**Before the**

Federal Communications Commission

Washington, D.C. 20554

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| In the Matters of                | * | WC Docket No. 02-112         |
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| Section 272(f)(1) Sunset of the  | ) | CC Docket No. 00-175         |
| BOC Separate Affiliate and       | * |                              |
| Related Requirements             | * | WC Docket No. 06-120         |
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+----------------------------------+---+------------------------------+

REPORT and order and

memorandum opinion and order

**Adopted: August 30, 2007 Released: August 31, 2007**

By the Commission: Commissioners Copps and Adelstein concurring in part,
dissenting in part, and issuing a joint statement; Commissioners Tate
and McDowell issuing separate statements.

Table of Contents

Para.

I. Introduction 1

II\. BACKGROUND 4

A. Historical Regulation of InterLATA Telecommunications Services 5

B. Section 272 Sunset Rulemaking 14

C. Equal Access Scripting Requirement 17

D. Qwest Forbearance Proceeding 17

III\. discussion 18

A. Report and Order in WC Docket No. 02-112 and CC Docket No. 00-175 19

1\. Market Analysis 19

a\. Domestic, In-region, Interstate, Long Distance Services 22

\(i\) Relevant Product Markets 22

\(ii\) Relevant Geographic Markets 32

\(iii\) Market Participants 36

\(iv\) Analysis of Traditional Market Power Factors 38

b\. International Telecommunications Services 60

\(i\) Wholesale Markets 61

\(ii\) End-User Markets 62

c\. Control of Bottleneck Access Facilities 64

2\. Dominant Carrier Regulation 65

a\. In-Region, Interstate, Long Distance Services 66

\(i\) Classical Market Power 66

\(ii\) Exclusionary Market Power 69

\(iii\) Conclusion 72

b\. International Telecommunications Services 73

c\. Effect of Nondominance Findings 75

3\. Structural Safeguards 79

a\. Section 272 Safeguards 79

b\. AT&T's and Verizon's Independent Incumbent LEC Affiliates 87

4\. Other Safeguards 89

a\. Continuing Requirements 90

b\. Additional Requirements 95

\(i\) Special Access Performance Metrics 96

\(ii\) Imputation 99

\(iii\) Low-Volume Usage Plans 106

\(iv\) Monthly Usage Information 108

c\. Advantages of Our New Framework 109

d\. Alternative Proposed Safeguards 112

B. Memorandum Opinion and Order in WC Docket No. 06-120 117

1\. Equal Access Scripting Requirement 117

a\. Overview 117

b\. Discussion 119

2\. Effective Date 127

IV\. Procedural Matters 128

A. Final Regulatory Flexibility Act Certification 128

B. Paperwork Reduction Act 131

C. Congressional Review Act 133

D. Accessible Formats 134

V. ORDERING CLAUSES 135

APPENDIX A -- COMMENTERS

APPENDIX B -- MASS MARKET DATA

APPENDIX C -- ENTERPRISE MARKET DATA

APPENDIX D -- WHOLESALE LONG DISTANCE VOICE AND DATA MARKETS

# Introduction

1.  In this Order, we establish a new framework to govern the provision
    of in-region, long distance services by the Bell Operating Companies
    (BOCs) and their independent incumbent local exchange carrier
    (incumbent LEC) affiliates.[^1] This framework replaces
    unnecessarily burdensome regulation with less intrusive measures
    that protect important customer interests while allowing the BOCs
    and their independent incumbent LEC affiliates to respond to
    marketplace demands efficiently and effectively. We find that this
    new framework will increase the BOCs' and the BOC affiliates'
    ability to develop and deploy innovative long distance services that
    meet their customers' needs.

2.  Our new framework, which applies to AT&T, Qwest, and Verizon, is
    consistent with the Commission's decision in the *Qwest Section 272
    Sunset Forbearance Order*.[^2] As discussed in that Order, our
    current rules force a BOC to choose between two different regulatory
    regimes in providing in-region, long distance services, both of
    which impose significant burdens and costs: the BOC can provide
    these services on a nondominant carrier basis through a section 272
    separate affiliate; alternatively, it can provide these services
    directly or through an affiliate that is not a section 272 separate
    affiliate subject to dominant carrier regulation, including rate
    regulation and tariff-filing requirements.[^3] AT&T's and Verizon's
    independent incumbent LEC affiliates must provide in-region,
    domestic, interexchange telecommunications services and in-region,
    international telecommunications services only through rule 64.1903
    separate affiliates. We conclude, for the reasons discussed below,
    that a new regulatory framework is more appropriate. Our new
    framework allows AT&T, Qwest, and Verizon to provide in-region,
    interstate, long distance services either directly or through
    affiliates that are neither section 272 separate affiliates nor rule
    64.1903 separate affiliates, subject to nondominant carrier
    regulation, as long as they comply with certain targeted safeguards
    set forth below as well as with other continuing statutory and
    regulatory obligations.[^4]

3.  We also forbear from application of the Equal Access Scripting
    Requirement (EA Scripting Requirement) to the BOCs. We find this
    requirement, under which incumbent LECs must provide customers
    seeking new telephone exchange service with certain information
    regarding their long distance options, no longer justified as
    applied to AT&T, Qwest, and Verizon, given the marketplace changes
    that have occurred since the requirement's adoption and the
    requirement's relative costs and benefits. We also find good cause
    to waive the EA Scripting Requirement for the BOCs' independent
    incumbent LEC affiliates.

# BACKGROUND

4.  Until the Commission's recent *Qwest Section 272 Forbearance
    Order*,[^5] all the BOCs were required to provide in-region,
    interLATA telecommunications services in accordance with the
    structural, transactional, and accounting requirements set forth in
    section 272 of the Communications Act of 1934, as amended
    (Communications Act or Act), and our implementing rules, or they
    would be subject to dominant carrier regulation. We summarize these
    regulatory requirements below.

## Historical Regulation of InterLATA Telecommunications Services

5.  In a series of orders in the *Competitive Carrier* proceeding, the
    Commission distinguished two kinds of carriers -- those with
    individual market power (dominant carriers) and those without market
    power (nondominant carriers).[^6] The Commission found it
    appropriate to continue to subject dominant carriers to full
    regulation under Title II of the Communications Act.[^7] The
    Commission further found, however, that because nondominant carriers
    lack market power, "application of our current regulatory procedures
    to nondominant carriers imposes unnecessary and counterproductive
    regulatory constraints upon a marketplace that can satisfy consumer
    demand efficiently without government intervention,"[^8] and
    therefore it was appropriate to streamline regulation of such
    carriers.[^9] The Commission found AT&T to be dominant in the
    provision of interstate, long distance services both because of its
    large long distance market share and its control of bottleneck local
    facilities.[^10]

6.  During the years following this finding, however, the long distance
    marketplace became increasingly competitive and AT&T's long distance
    market share declined significantly. In October 1995, the Commission
    found AT&T to be nondominant in the provision of interstate long
    distance services.[^11] The Commission found that "AT&T neither
    possesses nor can exercise individual market power within the
    interstate, domestic, interexchange market as a whole."[^12] AT&T
    also made voluntary commitments that were intended to allay concerns
    that had been raised concerning, for example, the effect of such
    reclassification on service to customers that make few interstate
    long distance calls, resellers, and geographically deaveraged
    rates.[^13] Based on its findings and AT&T's commitments, the
    Commission granted AT&T's motion for reclassification as a
    nondominant carrier.[^14]

7.  In February 1996, the Telecommunications Act of 1996 became
    law.[^15] The 1996 Act permitted the BOCs, which had been prohibited
    from providing interLATA telecommunications services under the
    Modification of Final Judgment (MFJ),[^16] to provide upon enactment
    interLATA services[^17] that originate outside of their
    regions.[^18] The 1996 Act required the BOCs to apply to the
    Commission for approval to provide *in-region*, interLATA services,
    however; and it conditioned such approval on certain Commission
    determinations.[^19] Specifically, under section 271 of the Act, the
    Commission was required to determine, *inter alia*, whether the BOC
    seeking permission to provide such services had complied with
    certain market-opening requirements contained in section 271 and
    whether the BOC would provide those services in accordance with the
    safeguards in section 272 of the Act.[^20]

8.  Section 272 imposes various structural, transactional, and
    nondiscrimination safeguards on the BOCs' provision of in-region,
    long distance services. Congress provided that the section 272
    safeguards, other than those in section 272(e), would sunset three
    years after a BOC receives interLATA authority in a state, absent
    Commission action extending that period.[^21] These section 272
    safeguards that sunset include requirements that: (1) the BOCs
    provide in-region, interLATA services only through separate
    affiliates;[^22] (2) the separate affiliates operate independently
    from their BOC affiliates;[^23] (3) the separate affiliates maintain
    books, records, and accounts separate from those their BOC
    affiliates maintain;[^24] (4) the separate affiliates conduct any
    transactions with their BOC affiliates on an arm's length
    basis;[^25] (5) the BOCs do not discriminate between their section
    272 separate affiliates and other entities in the provision or
    procurement of goods, services, facilities, and information, or in
    the establishment of standards;[^26] and (6) the BOCs, after
    receiving section 271 approval, obtain and pay for biennial joint
    federal/state audits to determine whether they have complied with
    section 272.[^27] In addition, section 272(e) sets forth certain
    safeguards that do not sunset after three years, including
    requirements that: (1) each BOC or BOC affiliate that is classified
    as an incumbent LEC must "fulfill any requests from an unaffiliated
    entity for telephone exchange service and exchange access within a
    period no longer than the period in which it provides such telephone
    exchange service and exchange access to itself or to its
    affiliates;"[^28] and (2) each BOC must charge its section 272
    separate affiliate, or "impute to itself (if using the access for
    its provision of its own services), an amount for access to its
    telephone exchange service and exchange access that is no less than
    the amount charged to any unaffiliated interexchange carriers for
    such service."[^29]

9.  Non-BOC incumbent LECs (also known as independent incumbent LECs)
    also are subject to structural separation requirements if they wish
    to provide in-region, interstate, interexchange telecommunications
    services other than through resale. Specifically, independent
    incumbent LECs are required to provide these services only through
    separate affiliates that satisfy the separation requirements in
    section 64.1903 of our rules.[^30] The separate affiliate must: (1)
    maintain books of account separate from those the independent
    incumbent LEC maintains; (2) purchase services from the independent
    incumbent LEC pursuant to the incumbent LEC's tariffs or generally
    available contract rates; and (3) not jointly own transmission or
    switching facilities with its independent incumbent LEC.[^31] Both
    AT&T and Verizon have independent incumbent LEC affiliates, though
    these affiliates voluntarily comply with the more stringent
    safeguards set forth in section 272 and the Commission's rules
    governing BOC provision of in-region, interLATA services.[^32]

10. In the *LEC Classification Order,* the Commission addressed the
    issue of whether, once a BOC received in-region, interLATA
    authority, its provision of in-region, interstate, long distance
    services should be subject to dominant carrier obligations.[^33] In
    that Order, the Commission focused its analysis on: (1) whether a
    section 272 separate affiliate could unilaterally raise prices of
    in-region, interstate, long distance services by restricting its own
    output; and (2) whether the BOC could indirectly raise prices of
    those services by increasing the price of essential inputs that its
    rivals need to offer their services.[^34] The Commission found that
    the section 272 separate affiliates were unlikely to be able
    unilaterally to raise the prices of in-region, interstate, long
    distance services,[^35] and that, although the BOCs possessed
    exclusionary market power over bottleneck access facilities, various
    safeguards prevented them from raising the prices of those services
    indirectly by raising rivals' costs.[^36]

11. The Commission further found that dominant carrier regulations were
    "generally designed to prevent a carrier from raising prices by
    restricting its own output rather than to prevent a carrier from
    raising its prices by raising its rivals' costs."[^37] Moreover, it
    found that dominant carrier regulation could "dampen competition"
    and would impose significant costs and burdens on the BOC section
    272 separate affiliates.[^38] Based on these findings, the
    Commission concluded that, so long as the BOCs provided in-region,
    interstate, long distance services through section 272 separate
    affiliates, these affiliates should be treated as nondominant in the
    provision of such services.[^39] The Commission stated that it could
    not predict how competition would develop once the BOCs received
    in-region interLATA authority or what safeguards, if any, would be
    needed after the section 272 safeguards sunset.[^40] Subsequently,
    the Commission made clear that, following sunset of the section 272
    safeguards, to the extent a BOC chooses to provide in-region,
    interstate, interLATA telecommunications services either directly or
    through an affiliate that is not a section 272 separate affiliate,
    it would be subject to dominant carrier regulation.[^41]

