VIII. Issue 3 - Collocation Recurring and Nonrecurring Charges

Collocation is the actual placement of a competitive local carrier's equipment in a Roseville central office.

A. Positions

Roseville seeks to set its collocation recurring and nonrecurring charges based on Pacific's factor-adjusted TELRIC study results. Covad seeks to set Roseville's collocation recurring and nonrecurring charges equivalent to Pacific's system-wide collocation charges.

B. Discussion

Unlike UNEs being impacted by a majority of primary rate elements, collocation is impacted by only two primary rate elements. These rate elements are land and building investment and labor. The investment element is a function of cost for the central office building and associated land. The labor element is a function of central office plant operating and testing costs.

Although Roseville's proposed collocation charges are based on a TELRIC study, its application of a factor to compensate for the differences between it and Pacific's service territory and operations substantially overstate Roseville's forward-looking collocation cost. This is because Roseville could not substantiate that real estate values in its service area are substantially higher than the real estate values in Pacific Bell's service territory. In addition, Roseville's labor rates are comparable to Pacific in the surrounding area but lower than Pacific's urban labor rates.

Roseville's proposal to use factor-adjusted TELRIC proposed collocation charges do not reasonably reflect the difference between Roseville and Pacific's collocation operations. Absent a Roseville bottoms-up TELRIC study or a comparable Pacific wire center TELRIC study, the appropriate proxy for Roseville's collocation recurring and nonrecurring charges should be Pacific's system-wide average, as proposed by Covad.