**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | WC Docket No. 02-237         |
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| Verizon Telephone Companies      | ) |                              |
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| Section 63.71 Application to     | * |                              |
| Discontinue Expanded             |   |                              |
| Interconnection Service Through  | * |                              |
| Physical Collocation             | * |                              |
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ORDER

**Adopted: October 17, 2003 Released: October 22, 2003**

By the Commission:

# introduction

1.  On August 16, 2002, Verizon filed an application pursuant to section
    214 of the Communications Act of 1934 (the Act) seeking to
    discontinue provision of section 201 expanded interconnection
    services through physical collocation in its federal tariffs in the
    former NYNEX and Bell Atlantic regions.[^1] In support of its
    application, Verizon asserts that virtual collocation under section
    201 will remain available through its federal tariffs, and physical
    collocation is available through its state interconnection
    offerings.[^2] Verizon also proposes to give section 201 physical
    collocation customers the options of converting their existing
    physical collocation arrangements to the physical collocation
    space-related rates, terms, and conditions in its state
    interconnection offerings, or remaining grandfathered under the
    federal tariff terms for space-related section 201 physical
    collocation charges.[^3] Section 201 supporting services, such as
    charges for direct current (DC) power and for new cross-connections
    (cross-connects) between a section 201 physical collocation
    arrangement and Verizon's facilities, would not be grandfathered in
    the federal tariffs. Verizon proposes that section 201 physical
    collocation customers opting to convert their existing physical
    collocation arrangements to the rates, terms, and conditions in the
    state interconnection offerings for space-related services would
    receive a "conversion credit" in the New England and South regions.
    Because Verizon has demonstrated that its affected customers can
    obtain a reasonable substitute for Verizon's federally-tariffed
    section 201 physical collocation service, and we find that
    discontinuance of this service will not otherwise unduly harm the
    public convenience and necessity, we grant Verizon's application.

# background

2.  There are currently two separate regimes for the provision of
    collocation by incumbent local exchange carriers (LECs), expanded
    interconnection collocation pursuant to section 201, and physical
    collocation pursuant to section 251. Beginning in 1992, the
    Commission imposed section 201 expanded interconnection requirements
    on the largest LECs to remove significant barriers to the growth of
    competition in the interstate access market.[^4] Under the
    Commission's section 201 expanded interconnection rules, LECs were
    required to provide access to bottleneck facilities by allowing
    competitors to collocate network equipment dedicated to their use at
    the LECs' central offices.[^5] Subsequently, in 1994, the United
    States Court of Appeals for the District of Columbia Circuit (D.C.
    Circuit) held that section 201 of the Act did not expressly
    authorize the Commission to require that carriers provide physical
    collocation, and therefore the court vacated the Commission's orders
    imposing physical collocation requirements.[^6] In response to the
    court's decision, the Commission amended its rules to require
    virtual collocation for section 201 interstate expanded
    interconnection, allowing carriers to provide section 201 physical
    collocation for these services on an optional basis.[^7] Once a LEC
    opts to provide section 201 physical collocation, however, it is not
    permitted to withdraw its physical collocation offering without
    first obtaining authorization from the Commission pursuant to
    section 214.[^8] In 1996, Congress added section 251 to the
    Communications Act, which requires that incumbent LECs provide
    physical collocation.[^9] Section 251 collocation offerings are
    reflected in interconnection agreements and state-tariffed
    statements of generally available terms (SGATs), and are priced at
    total element long run incremental cost (TELRIC).[^10] Unlike
    section 201 collocation, which is available to other carriers,
    information service providers, and end users, section 251 gives the
    right to collocate only to telecommunications carriers.[^11]

3.  Pursuant to the Commission's rules imposing section 201 expanded
    interconnection requirements, Verizon (then Bell Atlantic and NYNEX)
    filed federal tariffs for expanded interconnection physical
    collocation services in 1993. After the *Bell Atlantic* decision,
    NYNEX continued to provide physical collocation pursuant to
    section 201. Bell Atlantic initially discontinued providing physical
    collocation after the *Bell Atlantic* decision, instead satisfying
    its expanded interconnection requirements through the provision of
    section 201 virtual collocation, but it voluntarily reinstated
    physical collocation pursuant to section 201 on June 4, 1996.[^12]

4.  On August 16, 2002, Verizon filed its application under section 214
    of the Communications Act and section 63.71 of the Commission's
    rules to discontinue providing federally-tariffed section 201
    physical collocation in the former NYNEX and Bell Atlantic regions.
    Several parties commented on Verizon's application.[^13] Section
    63.71(c) of the Commission's rules provides for automatic grant of a
    domestic dominant carrier's discontinuance application on the 60^th^
    day after its filing unless the Commission notifies the applicant
    that the grant will not be effective automatically.[^14] The
    Wireline Competition Bureau provided notice to Verizon that its
    application would not automatically be granted in an order released
    on October 17, 2002.[^15] On March 31, 2003, Verizon revised its
    application in response to parties' comments.[^16]

5.  Verizon asserts that the Commission's rules do not require incumbent
    LECs to provide section 201 physical collocation,[^17] and that most
    of the other former BOCs do not offer section 201 physical
    collocation.[^18] Verizon states that federally-tariffed section 201
    virtual collocation will remain available, and physical collocation
    is available through state interconnection offerings.[^19]
    Therefore, according to Verizon, reasonable substitutes for
    federally-tariffed section 201 physical collocation are
    available.[^20]

6.  In its application and subsequent modification, Verizon proposes the
    following:

-   Verizon will maintain its virtual collocation offering pursuant to
    section 201 in its federal tariffs.

-   Verizon will no longer offer section 201 physical collocation
    services to new customers in its federal tariffs, Tariff F.C.C. Nos.
    1 and 11.[^21]

-   Verizon will discontinue providing section 201 physical collocation
    supporting services, such as DC power and new cross-connects between
    a section 201 physical collocation arrangement and Verizon's
    facilities,[^22] under its Tariff F.C.C. Nos. 1 and 11.[^23]

-   Section 201 physical collocation customers may remain grandfathered
    under the physical collocation space-related provisions for existing
    arrangements, but not the supporting services provisions, of
    Verizon's federal section 201 tariffs. Customers that elect this
    option will purchase the supporting services from state
    interconnection offerings.[^24] In the case of any existing
    customers that are not carriers and are unable to purchase
    supporting services pursuant to state interconnection offerings,
    Verizon agrees to furnish supporting services through private
    contracts at the same rates, terms, and conditions available under
    its state interconnection offerings.[^25]

-   Section 201 physical collocation customers may opt to convert their
    existing arrangements to the space-related rates, terms, and
    conditions in state interconnection offerings.[^26]

-   In the New England and South regions, section 201 physical
    collocation customers will receive a "conversion credit" for
    switching their existing physical collocation arrangements to the
    space-related rates, terms and conditions in the state
    interconnection offerings.[^27]

-   The credit is meant to reimburse section 201 physical collocation
    customers for the high up-front space preparation non-recurring
    charge (NRC) paid under the federal section 201 tariff, and it is
    based on the average unamortized difference between federal and
    state-tariffed NRCs for space preparation.[^28]

-   Verizon has agreed to use a 30-year period, the same period it uses
    as the depreciation life of buildings, as the amortization period
    for the credit.[^29]

-   Verizon will give converting section 201 physical collocation
    customers the option of receiving the credit as a one-time payment,
    or as an annual credit applied over nine years with 5.45 percent
    interest.[^30]

7.  Verizon claims that a conversion credit is not appropriate in New
    York and Connecticut because the rate structures are very different
    in the federal section 201 collocation tariff and the state
    tariffs.[^31] The federal section 201 tariff recovers almost all
    space preparation charges through a high, up-front NRC, with minimal
    monthly recurring charges. The New York and Connecticut state
    tariffs recover all space preparation charges through monthly
    recurring charges. Therefore, according to Verizon, existing section
    201 physical collocation customers in New York and Connecticut would
    remain grandfathered under the federal section 201 tariff and would
    not choose to switch to the state interconnection offerings with the
    higher monthly recurring charges.[^32]

# discussion

8.  Section 214 of the Communications Act states that no carrier shall
    discontinue service until the Commission has certified that "neither
    the present nor future public convenience and necessity will be
    adversely affected" by the discontinuance.[^33] The Commission
    normally will authorize a discontinuance unless reasonable
    substitutes are unavailable or the public convenience and necessity
    is otherwise adversely affected.[^34] In determining whether to
    allow a carrier to discontinue service pursuant to section 214, the
    Commission considers a number of factors in balancing the interests
    of the carrier and the affected user community. These include (1)
    the financial impact on the common carrier of continuing to provide
    the service; (2) the need for the service in general; (3) the need
    for the particular facilities in question; (4) the existence,
    availability, and adequacy of alternatives; and (5) increased
    charges for alternative services, although this factor may be
    outweighed by other considerations.[^35] We conclude that Verizon
    has demonstrated that reasonable substitutes are available and that
    the public convenience and necessity will not be otherwise adversely
    affected by the proposed discontinuance of its federally-tariffed
    section 201 physical collocation services.