12. The Commission granted its final interLATA authority to a BOC for an
    in-region state on December 3, 2003,[^42] and the Commission has not
    extended the period for which section 272 safeguards (other than
    those in section 272(e)) apply. Thus the section 272 requirements,
    other than those in section 272(e), have sunset throughout all BOC
    regions. Accordingly, section 272 does not preclude the BOCs from
    providing in-region, interLATA, long distance services either
    directly or through an affiliate that is not a section 272 separate
    affiliate in all their in-region states.[^43] Despite the sunset of
    section 272's requirements, however, the BOCs continue to provide
    virtually all of their in-region, interstate, interLATA, long
    distance services through their section 272 separate affiliates.
    These affiliates provide in-region, interstate, long distance
    services pursuant to the Commission's rules for nondominant
    carriers.[^44] These rules generally preclude carriers classified as
    nondominant in the provision of interstate and international long
    distance services from filing tariffs for those services.[^45]
    Instead, carriers subject to these rules provide those services
    pursuant to generally available offerings posted on their websites
    and under contract to large enterprise customers.[^46]

13. Under the *LEC Classification Order*, the BOCs would be subject to
    dominant carrier regulation if they provided in-region, interLATA,
    long distance services in a manner that did not comply with section
    272 and the Commission's implementing rules, absent Commission
    action relieving them of the obligation to comply with dominant
    carrier rules.[^47] These rules, among other things, would require
    the BOCs to file tariffs setting forth the prices, terms, and
    conditions under which they offer such services.[^48] According to
    our tariffing rules, these tariff filings would have to contain
    detailed information including twelve-month cost projections, and
    working papers and statistical support for any new services
    offered.[^49] The tariffs, cost projections, and supporting
    documentation would have to be filed at least seven or fifteen days
    before the BOCs would be permitted to initiate new services or
    revise existing services.[^50] The BOCs would also have to perform
    and file calculations as specified in our rules to change their
    maximum rates.[^51]

## Section 272 Sunset Rulemaking

14. In May 2002, the Commission initiated a rulemaking proceeding (the
    *Section 272 Sunset* proceeding) to determine what regulatory
    framework should apply to BOC provision of in-region, interLATA
    telecommunications services after the section 272 safeguards (other
    than those in section 272(e)) had sunset pursuant to section
    272(f)(1).[^52] The Commission invited comment on whether it should
    extend those safeguards beyond the three-year period Congress
    established for each state.[^53] The Commission also invited comment
    on what, if any, alternative safeguards it might apply to the BOCs'
    provision of in-region, interLATA, telecommunications services.[^54]

15. In May 2003, the Commission issued a *Further Notice* seeking
    comment on whether the BOCs should be classified as dominant if they
    provided in-region, interstate and international, long distance
    services in a way that did not comply with the section 272 separate
    affiliate requirements.[^55] This *Further Notice* also invited
    further comment on the issues raised in the *Independent Incumbent
    LEC* proceeding, concerning whether independent incumbent LECs
    should be classified as dominant in their provision of in-region,
    interstate and international, interexchange telecommunications
    services if the Commission eliminated or modified the separate
    affiliate requirements in section 64.1903 of the Commission's
    rules.[^56]

## Equal Access Scripting Requirement

16. In June 2006, AT&T filed a petition asking the Commission to forbear
    from, among other things, "obligations that require BOCs to inform
    new customers that they have a choice of long distance providers and
    to read them a list of providers."[^57] This EA Scripting
    Requirement requires incumbent LECs to inform customers who call to
    obtain new local exchange service that they may obtain long distance
    service from other carriers, and to read the customers a list of
    carriers offering long distance service in their area upon
    request.[^58] This requirement originated during the implementation
    of equal access following divestiture and is preserved by section
    251(g) of the Act.[^59]

## Qwest Forbearance Proceeding

17. In November 2005, Qwest filed a petition asking the Commission to
    forbear from applying its dominant carrier rules to Qwest if Qwest
    were to provide in-region, interstate, interLATA, telecommunications
    services in a manner that did not meet the requirements of section
    272 and the Commission's implementing rules.[^60] The Commission
    granted in part and denied in part Qwest's forbearance request,
    subject to certain conditions.[^61] The Commission found that Qwest
    lacked classical market power in the provision of in-region,
    interstate, interLATA, telecommunications services,[^62] but further
    found that Qwest might continue to have exclusionary market power in
    relation to these services by reason of its control of bottleneck
    facilities. It determined, however, that, despite Qwest's possibly
    possessing exclusionary market power, the burden of compliance with
    dominant carrier regulation outweighed the benefits.[^63] The
    Commission further found that existing safeguards, along with
    certain special access performance metrics and imputation conditions
    that it adopted, were adequate to prevent Qwest from exercising this
    exclusionary market power.[^64] Accordingly, the Commission found
    that Qwest could provide its in-region, interstate, interLATA
    telecommunications services without complying with all the
    requirements of section 272 and the Commission's implementing rules
    in its provision of these services, and that it would not be subject
    to section 203 and certain dominant carrier tariffing, price cap,
    rate of return, discontinuance, and transfer of control rules,
    provided that it complied with its ongoing statutory obligations and
    the conditions adopted in the Order.[^65]

# discussion

18. As discussed below, we establish a new regulatory framework for the
    BOCs' and their independent incumbent LEC affiliates' provision of
    in-region, long distance services. As in prior orders, we begin by
    analyzing whether these carriers could exercise either classical or
    exclusionary market power. We then consider the relative costs and
    benefits of both dominant carrier regulation and the section 272
    structural safeguards. As explained below, we find that dominant
    carrier regulation is not warranted, and that the current structural
    safeguards should be replaced with other, less costly regulations
    that still protect consumers and competition. We also find that
    forbearance from the application of the EA Scripting Requirement to
    the BOCs is warranted here. We also find good cause to waive the EA
    Scripting Requirement for the BOCs' independent incumbent LEC
    affiliates.

## Report and Order in WC Docket No. 02-112 and CC Docket No. 00-175 

### Market Analysis

19. In this part, we address whether the BOCs could exercise either
    classical or exclusionary market power with respect to in-region,
    long distance services provided either directly or through an
    affiliate that is not a section 272 separate affiliate. Our analysis
    builds upon the Commission's analyses in prior proceedings.
    Specifically, in the *Competitive* *Carrier* proceeding, the
    Commission determined that dominant carrier regulation was not
    necessary to ensure just, reasonable, and nondiscriminatory rates
    and practices where a carrier lacked individual market power.[^66]
    In the *LEC Classification Order*, the Commission elaborated on the
    conditions under which a carrier could exercise market power.[^67]

20. We follow these precedents and begin our analysis by first defining
    the relevant product and geographic markets.[^68] We then consider
    whether each BOC could exercise market power with respect to
    in-region, interstate and international, long distance services if
    they provide such services through an affiliate that is not
    compliant with section 272, by either: (1) unilaterally raising the
    retail price of its in-region, interstate, long distance services
    (*i.e.*, exercising "classical" market power);[^69] or (2) using its
    control over bottleneck local facilities to raise its rivals' costs
    (*i.e.,* exercising "exclusionary" market power).[^70] We conclude
    that the BOCs lack classical market power with respect to these
    services. We further conclude, however, that the BOCs have failed to
    demonstrate that they lack exclusionary market power with regard to
    these services by reason of their control of bottleneck facilities.

21. We note that the Commission recently performed a classical market
    analysis with respect to Qwest's in-region, interstate, long
    distance services in the *Qwest Section 272 Sunset Forbearance
    Order*, where it concluded that Qwest lacked classical market power
    in the provision of these services.[^71] Nothing in the record in
    this proceeding compels a different finding with regard to Qwest. We
    therefore find it appropriate to rely on this prior Commission
    finding with respect to Qwest, and do not restate our prior analysis
    here. Consequently, our analysis in this Order of whether the BOCs
    possess classical market power in the provision of in-region,
    interstate, long distance services focuses on AT&T and Verizon.

#### Domestic, In-region, Interstate, Long Distance Services

##### Relevant Product Markets

###### Mass Market Services

22. Based on the record in this proceeding and consistent with the
    *AT&T/BellSouth Order,* the *AT&T/SBC Order,* the *Verizon/MCI
    Order*, and the *Qwest Section 272 Sunset Forbearance Order*,[^72]
    we identify two relevant product markets for our mass market
    analysis: (1) stand-alone long distance services; and (2) bundled
    local and long distance services. Also, consistent with those
    orders, we consider both the demand for "access" and demand for
    "usage" when defining our relevant product markets.[^73]

####### Stand-Alone Long Distance Services

23. As the Commission found in the *BOC Merger Orders* and the *Qwest
    Section 272 Sunset Forbearance Order*, we find here that long
    distance service purchased on a stand-alone basis is becoming a
    fringe market. Evidence of this includes the 2004 decision by legacy
    AT&T to cease marketing long distance services and the declining
    proportion of consumers that choose a long distance provider
    different from their local service provider.[^74] Nonetheless, out
    of an abundance of caution and to ensure consistency with Commission
    precedent,[^75] we analyze stand-alone interstate long distance as a
    separate relevant product market.

24. As discussed below, we consider two alternative measures of market
    share in analyzing stand-alone long distance services. The first
    measure considers only consumers with a presubscribed wireline long
    distance carrier. This approach is consistent with the approach the
    Commission adopted in the *BOC Merger Orders* and the *Qwest Section
    272 Sunset Forbearance Order.*[^76] We recognize that this approach
    is overly narrow, however, and will tend to overstate AT&T's and
    Verizon's market positions, because it ignores two important
    factors: the ability of all presubscribed interexchange customers to
    make interstate, long distance calls using transaction services,
    such as prepaid calling cards and dial-around services; and the fact
    that a majority of these customers also subscribe to mobile wireless
    service and can make interstate, long distance calls using their
    wireless phones.[^77] In order to capture the possibility of such
    usage substitution, we therefore also perform a second market share
    calculation, which attempts to take into account the ability of
    presubscribed customers to engage in usage substitution.[^78]

25. In prior orders, the Commission has found that it may be appropriate
    to define narrower relevant product markets based on customer class
    if service providers engage in price discrimination.[^79] Both the
    record and the long distance carriers' web sites indicate that
    carriers generally offer multiple alternative long distance service
    packages to mass-market customers, which vary in terms of their
    monthly recurring charges and per-minute charges.[^80] These
    alternative packages appear designed to appeal to customer groups
    with differing demand patterns for long distance services. While
    such pricing plans generally benefit consumers, we believe that
    certain consumers who make relatively few interstate, long distance
    calls and who do not subscribe to mobile wireless service or
    broadband Internet access service in addition to their wireline long
    distance provider, may not face the same wide choice of alternative
    providers. Moreover, although there is insufficient information in
    the record for us to conclude that such customers constitute a
    separate relevant product market, we are concerned, as was the
    Commission in the *AT&T Reclassification* and the *Qwest Section 272
    Sunset Forbearance Orders*,[^81] that competition for such customers
    may not be as intense as it is for higher volume interstate, long
    distance users.

####### Bundled Local and Long Distance Services

26. Consistent with the *BOC Merger Orders* and the *Qwest Section 272
    Sunset Forbearance Order*, we also find it appropriate to define and
    examine a separate relevant product market for bundled local and
    long distance services.[^82] Because of the varied marketing
    strategies and limitations in the available data, we define a local
    and long distance service bundle,[^83] for purposes of this
    proceeding only, as a customer's purchase of local and long distance
    services from the same carrier, regardless of whether these services
    are purchased together as part of an advertised bundle from a single
    carrier or the consumer creates the bundle by selecting
    separately-offered local and long distance service plans from the
    same provider. The evidence indicates that a majority of consumers
    purchase local and long distance services from a single provider
    today and that this percentage has been increasing over time.[^84]
    We find that this trend is likely to continue and that the
    stand-alone wireline long distance market is steadily declining in
    size relative to the bundled services market.[^85]

27. Several other factors support our defining a separate relevant
    product market for bundled local and long distance services. First,
    the Commission recently determined that the BOCs' marketing and
    pricing strategies are designed to encourage subscription to a
    bundled service package.[^86] Second, the Commission has recently
    determined, and the evidence in this record indicates, that
    intermodal competition between wireline services and services
    provided on alternative service platforms, such as facilities-based
    VoIP and mobile wireless, has been increasing and is likely to
    continue to increase.[^87] These intermodal services tend to be
    offered as a bundle of local and long distance services.[^88] These
    findings suggest that competition is increasingly occurring between
    bundled offerings, rather than between a bundled package offered by
    an intermodal competitor and stand-alone local and long distance
    services offered by incumbent LECs.

