III. CONCLUSION

For the reasons stated above, D.08-04-055 is modified to reflect the clarifications specified below. The application for rehearing D.08-04-055, as modified, is denied because no legal error has been shown. The motion for stay is also denied.

THEREFORE, IT IS ORDERED that:

1. D.08-04-055 is modified as follows:

a. Page 13, second sentence of the second full paragraph

(beginning with: "AT&T asserts..."), is deleted as well as the

statement "We disagree." Insert:

Under the TRRO, and as we recognized in D.06-02-035,⁷⁷ once a wire center is determined to meet the criteria for unbundling (i.e., as non-impaired), it can not be changed back to impaired status even though market conditions may be dynamic.⁷⁸

b. Page 29, Conclusion of Law Number 6 is revised to state:

Under the TRRO, once a wire center is determined to meet the criteria for unbundling it can not be changed even though market conditions may be dynamic.

c. Page 24, second full sentence of the first paragraph, replace the word "Finally," with the word "Third."

d. Page 24, first paragraph, add the following final sentence:

Finally, AT&T notes that OP 3(c) is unnecessary and inconsistent with established Commission rules and dispute resolution procedures.

e. Page 24, second paragraph, add a first sentence to state:

AT&T is correct that OP 3(c) of the POD is unnecessary. Applicable procedures already exist under the TRRO, D.06-01-043, and our Rules of Practice and Procedure. Accordingly, we will delete that provision. In addition, our order resolves the other issues raised by AT&T's appeal based on the parties' arguments and the facts already in the record of this proceeding.

2. The application for rehearing of D.08-04-055, as modified, is hereby denied.

3. This proceeding, Case No. (C.) 06-03-023, is closed.

This order is effective today.

Dated September 18, 2008, at San Francisco, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners

⁷⁷ See Petition of Verizon California Inc. (U 1002 C) for Arbitration of an Amendment to Interconnection Agreements with Competitive Local Exchange Carriers and Commercial Mobile Radio Service Providers in California Pursuant to Section 252 of the Communications Act of 1934, as Amended, and the Triennial Review Order ("Decision Adopting Amendment To Existing Interconnection Agreement') [D.06-02-035], supra, (2006) 2006 Cal.PUC LEXIS 47, __ Cal.P.U.C.3d __, p. 47 & fn. 21 (slip op.).

⁷⁸ TRRO ¶ 167, fn. 466 stating in pertinent part:

To facilitate application of a federal standard, we rely on objective criteria that are administrable and verifiable, but could be disruptive as applied to a dynamic market if modest changes in competitive conditions resulted in the reimposition of unbundling obligations. Therefore, once a wire center satisfies the standard for no DS1 loop unbundling, the incumbent LEC shall not be required in the future to unbundle DS1 loops in that wire center. Likewise, once a wire center satisfies the standard for no DS3 loop unbundling, the incumbent LEC shall not be required in the future to unbundle DS3 loops in that wire center.

As we have previously concluded: "...a state commission is preempted from ordering unbundling in those instances where the FCC has determined that no unbundling should be required." (See D.06-02-035, supra, 2006 Cal.PUC LEXIS 47, __ Cal.P.U.C.3d__ at p. 8 (slip op.); see also TRRO ¶ 203.)