The California PUC has laid down the gauntlet to SBC and Sage Telecom to file their interconnection agreement under section 252 of the Telecommunication Act. The letter is here.

To my understanding, both SBC and Sage have refused to do so, Sage going so far as to say it will rescind the agreement if it has to be filed. Qwest and Verizon have also publicly stated that they will resist any directions to file with the states.

I am not wholly unsympathetic to the state position here, to the extent they are inclined to do things by rote. If it looks like an interconnection arrangement, then they think they have the right to review it. However, the states are missing that this insistence on filing -- much like the pick and choose rule -- utterly destroys any incentives for parties to reach privately negotiated arrangements. If everything must be filed and subject to an abstract "non-discrimination" requirement, then nothing can be negotiated in advance by the parties. In the end, the incumbent in particular can do nothing but come up with a single, standard "take it or leave it" standard offer.

Of course, a cynic would say that this is exactly what the states want -- to prevent any private negotiation and keep their hands deeply involved in a regulatory/supervisory process where they dictate the interconnection rights, terms and prices. Oh, wait, I am a cynic.