###### Enterprise Services

28. Retail enterprise customers purchase a variety of different
    communications services, including local voice, long distance and
    international voice, and data services.[^89] In addition, enterprise
    customers frequently purchase high-capacity transmission
    services,[^90] including Frame Relay,[^91] Asynchronous Transfer
    Mode (ATM),[^92] Gigabit Ethernet,[^93] and similar services
    provided via emerging technologies.[^94] Retail enterprise customers
    also purchase other facilities and customer premises equipment
    (CPE).[^95]

29. Consistent with Commission precedent and with the record in this
    proceeding,[^96] we find that the services offered to enterprise
    customers fall into a number of separate relevant product markets.
    More specifically, we find that long distance voice and data
    services constitute distinct relevant product markets.

30. We have less information about the substitutability of different
    transmission services. Although there are data indicating that the
    number of customers for Frame Relay is declining on a nationwide
    basis, and that the number of IP transmission services customers is
    increasing,[^97] we do not have data on elasticities (and cross
    elasticities) of demand for particular transmission services.
    Similarly, we lack sufficient information about the migration time,
    price differences, and service quality differences that customers
    face when deciding to change from one transmission service to
    another. Thus, the evidence is insufficient for us to define
    precisely the boundaries of those transmission service markets.
    Given the data available in the record, and for purposes of this
    proceeding only, we focus on five interstate services: long distance
    voice services, ATM, Frame Relay, T1, and T3 services.[^98]

31. In previous orders, the Commission has found it appropriate to
    define separate relevant product markets based on the class of
    customer (particularly where there is "price discrimination").[^99]
    As the Commission previously has discussed, however, there does not
    appear to be industry-wide consensus as to how to differentiate one
    class of enterprise customers from another.[^100] The Commission
    generally has found that a number of factors influence how carriers
    price their services to particular types of customers, including:
    the customer's total telecommunications spending; the types of
    services and technologies ordered; the customer's total employee
    count; the customer's total annual revenues; and whether the
    customer obtains customized services.[^101] Based on the data
    available to us in the record, we find it appropriate to focus our
    analysis on two categories of business customers: small/medium
    businesses and large enterprises.[^102]

##### Relevant Geographic Markets

32. The Commission previously has recognized that each customer location
    constitutes a separate relevant geographic market. For reasons of
    administrative practicality, however, the Commission has aggregated
    customers facing similar competitive choices to create larger
    relevant geographic markets.[^103]

###### Mass Market Services

33. The data in the record are not sufficiently detailed to define
    localized relevant geographic markets in which customers face
    similar competitive choices. Accordingly, consistent with the
    approach adopted in, and for the reasons given in, the *BOC Merger
    Orders*, we analyze stand-alone long distance and bundled local and
    long distance services for each BOC in their respective franchise
    area within a state.[^104]

###### Enterprise Services

34. The data in the record are likewise not sufficiently detailed to
    define localized relevant geographic markets in which all enterprise
    customers face the same competitive choices. Consistent with
    Commission precedent, we will use the most disaggregated data
    available in performing our structural analysis for different types
    of business services and for certain broad classes of business
    customers. For enterprise customers with single locations in AT&T's
    and Verizon's respective regions, we use the most disaggregated data
    in this record to complete our analysis. Consequently, for AT&T we
    analyze state-wide and MSA-level data; and for Verizon we analyze
    franchise area data and MSA-level data to determine their market
    presence for the services and customer classes considered in this
    Order.[^105]

35. For larger, multi-location enterprise customers, we find that these
    customers typically seek service from a provider that can serve all
    their locations, and generally only a few carriers serving a
    particular location have such capabilities. In light of the fact
    that there are relatively few providers that can offer a high level
    of ubiquitous service, the Commission in previous orders has
    concluded that this geographic market should encompass all the
    geographic locations where these multi-location business customers
    may have a presence.[^106] Thus, we analyze national data for long
    distance services provided to these multi-location businesses.[^107]

##### Market Participants

###### Mass Market

36. The record indicates that Verizon and AT&T face competition within
    their respective franchise areas from a variety of providers of
    retail mass market services. These competitors include competitive
    wireline local exchange and long distance carriers, stand-alone long
    distance providers, facilities-based VoIP providers, cable
    circuit-switched service providers, and wireless carriers, to the
    extent that consumers use their services as a replacement for local
    or long distance services.[^108]

###### Enterprise Market

37. Likewise, the record indicates that there are numerous categories of
    competitors providing services to enterprise customers. These
    include interexchange carriers, competitive LECs, data/IP network
    providers, cable companies, other incumbent LECs, and VoIP
    providers.[^109]

##### Analysis of Traditional Market Power Factors

38. We consider first whether Verizon and AT&T individually have such a
    significant presence in the relevant markets for interstate, long
    distance services that either could unilaterally and profitably
    raise and maintain the price of such services within their
    respective franchise areas. Our analysis examines these BOCs'
    respective market shares for the aforementioned relevant product
    markets, trends in their market shares, demand substitutability, and
    supply substitutability.[^110]

###### Mass Market Services

39. We conclude that Verizon and AT&T each lack classical market power
    with respect to the mass market interstate, long distance services
    within their respective franchise areas. Although the market share
    calculations for stand-alone interstate, long distance services
    indicate a moderately high level of concentration in certain
    franchise areas, we find that these calculations significantly
    overstate their respective market positions in those markets,
    particularly when one considers other market factors that affect
    market power.[^111] As discussed in greater detail below,[^112] we
    are concerned, as was the Commission in the *AT&T Reclassification
    Order* and the *Qwest Section 272 Sunset Forbearance Order*,[^113]
    that residential customers who make relatively few interstate long
    distance calls and who do not also subscribe to wireless or
    broadband Internet access service may have fewer competitive choices
    among interstate, interLATA long distance providers and may be
    unable to avoid the impact of a price increase by engaging in usage
    substitution. We also are concerned that these customers may not
    receive the information regarding their monthly long distance usage
    that they need to make informed choices among alternative long
    distance calling plans.

####### Stand-Alone Long Distance Market Share

40. Consistent with the Commission's analysis in the *BOC Merger
    Orders*, we first consider AT&T's and Verizon's market shares of
    wireline customers that have a presubscribed interexchange carrier
    (PIC).[^114] Using this methodology, the data in the record suggest
    that Verizon and AT&T have significant market shares in most of
    their franchise areas within their respective territories.[^115]
    Under this approach, AT&T's market share of stand-alone, interstate,
    long distance services ranges from **\[REDACTED\]** percent to
    **\[REDACTED\]** percent, with a median market share of
    **\[REDACTED\]** percent.[^116] The respective figures for Verizon
    are **\[REDACTED\]** percent, **\[REDACTED\]** percent, and
    **\[REDACTED\]** percent.[^117]

41. As discussed above, however, these market shares likely overstate
    AT&T's and Verizon's respective shares of the interstate long
    distance market, and their potential market power, for a number of
    reasons. First, this analysis is limited to customers who have a
    PIC. In recent years, however, an increasing number of customers are
    choosing to have no PIC. For example, **\[REDACTED\]** of AT&T's
    residential customers and **\[REDACTED\]** of Verizon's residential
    customers have no PIC.[^118] More importantly, this approach to
    calculating market shares fails to take into account possible usage
    substitution between wireless and wireline long distance services
    (for customers that subscribe to both wireless and wireline
    telephone services) or between wireline and over-the-top VoIP (for
    customers that subscribe to both wireline telephone service and
    broadband Internet access service). Although we lack the data
    necessary to estimate the impact of usage substitution between
    traditional wireline long distance service and long distance service
    provided by *over-the-top VoIP*, we can calculate market shares in a
    way that attempts to capture usage substitution between wireline and
    *wireless* long distance service providers.[^119] Taking such
    wireline-wireless usage substitution into account, AT&T's market
    share ranges from **\[REDACTED\]** percent to **\[REDACTED\]**
    percent, with a median market share of **\[REDACTED\]**
    percent.[^120] The corresponding figures for Verizon's residential
    customers are **\[REDACTED\]** percent, **\[REDACTED\]** percent,
    and **\[REDACTED\]** percent.[^121] Given the large and growing
    percentage of consumers who subscribe to both wireline service and
    wireless or broadband Internet access service,[^122] and who thus
    have the ability to shift interstate, long distance usage in
    response to price changes, we find that these market share numbers
    are likely to provide a more accurate picture of AT&T's and
    Verizon's market power for the stand-alone, interstate, long
    distance market within their respective franchise areas.[^123]

####### Bundled Local and Long Distance Market Shares 

42. As discussed above, an increasing number of customers are shifting
    to bundled service offerings and away from stand-alone long distance
    offerings. We acknowledge the conceptual difficulties associated
    with estimating market shares for this bundled services market;
    nevertheless, we believe that we have adopted a conservative
    approach, which, if anything, will again tend to overstate AT&T's
    and Verizon's respective market positions.[^124] We estimate that,
    for its franchise areas within its in-region states, AT&T's market
    share of bundled local and long distance services ranges from
    **\[REDACTED\]** percent to **\[REDACTED\]** percent, with a median
    market share of **\[REDACTED\]** percent.[^125] The corresponding
    figures for Verizon's residential customers are **\[REDACTED\]**
    percent, **\[REDACTED\]** percent, and **\[REDACTED\]**
    percent.[^126]

####### Other Factors

43. Traditionally, the Commission, in evaluating whether a carrier
    possesses individual market power, has considered not only current
    market share, but also such factors as trends in market share,
    elasticity of demand, and elasticity of supply.[^127] Consideration
    of these factors further supports our conclusion that AT&T and
    Verizon each lack individual market power with respect to mass
    market, interstate, long distance services within their respective
    franchise areas.

44. We begin by considering trends in market shares. We acknowledge that
    AT&T's and Verizon's shares of the stand-alone long distance market,
    measured in terms of presubscribed wireline customers, have
    increased over the past three years. Although such increases might
    normally be indicative of market power, there are several reasons to
    reject such an inference here. First, since AT&T and Verizon each
    entered the market with a zero market share relatively recently, it
    is to be expected that their market shares would be increasing.
    Second, reflecting the decline in the stand-alone long distance
    market legacy AT&T and legacy MCI (traditionally, the two largest
    stand-alone interexchange carriers) decided in 2004 to cease
    marketing such services; this led to a decrease in their market
    shares and a concomitant increase in the BOCs' respective market
    shares. A more important trend, however, has been the increasing
    number of consumers who now subscribe to multiple access services,
    including wireless services and broadband Internet access services
    (which permit customers then to subscribe to an over-the-top VoIP
    service with a long distance component).[^128] This increase in
    access choices has allowed customers to engage in increasing usage
    substitution. This trend evidence provides further support for our
    finding that AT&T and Verizon lack market power in the provision of
    mass market interstate, long distance services within their
    franchise areas.

45. In addition, the Commission traditionally considers demand
    substitutability factors. The record in this proceeding does not
    include data sufficient for us to estimate precisely the own-price
    elasticity of demand for stand-alone, interstate, long distance or
    bundled local and long distance services.[^129] Nor does the record
    permit us to determine the cross-elasticity of demand between
    interstate, long distance services provided by wireline carriers and
    similar services provided by wireless carriers and over-the-top VoIP
    providers. Nevertheless, the evidence in the record is consistent
    with the Commission's previous finding that customers are willing to
    shift usage to wireless and over-the-top VoIP providers in response
    to changes in relative prices.[^130] More specifically, the increase
    in the number of customers subscribing to competitive wireline and
    cable services suggests an increase in the elasticity of demand for
    AT&T's and Verizon's interstate, long distance services.[^131] In
    addition, the increase in subscriptions to broadband Internet access
    services,[^132] the increase in subscriptions to mobile wireless
    services,[^133] and the migration of wireline minutes to mobile
    wireless minutes indicate that consumers are increasingly finding
    that these alternatives serve as substitutes for traditional
    wireline long distance services offered by AT&T, Verizon and other
    carriers.[^134]

46. Finally, with respect to supply substitutability, we note that the
    Commission, in the *LEC Classification Order,* found that there was
    significant excess capacity for the provision of interstate long
    distance services, which would permit competitors to expand their
    output should a BOC attempt to raise the price of these
    services.[^135] Moreover, in the recent *BOC Merger Orders*, the
    Commission reaffirmed its finding that the wholesale long distance
    market is competitive due to substantial excess capacity.[^136]
    There is no evidence in this record that would cause us to
    reconsider these findings.

