Obtain supporting documentation

· The Service Provider must obtain copies of supporting documentation (e.g., sales reports) to substantiate transaction qualifies for PMP.

· For 272/ASA transactions, the Service Provider includes copies of supporting documentation as part of the Officer Certification Package.

Section I. A. (continued)

· The Service Provider must maintain copies of PMP support for audit and regulatory purposes.

C. Higher of Fully Distributed Cost (FDC) or Fair Market Value (FMV)

When a product or service offering does not meet the pricing criteria for tariff or prevailing market price, a comparison of fully distributed cost to fair market value must be completed to determine the transaction price.

Calculate Fully Distributed Cost (see Section III)

· The Service Provider must determine the pricing assumptions associated with the service to be provided, including identification of direct and indirect cost.

· In accordance with Affiliate Billing CAI 103 located on the Verizon intranet site http://baimsa.bellatlantic.com/corporate/fincomp/cb/fun/abhtml/html/abpolicy.htm, the Service Provider must contact Affiliate Billing to obtain calculation of FDC. Generally, Affiliate Billing will use actual cost to calculate FDC. However, depending on the nature and complexity of the transaction, it may be necessary for Affiliate Billing to engage the Service Cost Department to calculate FDC.

· Affiliate Billing retains the FDC supporting documentation for audit and regulatory purposes. The definition of supporting documentation as it relates to this Pricing Guideline refers to primary workpapers that develop the calculation of the amount to be billed, including references to the source documents supporting the calculation. Source documents include, but are not limited to:

· Account balances in a company's general ledger, internal or annual report

· Annual loading rate study

· Accounts payable file with specific voucher reference, if applicable

· Payroll file with specific reference to an employee, if applicable

· Supporting workpapers that develop the calculation of percent of non labor expenses to labor expenses

· Subject Matter Expert advice or opinion

Obtain Fair Market Value (see Section IV)

· The Service Provider must obtain Fair Market Value and provide the supporting documentation to Affiliate Billing for billing comparison.

· Affiliate Billing retains FMV supporting documentation for audit and regulatory purposes.

Compare Fully Distributed Cost to Fair Market Value (see Section V)

· Affiliate Billing compares results of the Fully Distributed Cost calculation to the FMV, using the higher result as the transaction price.

· For 272/ASA transactions, the Service Provider includes copies of supporting documentation as part of Officer Certification Package.

I. B. Pricing of products or services provided from a non-regulated affiliate to the ILEC

1. The business entity providing the service (Service Provider) must contact their business unit attorney and forward a written notification of the proposed transaction to the Affiliate Interest Compliance Office ("AICO").

2. The Service Provider applies the FCC pricing hierarchy to determine the pricing category for the product or service offering as follows:

A. Tariff

When a product or service is currently offered by a non-regulated affiliate pursuant to a tariff, the ILEC receives the service at the same tariff rate.

Identify and obtain tariff pages

· Products or services pursuant to a tariff provided by Section 272 and Advanced Services Affiliates require the Service Provider to obtain a copy of applicable tariff pages and include them as part of the Officer Certification Package and Public Disclosure.

B. Prevailing Market Price

When a product or service offering is assessed to determine if it meets the (PMP) criteria as outlined in Section II, the following steps must be followed: