AT&T Michigan s Response in Opposition to Complainants Request for Emergency Relief. Also attached is the Proof of Service. Please call if you have any questions. Very truly yours, FIELD LAW GROUP, PLLC Gary Field GLF/tab Enclosure cc: Parties of Record

2 STATE OF MICHIGAN IN THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the joint emergency complaint and request for declaratory ruling of Quick Communications, Inc. and Zenk Group, Ltd. against AT&T Michigan regarding AT&T s refusal to process Quick s acquisition of Zenk Group s T1 customer base. Case No. U REPLY OF QUICK COMMUNICATIONS INC AND ZENK GROUP, LTD. TO AT&T MICHIGAN S RESPONSE IN OPPOSITION TO COMPLAINANTS REQUEST FOR EMERGENCY RELIEF Zenk Group, Ltd ( Zenk and Quick Communications, Inc. ( Quick have been working diligently to effectuate the transfer of customers from Zenk to Quick. At times, AT&T Michigan ( AT&T has been cooperative and helpful, and significant progress has been made between the Parties. As a result of continuing progress, certain statements in AT&T s September 24, 2008 Response should be updated before addressing AT&T s arguments. A. Current Status of Effectuating Transfer of Customers from Zenk to Quick. AT&T correctly identifies the four categories of services that are involved: 1 Resale Services; 2 Network circuits (or special access circuits as characterized by AT&T; (3 T1 customers; and 4 Collocation services. The Commission should consider each service individually when addressing the Quick/Zenk Emergency Complaint. 1. The transfer of the Resale Customers has been accomplished and AT&T has sent invoices to Quick, which have been fully and timely paid. AT&T acknowledges that the Resale Customers have already been transferred to Quick and there is no dispute concerning these customers. AT&T s Response, p 9. In fact, AT&T in-

3 voiced Quick for approximately 80% of the transferred accounts on September 8 and 11, Quick overnighted full payment to AT&T for the two invoices in the amount of some $47,000 on October 1, This payment was made 7 and 10 days respectively before the invoice due dates. AT&T has issued two more invoices on the remaining transferred Resale Accounts, which are due October 13 and October 18, After completion of its review of these last two invoices, Quick will send payment to AT&T prior to their due date. AT&T also states that Zenk has an over $1 million arrearage on these customers and that it intends to pursue collection of this arrearage from Zenk. Id. Accordingly, the lion share of dollars that AT&T contended in Case No. U that Zenk owed relates to the Resale Customers, which are no longer in dispute. 2. Zenk and Quick no longer seek assignment of the Network Circuits. Due to AT&T s legal position 2 that Quick could not be assigned the Network Circuits without payment of the arrearage, in the interest of expediency, Quick has informed AT&T it 1 This Reply is supported by the Affidavit of Bruce H. Yuille, attached as Exhibit A. 2 AT&T s legal position that Quick could not be assigned the Network Circuits without payment of the arrearage because such circuits are covered by AT&T s access tariffs is not as strong as AT&T contends. For example, some of the circuits that AT&T identifies as special access are in fact circuits that include SS7 signaling, which are covered under Zenk s interconnection agreement with AT&T (the ICA, and which the Commission has jurisdiction to protect. Section of the ICA states: Each Party is responsible for requesting Interconnection to the other Party s [Common Channel Interoffice Signaling ( CCIS ] network, where SS7 signaling on the trunk group(s is desired. Each Party shall connect to a pair of access [signaling transfer points ( STPs ] that serve each LATA where traffic will be exchanged using a direct connection to the STPs serving the desired LATA, through the designated [AT&T] state gateway STP or through a third party provider which is connected to the other Party s signaling network. The Parties shall establish Interconnection at the STP. The rate for signaling links to establish such Interconnection is as provided in [AT&T s] access tariff(s. If CLEC does not possess Footnote continued on next page P AGE 2