47. Accordingly, based on the foregoing market analysis, we find that
    AT&T and Verizon lack individual, classical market power in the
    provision of interstate, long distance services for the mass market.
    Despite this general finding, the record does raise two areas of
    potential concern. The first concern relates to customers that make
    relatively few interstate long distance calls. In the *AT&T
    Reclassification Order,* the Commission expressed concern that,
    while AT&T lacked individual market power in the provision of mass
    market, interstate interLATA telecommunications services, customers
    that make few interstate long distance calls might nevertheless be
    harmed by the elimination of price cap regulation for AT&T's Basket
    One services.[^137] In response, AT&T offered certain commitments to
    protect these consumers, which the Commission accepted and made
    conditions of its Order.[^138] Here, we are concerned that consumers
    that make relatively few interstate long distance calls and that do
    not subscribe to wireless service or broadband Internet access
    service may have fewer competitive choices among interstate,
    interLATA long distance providers, and may not be able to avoid the
    impact of a price increase by engaging in usage substitution. We
    address this concern in part III.A.(iii) below.

48. Our second concern relates to a potential information failure that
    may prevent consumers from selecting the most cost-effective long
    distance plan. Consumers today that subscribe to wireline unlimited
    long distance plans often are not informed of their monthly usage of
    wireline long distance minutes. Without such information on their
    toll usage, however, they may have insufficient information to
    determine whether it might be more cost-effective for them to select
    a long distance plan that offers a limited number of toll minutes or
    charges long distance calls on a per-minute basis. In this regard,
    we believe that a consumer needs transparency in pricing to ensure
    that he chooses the carrier that best suits his or her needs.[^139]
    We address this concern in part III.A.(iv) below.

###### Retail Enterprise Services

49. We conclude that AT&T and Verizon separately lack classical market
    power with respect to interstate, long distance services for the
    enterprise market. In evaluating whether AT&T and Verizon separately
    possess market power, we consider AT&T's and Verizon's market share,
    their competitors' market shares, trends in their market shares,
    factors affecting demand substitutability, and supply
    substitutability. Although we find that AT&T's and Verizon's market
    shares within their respective franchise areas are relatively high
    for some relevant products,[^140] we nonetheless conclude that they
    each separately lack market power with respect to in-region,
    interstate, enterprise, long distance services.

####### Market Shares

50. We begin our analysis by calculating market shares and
    Herfindahl-Hirschman Index (HHI) estimates for long distance voice
    and data enterprise services for each of AT&T's and Verizon's
    franchise areas for which we have sufficient data.[^141] In general,
    the market share calculations indicate a moderate level of
    concentration in most franchise areas for many relevant services for
    *large* enterprise customers with significant operations in AT&T's
    region and Verizon's region.[^142] As noted above, our analysis of
    particular geographic areas is limited by the data submitted by AT&T
    and Verizon. We report figures for state-wide data for AT&T's
    regions, while we report figures for Verizon's Bell Atlantic
    franchise areas and GTE territories. We note that Verizon submitted
    combined Bell Atlantic/GTE data for the two states (Pennsylvania and
    Virginia) in which it has both a Bell Atlantic franchise area and a
    GTE territory.

51. AT&T's median market share for large enterprise customers for long
    distance voice services is **\[REDACTED\]** percent for the states
    within its BOC region.[^143] For data services provided within
    AT&T's BOC regions, AT&T's median market share for T-1 data services
    is **\[REDACTED\]** percent,[^144] its median market share for T-3
    data services is **\[REDACTED\]** percent,[^145] and its median
    market share for ATM data services is **\[REDACTED\]**
    percent.[^146]

52. For Verizon, we report figures separately for its BOC franchise
    areas and for its former GTE franchise areas. Verizon's median
    market share for large enterprise customers for long distance voice
    services is **\[REDACTED\]** percent for its former Bell Atlantic
    region[^147] and **\[REDACTED\]** percent for its former GTE
    territory.[^148] Verizon's median market share for T-1 data services
    is **\[REDACTED\]** percent for its former Bell Atlantic
    region[^149] and **\[REDACTED\]** percent for its former GTE
    territory.[^150] Verizon's median market share for T-3 data services
    is **\[REDACTED\]** percent within its former Bell Atlantic
    region.[^151] Verizon's median market share for Frame Relay data
    services is **\[REDACTED\]** percent within its former Bell Atlantic
    region[^152] and **\[REDACTED\]** percent within its former GTE
    territory.[^153]

53. Similarly, the market share calculations indicate a moderate level
    of concentration in most franchise areas for many relevant services
    for small/medium business customers with significant operations in
    AT&T's and Verizon's respective regions. Within its region, AT&T's
    median statewide market share for long distance voice services
    provided to small/medium enterprise customers is **\[REDACTED\]**
    percent,[^154] its median statewide market share for T-1 data
    services is **\[REDACTED\]** percent,[^155] its median statewide
    market share for T-3 data services is **\[REDACTED\]**
    percent,[^156] and its median statewide market share for ATM data
    services is **\[REDACTED\]** percent.[^157]

54. Verizon's median state franchise area market share for long distance
    voice services provided to small/medium enterprise customers is
    **\[REDACTED\]** percent within its former Bell Atlantic
    region[^158] and **\[REDACTED\]** percent within its former GTE
    territory.[^159] Verizon's median state franchise area market share
    for T-1 data services is **\[REDACTED\]** percent within its former
    Bell Atlantic region[^160] and **\[REDACTED\]** percent within its
    former GTE territory.[^161] Within the former Bell Atlantic region,
    Verizon's median state franchise area market share for T-3 data
    services is **\[REDACTED\]** percent,[^162] and its median state
    franchise area market share for ATM data services is
    **\[REDACTED\]** percent within its former Bell Atlantic
    region.[^163] Verizon's median state franchise area market share for
    Frame Relay data services is **\[REDACTED\]** percent within its
    former Bell Atlantic region[^164] and **\[REDACTED\]** percent
    within its former GTE territory.[^165]

55. These market shares and accompanying estimates of level of
    concentration suggest that AT&T and Verizon each operate in
    moderately concentrated in-region markets for the long distance
    voice services and the data services discussed above. These data
    further suggest that a significant number of competitors operate
    within each of these markets.

56. Finally, we find that AT&T and Verizon separately lack classical
    market power with respect to interstate, long distance services
    provided to large enterprise customers with national, multi-location
    operations both inside and outside of AT&T's and Verizon's
    respective franchise areas. First, AT&T's and Verizon's estimated
    market shares for these services do not raise concerns with respect
    to classical market power. For long distance services provided to
    the largest enterprise customers, AT&T's market share is
    **\[REDACTED\]** percent measured in revenues and their market share
    is **\[REDACTED\]** percent measured in minutes.[^166] The
    corresponding figures for Verizon are **\[REDACTED\]** percent and
    **\[REDACTED\]** percent.[^167] Second, consistent with the
    Commission's conclusions in the *SBC/AT&T Order* and the
    *Verizon/MCI Order*, we find that these large, multi-location
    enterprise customers tend to be sophisticated purchasers of
    communications services that make their decisions about
    communications services by using either communications consultants
    or employing in-house communications experts. This is significant
    not only because it demonstrates that these users are aware of the
    multitude of choices available to them, but also because it shows
    that these users are likely to make informed choices based on expert
    advice about service offerings and prices. Thus, so long as
    competitive choices remain in this market, these large
    multi-location enterprise customers should seek out best-priced
    alternatives, and neither AT&T nor Verizon should be able to raise
    and maintain prices above competitive levels.[^168]

####### Other Factors

57. Although the record in this proceeding does not include estimates of
    either the price elasticities of demand or the elasticities of
    supply for interstate, long distance services within AT&T's and
    Verizon's regions, the Commission's findings in the recent *BOC
    Merger Orders* help to inform our analysis here. Specifically,
    consistent with the Commission's conclusions in the recent *BOC
    Merger Orders,* we find that enterprise customers tend to be
    sophisticated purchasers of communications services, whether they
    are located solely within AT&T's or Verizon's respective regions, or
    have locations both inside and outside these regions. Because
    enterprise customers tend to make their decisions about
    communications services by employing communications consultants or
    in-house communications experts, we expect them to be aware of the
    multitude of choices available to them.[^169]

###### Wholesale Interexchange Competition

58. The Commission previously has identified wholesale domestic,
    interstate, interexchange (*i.e.*, long distance) services as a
    separate product market, although it has not always found it
    necessary to conduct a separate analysis of that product
    market.[^170] Consistent with our definition of the relevant
    geographic markets for retail enterprise and retail mass market
    services,[^171] we conclude that the relevant geographic market for
    wholesale, interstate, long distance services is the customer's
    location.[^172] We then aggregate locations where customers face
    similar competitive choices. Since all the major providers of
    wholesale long distance services have nationwide networks,[^173] we
    can aggregate customers of wholesale long distance service who are
    located throughout the United States. Moreover, wholesale long
    distance customers generally need to connect to the wholesale long
    distance provider at multiple locations throughout the United
    States. Consequently, we find it appropriate to aggregate customer
    locations and evaluate wholesale long distance services at the
    national level.[^174]

59. Consistent with prior Commission findings, we find that the market
    for wholesale, interstate, long distance services is competitive,
    and that significant spare capacity exists in this market.[^175]
    Specifically, AT&T's market share for wholesale long distance voice
    services is approximately **\[REDACTED\]** percent, and its market
    share for wholesale data services is **\[REDACTED\]** percent. The
    corresponding figures for Verizon's wholesale services are
    **\[REDACTED\]** percent and **\[REDACTED\]** percent.[^176] We find
    that, in addition to AT&T and Verizon, Qwest, and others have a
    significant presence in this market.[^177] Moreover, as the
    Commission recently determined, there is significant spare capacity
    in this market, and this industry segment faces increasing pressure
    from the migration of minutes to packet-switched voice services,
    Internet-based applications, and other technological
    substitutes.[^178] There is no information in this record that would
    cause us to alter these findings. The evidence of continued
    competition from a variety of wholesale interexchange service
    providers convinces us that the BOCs lack individual classical
    market power with respect to these wholesale markets.[^179] Based on
    the foregoing, we find that the BOCs are not dominant in the
    wholesale segment of the domestic, interstate, long distance
    services market.

#### International Telecommunications Services

60. We conclude that AT&T, Verizon, and Qwest lack individual classical
    market power in the markets for in-region, international
    telecommunications services.[^180] We examine two wholesale markets
    for these services -- facilities-based international message
    telecommunications services (IMTS)[^181] and international private
    line services[^182] -- and two retail IMTS markets -- mass market
    IMTS and international enterprise services.

