III. Comments on Petition

Comments on Verizon's petition were filed jointly by AT&T Communications of California, Inc. (AT&T) and MCI Corp. (MCI), and jointly by a group of small competitive local exchange carriers (CLCs), namely Anew Telecommunications Corp d/b/a Call America, DMR Communications, Navigator Telecommunications LLC; and Tri-M Communications d/b/a TMC Communications (collectively the "small CLCs").

AT&T/MCI contend that Verizon's petition should be denied for several reasons. First, the petition fails to establish new material facts requiring modification of D.03-03-033 because the Commission did not rely on New Jersey rates to the extent alleged by Verizon. Rather, AT&T/MCI explain that the Commission compared Synthesis Model results for California and New Jersey and modified the New Jersey rates upwards wherever modeling results indicated higher costs in California. Therefore, they argue that although New Jersey has changed a few modeling inputs, this does not mean the Commission is required to modify its interim rates.

Second, AT&T/MCI maintain it is not necessary for the Commission to stop its efforts to set permanent UNE rates for Verizon by opening a proceeding to modify interim rates when Verizon's interim rates are subject to true-up and it is not harmed by the current level of interim rates.

Third, AT&T/MCI argue the Commission cannot accept Verizon's unverified calculations that convert New Jersey rates into new interim rates for Verizon California. According to AT&T/MCI, recent New Jersey UNE rate changes are interim and still under review for accuracy. Finally, they suggest that if there is any fine-tuning of interim UNE rates, it should involve lowering the 22% shared and common cost markup factor incorporated into the interim rates to the 8% level adopted in New Jersey.

The small CLCs oppose Verizon's petition for many of the same reasons, emphasizing Verizon's petition will unnecessarily delay the permanent UNE rate proceeding and disagreeing with Verizon's assertions that interim rates based on initial New Jersey rates are no longer valid. In addition, the small CLCs disagree with Verizon's claims that it is harmed by the current interim rates, particularly given Verizon's statements in other forums that it will maintain UNE rates at current levels. Specifically, the small CLCs cite statements by Verizon to the Commission that it would not immediately raise rates on UNEs as a result of the FCC's TRO and that it would maintain current UNE rates for mass market UNE-Platform customers for five months. (Small CLC response, 6/21/04, p. 7.)