4.2.1 TELRIC and True-Down Provisions

Joint Petitioners and others contend that the appendices and amendments must be rejected or modified, asserting that adopted rates violate federal law, state law, and FCC regulations, by failing to comply with the FCC's total element long run incremental cost (TELRIC) methodology. Joint Petitioners specifically say the adopted rates are not TELRIC compliant for the monthly recurring price for line sharing, tie cables, and jumpers. Covad argues this is also true for ILEC-owned splitters, OSS modifications, and conditioning. Further, Covad asserts that to the extent interim rates are subject to a "true-up" adjustment it is actually a "true-down" adjustment (i.e., rather than CLCs underpaying now, CLCs will overpay now and receive a refund later). Covad says that the "true-down" adjustment fails to effectuate the intent of the FCC Line Sharing Order, and does not protect CLCs' interests.

Parties are very concerned about the level of rates adopted in the interim, despite all interim rates being subject to true-up adjustment with interest. We are not persuaded, however, to reject or modify the rates for the following reasons.