##### Wholesale Markets

61. We find that AT&T, Verizon, and Qwest do not possess individual,
    classical market power in the markets for facilities-based IMTS or
    international private line services. We base these findings on
    AT&T's, Verizon's, and Qwest's traffic shares for all international
    routes combined, their respective market shares on a route-specific
    basis, and prior Commission findings regarding characteristics of
    this market. Qwest is not a facilities-based provider of IMTS, and
    thus has no ability to exercise classical market power in this
    market.[^183] In addition, AT&T's and Verizon's respective market
    shares and the characteristics of this market support a finding that
    AT&T and Verizon also each lack individual classical market power in
    this market. As of 2005, the most recent year for which data are
    available, there were 45 facilities-based IMTS carriers. In 2005,
    AT&T and Verizon respectively accounted for **\[REDACTED\]** percent
    and **\[REDACTED\]** percent of the total number of all IMTS
    facilities-based minutes.[^184] While AT&T and Verizon account for a
    significant proportion of minutes on some specific routes,[^185]
    these are generally "thin" routes. Moreover, the Commission has
    found the IMTS market to be competitive. Specifically, in the
    *Verizon/MCI Order,* the Commission found that: (1) there were not
    significant barriers to entry on most international routes; (2)
    substantial international transport capacity exists in all regions;
    and (3) there were at least 10 reporting facilities-based IMTS
    carriers on 218 of the 247 international routes; and (4) there is a
    growing "spot market" for international termination services whereby
    carriers with excess capacity to various foreign destinations can
    auction foreign termination services to any U.S. carrier seeking
    such services.[^186] The Commission further found that, with
    improvements in quality of service and customer access,
    international VoIP services from the United States to foreign
    destinations could become a substitute for facilities-based IMTS
    services.[^187] There is no evidence in this record that would cause
    us to reconsider these findings. Finally, with respect to
    international private line service, we find that AT&T's, Verizon's,
    and Qwest's traffic shares, as well as the number of providers
    operating in this market,[^188] indicate that AT&T, Verizon, and
    Qwest individually could not exercise classical market power in this
    market. Therefore, we find it unlikely that AT&T, Verizon, or Qwest
    individually could exercise market power in the wholesale markets
    for facilities-based IMTS or international private line services.

##### End-User Markets

62. We also find that AT&T, Verizon, and Qwest do not possess
    individual, classical market power in the provision of international
    telecommunications services provided to mass market customers and to
    retail enterprise customers. The market for mass market,
    international telecommunications services resembles in many respects
    the market for domestic long distance services in that these
    customers generally have the same presubscribed interexchange
    carrier or wireless carrier when making both domestic and
    international long distance calls.[^189] The Commission has found
    that presubscription to a particular IMTS provider is generally less
    important for mass market consumers because consumers placing a
    large number of international calls often use "dial-around" services
    or prepaid calling cards to reduce the prices they pay for those
    calls.[^190] Thus, AT&T's, Verizon's, and Qwest's market shares for
    in-region, interstate, long distance services likely provide an
    upper bound for their respective market shares in the IMTS mass
    market. Given our conclusion that AT&T, Verizon, and Qwest lack
    individual, classical market power with respect to in-region
    interstate, long distance services for the mass market,[^191] we
    thus conclude that AT&T, Verizon, and Qwest also lack individual,
    classical market power with respect to mass market IMTS.

63. We also conclude that AT&T, Verizon, and Qwest do not possess
    individual, classical market power with respect to IMTS provided to
    enterprise customers. Like purchasers of domestic enterprise
    services,[^192] international enterprise customers are sophisticated
    purchasers of telecommunications services that are likely to make
    informed choices based on expert advice about service offerings and
    prices. In addition, the provision of international
    telecommunications services to enterprise customers depends in large
    part on the ability to obtain critical inputs, such as international
    transport capacity and operating agreements with carriers on the
    foreign end, as well as the technical ability to provide the
    specific services demanded by larger business customers. Given the
    Commission's prior findings that there are no structural barriers to
    entry for international telecommunications services provided to
    enterprise customers, we therefore find that AT&T, Verizon, and
    Qwest lack individual classical market power with respect to
    international enterprise services.[^193]

#### Control of Bottleneck Access Facilities

64. We next consider whether the BOCs' provision of in-region, interLATA
    telecommunications services directly or through an affiliate that is
    not compliant with section 272 would permit them to raise the price
    of those services by raising their rivals' costs through their
    control over bottleneck facilities.[^194] The BOCs assert that they
    face significant competition within their respective regions from
    wireline, wireless, and other intermodal competitors,[^195] and that
    their respective retail access line bases have declined
    significantly.[^196] We find, however, that the BOCs have failed to
    present persuasive evidence that they no longer possess exclusionary
    market power within their regions as a result of their control over
    ubiquitous telephone exchange service and exchange access networks.
    We therefore assume, for the purposes of this proceeding, that each
    of the BOCs individually continues to possess exclusionary market
    power within its respective regions by reason of its control over
    these bottleneck access facilities.[^197]

### Dominant Carrier Regulation

65. In the *Section 272 Sunset and Independent Incumbent LEC Further
    NPRM*, the Commission sought comment on whether it should apply
    dominant carrier regulation to any in-region, interstate, long
    distance services that the BOCs and the independent incumbent LECs
    provide either directly or through affiliates that are neither
    section 272 separate affiliates nor rule 64.1903 separate
    affiliates.[^198] We find here that application of dominant carrier
    regulation to AT&T's, Verizon's, and Qwest's in-region, interstate,
    long distance services is unwarranted. First, as our market analysis
    indicates, AT&T, Qwest, and Verizon do not possess classical market
    power in the provision of in-region, interstate, long distance
    services, which is the type of market power that dominant carrier
    regulation is designed to address.[^199] Second, as the Commission
    recognized in the *LEC Classification Order,* dominant carrier
    regulation is not designed to guard against potential abuse of
    exclusionary market power.[^200] Instead, as discussed below,
    existing safeguards, combined with the additional safeguards set
    forth below, adequately address the ability of AT&T, Qwest, and
    Verizon to raise their long distance rivals' costs through their
    control of bottleneck access facilities.[^201]

#### In-Region, Interstate, Long Distance Services

##### Classical Market Power

66. As our market analysis makes clear, we find that AT&T, Qwest, and
    Verizon generally lack classical market power in long distance
    markets.[^202] Consequently, we find it unlikely that these carriers
    will be able unilaterally to raise and maintain the prices of
    in-region, interstate, long distance services above competitive
    levels, or otherwise impose and maintain unjust, unreasonable, or
    unreasonably discriminatory terms and conditions in relation to
    these services.[^203] When the Commission made similar findings
    concerning classical market power in the *LEC Classification Order*,
    it concluded that the burdens of dominant carrier regulation
    outweigh its benefits.[^204] Nothing in the record leads us to
    question that conclusion. Therefore, consistent with that precedent,
    we do not apply dominant carrier regulation to the BOCs' provision
    of in-region, interstate, long distance services either directly or
    through an affiliate that is neither a section 272 separate
    affiliate nor a rule 64.1903 separate affiliate.

67. Despite this general finding, we remain concerned, as the Commission
    was in the *Qwest Section 272 Sunset Forbearance Order,*[^205] that
    BOC residential customers who make relatively few interstate long
    distance calls may have fewer competitive choices among in-region,
    interstate long distance providers. Such customers also may not
    subscribe to wireless or broadband Internet access service, and
    therefore may be unable to avoid the impact of a price increase by
    engaging in usage substitution.[^206] Our concern regarding such
    customers is twofold. First, customers who make very few interstate,
    long distance calls, or whose usage patterns do not justify
    subscription to unlimited calling plans, should be able to choose
    among reasonable and affordable alternatives to such plans. Second,
    customers who make relatively few interstate long distance calls
    should receive sufficient information regarding their monthly long
    distance usage to make informed choices whether calling plans with
    large numbers of monthly minutes and unlimited calling plans suit
    their needs.

68. As we discuss more fully below,[^207] AT&T, Qwest, and Verizon have
    made commitments to address these concerns. Specifically, AT&T and
    Verizon have committed, for three years, to offer rate plans
    tailored to low-volume customers.[^208] In addition, both AT&T and
    Verizon have committed, for three years, to make available monthly
    long distance usage information for customers who subscribe to
    certain single-rate telecommunications service plans.[^209] As
    discussed below, we find it appropriate to adopt these rate plans
    and usage information requirements as enforceable obligations. We
    note that, under the *Qwest Section 272 Sunset Forbearance Order*,
    Qwest made similar commitments that were adopted as a condition of
    the Commission's forbearance.[^210]

##### Exclusionary Market Power

69. As explained above, we assume for purposes of this proceeding that
    AT&T, Qwest, and Verizon continue to possess exclusionary market
    power within their respective regions as a result of their control
    over ubiquitous telephone exchange service and exchange access
    networks. We conclude, however, that imposing dominant carrier
    regulation on the BOCs' and their independent incumbent LEC
    affiliates' provision of in-region, long distance services is not a
    reasonable and cost-effective method of constraining exercise of
    this market power.

70. The Commission previously concluded that dominant carrier regulation
    is not designed to prevent the exercise of exclusionary market
    power.[^211] Nothing in the record of this proceeding persuades us
    to change this conclusion. AT&T's, Qwest's, and Verizon's
    exclusionary market power raises the possibility that they could
    leverage market power in the telephone exchange service or exchange
    access markets to impede competition in the in-region, interstate,
    long distance services market, through discrimination against
    competitors, improper cost shifting, or price squeezes.[^212] We
    find, however, that alternative safeguards, as described
    below,[^213] address these concerns far more directly than would
    dominant carrier regulation of AT&T's, Qwest's, and Verizon's
    in-region, long distance services.

71. We recognize, of course, that dominant carrier regulation of AT&T's,
    Qwest's, and Verizon's in-region, long distance services could
    provide some increased level of protection against the exercise of
    exclusionary market power, beyond that provided by these alternative
    safeguards. Such regulation would impose significant costs, however.
    These costs include the administrative costs imposed on both the
    carriers and this Commission that are associated with price
    regulation, tariff-filing requirements, and reporting
    requirements.[^214] Application of dominant carrier regulation to
    these services also would restrict AT&T's, Qwest's, and Verizon's
    ability to respond to competitors' pricing and product initiatives,
    and would give competitors advance notice of AT&T's, Qwest's, and
    Verizon's own pricing plans and new products.[^215] By impeding the
    BOCs' ability to compete, these requirements could dampen
    competition.[^216] Given the relative inefficiency of dominant
    carrier regulation in constraining the exercise of exclusionary
    market power and the significant costs associated with such
    regulation, we find that alternative safeguards we discuss and adopt
    below are more cost-effective than, and preferable to, imposing
    dominant carrier regulation.[^217]

##### Conclusion

72. Based on the preceding analysis, we find the BOCs to be nondominant
    in the provision of in-region, interstate, long distance services
    that they provide either directly or through affiliates that are not
    section 272 separate affiliates as long as they comply with certain
    targeted safeguards set forth below as well as continuing statutory
    and regulatory obligations. We also find the BOCs' independent
    incumbent LEC affiliates to be nondominant in the provision of
    in-region, long distance services either directly or through
    affiliates that are not rule 64.1903 separate affiliates. We discuss
    the effects of these findings in part III.c, below.

#### International Telecommunications Services

73. As discussed in part III.b, we conclude that AT&T, Verizon, and
    Qwest do not have the ability separately to exercise classical
    market power in the markets for in-region, international
    telecommunications services. Therefore, consistent with the
    Commission's conclusions in the *LEC Classification* and the *Qwest
    Section 272 Sunset Forbearance Orders*,[^218] we find no practical
    distinctions between AT&T's, Verizon's, and Qwest's incentives and
    ability to use any in-region market power in their provision of
    international and interstate, long distance services. Accordingly,
    to the extent the BOCs are deemed nondominant in the provision of
    any in-region, international telecommunications service provided
    through a section 272 separate affiliate, we find them to be
    nondominant in the provision of that service in the event they
    provide it directly or through an affiliate that is not a section
    272 separate affiliate. Moreover, to the extent the BOCs'
    independent incumbent LEC affiliates are deemed nondominant in the
    provision of any in-region, international telecommunications service
    provided through a rule 64.1903 separate affiliate, we find them to
    be nondominant in the provision of that service in the event they
    provide it directly or through an affiliate that is not a rule
    64.1903 separate affiliate. These findings are subject to the BOCs'
    and their independent incumbent LEC affiliates' compliance with the
    targeted safeguards set forth in part III.b of this Order. We
    discuss the effects of these findings in part III.c, below.

74. As a general matter, the BOCs and their independent incumbent LEC
    affiliates are not subject to dominant carrier regulation for their
    in-region provision of international telecommunications services to
    the same extent that that they are not subject to those requirements
    for their in-region provision of domestic, interstate, long distance
    services. AT&T, Qwest, and Verizon remain subject, however, to our
    dominant carrier rules that apply specifically to U.S. carriers that
    provide international telecommunications services.[^219] For
    example, to the extent that Verizon remains affiliated, or AT&T,
    Verizon, or Qwest become affiliated, within the meaning of section
    63.09 of our rules, with a foreign carrier that has the ability to
    discriminate against these carriers' rivals through control of
    bottleneck services or facilities in a foreign destination
    market,[^220] the BOCs and their independent incumbent LEC
    affiliates will continue to be presumptively classified as dominant
    under section 63.10 of our rules and subject to the safeguards in
    that rule, which apply to carriers that we classify as dominant
    based on a foreign carrier affiliation.[^221] Thus, our framework
    for addressing issues raised by the provision of international
    telecommunications services, either by the BOCs or their affiliates,
    will remain in effect.

