### **Before the** 

######## FEDERAL COMMUNICATIONS COMMISSION

**Washington, D.C. 20554**

In the Matter of ) WCB/Pricing No. 02-16

)

)

Verizon Petition for Interim Waiver of )

Sections 61.42(g), 61.38 and 61.49 )

of the Commission's Rules )

# 

# 

# ORDER

Adopted: June 10, 2002 Released: June 12, 2002

By the Chief, Pricing Policy Division, Wireline Competition Bureau

1\. The Verizon Telephone Companies ("Verizon")[^1] seek a waiver of
sections 61.42(g), 61.38, and 61.49 of the Commission's rules[^2] with
respect to services transferred from its separate advanced services
affiliate, Verizon Advanced Data Inc. ("VADI"), to Verizon, pending
further rulemakings concerning the regulatory status of these
services.[^3] Due to unique circumstances, we grant Verizon a limited
waiver of section 61.42(g) of the Commission's rules only for purposes
of its 2002 Annual Access Tariff Filing,[^4] and defer consideration of
the full waiver request until a later date.

**Background**

2.  VADI was created as a separate advanced services affiliate as a
    condition of the merger between GTE Corporation and Bell Atlantic
    Corporation.[^5] This condition required Bell Atlantic/GTE to offer
    advanced services through a separate affiliate until such time as
    provided for in the sunset provisions contained in the *Bell
    Atlantic-GTE Merger Order.*[^6] On May 1, 2001, Verizon sought
    permission to expedite the sunset of these requirements.[^7] On
    September 26, 2001, the Common Carrier Bureau granted Verizon's
    request, explaining that re-integration of these assets from VADI
    into Verizon on an accelerated basis was in the public interest.[^8]
    The Bureau also noted that a recent court ruling would, in any
    event, have caused the separate affiliate condition to terminate
    automatically in January 2001.[^9]

3.  On November 30, 2001, Verizon filed a petition for an interim waiver
    of sections 61.42(g), 61.38, and 61.49 of the Commission rules with
    respect to the assets transferred from VADI to Verizon.[^10] Section
    61.42(g) of the Commission's rules provides that new services must
    be included in the first annual price cap tariff filing following
    completion of the base period in which they are introduced.[^11]
    Sections 61.38 and 61.49 of the Commission's rules require the
    filing of certain supporting information with tariff
    modifications.[^12] The Competitive Pricing Division of the
    Commission's Common Carrier Bureau previously granted special
    permission to waive sections 61.38 and 61.49 of the Commission's
    rules with respect to the services transferred from VADI back into
    Verizon, under limited circumstances.[^13]

4.  On December 20, 2001, the Competitive Pricing Division issued a
    public notice[^14] seeking comment on the Petition. Four parties
    filed oppositions to the Petition,[^15] and Verizon filed a
    reply.[^16]

5.  Also on December 20, 2001, the Commission initiated a rulemaking
    proceeding to evaluate whether dominant local exchange carriers
    should be considered "dominant" with respect to broadband
    telecommunications services, such as those being transferred from
    VADI to Verizon (the "Broadband Proceeding"). One outcome of this
    proceeding could be the elimination of price cap regulation for
    advanced services.[^17]

**Discussion**

6.  The Commission's rules allow it to waive its regulations for good
    cause shown.[^18] In general, the waiver request must demonstrate
    special circumstances warranting a deviation from the general rule,
    and that such a deviation will serve the public interest.[^19] For
    the reasons discussed below, we find that good cause exists for us
    to grant a limited waiver of section 61.42(g) of the Commission's
    rules for services transferred from VADI to Verizon. Special
    circumstances warrant a temporary deviation from this rule, and such
    a limited grant is in the public interest.[^20]

7.  Verizon states that it would be burdensome to incorporate the VADI
    advanced services into its price cap indexes because the demand data
    for these services are not in the Verizon company databases, and the
    conversion of VADI billing data for price cap calculations would be
    extremely difficult.[^21] Verizon also argues that it would be more
    prudent to await the conclusion of the ongoing Broadband Proceeding,
    which may obviate the need to include advanced services within the
    price cap indexes and price cap rates.[^22]

8.  ASCENT, Sprint, Focal, and AT&T challenge Verizon's claims that
    incorporating the VADI advanced services into Verizon's price cap
    indexes would be burdensome, and they argue that the potential harm
    to competition outweighs any purported burden on Verizon.[^23] They
    also contend that it is inappropriate to seek a waiver based on the
    mere possibility that advanced services will eventually be excluded
    from price caps.[^24]

9.  We are persuaded that Verizon has demonstrated good cause to waive
    section 61.42(g) of the Commission's rules for services transferred
    from VADI to Verizon, with respect to the June 2002 filing
    requirements only.[^25] Those services formerly held by VADI were
    not incorporated into the Verizon price cap calculations, and a
    temporary waiver will allow maintenance of the *status quo* until we
    have fully considered the issues related to the Broadband
    Proceeding. This limited waiver will temporarily allow Verizon to
    avoid the burden associated with incorporating the VADI advanced
    services into its price cap indexes and converting the VADI demand
    data for price cap calculations. We conclude that the transfer of
    the advanced services assets, during a period in which we are
    considering a modification of our rules that would obviate the need
    to include advanced services within the price cap indexes and rates,
    constitutes special circumstances, and such circumstances outweigh
    any harm to competition.

