3. Verizon's Proposal for Extension of the Shared Asset Methodology to Additional Service Company Affiliates

In this application, Verizon seeks authorization to extend the shared asset methodology approved in D.04-03-038 to several new service company affiliates created as part of an ongoing corporate reorganization, as well as to other new service company affiliates that may be formed in future corporate reorganizations.

Verizon states that it is undergoing a nationwide service company reorganization intended to streamline administrative functions across the Verizon corporate family and to promote greater administrative efficiency. As part of this reorganization, Verizon will transfer certain functions performed by Service Corp., CSI, and VDSI to other service companies, some of which exist and others of which are new or are being formed. After its corporate reorganization, Verizon proposes to apply the shared asset methodology to the following service company affiliates, as identified in Exhibit A to the application:

· Verizon Services Organization - Verizon Services Organization will provide a variety of services across business segments, including: corporate real state, corporate purchasing, logistics, electronic repair services, supply chain systems and processes, supplier quality and supplier diversity, accounting operations and receivables, human resources for Verizon Telecom, and corporate fleet and aviation. Verizon Services Organization will include the following legal entities:

o Verizon Corporate Services Corp.

o Verizon Corporate Services Group Inc. (formerly GTE Service Corp.)

o New Legal Entity #4

· Verizon Domestic Telecom Service Companies - These companies will provide managerial and centralized staffing services to Verizon affiliates, including: administration, advertising, engineering and operations support, corporate communications, finance, marketing, customer services support, public coin operator services support, and professional and computer processing services. The Verizon Domestic Telecom Service Companies will include the following legal entities:

o Verizon Data Services Inc.

o Verizon Services Corp.

o Verizon Services Organization Inc. (formerly GTE Consolidated Services Inc. (CSI))

· The Verizon Corporate Services Companies - The Verizon Corporate Services Companies are administrative corporate headquarters organizations that provide certain human resources, finance, legal, public policy and external affairs, security, cash management, executive and planning, and public affairs services for Verizon affiliates. The Verizon corporate Service Companies will include the following legal entities:

o New Legal Entity #5

o New Legal Entity #6

Verizon also proposes to extend the shared asset methodology to any other new service company affiliates that may be formed in future corporate reorganizations. Verizon states that it would apply the shared asset methodology only to service company affiliates as defined by the FCC, e.g., "affiliates that exist solely to provide services to members of the carrier's corporate family."

Verizon offers to commence a shared asset study for the additional new service company affiliates, pending final approval by the Commission, and to provide the Commission with the same annual assessment and adjustment of shared asset usage for transactions with the new service company affiliates that it has previously provided for transactions with Service Corp., CSI and VDSI pursuant to D.04-03-038.