## Financial Impact on Verizon

9.  In its application, Verizon states that, due to timing differences
    between the promulgation of federal and state regulations,
    inconsistencies in rate levels and rate structures exist between
    Verizon's state tariffs and its federal section 201 tariffs for
    physical collocation services.[^36] These rate differences have led
    Verizon's physical collocation customers to "tariff shop" between
    the federally-tariffed and state-tariffed rate regimes. These
    customers are ordering physical collocation services based on rate
    offerings, instead of ordering service based on the jurisdictional
    nature of their traffic.[^37] To avoid the regulatory arbitrage
    caused by this tariff-shopping, and to eliminate the administrative
    burdens of maintaining two separate regulatory offerings for the
    same physical collocation service, Verizon has requested permission
    to discontinue providing section 201 physical collocation through
    its federal tariffs.[^38]

10. Commenters opposing Verizon's petition do not dispute Verizon's
    claim that its physical collocation customers engage in tariff
    shopping. In fact, one commenter confirms that it orders physical
    collocation services from Verizon's federal section 201 tariff for
    reasons other than the jurisdictional nature of its traffic.[^39]
    WorldCom argues that other services, such as switched and special
    access services, are tariffed at both the federal and state levels
    and Verizon is not complaining about arbitrage opportunities between
    these rates.[^40] Verizon responds that, for dual-jurisdictional
    services other than physical collocation, the jurisdictional nature
    of the traffic dictates the tariff out of which customers must order
    service. Verizon claims that there is no basis for it to deny a
    physical collocation application on jurisdictional grounds because
    only the collocator knows for what type of traffic, interstate or
    intrastate, the collocation services will be used.[^41] This creates
    arbitrage opportunities by allowing collocation customers to choose
    between the federal section 201 tariffs and the state tariffs based
    on the rates, terms and conditions available in each. SBC also
    asserts that differences between the federal section 201 tariffs and
    the state physical collocation regulatory regimes create tariff
    shopping and regulatory arbitrage problems.[^42] We agree with
    Verizon that requiring it to continue offering section 201 physical
    collocation services in its federal tariffs creates a financial
    burden for Verizon, due to the administrative burdens of maintaining
    two separate regulatory offerings for the same service and the
    opportunities for regulatory arbitrage.

## Need for the Service

11. The Commission imposed expanded interconnection requirements on LECs
    to open the interstate access market to competition. When the
    Commission first adopted expanded interconnection rules, it required
    LECs to make section 201 physical collocation available to all
    interconnectors that requested it.[^43] As discussed above, on June
    10, 1994, the D.C. Circuit in *Bell Atlantic v. FCC* vacated in part
    the Commission's expanded interconnection orders mandating physical
    collocation on the ground that the Commission lacked authority under
    section 201 of the Act to require LECs to provide expanded
    interconnection through physical collocation.[^44]

12. In response to the court's decision, the Commission adopted a
    mandatory section 201 virtual collocation policy to preserve the
    substantial public interest benefits of expanded
    interconnection.[^45] Under the *Virtual Collocation Order*, LECs
    that chose to offer section 201 physical collocation in lieu of
    virtual collocation were exempt from the virtual collocation
    requirement.[^46] Therefore, LECs were able to choose how they met
    their expanded interconnection obligations, through offering either
    virtual or physical collocation in their federal tariffs pursuant to
    section 201.

13. In analyzing Verizon's application, we examine the need for the
    service in general, and the need for the particular service in
    question. The Commission has consistently reiterated the public
    interest benefits of expanded interconnection requirements generally
    in promoting competition. The Commission also has expressed a
    preference for physical collocation as the best method of ensuring
    that the interstate expanded interconnection policy goals are
    met.[^47] Mandatory physical collocation, however, is not available
    pursuant to section 201 of the Act as a result of the *Bell
    Atlantic* decision. Thus, the Commission concluded that virtual
    collocation is the best alternative to serve the public
    interest.[^48] Physical collocation is, however, available to
    telecommunications carriers pursuant to section 251 of the Act, even
    if it is not available under section 201.[^49] Therefore, while
    expanded interconnection services are necessary to achieve the
    public interest benefits identified by the Commission, the provision
    of physical collocation pursuant to section 201 is not.

## Alternatives to Federally-Tariffed Physical Collocation

### Virtual Collocation Under Section 201 and Physical Collocation Under State Interconnection Offerings are Reasonable Substitutes.

14. If Verizon's application to discontinue providing section 201
    physical collocation is granted, Verizon will continue to meet its
    expanded interconnection obligations through the provision of
    virtual collocation in its federal tariffs pursuant to section
    201.[^50] Several commenters argue that virtual collocation is not
    an adequate substitute for physical collocation.[^51] The D.C.
    Circuit has found that section 201 does not authorize the Commission
    to mandate physical collocation in the first instance; therefore the
    Commission adopted a virtual collocation requirement to replace the
    section 201 physical collocation requirement. In so doing, the
    Commission expressly found that virtual collocation is the best
    available alternative to physical collocation to ensure that the
    expanded interconnection policy goals are met.[^52] Virtual
    collocation enables electronic equipment dedicated to an
    interconnector's use to terminate that interconnector's transmission
    links and to interconnect them with the LEC's network equipment
    inside LEC central offices.[^53] This allows interconnectors to
    avoid purchasing costly transmission links, which would inhibit
    interconnectors' ability to price competitively with LECs, and to
    overcome technical constraints regarding the maximum length of
    cross-connects needed to interconnect the LECs' and interconnectors'
    electronic equipment.[^54] For the same reasons, we conclude that
    virtual collocation is a reasonable substitute in this context as
    well.

15. In addition, Verizon provides physical collocation to
    telecommunications carriers pursuant to section 251 of the Act.[^55]
    Under the Act, section 251 physical collocation must be made
    available to telecommunications carriers either through negotiated
    or arbitrated interconnection agreements, or through SGATs reviewed
    and approved by the state commissions.[^56] Thus, all future
    collocation customers of Verizon can obtain expanded interconnection
    pursuant to section 201 through virtual collocation, as required by
    the Commission's rules, and telecommunications carriers can obtain
    physical collocation pursuant to section 251.

### Verizon's Options for Existing Section 201 Physical Collocation Customers and Conversion Credits are Reasonable.

16. Verizon proposes two alternatives for physical collocation customers
    with existing section 201 physical collocation arrangements taking
    service under Verizon's federal tariffs. For the space-related
    services, these collocation customers may choose either to
    grandfather their existing arrangements under the federal section
    201 tariff rates, terms and conditions, or to convert to the
    physical collocation space-related rates, terms, and conditions in
    the state interconnection offerings.[^57] Verizon reiterates that no
    section 201 physical collocation customer will be forced to convert
    its existing arrangements to a state collocation arrangement: a
    customer may choose instead to grandfather its existing arrangements
    in the federal section 201 tariff for space-related charges.[^58]

17. As discussed above, section 201 physical collocation customers that
    are taking service pursuant to Verizon's federal tariffs paid a
    substantial, up-front space preparation non-recurring charge (NRC),
    and in return they incur lower monthly recurring space-related
    charges. Verizon's state tariffs require much smaller up-front NRCs,
    with larger monthly recurring space-related charges.[^59] Verizon
    proposes to reimburse a portion of the federally-tariffed NRC to
    section 201 physical collocation customers that opt to convert their
    existing arrangements to the space-related rates, terms, and
    conditions of the state interconnection offerings.[^60] Verizon does
    not propose to calculate the specific amount owed to individual
    collocation customers, but rather to provide the same amount to
    all.[^61] This "conversion credit" would be based on the average
    unamortized difference between the federally-tariffed section 201
    space preparation NRCs and the state-tariffed space preparation
    NRCs.[^62] Verizon proposes to offer this credit to converting
    section 201 physical collocation customers in its New England and
    South regions, but not in its New York region.[^63] Verizon explains
    that the rate structure difference between the federal section 201
    tariff and the state tariffs is too large in the New York region;
    therefore, it expects that its existing section 201 physical
    collocation customers in the New York region will choose to remain
    grandfathered under the federal section 201 tariff space-related
    rates, terms and conditions.[^64]

18. Commenters oppose several aspects of Verizon's proposed conversion
    credit. Verizon originally proposed to provide the credit over a 9.5
    year period at 5.45 percent interest, and to calculate the refund
    using a 12-year amortization period for the collocation equipment.
    In response to criticisms of these aspects of the proposal,[^65]
    Verizon revised the conversion credit to allow collocation customers
    the option of receiving the credit in a one-time lump-sum payment or
    as an annual credit over nine years at 5.45 percent interest.[^66]
    Verizon also agreed to use a 30-year amortization period in
    calculating the credit.[^67] No party has objected to the revised
    amortization period or lump-sum payment option. We conclude that the
    availability of a lump-sum payment and the use of a 30-year
    amortization period in calculating the credit are reasonable.