**Ordering Clauses**

10\. Accordingly, IT IS ORDERED that, pursuant to section 204(a) of the
Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and the
authority delegated pursuant to sections 0.91, 0.291 and 1.3 of the
Commission's Rules, 47 C.F.R. §§ 0.91, 0.291, and 1.3, section 61.42(g)
of the Commission's rules IS WAIVED for services transferred from VADI
to Verizon, only with respect to Verizon's 2002 Annual Access Tariff
Filing requirements under section 61.43 of the Commission's rules.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Tamara L. Preiss
>
> Chief, Policy Pricing Division
>
> Wireline Competition Bureau

[^1]: The Verizon Telephone Companies are the affiliated local telephone
    companies of Verizon Communications Corporation.

[^2]: 47 C.F.R. §§ 61.42(g), 61.38, and 61.49.

[^3]: *See* Verizon Petition for Waiver of the Price Cap Rules (Nov. 30,
    2001) ("Petition").

[^4]: *See* 47 C.F.R. § 61.43.

[^5]: *Application of GTE Corporation and Bell Atlantic Corporation for
    Consent to Transfer Control of Domestic and International Section
    214 and 310 Authorizations and Applications 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")*.

[^6]: *Id.* at 14038-9 ¶ 5, and at 14258, Appendix D.

[^7]: *See* Letter from Gordon R. Evans, Vice President, Federal
    Regulatory, Verizon, to Dorothy Attwood, Chief, Common Carrier
    Bureau, CC Docket No. 98-184 (filed May 1, 2001).

[^8]: *Application of GTE Corporation and Bell Atlantic Corporation for
    Consent to Transfer Control of Domestic and International Section
    214 and 310 Authorizations and Applications to Transfer Control of a
    Submarine Cable Landing License,* CC Docket No. 98-184, Order, DA
    01-2203, 16 F.C.C. Rcd 16915 (2001) *("VADI Accelerated Transfer
    Order").*

[^9]: The separate affiliate condition automatically terminated nine
    months after the date of a final and non-appealable judicial
    decision determining that the separate advanced services affiliate
    is deemed a "successor or assign" of the incumbent. Bell
    Atlantic-GTE Merger Order at Appendix D, ¶11(c). The Bureau noted
    that, under the court's ruling in *Association of Communications
    Enterprises v. Federal Communications Commission,* 235 F.3d 662
    (D.C. Cir. 2001), VADI is a successor or assign of Verizon. *VADI
    Accelerated Transfer Order* at ¶ 2, note 5.

[^10]: *See* Petition at 4.

[^11]: *See* 47 C.F.R. § 61.42(g).

[^12]: *See* 47 C.F.R. §§ 61.38 and 61.49.

[^13]: *See* letters from Tamara Preiss, Chief, Competitive Pricing
    Division, Common Carrier Bureau, to Verizon, dated December 17, 2001
    (Special Permission No. 01-122); January 15, 2002 (Special
    Permission Nos. 02-036 and 02-009); and February 4, 2002 (Special
    Permission No. 02-028). See also letters from Jane E. Jackson,
    Chief, Competitive Pricing Division, Common Carrier Bureau, to VADI,
    waiving 47 C.F.R. § 61.38, dated August 31, 2001 (Special Permission
    No. 01-193) and July 19, 2001 (Special Permission No. 01-064).
    Pursuant to a Commission reorganization in March 2002, the
    Competitive Pricing Division was re-named the Pricing Policy
    Division, and the Common Carrier Bureau was re-named the Wireline
    Competition Bureau.

[^14]: *Comments Sought on Verizon Petition for Interim Waiver of
    Sections 61.42(g), 61.38 and 61.49 of the Commission's Rules,*
    Public Notice, DA 01-2950 (rel. December 20, 2001).

[^15]: The Oppositions were filed on January 22, 2002, by AT&T
    Corporation ("AT&T"), the Association of Communications Enterprises
    ("ASCENT"), Focal Communications Corporation and Pac-West Telecomm,
    Inc. (together, "Focal"), and Sprint Corporation ("Sprint").

[^16]: *See* Verizon Reply Petition (Feb. 4, 2002) ("Reply").

[^17]: *See Review of Regulatory Requirements for Incumbent LEC
    Broadband Telecommunications Services,* CC Docket No. 01-337, Notice
    of Proposed Rulemaking, 16 FCC Rcd. 22,745 (2001).

[^18]: 47 C.F.R. § 1.3.

[^19]: *See Northeast Cellular Telephone Co. v. F.C.C.,* 897 F.2d 1164,
    1166 (D.C. Cir. 1990) (citing *WAIT Radio v. F.C.C.,* 418 F.2d 1153,
    1159 (D.C. Cir. 1969)).

[^20]: We will act on Verizon's full waiver request at a later date.

[^21]: Petition at 3; Reply at 4.

[^22]: Petition at 3; Reply at 4-5**.**

[^23]: ASCENT Opposition at 3-5; Focal Opposition at 2-3; and AT&T
    Opposition at 5-6.

[^24]: ASCENT Opposition at 7-8; Sprint Comments at 2-4; Focal
    Opposition at 4-5; and AT&T Opposition at 3-5.

[^25]: See 47 C.F.R. § 61.49(f)(2).