4 does not seek assignment of such circuits (based upon the assumption that AT&T will not block Quick s efforts to purchase replacement circuits. Towards that end, Quick has contracted with ACD Telecom, Inc to provide substitute circuits. 3. Quick has offered to pay AT&T its fees to transfer the T1 Customers. AT&T s only issue with the T1 customers is that Quick has not paid AT&T certain fees that AT&T requires to transfer the customers. However, AT&T has neither requested Quick to pay such fees nor has AT&T sent Quick an invoice. As AT&T is fully aware, Zenk and Quick have repeatedly requested AT&T to draft and provide a Transfer Agreement, which AT&T has advised is its practice in all acquisitions. Zenk and Quick have urged AT&T to provide such a document so that they could be apprised of ALL of AT&T s issues, rather than trying to resolve this matter on a piecemeal basis. Despite being promised that AT&T would provide a draft Transfer Agreement on September 5, 2008, AT&T, despite repeated requests, did not receive the draft agreement until September 23, 2008 at 5:44 p.m. The payment of transfer fees is one of the subjects in the Transfer Agreement. Accordingly, it is inappropriate for AT&T to complain in its September 24, 2008 Response that Quick had not paid the transfer fees when Quick was advised less than 24 hour earlier how much those fees were. It is also inappropriate to expect Quick to start making payments described in one section of an agreement while the entire agreement is still being negotiated. Footnote continued from previous page STPs, CLEC may purchase access to [AT&T s] SS7 Network as provided in Ameritech s access tariff(s. (Emphasis supplied. Thus, only the rate for signaling links to establish interconnection is provided in AT&T s access tariffs. However, the SS-7 service itself falls within the parties ICA, and the procedure governing the transfer of such services is consequently found in the ICA, not AT&T s access tariffs. P AGE 3

5 As it has advised AT&T, Quick has no problem paying transfer fees on the T1 customer lines. Quick simply assumed that issue was being addressed in the Transfer Agreement. Quick is willing to put those fees in escrow pending finalization of the Transfer Agreement. Since approximately 140 T1 lines are involved, which are all billed on the same BAN, Quick calculates that the amount of the transfer fees is approximately $730. (For the Commission s information, at AT&T s request, Quick has sent a check to AT&T, which AT&T has cashed, to cover the first month of service involving the T1 customer lines, commencing August 15, 2008, the effective date that Zenk assigned those customers to Quick. 4. Zenk has offered to pay AT&T the arrearage on the Collocation. In its Response, AT&T argues that under Zenk s interconnection agreement with AT&T, Zenk s collocation can only be assigned to Quick if the arrearage on the collocation services is paid. AT&T cites no provision from the interconnection agreement to support that assertion. Despite the weakness of AT&T s legal position, Zenk, in the interest of expediency, has offered to pay AT&T for the collocation arrearage. But again, this is an issue that is among those being negotiated in the Transfer Agreement. In its Response, AT&T asserts that arrearage on the collocation arrangement is $29, as of September 17, AT&T Response, p 11. However, at AT&T s request, Quick sent AT&T a check (which AT&T has cashed to cover the first month of collocation services, commencing August 15, 2008, the effective date that Zenk assigned the collocation to Quick. Zenk has asked AT&T to verify whether Quick s payment, effective August 15, 2008, would reduce the arrearage that AT&T has calculated as of September 17, To date, no response has been received from AT&T. P AGE 4

6 As it has advised AT&T, Zenk will pay the collocation arrearage, but needs to know the correct amount, after Quick s payment is taken into account on the T1 customer lines. Zenk properly believed that issue was being addressed in the Transfer Agreement. Nevertheless, Zenk is willing to put those fees in escrow pending finalization of the Transfer Agreement. B. Remaining Hurdles 1. Activation of the ACD replacement circuits is necessary. Because Zenk and Quick could not resolve the controversy with AT&T regarding the Network Circuits on an expeditious basis, they had little choice but to seek replacement circuits from a third party. ACD has been engaged to provide the replacement circuits. These replacement network circuits are essential to the operation of the network. Among other things, they carry SS-7 signaling, which, as discussed, the Commission has jurisdiction to protect. Without such signaling the network (which carries both local and long distance traffic will go down. And all of Zenk and Quick s efforts to preserve the services of their customers will be for naught. In addition, these network circuits carry the long distance traffic of the Resale Customers who have been successfully transferred from Zenk to Quick. Consequently, if these replacement circuits are not activated, both the Resale and T1 customers would be adversely affected. However, technical issues have arisen on AT&T s side. First, AT&T stated that there were no available DC3 CFA slots in Zenk s West Bloomfield collocation to receive the ACD DS3 circuit. After much discussion, AT&T did admit that there were 2 available DS3 CFA slots. However, AT&T contended that regardless of that fact, the Zenk West Bloomfield collocation arrangement was locked due to Zenk s arrearage. This position is contrary to the fact that other CLECs have been able to order DS1 circuits to Zenk s collocation arrearage during and after the time AT&T locked the space. What has been blocked is Zenk s ability to order circuits to other P AGE 5

