DA 01-1462

June 21, 2001

**COMMON CARRIER BUREAU SEEKS COMMENTS ON**

**VERIZON SECTION 272 COMPLIANCE BIENNIAL AUDIT REPORT**

**IN CC DOCKET NO. 96-150**

Pursuant to section 271 of the Telecommunications Act of 1934, as
amended (\"Act\"),[^1] the Commission has authorized Verizon
Communications, Inc. to enter the in-region interLATA market in New York
State[^2]and in Massachusetts.[^3] Section 272 of the Act requires Bell
Operating Companies to offer in-region interLATA service through
separate affiliates that comply with certain structural,
nondiscrimination, and accounting safeguards. Section 272(d) requires a
biennial compliance audit.[^4] Pursuant to section 272, Verizon engaged
the independent auditing firm of PricewaterhouseCoopers LLP to conduct
the initial biennial compliance audit. A Federal/State biennial
oversight team was established under section 53.209(d) of the Commission
rules to oversee this biennial audit and included staff members from 13
state regulatory commissions in the Verizon region and the
Commission.[^5] On June 11, 2001, PricewaterhouseCoopers ("PWC") filed
its biennial compliance audit report with the Commission. The report
includes:

-   Report of Independent Accountants on Applying Agreed-Upon
    Procedures,

-   Verizon's Response to the Report of Independent Accountants, and

-   Observation of the Joint Federal/State Oversight Team.

Verizon has seven affiliates engaged in in-region interLATA services
and, therefore, addressed in the section 272(d) biennial audit. The
biennial compliance audit report filed on June 11, 2001 covers six of
these seven companies. The seventh company, Verizon Select Services,
Inc. ("VSSI"), is a former GTE affiliate that offers local,
long-distance, and advanced services to customers throughout the United
States. Because VSSI provides advanced services, it is also subject to
the audit requirements of the Bell Atlantic/GTE Merger Order.[^6] On
April 30, 2001, the Common Carrier Bureau extended the deadline
applicable to VSSI for filing the audit results. As a result, the
biennial compliance audit report filed on June 11, 2001 does not include
audit procedures applied with respect to VSSI. In a filing on June 18,
2001, PWC supplemented its June 11, 2001 filing with the audit results
for VSSI.

Section 272(d)(2) of the Act requires that the results of the audit be
made publicly available.[^7] We have attached the redacted version of
the initial report filed on June 11 and the supplement filed on June
18.[^8] In accordance with section 53.213(d) of the Commission's rules,
interested parties may file comments with the Commission within 60 days
after the audit report is made available for public inspection.[^9]
Accordingly, comments are due no later than August 20, 2001.

EX PARTE PRESENTATIONS

Pursuant to section 1.1206 of the Commission\'s rules, this proceeding
will be conducted as a permit‑but‑disclose proceeding in which ex parte
communications are permissible but subject to disclosure.[^10]

FILING PROCEDURES

Interested parties may file comments on the biennial audit report using
the Commission\'s Electronic Comment Filing System (ECFS) or by filing
paper copies.[^11]

Comments filed through the ECFS can be sent as an electronic file via
the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>. Generally, only
one copy of an electronic submission must be filed. If multiple docket
or rulemaking numbers appear in the caption of this proceeding, however,
commenters must transmit one electronic copy of the comments to each
docket or rulemaking number referenced in the caption. In completing the
transmittal screen, commenters should include their full name, Postal
Service mailing address, and the applicable docket or rulemaking number.
Parties may also submit an electronic comment by Internet e-mail. To get
filing instructions for e-mail comments, commenters should send an
e-mail to ecfs@fcc.gov, and should include the following words in the
body of the message, \"get form \<your e-mail address.\" A sample form
and directions will be sent in reply.

Parties who choose to file by paper must file an original and four
copies of each filing. If more than one docket or rulemaking number
appear in the caption of this proceeding, commenters must submit two
additional copies for each additional docket or rulemaking number. All
filings must be sent to the Commission\'s Secretary, Magalie Roman
Salas, Office of the Secretary, Federal Communications Commission, 445
12th Street, S.W., Washington, D.C. 20554.