#### Effect of Nondominance Findings

75. In this part, we discuss the specific regulatory implications of our
    decisions to classify the BOCs and their independent incumbent LEC
    affiliates as nondominant in the provision of in-region, interstate
    and international, long distance services, whether they provide
    these services directly or through affiliates that are neither
    section 272 nor rule 64.1903 separate affiliates. We emphasize that
    the BOCs and their affiliates are still subject to any rule that
    applies to carriers classified as nondominant in the provision of
    in-region, interstate and international, long distance
    services.[^222]

76. *Price Cap, Rate of Return, and Tariffing*. In view of our
    nondominance determinations in this Order, we find that, subject to
    the conditions set forth below, AT&T, Verizon, and Qwest are no
    longer subject to the requirements in section 203 of the Act and
    certain of our price cap, rate of return, and tariffing rules with
    respect to in-region, interstate and international, long distance
    services. Specifically: (1) AT&T, Verizon, and Qwest are not
    required to, and are in fact barred from, filing tariffs for
    in-region, interstate and international, long distance services
    pursuant to section 203 of the Act and sections 61.31-61.38 and
    61.43 of our rules;[^223] (2) AT&T, Verizon, and Qwest are not
    required to establish an "interexchange basket" pursuant to section
    61.42(d)(4) of our rules,[^224] to the extent that section
    61.42(d)(4) would require the establishment of an interexchange
    basket for the services covered by this Order when those services
    are provided directly or through an affiliate that is neither a
    section 272 nor a rule 64.1903 separate affiliate; and (3) AT&T,
    Verizon, and Qwest need not comply with section 61.28 of our rules
    for the provision of in-region, international telecommunications
    services to the extent that, and only to the extent that, the BOCs
    or their affiliates that are neither section 272 nor rule 64.1903
    separate affiliates would be treated as dominant carriers under
    section 61.28 for no other reason than their provision of in-region,
    international telecommunications services.[^225] To the extent that
    the BOCs or their affiliates that are neither section 272 nor rule
    64.1903 separate affiliates otherwise would be treated as dominant
    carriers under section 61.28, this Order has no effect on that
    treatment.[^226]

77. *Discontinuance and Streamlined Transfer of Control*. In view of our
    nondominance determinations in this Order, we find that, subject to
    the conditions set forth below, AT&T, Qwest, and Verizon are not
    subject to certain of our discontinuance and streamlined transfer of
    control rules in connection with their in-region, interstate and
    international, long distance services. Specifically, AT&T, Qwest,
    and Verizon are not subject to sections 63.03, 63.19, 63.21, 63.23,
    and 63.60-63.90 of our rules for their provision of in-region,
    interstate and international, long distance services to the extent
    that, and only to the extent that, the BOCs or their affiliates
    would be treated as dominant carriers under these rules for no
    reason other than their provision of those services directly or
    through an affiliate that is neither a section 272 nor a rule
    64.1903 separate affiliate.[^227] To the extent that the BOCs or
    their affiliates otherwise would be treated as dominant carriers
    under these rules, that treatment shall continue.[^228]

78. *Contract Filing and Reporting*. In light of our nondominance
    determinations in this Order, we find that, subject to the
    conditions set forth below, AT&T, Qwest, and Verizon are not subject
    to section 43.51 of our rules with respect to their provision of
    in-region, interstate or international, long distance services
    directly or through an affiliate that is neither a section 272 nor a
    rule 64.1903 separate affiliate.[^229] Specifically, the BOCs and
    their affiliates are not subject to section 43.51 of our rules for
    their provision of in-region, interstate or international, long
    distance services directly or through an affiliate that is neither a
    section 272 nor a rule 64.1903 separate affiliate to the extent
    that, and only to the extent that, the BOCs or their affiliates
    would be treated as dominant carriers under section 43.51 for no
    other reason than their provision of in-region, interstate or
    international, long distance services directly or through an
    affiliate that is neither a section 272 nor a rule 64.1903 separate
    affiliate. To the extent that the BOCs or their affiliates otherwise
    would be treated as dominant carriers under section 43.51, that
    treatment shall continue.

### Structural Safeguards

#### Section 272 Safeguards

79. In this part, we conclude that the section 272 safeguards, other
    than those in section 272(e), impose significant costs. Because we
    find that other less costly safeguards adequately address the
    concerns raised by the BOCs' possession of exclusionary market
    power, we decline to impose on the BOCs the section 272 safeguards
    that have sunset.[^230]

80. In the *Section 272 Sunset Notice*, the Commission invited comment
    on whether it should extend the section 272 structural separation
    and other requirements, or variations of these requirements, beyond
    the three-year period in order to protect against anticompetitive
    discrimination and improper cost shifting by the BOCs in the
    provision of in-region, interLATA telecommunications services.[^231]
    The Commission also invited comment on what, if any, alternative
    safeguards it should apply to BOC provisioning of in-region,
    interLATA, telecommunications services in the event it decided not
    to extend that statutory period.[^232]

81. As discussed above, the BOCs have failed to demonstrate that they
    lack exclusionary market power associated with their control of
    bottleneck facilities.[^233] Accordingly, we must assume, for
    purposes of this proceeding, that the BOCs possess exclusionary
    market power.[^234] In the *LEC Classification Order*, the
    Commission relied in part on the presence of section 272 safeguards
    as protection against the BOCs' possible exercise of exclusionary
    market power.[^235] We find, based on the current record, however,
    that the section 272 safeguards, other than those in section 272(e),
    are not necessary to protect against the exercise of any market
    power the BOCs possess given our ability to rely on less costly
    alternatives.[^236]

82. We find that the section 272 safeguards impose a variety of
    significant costs, including administrative costs on both the BOCs
    and the Commission. For example, providing interstate, interLATA
    telecommunications services through a section 272 separate affiliate
    requires the BOCs, *inter alia,* to operate these services
    independently of their telephone exchange service and exchange
    access operations, and to maintain duplicate sets of officers,
    directors, and employees.[^237] These restrictions not only impose
    additional costs, but also prevent the BOCs from taking advantage of
    the economies of scope and scale associated with integrated
    operation that their competitors are able to realize.[^238]
    Moreover, structural separation between a BOC's local telephone and
    long distance operations are at odds with a market environment where
    the distinction between those local and long distance services has
    been blurred by the way those services are marketed and delivered to
    consumers.[^239] As a general matter, these restrictions and their
    associated costs make the BOCs less effective competitors in the
    market.

83. These restrictions also may prevent the BOCs and their affiliates
    from quickly responding to technological and marketplace
    developments. For example, although competitors may purchase a
    single piece of new technology and quickly deploy it, because of
    prohibitions against jointly owning facilities and sharing
    directors, officers, and employees,[^240] a BOC might be required to
    purchase two pieces of equipment and might suffer delays in bringing
    the technology to market because it must coordinate deployment with
    its long distance affiliate's officers and employees.[^241] The
    joint ownership prohibition could also prevent a BOC from deploying
    the latest, most innovative technology, or cause delays in bringing
    services relying on that technology to market.[^242] Additionally,
    the requirement that a BOC and its section 272 separate affiliate
    "operate independently" hinders their ability to alter business
    priorities quickly in response to changing market demands. The
    required duplicative management of the two affiliated companies
    creates unnecessary inefficiencies in decision making and may
    therefore increase the costs and delay deployment of new
    services.[^243]

84. We reject arguments that we should retain the section 272
    safeguards, in whole or in part, to protect against BOCs' use of any
    exclusionary market power they may possess.[^244] Instead, we find
    that other existing safeguards, in combination with the safeguards
    we adopt in this Order, provide sufficient protection against these
    concerns and impose fewer costs and burdens.[^245] We find that
    commenters advocating retention of the section 272 safeguards do not
    adequately consider the costs of structural separation, nor do they
    adequately consider less costly alternatives, such as the targeted
    safeguards we adopt in this Order.[^246]

85. We also reject arguments that we should impose an alternative set of
    structural safeguards on the BOCs, such as the rule 64.1903
    requirements under which independent incumbent LECs provide
    interexchange telecommunications services on a nondominant carrier
    basis.[^247] Structural safeguards like those imposed in section
    64.1903 of the Commission's rules include a number of the same
    obligations that we find lead to costs, as discussed above, that
    make the BOCs less effective marketplace competitors.[^248] In
    addition, proponents of alternative structural safeguards make no
    showing comparing the relative effectiveness of their proposed
    structural regime with either the section 272 structural regime or
    the non-structural safeguards regime set forth in this Order. We
    find, however, that these non-structural safeguards provide
    substantial protection against anticompetitive discrimination and
    improper cost shifting by the BOCs in connection with their
    provision of in-region, long distance services.

86. We conclude that our decisions not to extend the section 272(b)
    safeguards and to refrain from applying alternative structural
    safeguards to BOC provision of in-region, interLATA
    telecommunications services are consistent with section 272(f)(1) of
    the Act and with the D.C. Circuit's opinion in *AT&T* *v.
    FCC*.[^249] Section 272(f)(1) does not mandate that we extend the
    section 272 safeguards or adopt alternative safeguards as
    replacements, but rather simply states that the section 272
    safeguards, other than those in section 272(e) "shall cease to
    apply" with respect to a BOC's interLATA telecommunications services
    three years after the BOC was authorized to provide those services
    unless the Commission extends that period.[^250] Moreover, the D.C.
    Circuit's opinion in *AT&T v. FCC* requires only that we resolve
    open questions regarding whether safeguards are needed for the BOCs'
    provision of in-region, interLATA telecommunications services, a
    task we complete in this Order.[^251]

#### AT&T's and Verizon's Independent Incumbent LEC Affiliates

87. As discussed above,[^252] both AT&T and Verizon have independent
    incumbent LEC affiliates.[^253] Separate and apart from the
    applicability of section 272 safeguards to the BOCs, these
    independent incumbent LEC remain subject to the structural
    separation requirements in section 64.1903 of the Commission's
    rules.[^254] As noted above, however, AT&T's and Verizon's
    independent incumbent LEC affiliates voluntarily comply with the
    section 272 safeguards for consistency of operations within each
    company.[^255]

88. We find good cause to waive section 64.1903 of the Commission's
    rules for the BOCs' independent incumbent LEC affiliates.[^256] As a
    practical matter, AT&T's and Verizon's independent incumbent LEC
    affiliates have been operating consistent with the section 272
    safeguards to avoid the inefficiency of using two different
    affiliate structures and sets of operational methods for the BOC
    incumbent LECs and the independent incumbent LECs, particularly
    where the independent incumbent LEC operations are a relatively
    small portion of AT&T's and Verizon's local operations. Thus, the
    concerns expressed above regarding the costs of the section 272
    safeguards effectively apply to both the BOCs and their independent
    incumbent LEC affiliates. We further find that AT&T and Verizon can
    more effectively implement the new regulatory framework adopted in
    this Order if their independent incumbent LEC affiliates are subject
    to the same targeted safeguards as the rest of the company as a
    whole.[^257] These special circumstances convince us that it is
    consistent with the public interest to deviate from the general
    obligations imposed by section 64.1903 of the Commission's rules,
    conditioned upon the AT&T and Verizon independent incumbent LECs'
    complying with the targeted safeguards discussed below. We therefore
    conditionally waive section 64.1903 as applied to SNET, including
    Woodbury, and former GTE.[^258]

### Other Safeguards

89. As discussed below, we conclude that a new regulatory framework for
    the BOCs' in-region, long distance services is appropriate. Our new
    framework is based in part on the substantial legal obligations that
    continue to apply to the BOCs in addition to the targeted safeguards
    we adopt below. We find that this regulatory framework adequately
    and comprehensively addresses the competitive concerns described
    above, but imposes fewer costs and burdens than full section 272
    safeguards.

