8. Cost Issues are Complex

In seeking parties' input on CALTEL's proposed rules, we learned that the ILECs and CALTEL have disparate views on who should pay to maintain the network, the costs involved and how to calculate them, and whether we should have CLECs purchase portions of the network the ILECs no longer need. We are well aware of the time consuming and complex disputes that arose over cost and pricing of UNEs, both at this Commission and around the country.⁵⁸

Evidence the parties submitted in this record indicates that any effort to determine the cost to an ILEC of preserving aspects of the copper network that it no longer needs could be equally difficult. CALTEL asserts that UNE pricing or special access rates for loops approximates the ILEC costs of maintaining a retired copper loop.⁵⁹ While Total Element Long Run Incremental Cost - the UNE standard - might be the appropriate cost basis according to the CLECs, the ILECs certainly would dispute this methodology and assert that many other costs should be included in any price to competitors of maintaining a network the ILECs no longer use. The ILECs, for example, argue that the existing UNE prices for copper loops are based on the total element long run incremental cost (TELRIC) model, which represents the costs of building the most efficient forward-looking network and not the cost of replacing copper networks with more copper plant.⁶⁰ Further, neither CALTEL nor the ILECs expressed interest in having the Commission broker a purchase by competitors of copper facilities that the ILECs no longer need.

Thus, any proceeding on this topic could require extensive litigation on how to compute costs. We are reluctant to expend the substantial resources and time that would be required to take on this task without a clear showing of need. Instead, we believe that the process we set forth here will encourage the parties to negotiate privately to reach an agreement on access to the copper loop, or alternative facilities.

⁵⁸ See The Echoes of Forgotten Footfalls: Telecommunications Mergers at the Dawn of the Digital Millennium, 43 Hous. L. Rev. 1311, 1330 (2007) ("For its part, TELRIC [the price CLECs ultimately were required to pay ILECs for UNEs] has a storied history.").

⁵⁹ CALTEL Opening Comments at 10, 28.

⁶⁰ Verizon Opening Comments, Appendix A at ¶¶ 97-98 (noting that any pricing methodology that would apply to preservation of copper plant would need to account for the long run costs of replacing copper plant with new copper). Additionally, the ILECs note that once they begin to migrate more existing customers off copper plant, the "fill factor" for ILEC plant will be substantially lower with retired copper plant than for plant providing service to both ILEC and CLEC customers; therefore, the cost of providing UNEs on retired copper plant must reflect actual CLEC-only usage. See Id. at Appendix A at ¶ 100.