19. The commenters also argue that the conversion credit should be
    available in all Verizon East regions, including the New York
    region.[^68] Verizon's grandfathering proposal for space-related
    services ensures that existing section 201 physical collocation
    customers in the New York region will continue to receive these
    services at the same monthly recurring rates that are currently
    available under Verizon's federal section 201 tariff. Therefore
    existing section 201 physical collocation customers are not harmed
    by Verizon's decision not to offer the conversion credit in the New
    York region.

20. Conversent argues that the conversion credit should be calculated on
    a carrier-specific basis, and not as an average amount.[^69] We find
    that it is permissible for Verizon to offer an average credit,
    rather than a carrier-specific credit, to carriers that opt to
    convert to the state tariff space-related recurring rates. Verizon's
    average credit, based on an average collocation life of 36 months,
    may not precisely reimburse each collocator for the actual amount of
    the unamortized portion of the federal NRC each paid. Collocation
    customers that do not believe the average conversion credit
    adequately compensates them for the federal NRCs they paid may
    instead opt to remain grandfathered under the current federal
    space-related rates, terms, and conditions for their existing
    section 201 physical collocation arrangements. The federal tariff
    grandfathering option ensures that collocators that object to the
    conversion credit may maintain the status quo with respect to the
    space-related rates they pay, and that, therefore, they are not
    harmed by Verizon's offering of an average conversion credit.

### Verizon Will Provide Reasonable Substitutes for Non-Telecommunications Carriers.

21. Commenters also argue that physical collocation pursuant to section
    251 is not available to non-telecommunications carriers; therefore,
    no adequate alternative to Verizon's federally-tariffed section 201
    physical collocation exists for these entities.[^70] Verizon
    responds that the Commission's expanded interconnection rules
    entitle customers only to virtual collocation under section 201, not
    physical collocation.[^71] Verizon also asserts that it has no
    existing non-telecommunications carrier customers taking service
    pursuant to its federal section 201 physical collocation
    tariffs.[^72] To the extent it has any existing section 201 physical
    collocation customers that cannot obtain physical collocation
    services through its state interconnection offerings, Verizon has
    offered to enter into non-carrier contracts to provide physical
    collocation at the same rates, terms and conditions available to
    telecommunications carriers pursuant to the state interconnection
    offerings.[^73] Based on the continued availability of Verizon's
    section 201 virtual collocation offering, and Verizon's
    representation that it is willing to continue to provide physical
    collocation services to its existing non-telecommunications carrier
    section 201 physical collocation customers, if any exist, at the
    rates, terms and conditions available in its state interconnection
    offerings, reasonable substitutes exist for these customers.

### Verizon's Proposal not to Grandfather Section 201 Physical Collocation Supporting Services is Reasonable.

22. As discussed above, Verizon proposes to grandfather existing
    space-related rates, terms and conditions for section 201 physical
    collocation customers that do not opt to convert existing
    arrangements to the physical collocation space-related rates, terms,
    and conditions available pursuant to state interconnection
    offerings. Verizon does not, however, provide a grandfathering
    option for section 201 physical collocation supporting services.
    These services include DC power; new cross-connects between a
    section 201 physical collocation arrangement and Verizon's
    facilities; augments; new cable racking; new entrance cabling;
    changes, additions or rearrangements of space; and all other
    miscellaneous services such as testing, escorts to non-collocation
    space, and identification badges, for which customers are
    charged.[^74] Parties opposing Verizon's application argue that
    these supporting services should be grandfathered at the rates,
    terms and conditions currently in effect in the federal section 201
    physical collocation tariffs.[^75] In response, Verizon argues that
    it is appropriate to grandfather space-related charges, which are
    based on collocation arrangements purchased in the past, but the
    ongoing costs of supporting services are recovered through recurring
    charges that need not be based on what collocation customers paid
    for similar services in the past.[^76] Physical collocation
    supporting services are available to telecommunications carriers
    pursuant to section 251, at rates based on TELRIC.[^77] Verizon has
    agreed to make these supporting services available through private
    contracts to existing non-telecommunications carrier section 201
    physical collocation customers that are unable to obtain such
    services from state interconnection offerings at the rates, terms,
    and conditions in Verizon's state interconnection offerings.[^78]
    Therefore, we find that the availability of comparable physical
    collocation supporting services provides a reasonable substitute to
    the federally-tariffed section 201 physical collocation supporting
    services Verizon proposes to discontinue.

## Increased Charges for Alternative Services

23. Parties opposing Verizon's application assert that grant of the
    application will increase the amount they pay for physical
    collocation services. In particular, commenters argue that changing
    from the federally-tariffed section 201 physical collocation DC
    power rate to the state-tariffed rates will increase significantly
    their physical collocation costs.[^79]

24. In its reply, Verizon provides an analysis purporting to demonstrate
    that the opposing parties' collocation costs would decrease if
    Verizon's application is granted.[^80] The analysis is based on the
    assumption that collocation customers switching from the federal
    section 201 tariffs to the state interconnection offerings can
    decrease the amount of DC power they request by two-thirds.[^81]
    Verizon asserts that this reduction in the amount of power requested
    is possible due to differences in the manner in which Verizon bills
    for DC power in its federal and state tariffs. Pursuant to its
    federal section 201 tariffs, Verizon bills collocation customers for
    power based on the total fused capacity of each power feed ordered
    by the collocator on its collocation application.[^82] For its
    section 201 physical collocation customers, Verizon fuses each feed
    at 1.5 times the requested amount of power. If a section 201
    physical collocator orders two feeds at 40 amps per feed, for
    example, it would be billed for 120 amps of power.[^83] Pursuant to
    its state tariffs, Verizon bills for power usage based on the total
    number of amps ordered by the collocator on its collocation
    application for all feeds. For physical collocation customers
    ordering power pursuant to its state tariffs, Verizon fuses each
    feed at 2.5 times the requested amount of power.[^84] Verizon claims
    that this higher fusing factor will enable collocation customers to
    request fewer amps on each feed, because each feed can carry the
    entire load at a level below the capacity of the fuse if one of the
    feeds should fail.[^85]

25. According to Verizon, a section 201 physical collocator that
    requires 40 amps of power for its equipment would typically order 40
    amps on an A feed and 40 amps on a B feed to ensure redundancy
    should one of the feeds fail.[^86] Under the federal section 201
    tariff, this collocator would be billed for 120 amps of fused power.
    If this collocator converted to the rates, terms, and conditions in
    a state tariff, it could request 20 amps on the A feed and 20 amps
    on the B feed. Because the fusing factor under the state tariffs is
    2.5 percent, each feed would be fused at 50 amps and therefore could
    handle the entire 40 amp load if the other feed failed. Under the
    state tariffs, Verizon would bill the collocator only for the 40
    amps ordered. Therefore, the collocator could reduce the number of
    amps for which it is billed from 120 under the federal section 201
    tariffs to 40 under the state tariffs.[^87] Verizon argues,
    therefore, that even if the per-amp rates in the state tariffs are
    higher than the federally-tariffed section 201 rates, this power
    request reduction, combined with the conversion credit, will allow
    collocation customers to reduce their physical collocation
    charges.[^88]

26. Opposing parties generally dispute Verizon's cost reduction
    claims.[^89] Opposing parties also argue that, in addition to
    increasing the rates for DC power, Verizon's discontinuance of
    federally-tariffed section 201 physical collocation will increase
    collocation customers' transaction costs and will impose substantial
    and disruptive administrative burdens on collocation customers.[^90]

27. The Commission will consider increased charges to consumers in
    determining whether grant of a service discontinuance adversely
    affects the public convenience and necessity. The Commission,
    however, has found that increased consumer charges may be outweighed
    by other factors.[^91] The relevant issue is whether the alternative
    services are priced so high that most users cannot afford to
    purchase them.[^92]

28. Opposing parties do not argue that Verizon's federally-tariffed
    section 201 rates for virtual collocation service are prohibitively
    high,[^93] although WorldCom argues that existing section 201
    physical collocation customers would not forgo the sunk investment
    in a physical collocation arrangement to convert to virtual
    collocation.[^94] WorldCom does not claim that this conversion would
    be unaffordable, but only that collocation customers would be
    "unlikely" to make the switch.[^95] This does not demonstrate that
    converting from a Verizon section 201 physical collocation
    arrangement to a section 201 virtual collocation arrangement would
    be unaffordable.