Parties who choose to file by paper should also submit their comments on
diskette. These diskettes should be submitted to: Ernestine Creech, Room
6-C317 Accounting Safeguards Division, 445 12th Street, S.W.,
Washington, D.C. 20554. Such a submission should be on a 3.5-inch
diskette formatted in an IBM compatible format using Word or compatible
software. The diskette should be accompanied by a cover letter and
should be submitted in \"read only\" mode. The diskette should be
clearly labeled with the commenter\'s name, proceeding (including the
docket number, in this case CC Docket No. 96-150, type of pleading
(comments), date of submission, and the name of the electronic file on
the diskette. The label should also include the following phrase \"Disk
Copy - Not an Original.\" Each diskette should contain only one party\'s
pleadings, preferably in a single electronic file. In addition,
commenters must send diskette copies to the Commission\'s copy
contractor, International Transcription Service, Inc., 1231 20th Street,
N.W., Washington, D.C. 20037.

Copies of the biennial audit report (attached) and any subsequently
filed documents in this matter may be obtained from International
Transcription Service, Inc., 445 12th Street, S.W., CY-B402, Washington,
D.C. 20554, (202) 857-3800. Electronic versions of the report are also
available on the FCC\'s Internet Home Page (http://www.fcc.gov) and
through the Commission\'s Electronic Comment Filing System. To the
extent that parties file electronic versions of comments, such filings
also will be available on the FCC\'s Internet Home Page and through the
Commission\'s Electronic Comment Filing System. Copies of the audit
report (attached) and documents are also available for public inspection
and copying during normal reference room hours at the Commission\'s
Reference Center, 445 12th Street, S.W., CY-A257, Washington, D.C.
20554.

For further information, contact Hugh L. Boyle, Chief, Audits Branch, at
(202) 418-7147 or Anthony Dale at (202) 418-2260.

Action by the Chief, Common Carrier Bureau

[^1]: 47 U.S.C. § 271

[^2]: Application of Bell Atlantic New York for Authorization under
    Section 271 of the Communications Act to Provide In‑Region,
    InterLATA Service in the State of New York, CC Docket No. 99‑295,
    *Memorandum Opinion and Order*, 15 FCC Rcd 3953 (1999).

[^3]: Application of Verizon New England Inc., Bell Atlantic
    Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long
    Distance Company (d/b/a Verizon Enterprise Solutions) And Verizon
    Global Networks Inc., for Authorization to Provide In‑Region,
    InterLATA Services in Massachusetts, CC Docket 01‑9, *Memorandum
    Opinion and Order,* FCC 01‑130 (rel. April 16, 2001).

[^4]: 47 U.S.C. § 272

[^5]: 47 C.F.R. § 53.209(d)

[^6]: Application of GTE Corporation, Transferor, and Bell Atlantic
    Corporation, Transferee, for Consent to Transfer Control of Domestic
    and International Sections 214 and 310 Authorizations and
    Application to Transfer Control of a Submarine Cable landing
    License, CC Docket No. 98‑184, *Memorandum Opinion and Order*, 15
    FCC Rcd 14032 (2000) (Bell Atlantic/GTE Merger Order).

[^7]: 47 U.S.C. § 272(d)(2).

[^8]: PWC filed a redacted version of the audit report containing no
    confidential information and an unredacted proprietary version of
    the report claiming confidential treatment under sections 220(f) and
    272(d)(3) of the Act (47 U.S.C. §§ 220(f) and 272(d)(3)), and
    sections 0.457 and 0.459 of the Commission rules (47 C.F.R. §§ 0.457
    and 0.459).

[^9]: 47 C.F.R. § 53.213(d).

[^10]: 47 C.F.R. § 1.1206.

[^11]: *See* Electronic Filing of Documents in Rulemaking Proceedings,
    63 Fed. Reg. 24,121 (1998).