High Capacity Loops and Transport

43. In D.04-09-063, the Commission found flaws with HM 5.3 interoffice transport and high capacity loop rates and did not rely on them to set SBC's rates.

44. Unless inputs are modified, HM 5.3 produces a DS-3 loop rate more than double the rate adopted for SBC.

45. Verizon proposes significant increases to its transport and high capacity loop rates.

46. The rebuttal version of HM 5.3 contains updated inputs relating to interoffice and high capacity costing and derived from Verizon data.

47. For SBC, the Commission adopted interoffice transport rates that blend fixed and per-mile charges.

Shared and Common Cost Markup

48. Verizon proposes a 14.5% shared and common cost markup composed of three separate loading factors.

49. JC propose an overhead markup based on the relationship between corporate operations expenses and total operating revenues and using data specific to Verizon California. JC exclude retail, non-recurring costs, and other non-UNE costs from their markup calculations.

Price Floors

50. In D.03-03-033, the Commission approved interim price floors for Verizon using figures from Verizon's 1997 cost studies.

51. The FCC's Triennial Review Remand Order found that CLCs are not impaired in the deployment of switches and, therefore, eliminated the requirement that ILECs provide competitors access to unbundled mass market switching.

52. Verizon's price floor proposals are based on retail cost studies that are part of the VzCost model and use many, but not all, the same inputs and assumptions used by Verizon to propose UNE costs and prices.

53. In D.99-11-050, the Commission rejected a "sum of the UNEs" approach to setting price floors.

54. In D.04-11-022, the Commission directed the use of updated UNE rates when calculating price floors under current imputation rules. D.04-11-022 does not expand the list of MBBs.

55. The $13.94 average basic loop rate adopted in this order is 17.1% less than Verizon's 1997 UNE rate of $16.81.