Application by Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions), Verizon Global Networks Inc., and Verizon Select Services Inc., Pursuant to Section 271 of the Telecommunications Act of 1996, For Authorization To Provide In-Region, InterLATA Service in the State of Maine

AGENCY:

Federal Communications Commission.

ACTION:

Notice.

SUMMARY:

In this document, the Commission grants the section 271 application of Verizon New England Inc., et al. (Verizon) for authority to enter the interLATA telecommunications market in the state of Maine. The Commission grants Verizon's application based on its conclusion that Verizon has satisfied all of the statutory requirements for entry, and opened its local exchange markets to full competition.

DATES:

Effective July 1, 2002.

FOR FURTHER INFORMATION CONTACT:

Christine Newcomb, Attorney, Wireline Competition Bureau (WCB), at (202) 418-1573 or via the Internet at cnewcomb@fcc.gov. The complete text of this MO&O is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. Further information may also be obtained by calling the Wireline Competition Bureau's TTY number: (202) 418-0484.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Memorandum Opinion and Order (MO&O) in CC Docket No. 02-61, FCC 02-187, adopted June 18, 2002, and released June 19, 2002. This full text may be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com. It is also available on the Commission's website at http://www.fcc.gov/Bureaus/Common_Carrier/ in-region_applications/verizon_vt/welcome.html.

Synopsis of the Order

1. History of the Application. On March 21, 2002, Verizon filed an application (Maine Application), pursuant to section 271 of the Telecommunications Act of 1996, with the Commission to provide in-region, interLATA service in the state of Maine.

2. The Maine Commission's Evaluation. The Maine Public Utilities Commission (Maine Commission) conducted a comprehensive evaluation of Verizon's compliance with section 271, which included two days of evidentiary hearings. The Maine Commission concluded that Verizon met the checklist requirements of section 271(c) and has taken the appropriate steps to open the local exchange and exchange access markets in Maine in accordance with standards set forth in the Act. Consequently, the Maine Commission recommended that the Commission approve Verizon's in-region, interLATA entry in its (April 10, 2002) evaluation of the Maine Application.

3. The Department of Justice's Evaluation. The Department of Justice filed its evaluation of Verizon's Maine Application on April 25, 2002, and recommended approval of the Maine Application.

Primary Issue in Dispute

4. Checklist Item 2—Unbundled Network Elements—Pricing. Checklist Item 2—Unbundled Network Elements—Pricing. Based on the record, we find that Verizon's Maine UNE rates are just, reasonable, and nondiscriminatory as required by section 251(c)(3), and are based on cost plus a reasonable profit as required by section 252(d)(1). Thus, Verizon's Maine UNE rates satisfy checklist item 2. The Commission has previously held that it will not conduct a de novo review of a state's pricing determinations and will reject an application only if either “basic TELRIC principles are violated or the state commission make clear errors in the actual findings on matters so substantial that the end result falls outside the range that a reasonable application of TELRIC principles would produce.” The Maine Commission concluded that Verizon's UNE rates satisfied the requirement of checklist item 2. While we have not conducted a de novo review of the Maine Commission's pricing determinations, we did receive comments concerning two aspects of Verizon's Maine UNE pricing; unbundled local switching rates and the Daily Usage File (DUF) rate.

5. After carefully reviewing these comments, we conclude that, with respect to switching rates, the Maine Commission followed basic TELRIC principles and that the record does not support a finding that the Maine Commission committed clear error in adopting switching rates using the default cost allocation contained in the Synthesis Model. We also conclude that claims concerning Verizon's DUF rate are without merit or premature, and that a DUF rate of zero is an appropriate interim rate. For other rates, because the Maine Commission did not conduct a TELRIC analysis in all circumstances, we compared Verizon's Maine loop and non-loop rates to recently adopted New York rates and find that these rates satisfy our benchmark analysis. Thus, we conclude that Verizon's Maine UNE rates satisfy the requirements of checklist item 2.

6. The Commission also concludes that Verizon meets its obligation to provide access to its operations support systems (OSS)—the systems, databases, and personnel necessary to support the network elements or services. Nondiscriminatory access to OSS ensures that new entrants have the ability to order service for their customers and communicate effectively with Verizon regarding basic activities such as placing orders and providing maintenance and repair services for customers. The Commission finds that, for each of the primary OSS functions (pre-ordering, ordering, provisioning, maintenance and repair, and billing, as well as change management and technical assistance), Verizon provides access that enables competing carriers to perform the functions in substantially the same time and manner as Verizon or, if there is not an appropriate retail analogue in Verizon's systems, in a manner that permits an efficient competitor a meaningful opportunity to compete.