29. Section 201 physical collocation customers that are
    telecommunications carriers also have the option of obtaining
    physical collocation pursuant to section 251. Opponents of the
    application argue that negotiating interconnection agreements will
    be administratively burdensome and costly, although they do not
    claim that these negotiations are unaffordable.[^96] To the extent
    telecommunications carriers wish to avoid the administrative cost of
    negotiating or opting into interconnection agreements, they may
    avail themselves of Verizon's other state interconnection offerings.
    In the case of SGATs, section 251 physical collocation rates are set
    based on TELRIC, and are reviewed by the state commissions pursuant
    to section 252 of the Act.[^97] This process ensures that the
    space-related and supporting services rates set pursuant to section
    251 are affordable.

30. Commenters also argue that, if Verizon's application is granted,
    physical collocation customers will be subject to disparate pricing
    regimes that vary significantly from state to state.[^98] Conversent
    states that the Commission should require all incumbent LECs to file
    federal physical collocation tariffs under section 251(c)(6) in
    place of existing state tariffs.[^99] We find no reason to do so.
    Section 252(f) requires that any SGATs be filed with state
    commissions, not the Commission.[^100] The statutory mechanism
    providing for section 251 physical collocation contemplates that
    rates will be set at the state level, and that these rates lawfully
    may vary. Finally, we note that collocation customers that do not
    wish to contend with multiple state rates can avail themselves of
    Verizon's section 201 virtual collocation offering.

31. For these reasons, we find that both section 201 virtual collocation
    and section 251 physical collocation services are affordable and are
    therefore reasonable substitutes to Verizon's federally-tariffed
    section 201 physical collocation services.

## Other Issues

### Cross-Connects.

32. Several opponents of Verizon's application argue that it violates
    the Commission's rule requiring Verizon to make available through
    federal tariffs certain types of cross-connects.[^101]
    Cross-connects are cabling schemes that connect pieces of equipment
    in a central office.[^102] Verizon responds that its application is
    consistent with the Commission's cross-connects requirements because
    Verizon is seeking approval under section 214 to discontinue
    providing only cross-connects between physical collocation
    arrangements and Verizon's equipment.[^103] Verizon is not proposing
    to discontinue or change its federally-tariffed section 201
    cross-connect service between physical collocation
    arrangements.[^104] The Commission's rules require only that Verizon
    offer cross-connects between collocated telecommunications carriers,
    and that it include the rates, terms, and conditions for the
    provision of these cross-connects in its federal tariffs.[^105]
    Grant of Verizon's application would not, therefore, violate the
    Commission's cross-connects requirement. Furthermore, existing
    cross-connects between section 201 physical collocation arrangements
    and Verizon's equipment will be grandfathered under the existing
    federally-tariffed section 201 rates, terms, and conditions, or the
    section 201 physical collocator may opt to convert these existing
    cross-connects to the rates, terms, and conditions in Verizon's
    state interconnection offerings.[^106] Therefore, we find that
    reasonable substitutes exist for the cross-connect services Verizon
    proposes to discontinue.

33. Conversent also argues that, if Verizon's application is granted,
    collocation customers buying new cross-connects pursuant to the
    state tariffs would pay twice for the non-recurring costs associated
    with cross-connects.[^107] According to Conversent, Verizon's
    federal tariff requires collocation customers to purchase
    cross-connects in batches of 28 and to pay NRCs at the time the
    cross-connects are ordered.[^108] Conversely, according to
    Conversent, the state tariffs in Verizon's New England region do not
    include NRCs, but recover all costs through monthly recurring
    charges.[^109] Verizon does not propose to grandfather
    federally-tariffed cross-connects that are not in service and being
    billed as of the effective date of the discontinuance.[^110]
    Therefore, Conversent claims that any federally-tariffed
    cross-connects that collocation customers have ordered (and for
    which they have paid a federally-tariffed NRC) but have not yet
    placed in service will incur the higher monthly recurring rates in
    New England, or possibly a new NRC if the New England state tariffs
    are modified to include a NRC.[^111] In response, Verizon argues
    that the federally-tariffed NRC cited by Conversent is not in effect
    in the New England region.[^112] Verizon claims that the rate
    structures for cross-connects are the same in the New England
    federal and state tariffs, i.e., Verizon does not charge a NRC and
    does not begin billing monthly charges until the cross-connects are
    placed in service.[^113] On this basis, we find Conversent's concern
    about double-billing of a federally-tariffed NRC in this region to
    be unfounded.

### Prior DC Power Tariff Filing.

34. Several opponents of the application argue that Verizon is merely
    trying in this proceeding to achieve the higher federally-tariffed
    DC power rates that it was unable to obtain pursuant to a tariff
    filing in 2001.[^114] In that proceeding, Verizon filed revisions to
    its FCC Tariff Nos. 1 and 11 to revise the monthly rates for DC
    power to section 201 physical and virtual collocation arrangements
    in the New York and New England regions, and to revise the monthly
    rates for DC power to section 201 physical collocation arrangements
    and to establish a new rate element for DC power to section 201
    virtual collocation arrangements in the South region.[^115] In
    response to several petitions, the revisions were suspended and an
    investigation was instituted.[^116] Before the tariff investigation
    concluded, Verizon reinstated the rates in effect prior to the
    investigation, and the Commission therefore terminated the
    investigation.[^117] Verizon's current rates for section 201
    physical collocation DC power in its federal tariff were set by the
    Commission pursuant to a 1997 order, and they have not changed since
    that time.[^118] Existing physical collocation rates pursuant to
    state interconnection offerings have been reviewed and approved by
    the state commissions in recent proceedings,[^119] and any future
    changes to these rates are also subject to state review and
    approval. Section 251 physical collocation rates pursuant to
    state-tariffed SGATS and interconnection agreements are priced at
    TELRIC under sections 251(c)(6) and 252 of the Act, and, as we
    discuss above, they are affordable to carriers. Therefore, a
    reasonable substitute to the current federally-tariffed section 201
    DC power physical collocation charges exists.

35. For this reason, and because we have also found that the public
    convenience and necessity is not otherwise adversely affected, the
    commenters are incorrect in asserting that Verizon should file
    tariff revisions for the change in DC power rates: rather, Verizon
    has satisfied the criteria for discontinuance of service set forth
    in section 214 and our implementing regulations, and it may
    discontinue its section 201 physical collocation service.

### State-Tariffed Interstate Rates.

36. Several commenters argue that Verizon cannot provide supporting
    services from state tariffs to interstate physical collocation
    arrangements because the Commission has exclusive jurisdiction over
    interstate services.[^120] Verizon responds that incumbent LECs
    currently provide state-regulated services in connection with almost
    all collocation arrangements ordered exclusively from the federal
    tariffs.[^121] For example, Verizon notes that some carriers order
    collocation services exclusively from the federal tariff, but use
    these arrangements primarily for access to unbundled network
    elements, rates for which are governed by the states pursuant to
    section 251.[^122] Verizon also cites other instances where the
    Commission has allowed carriers to provide services that are
    jurisdictionally interstate pursuant to state tariffs, such as the
    enhanced service provider (ESP) exemption, which permits ESPs to
    obtain interstate services by purchasing local exchange service
    under the state tariffs; the provision of custom calling features
    under the state tariffs to customers that purchase Feature Group A
    access service from the interstate tariff; and the provision of
    complementary network services (CNS) under the state tariffs to
    customers purchasing open network architecture services under the
    interstate tariffs.[^123] Verizon further argues that the states
    have the authority to set physical collocation rates pursuant to
    section 251(c)(6) and there is no federal tariffing requirement for
    collocation in this section.[^124]