7 offices, but again, other CLECs have been able to place orders on behalf of themselves to this collocation. Because AT&T has blocked ACD from ordering its own DS3 circuit, ACD s ability to provide the replacement circuits has been hindered. Accordingly, it is important that the Transfer Agreement be finalized (including the provision where Zenk would pay the collocation arrearage so that the collocation can be unlocked. However, to date, AT&T has not responded to the most recently edited draft that Zenk and Quick provided to AT&T on September 30, 2008 at 6:09 p.m. Another technical issue that has arisen is due to the fact that the Long Distance traffic of the transferred resale customers rides on the Network Circuits. Consequently, when the replacement circuits are activated, Quick will require another wholesale LD service provider and has engaged ACD to provide that service. However, AT&T has indicated that it does not recognize ACD s Carrier Identification Code (CIC. AT&T and ACD are working to resolve this issue, but have not yet been able to do so. Zenk and Quick hope that all details of the transfer can be accomplished by October 13, However, as discussed above, certain details require the cooperation of AT&T. Quick is willing to continue paying for any of the needed Network Circuits after October 13, However, how soon such replacement circuits can be activated is largely within AT&T s control. The fact that only a couple of seemingly minor issues still remain unresolved provides little comfort. All of the network issues must be resolved or the network will not work. 2. Emergency relief is required so that the network will not go dark on October 13, P AGE 6

8 AT&T claims that emergency relief is not appropriate because the harm to Quick is not irreparable in that AT&T has not permitted the assignment of access services to Quick, and thus Quick cannot claim irreparable injury with regard to the customers served by such services. AT&T s Response, at 8. AT&T misses the point. Zenk s customers were notified in an August 13, 2008 letter sent pursuant to the federal slamming regulations that Quick had agreed to acquire the assets of Zenk, and that upon the expected completion of the transfer by September 12, 2008, Quick would become their service provider. See Exhibit C-7 to the testimony of Bruce Yuille. Having not anticipated that AT&T would block the transfer of certain services to Quick, Quick committed by this letter to become these customers service provider. Now, if AT&T disconnects service to these customers, it will destroy all confidence in Quick s ability to provide telecommunications services, and as such the irreparable harm will incur to Quick, not Zenk. More importantly, AT&T s disconnection of Zenk s services before a complete transfer of such services to Quick is adverse to the public interest. As indicated in the Amended Emergency Complaint, if AT&T is permitted to discontinue service on October 13, 2008, approximately 150 Michigan companies and medical providers would find themselves suddenly without service. Many of these services are complex services that cannot be supplied immediately by other providers, and it could take weeks for other providers to be able to provision such services to these customers. As a result, these companies would suffer great loss in that they depend on telecommunications to conduct their business. In addition, the disconnection of service to the medical providers could potentially affect the health and wellbeing of patients. AT&T ignores important aspects of the Commission s order in Case No. U when AT&T claims that the Commission considered the public interest and ruled that AT&T had the right to disconnect the resale and unbundling customers as of September 12, AT&T s P AGE 7

9 Response, at 16. In its July 29, 2008 Order in Case No. U-15517, at 6, the Commission found that immediate discontinuation of service to Planet Access is adverse to the public interest, and as such the Commission imposed a 45-day time period to allow for notification and migration of Planet Access customers. Clearly the intent of the Commission s order was to avoid the disconnection of services until these customers were either provided advanced notice of the disconnection or were migrated to another provider. Zenk worked diligently to effect the migration of these customers, and accordingly provided notice of the migration of these customers to Quick to AT&T on August 13, Since then, it has been AT&T that has been blocking the transfer of these customers, and these customers should not be made to suffer as a result of AT&T s delays. In addition, AT&T will suffer no harm because will be paid for the services it provides until the transfer occurs. AT&T also argues that there are no exigent circumstances because if Complainants post adequate security, under [MCL (13], AT&T cannot, and will not, disconnect the access service at issue during the pendency of this action. AT&T s Response, at 5. Although AT&T makes posting such security sound simple, the issue that arises is what amount of security is adequate, and which party decides the adequacy of such amounts. AT&T apparently believes that it is the party that gets to set the amount of security, stating that all Complainants have to do to avoid the alleged irreparable harm is to post adequate security for the disputed amounts, including amounts past due as well as charges incurred during the course of this litigation. AT&T s Response, at 6. The first problem with AT&T s argument is that it is unclear. For what past due amounts is security required? And how much security is required for charges incurred during the course of this litigation? Does this mean that AT&T is asking Quick to pay for all current services six P AGE 8