7. Pursuant to this checklist item, Verizon must also provide nondiscriminatory access to network elements in a manner that allows other carriers to combine such elements. Based on the evidence in the record, and upon Verizon's legal obligations under interconnection agreements, Verizon demonstrates that it provides to competitors combinations of already-combined network element as well as nondiscriminatory access to unbundled network elements in a manner that allows competing carriers to combine those elements themselves.

Other Checklist Items

8. Checklist Item 4—Unbundled Local Loops. Verizon has adequately demonstrated that it provides unbundled local loops as required by section 271. More specifically, Verizon establishes that it provides access to stand alone xDSL-capable loops and high-capacity loops. Also, Verizon provides voice grade loops, both as new loops and through hot-cut conversions, in a nondiscriminatory manner. Finally, Verizon has demonstrated that it has a line-sharing and line-splitting provisioning process that affords competitors nondiscriminatory access to these facilities.

9. In the Commission's overview of Verizon's performance data, it relies primarily on Maine performance data (supplemented with Massachusetts data) collected and submitted by Verizon under the state-adopted carrier-to-carrier standards. Verizon provides evidence and performance data establishing that it can efficiently furnish unbundled loops, for the provision of both traditional voice services and various advanced services, to other carriers in a nondiscriminatory manner.

10. Checklist Items 1, 3, 5-14. An applicant under section 271 must demonstrate that it complies with checklist item 1 (interconnection), item 3 (poles, ducts, conduits, and rights of way), item 5 (transport), item 6 (unbundled local switching), item 7 (911/E911 access and directory assistance/operator services), item 8 (white page directory listings), item 9 (numbering administration), item 10 (databases and associated signaling), item 11 (number portability), item 12 (local dialing parity), item 13 (reciprocal compensation), and item 14 (resale). Based on the evidence in the record, and in accordance with Commission rules and orders concerning compliance with section 271 of the Act, the Commission concludes that Verizon demonstrates that it is in compliance with these checklist items in Maine. The Maine Commission also concluded that Verizon complies with the requirements of each of these checklist items.

Other Statutory Requirements

11. Compliance with Section 271(c)(1)(A). The Commission concludes that Verizon demonstrates that it satisfies the requirements of section 271(c)(1)(A) based on the interconnection agreements it has implemented with competing carriers in Maine. The record demonstrates that competitive LECs serve some business and residential customers using predominantly their own facilities.

12. Section 272 Compliance. Verizon has demonstrated that it complies with the requirements of section 272. Significantly, Verizon provides evidence that it maintains the same structural separation and nondiscrimination safeguards in Maine as it does in Pennsylvania, New York, Connecticut, and Massachusetts—states in which Verizon has already received section 271 authority.

13. Public Interest Analysis. The Commission concludes that approval of this application is consistent with the public interest. The Commission views the public interest requirement as an opportunity to review the circumstances presented by the application to ensure that no other relevant factors exist that would frustrate the congressional intent that markets be open, as required by the competitive checklist, and that the applicant's entry into the in-region, interLATA market will therefore serve the public interest as Congress expected. While no one factor is dispositive in this analysis, the Commission's overriding goal is to ensure that nothing undermines its conclusion that markets are open to competition.

14. The Commission finds that, consistent with its extensive review of the competitive checklist, barriers to competitive entry in the local market have been removed and the local exchange market today is open to competition. The Commission also finds that the record confirms its view that a BOC's entry into the long distance market will benefit consumers and competition if the relevant local exchange market is open to competition consistent with the competitive checklist. The Commission also finds that the performance monitoring and enforcement mechanisms developed in Maine, in combination with other factors, provide meaningful assurance that Verizon will continue to satisfy the requirements of section 271 after entering the long distance market.

15. Section 271(d)(6) Enforcement Authority. Working with the Maine Commission, the Commission intends to monitor closely post-entry compliance and to enforce the provisions of section 271 using the various enforcement tools Congress provided in the Communications Act.