37. Under the conditions for discontinuance set forth in this order,
    commenters' jurisdictional claims are only applicable to existing
    customers that purchase supporting services directly from a
    non-section 251 state tariff,[^125] whether they are carriers[^126]
    or non-carriers.[^127] This jurisdictional issue does not arise
    where customers purchase physical collocation services pursuant to
    sections 251 and 252 of the Act through state-tariffed SGATs or
    interconnection agreements.[^128] As commenters in this proceeding
    recognize, physical collocation arrangements are being purchased
    from the federal or state tariffs based on the rates, terms and
    conditions available in those tariffs and not on the jurisdictional
    nature of the traffic traversing those arrangements.[^129] We find
    that, in these instances, the public interest is served by allowing
    state-set rates, terms and conditions to govern services that may be
    used for interstate traffic. To now require collocation customers to
    purchase physical collocation services based entirely on the
    jurisdictional nature of the traffic would be disruptive and
    burdensome to collocation customers and collocation providers. For
    instance, collocation customers would be required to use
    cross-connects between their arrangements and Verizon's equipment
    purchased from the federal tariff only for interstate traffic, and
    to purchase separate cross-connects from the state tariffs for their
    intrastate traffic, or, alternatively, to begin jurisdictionally
    separating the traffic over the cross-connect and paying
    proportionately from two separate tariffs. This would impose
    redundant and inefficient provisioning and purchasing requirements
    on the industry with potentially negative effects on consumers. To
    minimize customer impact, we find that it is in the public interest
    to allow physical collocation customers to order supporting services
    from the relevant state tariff.[^130] As discussed above, section
    251 gives states the authority to govern physical collocation for
    telecommunications carriers without regard to the jurisdictional
    nature of the traffic, and the states are experienced in regulating
    these services.

### Interconnection Agreements.

38. Commenters also argue that grant of Verizon's section 214
    application would constitute an unlawful unilateral modification of
    Verizon's interconnection agreements with competitive LECs.[^131]
    According to these commenters, Verizon's interconnection agreements
    mirror the terms in the federal tariff that it now seeks to
    eliminate.[^132] Verizon responds that its interconnection
    agreements were not intended to lock the parties in to the rates,
    terms and conditions that existed at the time the agreements were
    executed.[^133] By referencing tariffs rather than specifying
    particular rates in the interconnection agreements, Verizon states
    that the parties were necessarily deferring to the regulatory
    commissions as the ultimate arbiters of those tariffs.[^134] We
    agree. Tariffed rates, terms and conditions are not frozen by the
    existence of an interconnection agreement incorporating their terms.
    Moreover, interconnection agreements generally acknowledge that
    underlying regulatory obligations will change given that they
    normally incorporate provisions to address changes in law. The
    impact on interconnection agreement terms is thus not a basis for
    denying changes to tariffed rates, terms and conditions, and we do
    not deny Verizon's application on that basis here.

# conclusion

39. We find that there are reasonable substitutes for the services
    Verizon proposes to discontinue, and that grant of Verizon's
    application to discontinue providing federally-tariffed section 201
    physical collocation services, subject to the conditions discussed
    in this order that we impose pursuant to section 214(c) of the Act,
    will not adversely affect the present or future public convenience
    and necessity.[^135] These conditions, which Verizon will
    incorporate in revisions to its Tariff F.C.C. Nos. 1 and 11, are:
    the ability of section 201 physical collocation customers to remain
    grandfathered under the federally-tariffed section 201 space-related
    rates, terms and conditions for their existing physical collocation
    arrangements;[^136] the option for section 201 physical collocation
    telecommunications carrier customers to convert their existing
    physical collocation arrangements to the space-related rates, terms,
    and conditions in state interconnection offerings;[^137] the ability
    of non-telecommunications carrier section 201 physical collocation
    customers to enter into non-carrier contracts for their existing
    physical collocation arrangements, and supporting services for those
    arrangements, where they are unable to obtain such services from a
    state interconnection offering, at the same rates, terms and
    conditions available in Verizon's state interconnection
    offerings;[^138] and the availability of a conversion credit for
    section 201 physical collocation customers in the New England and
    South regions that convert their existing physical collocation
    arrangements to the space-related rates, terms, and conditions in
    state interconnection offerings.[^139] Should Verizon fail to
    observe these conditions, the Commission could initiate an
    enforcement action on its own or in response to a complaint that
    Verizon failed to observe conditions imposed under section 214(c)
    and its tariffs.[^140]

# Ordering Clause

40. Accordingly, pursuant to sections 1, 4(i), and 214 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
    214, and section 63.71 of the Commission's rules, 47 C.F.R. § 63.71,
    IT IS ORDERED that the application of Verizon to discontinue
    provision of section 201 expanded interconnection services through
    physical collocation in its federal tariffs in the former NYNEX and
    Bell Atlantic regions IS GRANTED subject to the conditions set forth
    in paragraph 39 above.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

    **APPENDIX A**

    **Commenters in WC Docket No. 02-237**

    **[Parties filing Comments:]{.underline}**

    Allegiance Telecom, Inc., *et al.* (Allegiance)

    Association for Local Telecommunications Services, *et al.* (ALTS)

    AT&T

    Choice One Communications Inc.

    Conversent Communications, LLC

    Covad Communications Company

    Network Access Solutions Corporation

    Qwest Communications Corporation

    Sprint Corporation

    WorldCom, Inc.

    **[Parties filing Reply Comments:]{.underline}**

    AT&T

    SBC Communications, Inc.

    Time Warner Telecom

    Verizon

[^1]: Verizon Telephone Companies, Section 63.71 Application, WC Docket
    No. 02-237 (filed Aug. 16, 2002) (Verizon Application). Hereinafter,
    we refer to collocation services provided pursuant to the
    Commission's expanded interconnection requirements as "section 201
    collocation." There can be both "section 201 physical collocation"
    and "section 201 virtual collocation." This is intended to
    distinguish these services from collocation provided pursuant to
    sections 251 and 252 of the Act. Physical collocation is an offering
    that enables an interconnector to locate its own transmission
    equipment in a segregated portion of the LEC central office. The
    interconnector pays the LEC for the use of that central office space
    and may enter the central office to install, maintain, and repair
    the equipment. 47 C.F.R. § 64.1401(d).

[^2]: Verizon Application at 1, 8. Virtual collocation is an offering in
    which the LEC owns (or may lease) and exercises exclusive physical
    control over the transmission equipment, located in the central
    office, that terminates the interconnector's circuits. The LEC
    dedicates this equipment to the exclusive use of the interconnector,
    and provides installation, maintenance, and repair services on a
    non-discriminatory basis. The interconnector has the right to
    designate its choice of central office equipment, and to monitor and
    control the equipment remotely. The LEC connects this equipment to
    the interconnector's circuit outside the central office, with an
    interconnection point between LEC-owned facilities and
    interconnector-owned facilities as close as possible to the office.
    47 C.F.R. § 64.1401(e).

    For convenience, we use the term "state interconnection offerings"
    to refer generically to the state tariffs, interconnection
    agreements, and statements of generally available terms (SGATs)
    through which Verizon offers physical collocation services. In each
    of its in-region states, Verizon offers physical collocation
    pursuant to section 251 through interconnection agreements or SGATs
    that derive from state tariffs. We note that such interconnection
    agreements and SGATs are section 251 offerings even though Verizon
    originally may have filed the underlying state tariff to comply with
    intrastate interconnection obligations under other statutory
    authority.

[^3]: Verizon Application at 4-6. "Existing" section 201 physical
    collocation arrangements are those that are in service or on order
    as of the effective date of Verizon's filing to amend its federal
    tariffs in response to the grant of its section 214 authorization in
    this order. Verizon Application at 4.

[^4]: *Expanded Interconnection with Local Telephone Company Facilities,
    Amendment of the Part 69 Allocation of General Support Facility
    Costs*, CC Docket Nos. 91-141 and 92-222, Report and Order and
    Notice of Proposed Rulemaking, 7 FCC Rcd 7369, 7372, para. 1 (1992);
    *Local Exchange Carriers' Rates, Terms, and Conditions for Expanded
    Interconnection Through Physical Collocation for Special Access and
    Switched Transport*, CC Docket No. 93-162, Second Report and Order,
    12 FCC Rcd 18730, 18733, para. 1 (1997) (*Physical Collocation
    Tariff Investigation Order*). The Commission's section 201 expanded
    interconnection requirements apply to LECs that are classified as
    Class A companies under section 32.11 of the Commission's rules, 47
    C.F.R. § 32.11. These are LECs that have annual revenues from
    regulated telecommunications operations that are equal to or above
    an indexed revenue threshold. The current revenue threshold for
    Class A carriers is \$121 million. *Annual Adjustment of Revenue
    Threshold*, Public Notice, 18 FCC Rcd 10,002 (Pric. Pol. Div. 2003).