10 months in advance? This leads to the second problem with AT&T s argument that such a request is patently unreasonable given the fact that Quick has already committed to paying for such services, and has already begun paying for such services. Accordingly, despite the fact that the Michigan Telecommunications Act ( MTA permits the posting of security to stay disconnection, being required to provide security in an amount that is too large can also result in an irreparable harm. If the security is excessive, and it appears that AT&T is seeking an excessive amount, then Quick and Zenk will not have the resources to provide such security, which will permit AT&T to continue with disconnection as it pleases. Although providing security in vast amounts is perhaps not a significant undertaking for a company the size of AT&T, smaller companies such as Quick do not have the capital available to provide large amounts of security. But more importantly, there is no basis to impose a bonding requirement upon Quick, when Quick has demonstrated good faith by prepaying for services before invoices have been issued, as requested by AT&T, and when Quick has been fully and timely paying any invoices that AT&T has sent to Quick for the services assigned to it by Zenk. 3. Sanctions are not appropriate. The Commission should deny AT&T s request to award its attorney fees because the Emergency Complaint was not frivolous under the MTA. The primary purpose of the Emergency Complaint was not to harass, embarrass, or injure AT&T. See MCL (2(i. The clear primary purpose of the Emergency Complaint was to ensure that services are not disconnected while the parties work out the remaining issues relating to the transfer of services to Quick. Granting emergency relief does not injure AT&T at all because Quick has committed to paying, and is in fact paying, for the current services AT&T is providing. Also, as shown above and in the Emergency Complaint, reasonable basis exists for Quick and Zenk to believe that the P AGE 9

11 facts of this case warrant emergency relief. See MCL (2(ii. Finally, Quick and Zenk s position was not devoid of arguable legal merit. See MCL (2(iii. Quick and Zenk have explained why emergency relief is appropriate according to the standard for granting emergency relief in MCL (3. Quick and Zenk have also supported their legal position with references to the ICA and the MTA. Thus, attorney fees are not appropriate in this proceeding. WHEREFORE, Quick and Zenk Group respectfully request that the Commission: a. Issue an order providing emergency relief prohibiting AT&T from disturbing or disconnecting any service to Quick provided to serve the transferred customer base until such time that the Parties execute the Transfer Agreement and the replacement network Circuits are activated; b. Determine that AT&T will be sufficiently secured by Zenk and Quick depositing $30,000 into escrow for payment of the service transfer fees and the collocation arrearage; c. Order Quick to pay AT&T for any Network Circuits that it continues to use until the replacement network circuits can be activated; d. Order the Parties to promptly negotiate and finalize the Transfer Agreement; e. Order AT&T to act promptly in the activation of the replacement Network Circuits; f. Deny AT&T s request for attorney fees; and g. Grant any other relief the Commission deems appropriate according to the law and the facts of this case. P AGE 10

12 Respectfully submitted, QUICK COMMUNICATIONS, INC. ZENK GROUP, LTD Dated: October 3, 2008 Gary L. Field (P37270 Gary A. Gensch (66912 Field Law Group Attorneys for Zenk Group, Ltd and Quick Communications, Inc 915 N. Washington Ave Lansing MI ( P AGE 11

13 Exhibit A

14

15

16 STATE OF MICHIGAN IN THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the joint emergency complaint and request for declaratory ruling of Quick Communications, Inc. and Zenk Group, Ltd. against AT&T Michigan regarding AT&T s refusal to process Quick s acquisition of Zenk Group s T1 customer base. Case No. U Proof of Service Gary A. Gensch, employed with Field Law Group, PLLC, being duly sworn, affirms that on the 3 rd day of October, 2008, he caused to be served a copy of the Reply of Quick Communications, Inc. and Zenk Group, Ltd. to AT&T Michigan s Response in Opposition to Complainants Request for Emergency Relief by to the addresses listed below: Lisa Bruno lb2872@att.com Jennifer Copland jcopland@dickinsonwright.com Subscribed and sworn to before me on October 3, 2008: Gary A. Gensch Tina A. Barlow Ingham County, MI My Commission Expires: September 9, 2014