Before the

Federal Communications Commission

**Washington, D.C. 20554**

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| In the Matter of               | * |   | WC Docket No. 02-362       |
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| Verizon Telephone Companies    | ) |   |                            |
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| Tariff FCC Nos. 1 & 11,        | * |   |                            |
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| Transmittal No. 232            | * |   |                            |
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**ORDER**

**Adopted: January 15, 2003 Released: February 3, 2003**

By the Commission: Commissioner Martin approving in part, dissenting in
part, and issuing a statement.

1.  In this order, we terminate the investigation into the tariff
    revisions described in Verizon Telephone Companies (Verizon) Tariff
    FCC Nos. 1 and 11, Transmittal No. 232. As discussed below, the
    investigation is moot.

2.  On August 9, 2002, Verizon filed Transmittal No. 232, revising
    certain provisions of its interstate access tariff FCC Nos. 1 and
    11, to become effective August 24, 2002.[^1] This transmittal
    introduced Packet At Remote Terminal Service (PARTS), an access
    service using Digital Subscriber Line technology. Verizon
    subsequently deferred the effective date of the subject revisions to
    September 4, 2002.[^2] On September 3, 2002, the Wireline
    Competition Bureau (the Bureau) released an order that suspended the
    tariff revisions for one day, set them for investigation, and
    imposed an accounting order.[^3] On November 18, 2002, the Bureau
    released an Order Designating Issues for Investigation in the
    proceeding.[^4] Verizon withdrew the PARTS offering on November 25,
    2002.[^5] In its transmittal withdrawing PARTS, Verizon states that
    it has no customers for the PARTS service.[^6] Verizon's withdrawal
    renders moot the Commission's investigation of Verizon's tariff
    revisions. Accordingly, we terminate the investigation of those
    revisions.

3.  ACCORDINGLY, IT IS ORDERED that, pursuant to section 204 of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204, the
    investigation and accounting order imposed by the Wireline
    Competition Bureau in CC Docket No. 02-362 with respect to the
    Verizon Telephone Companies Revisions in Tariff FCC Nos. 1 & 11,
    Transmittal No. 232, ARE TERMINATED.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

> Secretary

**STATEMENT OF\
COMMISSIONER KEVIN J . MARTIN**

*Re: Verizon Telephone Companies Tariff FCC Nos. 1 & 11, Transmittal No.
232;* **WC Docket No. 02-362**

I am disappointed that the Commission may have missed an opportunity to
promote further the deployment of broadband services to all Americans.

Last summer, Verizon attempted to introduce a new service (Packet At
Remote Terminal Service "PARTS") that would have provided new entrants
with another option to use Verizon's network to provide competitive high
speed internet access service to residential customers. This generally
available service offering would have enabled competitors to maintain
access while facilitating Verizon's attempt to provide DSL service to
more residential customers. By using recently deployed network
facilities, Verizon was "extending the reach" of its existing broadband
network to serve remote end-users.[^7]

In making this voluntary offering, Verizon sought to recover the costs
of providing competitors with access to its new next generation Digital
Loop Carrier ("NGDLC") network by pricing the service at its incremental
cost. Without full Commission input, the Wireline Competition Bureau
("Bureau") noted that it is more appropriate to require Verizon to price
this service at the total element long-run incremental cost ("TELRIC")
standard.

On November 18, 2002, the Bureau issued a detailed order designating the
PARTS service for investigation. One week later, Verizon decided to
withdraw the PARTS service as a generally available offer, and instead
make such offering available only on a private carriage basis tailored
to specific individual requests by new entrant carriers.

I am disappointed with Bureau's unilateral action in this tariff
investigation. As I have stated previously, the TELRIC pricing formula
provides incumbent service providers with an insufficient return on new
investment capital for new infrastructure. Given the nature of this
voluntary service offering, the Commission missed a unique opportunity
here to take a more deregulatory approach and provide the incumbent with
greater pricing flexibility. Such flexibility provides the type of
economic incentives necessary for service providers to invest in and
deploy new network infrastructure that will make broadband services
available to more American consumers.

This agency's heavy handed regulatory approach fails to recognize our
own data that acknowledges Cable as the dominant provider of residential
high speed internet access services. Consistent with recent admonitions
from the courts and as I have stated previously, the Commission has no
choice but to recognize this fact as it decides whether incumbent DSL
providers should be treated as dominant carriers when they provide high
speed Internet access services in competition with Cable.

This agency's apparent desire to continue to impose legacy
regulation---and an unaltered TELRIC pricing regime\--on all new
broadband network investment and infrastructure has effectively shut
down an incumbent's effort to make such facilities generally available
to new competitors at prices that allow the ILEC to recover a sufficient
return on investment. The long-term consequences of affirming this
policy is only to further delay investment and deployment of facilities
necessary to provide Americans in all regions of the country with
broadband services.

[^1]: Verizon Telephone Companies Transmittal No. 232, Tariff FCC Nos. 1
    and 11 (filed Aug. 9, 2002).

[^2]: Verizon Telephone Companies Transmittal No. 236, Tariff FCC Nos. 1
    and 11 (filed Aug. 23, 2002).

[^3]: *Verizon Telephone Companies Tariff FCC Nos. 1 & 11, Transmittal
    No. 232*, Order, 17 FCC Rcd 16529 (Wireline Comp. Bur. 2002).

[^4]: *Verizon Telephone Companies Tariff FCC Nos. 1 & 11, Transmittal
    No. 232*, WCB Docket No. 02-362, Order Designating Issues for
    Investigation, 17 FCC Rcd 23598 (Wireline Comp. Bur. 2002).

[^5]: Verizon Telephone Companies, Transmittal No. 266, Tariff FCC Nos.
    1 and 11 (filed Nov. 25, 2002).

[^6]: *Id*.

[^7]: ^1^ *Verizon Telephone Companies Tariff FCC Nos. 1 & 11,
    Transmittal No. 232,* Order Designating Isues for Investigation, DA
    02-3196, WC Docket 02-362, (rel. Nov. 18, 2002).