[^5]: *Physical Collocation Tariff Investigation Order*, 12 FCC Rcd at
    18733, para. 1.

[^6]: *Bell Atlantic v. FCC*, 24 F.3d 1441, 1447 (D.C. Cir. 1994) (*Bell
    Atlantic*).

[^7]: *Expanded Interconnection with Local Telephone Company
    Facilities*, CC Docket No. 91-141, Memorandum Opinion and Order, 9
    FCC Rcd 5154, 5156, para. 3 (1994) (*Virtual Collocation Order*).

[^8]: *Virtual Collocation Order*, 9 FCC Rcd at 5166, para. 32.

[^9]: 47 U.S.C. § 251(c)(6). Congress did not amend section 201 with
    respect to collocation.

[^10]: 47 U.S.C. §§ 252(a), (b), (d), and (f). "A Bell operating company
    may prepare and file with a State commission a statement of the
    terms and conditions that such company generally offers within that
    State to comply with the requirements of section 251 and the
    regulations thereunder and the standards applicable under this
    section." 47 U.S.C. § 252(f)(1).

[^11]: 47 U.S.C. § 251(a)(1) and (c)(6).

[^12]: Bell Atlantic Tariff F.C.C. No. 1 Transmittal No. 883 (June 4,
    1996).

[^13]: A list of parties filing comments and reply comments is attached
    at Appendix A.

[^14]: For purposes of this rule section, an application is deemed filed
    on the date the Commission releases public notice of the filing. 47
    C.F.R. § 63.71(c). Public notice of Verizon's filing was released on
    August 19, 2002. *Comments Invited on Verizon's Application to
    Discontinue Federally-Tariffed Physical Collocation Service*, WC
    Docket No. 02-237, Public Notice, 17 FCC Rcd 16122 (Wireline Comp.
    Bur. 2002).

[^15]: *Verizon Telephone Companies Section 63.71 Application to
    Discontinue Expanded Interconnection Service Through Physical
    Collocation*, WC Docket No. 02-237, Order, 17 FCC Rcd 20411
    (Wireline Comp. Bur. 2002).

[^16]: Letter from Joseph DiBella, Assistant General Counsel --
    Regulatory, Verizon, to Marlene H. Dortch, Secretary, Federal
    Communications Commission, WC Docket No. 02-237 (Mar. 31, 2003)
    (Verizon March 31 *Ex Parte* Letter).

[^17]: Verizon Application at 2; Verizon Reply at 20. *See* 47 C.F.R. §
    64.1402(c). Subsequent to the court's decision in *Bell Atlantic*,
    the 1996 Act imposed a physical collocation requirement, which
    incumbent LECs now fulfill either through interconnection agreements
    with carriers or through SGATs. 47 U.S.C. § 251(c)(6).

[^18]: Verizon Application at 2. Of the former BOCs other than Verizon,
    four of the five SBC companies, Ameritech, Nevada Bell, Pacific
    Bell, and SNET, currently offer physical collocation in their
    federal tariffs. The remaining SBC company, SWBT, which serves five
    states, BellSouth, and Qwest do not offer physical collocation in
    their federal tariffs.

[^19]: Verizon Application at 1.

[^20]: Verizon Application at 8-9. *See* 47 C.F.R. § 63.71(a)(5)(ii).

[^21]: Verizon Application at 2.

[^22]: Verizon will continue to provide cross-connects between
    collocation arrangements as required by the Commission's rules.
    Verizon Reply at 4-6. *See* 47 C.F.R. § 51.323(h).

[^23]: Verizon Application at 5-6.

[^24]: Verizon Application at 4-5.

[^25]: Letter from Joseph Mulieri, Assistant Vice President Federal
    Regulatory Advocacy, Verizon, to Marlene H. Dortch, Secretary,
    Federal Communications Commission, WC Docket No. 02-237 at 1 (July
    11, 2003) (Verizon July 11 *Ex Parte* Letter).

[^26]: Verizon Application at 6.

[^27]: Verizon Application at 6-8; Verizon March 31 *Ex Parte* Letter at
    2.

[^28]: Verizon Application at 6.

[^29]: Verizon March 31 *Ex Parte* Letter at 1.

[^30]: Verizon March 31 *Ex Parte* Letter at 1-2.

[^31]: Verizon Application at 6-7; Verizon Reply at 4, 17; Verizon July
    11 *Ex Parte* Letter at 2.

[^32]: Verizon Application at 6-7; Verizon Reply at 4, 17; Letter from
    Ann D. Berkowitz, Project Manager-Federal Affairs, Verizon, to
    Marlene H. Dortch, Secretary, Federal Communications Commission, WC
    Docket No. 02-237, Att. at 4 (Dec. 19, 2002) (Verizon December 19
    *Ex Parte* Letter); Verizon July 11 *Ex Parte* Letter at 2.

[^33]: 47 U.S.C. § 214(a). Although authority to act upon applications
    to discontinue service is routinely delegated to the Wireline
    Competition Bureau, s*ee* 47 C.F.R. § 0.291(a)(1), an application to
    discontinue a service provided pursuant to our expanded
    interconnection regime presents a novel issue not present in prior
    discontinuance applications. Accordingly, we will resolve this
    application at the Commission level. *See* 47 C.F.R. § 0.291(a)(2).

[^34]: 47 C.F.R. § 63.71(a)(5)(ii); *Southwestern Bell Tel. Co., US West
    Communications, Bell Atlantic Tel. Cos., BellSouth Tel. Cos.,
    Application for Authority Pursuant to Section 214 of the
    Communications Act of 1934 to Cease Providing Dark Fiber Service*,
    File Nos. W-P-C-6670 and W-P-D-364, 8 FCC Rcd 2589, 2601, para. 59
    (1993) (*Dark Fiber Order*); *remanded on other grounds*,
    *Southwestern Bell v. FCC*, 19 F.3d 1475 (D.C. Cir. 1994).

[^35]: *Dark Fiber Order*, 8 FCC Rcd at 2600, para. 54.

[^36]: Verizon Application at 3.

[^37]: *Id.*

[^38]: Verizon Application at 2.

[^39]: *See* Sprint Comments at 9 (describing the "operational and
    practical" reasons behind Sprint's election to use federal physical
    collocation instead of state physical collocation).

[^40]: WorldCom Comments at 8.

[^41]: Verizon Reply at 25.

[^42]: SBC Reply at 1-2.

[^43]: *Expanded Interconnection with Local Telephone Company
    Facilities, Amendment of Part 69 Allocation of General Support
    Facilities Costs*, CC Docket Nos. 91-141 and 92-222, Report and
    Order and Notice of Proposed Rulemaking, 7 FCC Rcd 7369, 7390, para.
    39 (1992) (*Special Access Expanded Interconnection Order*);
    *Expanded Interconnection with Local Telephony Company Facilities,
    Amendment of Part 36 of the Commission's Rules and Establishment of
    a Joint Board*, CC Docket Nos. 91-141 Transport Phase I and 80-286,
    Second Report and Order and Third Notice of Proposed Rulemaking, 8
    FCC Rcd 7374 (1993) (*Switched Transport Expanded Interconnection
    Order*).

[^44]: *Bell Atlantic v. FCC*, 24 F.3d 1441 (D.C. Cir. 1994).

[^45]: *Virtual Collocation Order*, 9 FCC Rcd at 5156, para. 3.

[^46]: *Id.* at 5161, para. 17.

[^47]: *Id.* at 5159, para. 12.

[^48]: *Id.* at 5159-60, para. 12.

[^49]: 47 U.S.C. § 251(c)(6).

[^50]: Verizon Application at 2.

[^51]: These commenters assert that virtual collocation competitively
    disadvantages collocation customers by forcing them to rely on
    incumbent LECs for equipment installation, and maintenance and
    repair. ALTS *et al.* Comments at 14-15; Covad Comments at 4-5;
    Sprint Comments at 9-10; AT&T Reply at 6. We note that the
    commenters appear to be either telecommunications carriers or a
    trade association of telecommunications carriers, for which section
    251 physical collocation is available.

[^52]: *Virtual Collocation Order*, 9 FCC Rcd at 5159-60, para. 12.

[^53]: *Virtual Collocation Order*, 9 FCC Rcd at 5159, para. 10.

[^54]: *Virtual Collocation Order*, 9 FCC Rcd at 5159, paras. 10-11.

[^55]: 47 U.S.C. § 251(c)(6).

[^56]: 47 U.S.C. § 252(a) and (f).

[^57]: Verizon Application at 4-6.

[^58]: Verizon Reply at 3-4.

