3. Regulatory Background
This proceeding is the fourth triennial review of the New Regulatory Framework (NRF) for SBC and Verizon. The order instituting this proceeding divided the proceeding into three Phases. Phase 1, which is now complete, addressed factual issues related to an audit of Verizon of limited scope. Phase 2, which is now complete, addressed factual issues related to (1) an audit of SBC, and (2) how service quality for SBC's and Verizon's end-users has fared under NRF. The purpose of Phase 3, which has not yet started, is to review and possibly revise NRF based, in part, on the record developed in Phases 1 and 2.3
Phase 1 concluded with the issuance of D.02-10-020. Among other things, D.02-10-020 directed ORA to conduct a comprehensive audit of Verizon covering the years 1999 through 2002. Decision 02-10-020 also required the scope of ORA's audit to include the following4:
_ All of Verizon's NRF monitoring reports for 1999 - 2002.
_ Any reports that Verizon submitted to the Federal Communications Commission (FCC) that contain information about service quality in California.
_ Affiliates' books and records.
_ Such other matters that might arise in Phases 2 and 3.
Decision 02-10-020 directed ORA to submit an audit report in the next triennial review of NRF. The Decision also authorized ORA to hire CPAs to conduct the audit, ordered Verizon to pay for the CPAs, and allowed Verizon to seek recovery of these costs.5 On January 19, 2005, ORA issued a request for proposal (RFP) to begin the process of hiring CPAs to conduct the audit.
As mentioned previously, the purpose of the upcoming Phase 3 is to review and possibly revise NRF. However, the Commission is presently considering in R.05-04-005 whether to adopt a uniform regulatory framework for most telecommunications utilities, including SBC and Verizon. Thus, many of the key policy issues previously designated for Phase 3 will now be considered in R.05-04-005. We anticipate that the scope of Phase 3 will be revised to reflect R.05-04-005 by a Commission decision or an Assigned Commissioner ruling.
3 As explained in more detail, infra, many of the key Phase 3 issues will be addressed in Rulemaking (R.) 05-04-005.
4 D.02-10-020, mimeo., pp. 78 - 80 [Conclusions of Law (COLs) 41, 42, 43, 44, and 54] and p. 83 [OPs 8 and 9].
5 D.02-10-020, mimeo., pp. 83 - 84 [OPs 11 and 13].