#### Continuing Requirements

90. AT&T, Verizon, and Qwest remain subject to a number of legal
    obligations that are an important component of the regulatory
    framework that we find appropriate for the BOCs and their
    independent incumbent LEC affiliates. In particular, these carriers
    are still subject to: dominant carrier regulation of their
    interstate exchange access services, including price cap regulation
    of most exchange access services;[^259] the Commission's accounting
    and cost allocation rules and related reporting requirements;[^260]
    equal access obligations under longstanding Commission precedent and
    section 251(g) of the Act;[^261] section 251 obligations;[^262]
    section 271 obligations, including the obligation to continue to
    comply with the market-opening requirements that the BOCs had to
    meet in order to receive authority to provide in-region, interLATA
    services;[^263] and the continuing general obligation to provide
    service on just, reasonable, and not unreasonably discriminatory
    rates, terms, and conditions pursuant to sections 201 and 202 of the
    Act.[^264] In addition, the nondiscrimination requirement in section
    272(e)(1) of the Act and the imputation requirement in section
    272(e)(3) of the Act (which we discuss below) continue to
    apply.[^265]

91. These continuing legal obligations help address the competitive
    concerns raised above in a variety of ways. For example, under
    section 202(a) of the Act, the BOCs and their independent incumbent
    LEC affiliates will remain obligated to provide any of their special
    access services that their competitors rely on as inputs for the
    competitors' own interLATA telecommunications service offerings on
    rates, terms, and conditions that are not unreasonably
    discriminatory.[^266] The BOCs also will remain obligated, under
    section 272(e)(1), to "fulfill any requests" from their interLATA
    telecommunications services competitors "for telephone exchange
    service and exchange access" within periods no longer than the
    periods in which they provide such telephone exchange service and
    exchange access to themselves or their affiliates.[^267] Moreover,
    the BOCs and their independent incumbent LEC affiliates will remain
    subject to unbundling obligations pursuant to section 251(c)(3),
    which, as the Commission has found previously, provides "a check on
    special access pricing.,[^268] and the BOCs also have unbundling
    obligations under section 271(c)(2)(B) as conditions of their
    authority to provide in-region, interLATA services.[^269]

92. The BOCs and their independent incumbent LEC affiliates also remain
    obligated, under section 251(a), to interconnect with other
    carriers, and, pursuant to section 251(c), to interconnect on
    "rates, terms, and conditions that are just, reasonable, and
    nondiscriminatory," which is an important tool for facilitating
    intermodal competition.[^270] In addition, the BOCs' continuing
    equal access obligations under longstanding Commission precedent and
    section 251(g) of the Act should protect against anticompetitive
    discrimination in connection with areas such as dialing parity,
    network control signaling, and automatic calling number
    identification.[^271]

93. In the *Section 272 Sunset Further NPRM*, the Commission sought
    comment on the adequacy of safeguards to prevent anticompetitive
    conduct by the BOCs and their independent incumbent LEC affiliates,
    including improper cost shifting, as a result of the direct
    provision of interLATA services.[^272] As explained in the *Qwest
    Section 272 Sunset Forbearance Order*, based on the Commission's
    conclusions in the *Accounting Safeguards Order*, in-region,
    interLATA telecommunications services provided by the BOCs on an
    integrated basis currently are required to be treated as
    nonregulated for accounting purposes.[^273] Similarly, the
    independent incumbent LECs are currently required to treat their
    interLATA telecommunications services as nonregulated for accounting
    purposes.[^274] This treatment is consistent with the current
    accounting treatment by the BOCs of directly-provided, incidental
    and out-of-region interLATA telecommunications services.[^275]

94. We find that the continued treatment of the costs of, and revenues
    from, the direct provision of in-region, long distance services as
    nonregulated for accounting purposes will provide an important
    protection against improper cost shifting by the BOCs' and their
    independent incumbent LEC affiliates. This accounting treatment also
    will address concerns of continued compliance with section 254(k) of
    the Act, and will lessen the chance that costs associated with such
    services are inadvertently assigned to a local exchange or exchange
    access category.[^276] First, the revised cost allocation manuals we
    require AT&T, Verizon, and Qwest to file describing how they
    separate regulated from nonregulated costs will be subject to public
    comment.[^277] This public disclosure requirement will provide an
    opportunity for interested parties to review and comment on whether
    the identified methodology could result in improper cost-shifting
    between the BOCs' in-region, long distance services and their
    telephone local exchange and exchange access services. Second, we
    require disclosure in ARMIS filings of the access charges the
    independent incumbent LEC affiliates impute to themselves through
    debits to their nonregulated revenues.[^278] This public disclosure
    requirement will provide interested parties with information they
    can evaluate to determine whether the BOCs and their independent
    incumbent LECs properly impute the costs of the access they provide
    their in-region, long distance service offerings. We note that the
    BOCs all have petitioned for and been granted pricing flexibility
    within their service regions.[^279] Accordingly, they, and their
    independent incumbent LEC affiliates, are prohibited from making any
    low-end adjustments pursuant to section 61.45(d)(1)(vii) of our
    rules.[^280] This fact reduces the incentives of the independent
    incumbent LEC affiliates to improperly shift costs to local exchange
    and exchange access services, because they are precluded from
    seeking rate increases for these services based on low earning
    levels.

#### Additional Requirements

95. In this Order, we adopt targeted safeguards that will apply to the
    BOCs to the extent they choose to provide in-region, interstate or
    international, long distance services either directly or through an
    affiliate that is not a section 272 separate affiliate. As a further
    condition of this Order, the BOCs' independent incumbent LEC
    affiliates also must comply with these safeguards to the extent they
    provide in-region, interstate, interexchange telecommunications
    services either directly or through an affiliate that does not
    comply with the requirements of either section 272 or section
    64.1903 of our rules. The targeted safeguards include: (1) special
    access performance metrics to prevent non-price discrimination in
    the provision of special access services; (2) imputation
    requirements to help monitor BOC provisioning of these services for
    possible price discrimination; (3) the offering of calling plans to
    protect residential customers who make few interstate, long distance
    calls; and (4) providing subscribers monthly usage information to
    enable them to make cost-effective decisions concerning alternative
    long distance plans. We will carefully monitor the BOCs' compliance
    with these safeguards and will not hesitate to take appropriate
    remedial action if necessary. We also retain the authority to adjust
    these safeguards in the future as appropriate to reflect any
    competitive changes that might occur in the markets for in-region,
    long distance services.

##### Special Access Performance Metrics

96. As part of the Commission's implementation of the section 272
    structural safeguards, the BOCs have implemented special access
    performance metrics designed to help ensure that they refrain from
    non-price discrimination in their provision of special access
    services.[^281] Once a BOC chooses to provide in-region, interLATA
    telecommunications services either directly or through an affiliate
    that is not a section 272 separate affiliate, those metrics would
    cease to be available. AT&T, Verizon, and Qwest also are required to
    implement special access metrics in accordance with their voluntary
    commitments in connection with the *BOC Merger Orders* and the
    *Qwest Section 272 Sunset Forbearance Order*.[^282] This latter
    group of special access metrics addresses order taking,
    provisioning, and maintenance and repair of the BOCs' DS0, DS1, DS3,
    and OCn services.

97. We find the metrics the Commission approved in the *BOC Merger
    Orders* and the *Qwest Section 272 Sunset Forbearance Order* are
    necessary to monitor whether the BOCs and their independent
    incumbent LEC affiliates are engaging in non-price discrimination in
    the provision of special access services to unaffiliated entities in
    light of the regulatory relief we are granting those carriers in
    this order.[^283] The information that AT&T, Qwest, and Verizon
    record and report to the Commission under these metrics will provide
    the Commission and other interested parties with reasonable tools to
    monitor each BOC's performance in providing these special access
    services to itself and its competitors.[^284] This obligation shall
    apply beginning the first full quarter following provision of any
    in-region, interLATA telecommunications service through the BOC or
    through an affiliate that is not a section 272 separate affiliate.
    In addition, each of AT&T's and Verizon's independent incumbent LEC
    affiliates shall implement these metrics for the first full quarter
    following provision of any in-region, interstate, interexchange
    telecommunications service through the BOC or through an affiliate
    that is not a section 272 separate affiliate. The BOCs and their
    independent incumbent LEC affiliates must continue to abide by
    special access performance metrics until there is an affirmative
    Commission determination that such metrics no longer are necessary.

98. Each BOC and each of AT&T's and Verizon's independent incumbent LEC
    affiliates shall implement these metrics to the extent the BOC or
    independent incumbent LEC provides one or more of the covered
    special access services to itself, to any affiliate, or to third
    parties. The BOCs and their independent incumbent LEC affiliates
    shall provide the Commission with their performance measurement
    results on a quarterly basis.[^285] We conclude that the metrics and
    the associated reporting requirements that we impose in this Order
    adequately address commenters' concerns about the BOCs' and their
    independent incumbent LEC affiliates' incentives and ability to
    engage in non-price discrimination in their provisioning of special
    access services in order to impede competition in the market for
    in-region, interstate, long distance services.[^286]

##### Imputation

99. We also provide guidance to AT&T, Qwest, and Verizon regarding the
    treatment of charges for any access services that their incumbent
    LEC affiliates provide their in-region, long distance operations. In
    providing this guidance, we address three situations: (1) the BOCs'
    imputation in the event they provide in-region, long distance
    services on an integrated basis; (2) the obligations of AT&T's and
    Verizon's independent incumbent LEC affiliates in the event they
    provide in-region, long distance services on an integrated basis;
    and (3) AT&T's, Qwest's, and Verizon's obligations in the event they
    provide in-region, long distance services through an affiliate that
    is neither a section 272 nor a rule 64.1903 separate
    affiliate.[^287] We provide this guidance pursuant to our authority
    under sections 201, 202(a), 220(a), and 272(e)(3) of the Act.[^288]

100. In order to ensure the BOCs' continued compliance with their
     imputation obligations under section 272(e)(3), we direct each BOC
     to continue to impute to itself its highest tariffed rate for
     access, including access provided over joint-use facilities.[^289]
     We also require AT&T's and Verizon's independent incumbent LEC
     affiliates, as a condition of the waiver we grant them in part
     III.b of this Order, to comply with the same requirement with
     regard to their provision of access to any in-region, long distance
     services that they provide directly. In addition, we require the
     BOCs and their independent incumbent LEC affiliates to charge any
     non-section 272 affiliate through which they provide in-region,
     long distance services the same amount for access that they would
     have charged a section 272 separate affiliate under section
     272(e)(3).[^290] Although the statute does not address these latter
     two situations directly, applying protections paralleling those in
     section 272(e)(3) to these situations will assure that the degree
     of protection against improper cost shifting does not vary with
     AT&T's, Qwest's, and Verizon's choice of corporate structure for
     the provision of in-region, long distance services.

101. Section 69.727(a)(iii) of our rules requires that a price cap LEC
     cannot provide contract tariff services to either a section 272
     separate affiliate or a rule 64.1903 affiliate until after it
     "certifies to the Commission that it provides service pursuant to
     that contract tariff to an unaffiliated customer."[^291] To ensure
     that equivalent protection is in place in the event the BOCs
     provide in-region, long distance services directly, we require that
     each AT&T, Verizon, and Qwest incumbent LEC provide such a
     certification to the Commission prior to providing contract tariff
     services to itself or to any affiliate that is neither a section
     272 nor a rule 64.1903 separate affiliate for use in the provision
     of any in-region, long distance services.[^292]

102. We require that AT&T, Qwest, and Verizon revise the cost allocation
     manuals they filed pursuant to section 64.903 of our rules to
     include their imputation methodologies, which will be subject to
     public comment.[^293] We also require that AT&T, Qwest, and Verizon
     to revise their cost allocation manuals to include a description of
     how their provision of access services will comply with the
     affiliate transaction rules, to the extent they will offer
     in-region, interstate, long distance service through an affiliate
     that is not a section 272 separate affiliate or a rule 64.1903
     affiliate. Consistent with the Commission's findings in the
     *Accounting Safeguards Order*,[^294] we require that the BOCs and
     their independent incumbent LEC affiliates continue to treat
     in-region, long distance services as nonregulated for accounting
     purposes. These carriers also must continue to apply our affiliate
     transaction rules to any transactions they have with affiliates
     that provide long distance services.