[^59]: *See, e.g.* Verizon Telephone Companies Tariff F.C.C. No. 11,
    Section 31.28.1(A)(2) and (B)(2) (federal NRC of \$47,686.20 for a
    100 square-foot collocation arrangement and monthly recurring space
    charge of \$2.04 per square foot) and Verizon New England Inc.
    Tariff NHPUC No. 84, Part M, Sections 5.2.2 and 5.2.3 (New Hampshire
    state NRC of \$14,686.00 for a 100 square-foot collocation
    arrangement and monthly recurring space charge of \$2.57 per square
    foot).

[^60]: Verizon Application at 6.

[^61]: Verizon Reply at 18.

[^62]: Verizon Application at 6-8; Verizon March 31 *Ex Parte* Letter.

[^63]: Verizon Application at 6-7; Verizon March 31 *Ex Parte* Letter at
    2. Verizon's New England region includes Massachusetts, Maine, New
    Hampshire, Rhode Island, and Vermont. Verizon's South region
    includes Washington, D.C., Delaware, Maryland, New Jersey,
    Pennsylvania, Virginia, and West Virginia. Verizon's New York region
    includes Connecticut and New York.

[^64]: Verizon Reply at 17.

[^65]: Allegiance *et al.* Comments at 12; AT&T Comments at 14; Sprint
    Comments at 7-8; AT&T Reply at 6-7.

[^66]: Verizon March 31 *Ex Parte* Letter.

[^67]: *Id.*

[^68]: Conversent Comments at 13; Sprint Comments at 5-7.

[^69]: Conversent Comments at 11. Verizon contends that it would be
    prohibitively burdensome to calculate a specific conversion credit
    for each collocator based on the length of time each has taken
    physical collocation services, and the various rates in effect
    during that period. Specifically, Verizon asserts that calculating
    carrier-specific credits would entail researching the date each
    collocation arrangement was ordered and the rates that were in
    effect at that time, as well as examining the history of each
    arrangement to determine if any augments or modifications were made
    to the arrangement and the rates in effect when the augments or
    modifications were made. Verizon Reply at 18.

[^70]: ALTS *et al.* Comments at 10-12, 22-24; Covad Comments at 5.

[^71]: Verizon Reply at 21.

[^72]: Verizon July 11 *Ex Parte* Letter at 1.

[^73]: *Id.*

[^74]: Verizon Application at 5.

[^75]: Allegiance *et al.* Comments at 12; ALTS *et al.* Comments at
    12-13; Choice One Comments at 6; Conversent Comments at 12-13; Covad
    Comments at 10; Time Warner Reply at 2, 5-6.

[^76]: Verizon Reply at 19.

[^77]: 47 U.S.C. § 252(d)(1); *Implementation of the Local Competition
    Provisions in the Telecommunications Act of 1996*, CC Docket No.
    96-98, First Report and Order, 11 FCC Rcd 15499, 15844-57, paras.
    672-703 (1996) (*Local Competition First Report and Order*)
    (subsequent history omitted).

[^78]: Verizon July 11 *Ex Parte* Letter at 1.

[^79]: Allegiance *et al.* Comments at 9-10; ALTS *et al.* Comments at
    9; AT&T Comments at 8; Conversent Comments at 7; Covad Comments at
    8-9; Network Access Solutions Comments at 5-8; Qwest Comments at
    4-5; Sprint Comments at 4-5; Time Warner Comments at 2-4.

[^80]: Verizon Reply at Att.

[^81]: Verizon Reply at 10-15.

[^82]: Qwest argues that Verizon is charging federal collocation
    customers improperly for DC power on a per-fused amp basis in
    violation of the language in its federal tariffs. Letter from Robert
    B. McKenna, Associate General Counsel, Qwest, to Marlene H. Dortch,
    Secretary, Federal Communications Commission, WC Docket No. 02-237
    (Oct. 17, 2002). Verizon's billing practices with respect to its
    federal tariff are not at issue in this proceeding, which is limited
    to consideration of Verizon's section 214 application to discontinue
    federally-tariffed physical collocation service. Parties wishing to
    challenge Verizon's billing practices may file a complaint pursuant
    to section 208 of the Communications Act, 47 U.S.C. § 208.

[^83]: (2 feeds) x (40 amps/feed) x (1.5 fusing factor) = 120 amps.

[^84]: Verizon Reply at 10 n.2.

[^85]: Verizon Reply at 10. Verizon will not bill customers for fuse
    changes resulting solely from the rate structure changes in moving
    from the federal to the state collocation tariffs. Verizon July 11
    *Ex Parte* Letter at 2.

[^86]: Verizon Reply at 9-10.

[^87]: Verizon Reply at 10.

[^88]: Verizon Reply at 9-15, Att.

[^89]: *See* Letter from Norina Moy, Director, Federal Regulatory Policy
    and Coordination, Sprint, to Marlene H. Dortch, Secretary, Federal
    Communications Commission, WC Docket No. 02-237 (Dec. 11, 2002)
    (Sprint's review indicated that grant of Verizon's application would
    result in a minor decrease in Sprint's recurring collocation
    expense, but the addition of a single augment under the state rates
    would eliminate this cost savings); Letter from Patrick J. Donovan,
    Counsel for Allegiance Telecom, Inc., and Focal Communications
    Corporation, to Marlene H. Dortch, Secretary, Federal Communications
    Commission, WC Docket No. 02-237 (Dec. 18, 2002) (Allegiance and
    Focal are not persuaded that they could or should reduce their DC
    power requirements); Letter from Frank S. Simone, Government Affairs
    Director, AT&T, to Marlene H. Dortch, Secretary, Federal
    Communications Commission, WC Docket No. 02-237 (Dec. 19, 2002)
    (Verizon's suggestion that conversion to state interconnection
    offerings will benefit CLECs is specious); Letter from Scott Sawyer,
    Vice President-Regulatory Affairs, Conversent Communications, LLC,
    to Marlene H. Dortch, Secretary, Federal Communications Commission,
    WC Docket No. 02-237 (Jan. 29, 2003) (Conversent cannot reduce its
    power request by two-thirds and its costs will increase if Verizon's
    application is granted). We discuss the impact of the proposed
    discontinuance on DC power rates at paragraph 34, *infra*.

    *But see* Letter from Don Shepheard, Vice President Federal
    Regulatory Affairs & Policy, Time Warner Telecom, to Marlene H.
    Dortch, Secretary, Federal Communications Commission, WC Docket No.
    02-237 (Dec. 20, 2002) (after discussions with Verizon regarding the
    fusing factor issue, Time Warner Telecom's issues with Verizon's
    application generally are resolved).

[^90]: ALTS *et al.* Comments at 6; AT&T Comments at 12; Covad Comments
    at 9; Sprint Comments at 8.

[^91]: *See American Telephone and Telegraph Co. Application for
    Authority Pursuant to Section 214 of the Communications Act to
    Discontinue the Offering of Type 400 Switching System Service*, File
    No. T-D-23028, Memorandum Opinion, Order and Certificate, 63 F.C.C.
    2d 371, 372-73, para. 4 (1977) (finding that increased charges to
    consumers were outweighed by other factors favoring grant of the
    application to discontinue service)). *See also AT&T Corp.
    Application for Authority Under Section 214 of the Communications
    Act, as Amended, to Discontinue the Offering of High Seas Service
    and to Close its Three Radio Coast Stations (KMI, WOM, and WOO)*,
    File No. ITC-MSC-19981229-00905, Memorandum Opinion and Order, 14
    FCC Rcd 13225, 13230, para. 10 (Int'l Bur. 1999) ("the Commission
    has made it clear that the mere fact that an alternative service
    costs more than the discontinued service, or requires customers to
    purchase additional equipment, does not render the alternative
    service nonviable as a substitute").

[^92]: *AT&T Corp. Application for Authority Under Section 214 of the
    Communications Act, as Amended, to Discontinue the Offering of High
    Seas Service and to Close its Three Radio Coast Stations (KMI, WOM,
    and WOO)*, File No. ITC-MSC-19981229-00905, Order on
    Reconsideration, 16 FCC Rcd 13636, 13644, para. 15 (Int'l Bur.
    2001).

[^93]: Indeed, rates for federal virtual collocation are governed by the
    "just and reasonable" requirements of section 201. 47 U.S.C. §
    201(b).

[^94]: WorldCom Comments at 4, 6.

[^95]: WorldCom Comments at 4.

[^96]: ALTS *et al.* Comments at 6; AT&T Comments at 12; Covad Comments
    at 9; Sprint Comments at 8.

