**SEPARATE STATEMENT OF\
COMMISSIONER MICHAEL J. COPPS**

Re: *Federal-State Joint Conference on Accounting Issues* (WC Docket No.
02-269),

Recommendation

One year ago, I expressed enthusiasm when the Joint Conference on
Accounting was first convened. In light of the accounting depredations
that have haunted the telecommunications industry and the economy as a
whole, I believed then---and believe now---that review and attention
from both state and federal authorities is absolutely essential.

Today, the Joint Conference offers a Recommendation that is a roadmap.
It provides the Commission with a set of directions that address where
and how it should head next in its accounting review. The Commission now
must move swiftly to convert this Recommendation into a Notice of
Proposed Rulemaking.

Through participation in this group, it has become clear to me that it
is vitally important that the Commission ensure that the States have the
accounting information they need to do their jobs. Both the States and
the Commission use reported data to develop an understanding of the
plant, revenue and expenses of carriers and to enable comparisons among
companies and over time. States also use it to develop prices for
network elements, develop prices for resold services and conduct
ratemaking proceedings. In short, if the Commission's periodic
streamlining efforts strip the States of the uniform accounting data
they need, they will be unable to carry out their statutory
responsibilities.

I regret that this fact was not as lucid to the Commission as it should
have been when it embarked on the *Phase III Further Notice of Proposed
Rulemaking*. At the time, the Commission suggested that we should only
collect accounting information for which there is a federal purpose,
notwithstanding any state need for the data. Yet we have entered an era
when more information---not less---is necessary to ensure that consumers
are confident and investors secure. We have a duty to ensure that the
required system of accounts provides both state and federal regulators
with the information they need to discharge their required tasks.

To this end, I am heartened by the approach taken in the Joint
Conference Recommendation. The Recommendation specifically rejects the
federal purpose standard and approaches its review under the broad
charge of the Order convening the Joint Conference. This mandate directs
the Joint Conference to evaluate accounting requirements that both state
and federal regulators need and to further the development of improved
regulatory accounting and related requirements. I believe the approach
taken in the Recommendation is the right way to go and the right thing
to do.

Although the progress we make today is good news, there is *much more
work to be done*. This Recommendation addresses only a narrow subset of
the mandate. We have more fundamental challenges ahead as we work to
live up to our charge to ensure that data filed by carriers are
adequate, truthful and thorough.

I believe the Joint Conference should move next to assess broader issues
that impact regulatory accounting and reporting reliability. I hope we
can start by rigorously reviewing the scope of the authority granted to
the Commission by Congress. In particular, I would like the Joint
Conference to consider how use of the Commission's authority to inquire
into the business management of carriers under Section 218 might have
helped us to identify recent corporate governance problems ranging from
capacity swaps to tactics to circumvent access charges. The Commission
also has specific requirements that carriers must comply with concerning
continuing property records. I hope we can take a hard look at how the
Commission can undertake regular continuing property record audits to
ensure that carriers maintain equipment in compliance with Commission
rules and verify that property is recorded in proper accounts. Finally,
I hope the Joint Conference can serve as a vehicle for jumpstarting
discussion with other agencies at the state and federal level with
interest in the soundness of regulatory accounting and reporting
requirements. Such discussion could help inform the recommendations of
the Joint Conference to the Commission.

I commend my state and federal colleagues on the Joint Conference for
their extraordinary effort. I commend them for their commitment to
thinking through the thorny issues of our accounts, subaccounts,
separate affiliate rules and reporting requirements. This group tackled
issues as complex as they come. They are devoted to ensuring we craft an
accounting regime that will best serve the public interest. We all
benefit from their contributions and hard work. I also wish to commend
the leadership of our Chairman, FCC Commissioner Martin. Commissioner
Martin has encouraged the Joint Conference to act expeditiously on the
specific accounting rules before us and also to look more broadly at
what needs to be done so that our accounting rules are up to the needs
and the high standards of corporate governance that the American people
have a right to expect in light of events over the past few years.