ALJ/KAJ/tcg * DRAFT H-2

10/24/2002

Agenda ID #623

Decision

Rulemaking on the Commission's Own Motion to Govern Open Access to Bottleneck Services and Establish a Framework for Network Architecture Development of Dominant Carrier Networks.	Rulemaking 93-04-003 (Filed April 7, 1993)
Investigation on the Commission's Own Motion into Open Access and Network Architecture Development of Dominant Carrier Networks.	Investigation 93-04-002 (Filed April 7 1993) (Permanent Line Sharing Phase)

INTERIM OPINION ESTABLISHING PERMANENT RATES FOR THE

HIGH-FREQUENCY PORTION OF THE LOOP

(See Appendix A for a List of Appearances)

TABLE OF CONTENTS

Title Page

INTERIM OPINION ESTABLISHING PERMANENT RATE FOR THE
HIGH-FREQUENCY PORTION OF THE LOOP.............................................................1

1. Summary 2

2. Background 3

3. The D.C. Circuit's USTA Decision Does Not Preclude This
Commission from Exercising its Authority under Section 251(d)(3) 5

3.1 Background 5

3.2 Parties' Positions 6

3.3 Discussion 11

4. There Should be a Monthly Recurring Price for Use of the High
Frequency Portion of the Loop 16

4.1. Parties' Positions 16

4.1.1. Rhythms' Links, Inc.'s (Rhythms) Position 16

4.1.2 TURN's Position 18

4.1.3 ORA's Position 21

4.1.4 Pacific's Position 22

4.1.5 Verizon's Position 24

4.1.6 Discussion 25

5. What is the Appropriate Price for Use of the HFPL? 28

5.1. Parties' Positions 28

5.1.1 TURN's Position 28

5.1.2 ORA's Position 33

5.1.3 Pacific's Position 33

5.1.4 Verizon's Position 38

5.1.5 Discussion 40

6. Having a Positive Monthly Recurring Rate for the HFPL Results
in Over-Recovery of Loop Costs 51

6.1 Parties' Positions 51

6.1.1 TURN's Position 51

6.1.2 ORA's Position 53

6.1.3 Rhythms' Position 53

6.1.4 Pacific's Position 53

6.1.5 Verizon's Position 55

6.1.6 Discussion 56

7. True-up and Treatment of Balances in Memoranda Accounts 62

8. Limited Exogenous (LE) Factor Treatment 64

9. Comments on Draft Decision 66

Findings of Fact .......................................................................................................66

Conclusions of Law...................................................................................................70

INTERIM ORDER....................................................................................................71

Appendix A - List of Appearances

INTERIM OPINION ESTABLISHING PERMANENT RATES FOR THE

HIGH-FREQUENCY PORTION OF THE LOOP

1. Summary

This decision adopts permanent Unbundled Network Element (UNE) rates for the High-Frequency Portion of the Loop (HFPL)¹ for both Pacific Bell Telephone Company (Pacific) and Verizon California Inc. (Verizon). The rate for Pacific is $2.48 per loop per month, and for Verizon, $3.00. The methodology adopted allows the rate for the HFPL to be modified, based on changes in adopted loop rates.

The Interim Line Sharing (ILS) decision determined that there should be a true-up, from the interim rates adopted in the ILS proceeding, and the final rates adopted in this Permanent Line Sharing (PLS) Phase. Therefore, Pacific is required to refund the difference between the $5.85 monthly recurring rate adopted in the ILS proceeding, and the $2.48 (or deaveraged loop rates) adopted in this decision to the Competitive Local Exchange Carrier (CLEC) which purchased each loop. Since this decision retains the $3.00 rate adopted for Verizon in the Interim phase, no true-up is required for Verizon.

We find that establishing a separate rate for the HFPL allows Pacific and Verizon to over-recover their loop costs, since they are currently recovering the full cost of the loop-including the HFPL portion-through rates for their existing tariffed services. Pacific and Verizon will be required to return the balances in their memoranda accounts and future HFPL revenues to ratepayers using Pacific's Rule 33 and Verizon's A-38 surcharge/surcredit mechanisms.