VII. DS-3 Loop Rates

XO proposes that DS-3 loop rates be deaveraged. According to XO, CLCs are tremendously disadvantaged by an average rate for DS-3 loops, when SBC-CA itself is providing DS-3 retail services at deaveraged prices. Furthermore, XO contends that adopting deaveraged DS-3 UNE loop rates will not prejudice SBC-CA because SBC-CA's cost studies have already calculated DS-3 loop costs by deaveraged zones. (XO, 2/7/03, p. 47.)

SBC-CA opposes this proposal on the basis the proceeding was only intended to review cost changes for the UNEs at issue, and not address rate structures. Nevertheless, SBC-CA confirms that its cost studies are able to calculate deaveraged costs for DS-3 loops.

We will adopt XO's proposal for deaveraged DS-3 rates, because SBC-CA's model calculates DS-3 costs on a deaveraged basis and because SBC-CA has not presented any economic rationale to leave the rates averaged. The information clearly exists to adopt DS-3 rates for three zones, and we will do so.

In modeling DS-3 related costs, we found that HM 5.3 consistently yielded costs that were higher than those requested by SBC-CA. We believe that this result arises from flaws in HM 5.3, and we do not find it reasonable to set rates above those requested by SBC-CA. Thus, for UNEs involving DS-3, we simply adopt SBC-CA rates. This affects rate elements for DS-3 Loops, Unbundled Dedicated Transport involving DS-3, and DS-3 Entrance Facility.