[^97]: 47 U.S.C. §§ 252(d)(1), (e)(1), and (f); *Local Competition First
    Report and Order*, 11 FCC Rcd at 15844-57, paras. 672-703.

[^98]: ALTS *et al.* Comments at 8; Conversent Comments at 5; Covad
    Comments at 5.

[^99]: Conversent Comments at 1, 5.

[^100]: 47 U.S.C. § 252(f). The Commission may preempt a state
    commission's authority only if the state commission fails to act to
    carry out its responsibility under section 252. 47 U.S.C. §
    252(e)(5).

[^101]: Allegiance *et al.* Comments at 8-9; ALTS *et al.* Comments at
    21; AT&T Comments at 14-15; WorldCom Comments at 4-5; AT&T Reply at
    4, 7.

[^102]: "A cross-connection \[or cross-connect\] is a cabling scheme
    between cabling runs, subsystems, and equipment using patch cords or
    jumper wires that attach to connection hardware on each end."
    *Deployment of Wireline Services Offering Advanced
    Telecommunications Capability*, CC Docket No. 98-147, Fourth Report
    and Order, 16 FCC Rcd 15435, 15465, para. 58 (2001) (*Collocation
    Remand Order*) (citing John Vacca, The Cabling Handbook, 151
    (Prentice Hall 1998)).

[^103]: Verizon Reply at 5.

[^104]: *Id.* The Commission has held that incumbent LECs must provide
    this type of cross-connect pursuant to sections 201 and 251(c)(6) of
    the Act. *Collocation Remand Order*, 16 FCC Rcd at 15467-78, paras.
    62-84.

[^105]: 47 C.F.R. § 51.323(h). *See also Collocation Remand Order*, 16
    FCC Rcd at 15464-78, paras. 55-84 (requiring incumbent LECs to
    provision cross-connects between two collocated competitive LECs);
    *Deployment of Wireline Services Offering Advanced
    Telecommunications Capability*, CC Docket No. 98-147, Order on
    Reconsideration of Fourth Report and Order, and Fifth Report and
    Order, 17 FCC Rcd 16960, 16963, paras 1 n.2 and 9 (2002) (requiring
    incumbent LECs to file federal tariffs for cross-connects between
    collocated carriers).

[^106]: Verizon Application at 5.

[^107]: Conversent Comments at 8.

[^108]: *Id.*

[^109]: Conversent Comments at 9.

[^110]: Verizon Application at 5.

[^111]: Conversent Comments at 9-10.

[^112]: Verizon Reply at 7 (citing Verizon Telephone Companies Tariff
    F.C.C. No. 11, Section 31.28(C)(2) (note #)).

[^113]: Verizon Reply at 7.

[^114]: Allegiance *et al.* Comments at 1-3; AT&T Comments at 5-8;
    Network Access Solutions Comments at 4-5; Sprint Comments at 12-13;
    AT&T Reply at 3-4; Time Warner Telecom Reply at 4-5.

[^115]: Letter from Kenneth W. Rust, Director Government Relations-FCC,
    Verizon, to Magalie Roman Salas, Secretary, Federal Communications
    Commission, Transmittal No. 1373 (Apr. 11, 2001) (Bell Atlantic
    Transmittal No. 1373); Letter from Kenneth W. Rust, Director
    Government Relations-FCC, Verizon, to Magalie Roman Salas,
    Secretary, Federal Communications Commission, Transmittal No. 1374
    (Apr. 12, 2001) (Bell Atlantic Transmittal No. 1374).

[^116]: *The Bell Atlantic Telephone Companies Revisions for Tariff
    F.C.C. Nos. 1 and 11; The Verizon Telephone Companies Tariff F.C.C.
    Nos. 1 and 11*, Transmittal Nos. 1373 and 1374, Transmittal Nos. 23
    and 24, Order, 16 FCC Rcd 8901 (Comp. Pric. Div. 2001); *Bell
    Atlantic Telephone Companies Revisions in Tariff FCC Nos. 1 and 11,
    Verizon Telephone Companies Tariff FCC Nos. 1 and 11*, CC Docket No.
    01-140, Transmittal Nos. 1373 and 1374, Transmittal Nos. 23 and 24,
    Order Designating Issues for Investigation, 16 FCC Rcd 12967 (Comm.
    Carr. Bur. 2001).

[^117]: *Bell Atlantic Telephone Companies Revisions in Tariff FCC Nos.
    1 and 11, Verizon Telephone Companies Tariff FCC Nos. 1 and 11*, CC
    Docket No. 01-140, Transmittal Nos. 1373 and 1374, Transmittal Nos.
    23 and 24, Order Terminating Tariff Investigation, 16 FCC Rcd 17572
    (2001).

[^118]: *Physical Collocation Tariff Investigation Order*, 12 FCC Rcd
    18730. Although the Commission reviewed Verizon's DC power rates in
    the 2001 tariff investigation, no rate changes resulted from that
    proceeding because Verizon reinstated its previous rates.

[^119]: *See, e.g., The Collocation Tariff Filed Under Transmittal No.
    1003 by Bell Atlantic-Maryland, Inc.*, Case No. 8766, Order No.
    77575 (MD PSC, Feb. 27, 2002); *Investigation by the Department of
    Telecommunications and Energy on its own Motion into the Appropriate
    Pricing, Based Upon Total Element Long-Run Incremental Costs, for
    Unbundled Network Elements and Combinations of Unbundled Network
    Elements, and the Appropriate Avoided-Cost Discount for Verizon New
    England, Inc. d/b/a Verizon Massachusetts' Resale Services in the
    Commonwealth of Massachusetts*, D.T.E. 01-20, Order (MA DTE, July
    11, 2002); *Bell Atlantic Petition for Approval of Statement of
    Generally Available Terms Pursuant to the Telecommunications Act of
    1996*, Docket DT 97-171, Order Addressing Motion for Reconsideration
    of Order No. 23,847, Order No. 23,915 (NH PUC, Feb. 4, 2002);
    *Implementation of the District of Columbia Telecommunications
    Competition Act of 1996 and Implementation of the Telecommunications
    Act of 1996*, Formal Case No. 962, Order, Order No. 12614 (DC PSC,
    Dec. 12, 2002).

[^120]: Allegiance *et al.* Comments at 4-8; ALTS *et al.* Comments at
    19; WorldCom Comments at 4, 6-7.

[^121]: Verizon December 19 *Ex Parte* Letter Att. at 2.

[^122]: *Id.*

[^123]: Letter from Ann D. Berkowitz, Project Manager-Federal Affairs,
    Verizon, to Marlene H. Dortch, Secretary, Federal Communications
    Commission, WC Docket No. 02-237 (Apr. 25, 2003).

[^124]: Verizon Reply at 23-24.

[^125]: *See supra* n.Error: Reference source not found.

[^126]: *See supra* para. 29.

[^127]: *See supra* para. 22.

[^128]: 47 U.S.C. §§ 251(c)(6), 252(f). *See AT&T Corp. v. Iowa Utils.
    Bd.*, 525 U.S. 366, 379-82 (1999).

[^129]: *See* para. 10 *supra*.

[^130]: *See MTS and WATS Market Structure*, CC Docket No. 78-72 Phase
    I, 97 FCC 2d 682, 715, para. 83 (1983) (allowing non-carriers to
    continue paying local business exchange service rates for interstate
    access services due to concerns about customer impact and market
    displacement of imposing federally-tariffed access charges).

[^131]: Network Access Solutions Comments at 2-3; Qwest Comments at 1-7.

[^132]: Network Access Solutions Comments at 3; Qwest Comments at 2-3.

[^133]: Verizon Reply at 26.

[^134]: Verizon Reply at 27.

[^135]: 47 U.S.C. § 214(c) ("The Commission . . . may attach to the
    issuance of the \[section 214\] certificate such terms and
    conditions as in its judgment the public convenience and necessity
    may require. . . . Any . . . discontinuance . . . contrary to the
    provisions of this section may be enjoined by any court of competent
    jurisdiction at the suit of the United States, the Commission, the
    State commission, any State affected, or any party in interest.").

[^136]: Verizon Application at 4-6.

[^137]: Verizon Application at 6.

[^138]: Verizon July 11 *Ex Parte* Letter at 1.

[^139]: *See supra* paras. 17-20; Verizon Application at 6-8; Verizon
    March 31 *Ex Parte* Letter. The conversion credit would also apply
    to any existing Verizon section 201 physical collocation
    non-telecommunications carrier customers that opt to convert to
    state interconnection offering rates, terms, and conditions through
    non-carrier contracts.

[^140]: 47 U.S.C. §§ 208, 214(c).