**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS,**

**APPROVING IN PART AND DISSENTING IN PART**

Re: *Review of the Commission's Rules Regarding the Pricing of Unbundled
Network*

*Elements and the Resale of Service by Incumbent Local Exchange
Carriers*

*(WC Docket No. 03-173)*

Seven years ago, the Commission adopted a forward-looking economic cost
policy for pricing unbundled network elements. We did the right thing.
The Supreme Court blessed our action---pretty heady stuff for a
Commission not always accustomed to such approbations from above. So
we're building on solid ground here, with no judicial charge to start
all over or to perform drastic reconstruction. It's clear to me that
from time to time we should review and recalibrate our policy, known as
Total Element Long Run Incremental Cost, or TELRIC. We have a duty to
adjust it over time to ensure that, as Congress intended, incumbents are
justly compensated for their network costs plus a reasonable profit. At
the same time, we need to ensure that competitors pay prices that induce
efficient market entry. There is also the need to adjust our policy to
reflect the new realities of the recent *Triennial Review*.

To a significant extent we initiate a proceeding today that lays the
groundwork for accomplishing these objectives. There is much in this
item that I am pleased to support. I regret, however, that I cannot
support today's Notice of Proposed Rulemaking *en toto*. I just don't
believe the record at hand justifies the making of important, even if
tentative, conclusions. Such tentative conclusions often have a curious
way of becoming final. On the basis of little or no prior record, the
majority today adopts a tentative conclusion concerning so-called
real-world network attributes that I believe is confusing and
inconsistent with basic premises of TELRIC that were upheld as a
reasonable interpretation of Section 252(d)(1) by the Supreme Court. For
a Commission striving to provide clarity to an industry, this is a
strange way to do it.

Moreover, some of the questions that flow from this tentative conclusion
come close to saying that the assumptions that undergird our TELRIC
policy are misdirected and flawed. Again, these are the same assumptions
that passed muster with the highest court in the land. I have no
objection to asking probing questions; I just think that a tentative
conclusion here is unnecessary and probably unwise.

Despite this reservation, I appreciate my colleagues' willingness to
engage in a dialogue and their efforts to accommodate some of my
concerns. I think this is a stronger item as a result. I look forward to
our continuing work together on this.

Finally, I hope---I really hope---that we can encourage all the parties
interested in TELRIC to sit together and discuss the issues attending it
in something approaching candor and maybe even a little cooperation. I
think all the company CEOs and others directly impacted have heard my
plea on this over the past two years since I came here. Frankly, it was
easier to get the Russians and the Chinese to sit down with us during
the latter days of the Cold War than it is to convene a TELRIC dialogue.
It's not that I expect everyone to come to a joyous outcome on this, but
rather just a hope that there might be one or two or maybe even three
facts we could agree on and then see if from a small patch of common
ground we can't do some building out. I'd like to see everyone a part of
this---incumbents and competitors, our Commission and the State
Commissions, traditional and non-traditional stakeholders. Crafting
appropriate rules for our unbundled network element pricing policy will
be a daunting task. We cannot get it done without less rhetoric and more
dialogue among all the players. Toward that end, Mr. Chairman and my
colleagues, I would very much like to see us hold some hearings or a
forum to bring the players together, or perhaps even commence a Joint
Conference to jumpstart discussion and engage our counterparts in the
States on this important topic. I think this would be an excellent way
to follow through on the work this proceeding today commences.