103. AT&T, Qwest, and Verizon indicate that a significant reason
     underlying their desire to provide in-region, long distance
     services outside of the section 272 and rule 64.1903 separate
     affiliate structures is to realize the efficiencies of an
     integrated network over time.[^295] This integration will change
     both how each carrier's in-region, long distance network
     interconnects with its local network and the degree to which some
     facilities are jointly used to provide both local and interLATA
     services. The degree of integration does not alter AT&T's, Qwest's,
     and Verizon's obligations under section 272(e)(3) and this
     Order.[^296] We direct AT&T, Qwest, and Verizon to modify their
     cost allocation manuals as necessary, however, to ensure that their
     imputation and access charge methodologies remain consistent with
     section 272(e)(3) and this Order as each of these carriers changes
     the degree to which it integrates its local telephone and long
     distance operations.[^297]

104. Finally, under our rules, amounts imputed to each BOC's or BOC
     independent incumbent LEC affiliate's in-region, long distance
     operations pursuant to section 272(e)(3) and this Order must be
     debited to account 32.5280,[^298] which includes nonregulated
     operating revenue.[^299] To facilitate transparency of each
     carrier's imputation of in-region, long distance costs, we require
     AT&T, Qwest, and Verizon, as a condition of this Order, to include
     the imputation charges it debits to account 32.5280 in its ARMIS
     filings, accompanied by an explanatory footnote for each line
     item identifying the amount imputed.[^300] This requirement should
     pose at most a minimal additional burden to the carriers because
     they already record imputation charges in a subsidiary record
     account for revenues derived from regulated services treated as
     nonregulated for federal accounting purposes,[^301] and already
     must file ARMIS reports.[^302]

105. We conclude that the requirements set forth above adequately
     address the commenters' concerns regarding the incentives and
     ability of the BOCs and BOC independent incumbent LEC affiliates to
     use their pricing of access services, including special access
     services, to impede competition in the provision of in-region, long
     distance services.[^303] At the same time, these imputation and
     access charge requirements should not in any way hamper the BOCs'
     and their independent incumbent LEC affiliates' ability to compete.
     Instead, they should give AT&T, Qwest, and Verizon, their access
     services customers, and the Commission meaningful information for
     evaluating whether these carriers' imputation and access charge
     practices and procedures comply with section 272(e)(3) and this
     Order. We also believe that, in comparison with dominant carrier
     regulation, these imputation requirements provide a less costly but
     more effective method of assuring that the BOCs and their
     independent incumbent LEC affiliates will not discriminate between
     their own operations and their competitors in the pricing of
     special access services.

##### Low-Volume Usage Plans

106. As discussed above, although we find that Qwest, Verizon, and AT&T
     generally lack classical market power in the provision of
     in-region, interstate, long distance services, we are concerned
     that their customers who make relatively few interstate long
     distance calls and who do not also subscribe to wireless or
     broadband Internet access service may have fewer competitive
     choices among interstate, long distance providers and may not be
     able to avoid the impact of a price increase by engaging in usage
     substitution. To address this concern, AT&T and Verizon each have
     committed for three years to offer a rate plan tailored to these
     customers' needs.[^304] We note that, under the *Qwest Section 272
     Sunset Forbearance Order*, Qwest committed to freeze for two years
     the per-minute prices for two calling plans that it currently
     offers which are tailored to these customers' needs, and to not
     increase the monthly fee that applies to one of these plans by more
     than one dollar as a condition of the Commission's
     forbearance.[^305]

107. We agree with Consumers Union that the availability of such rate
     plans is important,[^306] and thus require that AT&T, Qwest, and
     Verizon adhere to these commitments as a condition of the relief we
     grant in this Order.[^307] We take this action pursuant to our
     authority under section 201 of the Act.[^308] We find that this
     condition will help protect against the exercise of any classical
     market power that Verizon, AT&T, or Qwest may have in relation to
     customers that make relatively few interstate long distance calls.
     We also find that this condition provides a more effective and less
     costly means of protecting against the exercise of such classical
     market power than would applying dominant carrier regulation to the
     BOCs' and their independent incumbent LECs' in-region, interstate
     long distance services.

##### Monthly Usage Information

108. We also are concerned that interstate long distance consumers need
     adequate information regarding their monthly usage in order to make
     informed choices among alternative long distance calling
     plans.[^309] To address this concern, AT&T has committed to
     provide, for three years, each residential customer who subscribes
     to a calling plan that establishes a single rate for unlimited
     wireline local exchange and long distance telecommunications
     service with the total number of long distance telecommunications
     service minutes used by that customer each month.[^310] Similarly,
     Verizon has committed, for three years, to offer monthly long
     distance usage information to customers who subscribe to wireline
     interstate, interexchange telecommunications service plans that
     establish a single rate for unlimited wireline local exchange,
     intraLATA toll, and 1+ long distance telecommunications
     service.[^311] In addition, in the *Qwest Section 272 Sunset
     Forbearance Order*, the Commission conditioned its relief on
     Qwest's commitment to ensure that its subscribers continue to
     receive in their bills the monthly usage information that they may
     need to make cost-effective decisions concerning alternative long
     distance plans. As a condition of the regulatory relief granted in
     this order, we require AT&T, Verizon, and Qwest to provide such
     usage information without an additional charge.

#### Advantages of Our New Framework

109. We find that the new regulatory framework adopted in this Order is
     preferable to the regulatory requirements previously in place for
     the BOCs and their independent incumbent LEC affiliates. In
     particular, we find that the new framework imposes significantly
     fewer costs than the prior regulations. Because the new framework
     does not involve retail price regulation or tariff filing with
     respect to in-region interLATA telecommunications services, it also
     imposes fewer costs than would dominant carrier regulation.[^312]
     The new framework also does not impose the costs and inefficiencies
     associated with the full section 272 safeguards, including the
     costs and inefficiencies from maintaining structural separation
     between local telephone and long distance operations, operating
     these services independently, and maintaining duplicate sets of
     officers, directors, and employees.[^313] The new framework also
     does not impose the same constraints on the ability of the BOCs and
     their independent incumbent LEC affiliates to respond to
     technological and marketplace developments as do the section 272
     and rule 64.1903 safeguards.[^314]

110. Further, as discussed above, we find the regulatory safeguards
     adequately address the limited classical market power concerns, as
     well as the concerns associated with exclusionary market power. As
     discussed in our market analysis, although we generally find that
     the BOCs lack classical market power with regard to in-region,
     interstate, long distance services, we identify concerns relating
     to consumers who make relatively few interstate long distance
     calls.[^315] As discussed above, we find that the low-volume usage
     plan and monthly usage information requirements are targeted
     responses to these concerns.[^316] We also find that the continuing
     legal requirements, including section 251(c) and 271(c)(2)(B)
     unbundling and sections 272(e)(1) and 272(e)(3), as well as the
     special access performance metrics and imputation requirements set
     forth in this Order, adequately address concerns associated with
     exclusionary market power.[^317] We also find that the improved
     ability of AT&T, Verizon, and Qwest to develop and deploy
     innovative interLATA services that meet their customers' needs is a
     significant benefit associated with the new framework adopted in
     this Order. We find that customers and competition will benefit
     from the Commission's elimination of hindrances previously imposed
     by the section 272 safeguards by allowing AT&T, Verizon, and Qwest
     to become more effective competitors.

111. Finally, in concluding that dominant carrier regulation and
     structural safeguards no longer are appropriate for AT&T's,
     Verizon's, and Qwest's in-region, interstate, long distance
     services, we exercise our "expert policy judgment" with respect to
     a "'subject matter \[that\] is technical, complex, and
     dynamic.'"[^318] We find, in particular, that the section 272
     safeguards impose higher costs than the new framework we adopt, but
     while we find both the section 272 safeguards and the new framework
     adequate to address our competitive concerns, the relative
     magnitudes of the benefits of each approach do not lend themselves
     to precise balancing. Given our expertise and experience with the
     regulation historically imposed on the BOCs and their independent
     incumbent LEC affiliates; the evidence of significant competition
     and evolution in the marketplace for interstate long distance
     services within the AT&T, Verizon, and Qwest incumbent LEC
     territories; and our conclusions regarding the adequacy of other
     safeguards, we find it appropriate to remove hindrances to the
     BOCs' and their independent incumbent LEC affiliates' becoming more
     effective competitors in a manner that we believe is administrable
     and adequately protects customers and competition.

#### Alternative Proposed Safeguards

112. We reject commenters' calls for safeguards in addition to those we
     adopt above. Specifically, we do not adopt safeguards in this
     proceeding in response to arguments by legacy AT&T and Working
     Assets that the BOCs have significant advantages in the marketing
     of long distance services to residential customers,[^319] because
     those arguments have either been addressed in prior Commission
     orders or are better addressed in our pending *Equal Access*
     proceeding.[^320] We also reject legacy MCI's arguments that the
     BOCs have unfair marketing advantages resulting from their historic
     local market share and their established business relationships
     with subscribers that require changes to our do-not-call
     rules.[^321] The Commission has previously rejected those
     arguments.[^322] For the same reason, we reject commenters'
     concerns regarding the BOCs' ability to market using customer
     proprietary network information (CPNI).[^323]

113. We also reject certain commenters' suggestion that we should impose
     safeguards addressing the BOCs' billing and collection
     practices.[^324] In the *Billing and Collection Detariffing Order*,
     the Commission concluded that billing and collection services
     provided by LECs are not subject to regulation under Title II of
     the Act because they are not communications services.[^325] The
     Commission further found that unregulated treatment of LECs'
     billing and collection services would best serve the interests of
     the LECs, their subscribers, and their competitors.[^326]
     Commenters do not demonstrate that we should adopt different
     conclusions in this proceeding. Furthermore, we note that carriers
     have the option of providing their own billing and collection
     services as well as using the billing and collection services of
     companies other than the BOCs.

114. We also decline to impose additional safeguards to address the
     rates, terms, and conditions under which the BOCs and their
     independent incumbent LEC affiliates provide access services.
     Specifically, we decline to address at this time certain parties'
     concerns regarding AT&T's, Verizon's, and Qwest's special access
     services rates and regarding growth discounts these carriers have
     made available to their switched access services customers.[^327]
     We find that existing law and Commission rules and procedures are
     designed to address such concerns as they arise,[^328] and that to
     the extent that commenters have other specific concerns, they are
     better addressed in the context of the broader records in other
     Commission proceedings.[^329]

115. Similarly, we find that existing rules and legal protections
     adequately address commenters' concerns regarding the primary
     interexchange carrier (PIC) process.[^330] We believe that the
     Commission rules designed to implement fairly the PIC
     administration process are sufficient to guard against the type of
     anticompetitive concerns raised by commenters.[^331] Moreover, as
     the Commission has observed previously, the Commission's carrier
     freeze rules place subscribers in control over whether there is a
     PIC freeze in place on their carrier selection.[^332] Carriers are
     able to use the Commission's section 208 complaint process if they
     believe that AT&T, Verizon, or Qwest has violated the Act or the
     Commission's rules.

116. We also are not persuaded that asserted BOC violations of
     particular section 272 safeguards require that we extend those
     safeguards, either in particular states or throughout the
     individual BOC's region.[^333] To the extent the parties expressed
     concerns regarding the need for safeguards in particular BOC
     in-region states, we believe that this Order adequately addresses
     those concerns.[^334] Indeed, the arguments the parties present
     regarding whether we should extend the section 272 safeguards in
     particular states are closely-related to similar issues raised in
     the general rulemaking.[^335] Thus, the conclusions that we reach
     in this Order on these issues also apply to the issues raised in
     arguing against allowing the section 272 safeguards to sunset in
     individual states. For example, one of the parties' primary
     arguments against allowing those safeguards to sunset in individual
     states is that the BOCs have discriminated against their interLATA
     telecommunications services competitors in the provisioning of
     special access services.[^336] The special access metrics we adopt
     in this Order address this alleged discrimination far more
     directly, and at lesser cost, than would extension of the section
     272 safeguards. []{.mark}

## Memorandum Opinion and Order in WC Docket No. 06-120

### Equal Access Scripting Requirement 

#### Overview

117. We now turn to AT&T's petition pursuant to section 10 of the Act
     for forbearance from application of the equal access scripting
     requirement (EA Scripting Requirement).[^337] The EA Scripting
     Requirement requires incumbent LECs to inform customers calling to
     obtain new local exchange service that they may obtain stand-alone
     long distance service from other carriers, and to read the
     customers a list of carriers offering long distance service in
     their area upon request.[^338] This requirement originated during
     the implementation of equal access following divestiture and is
     preserved by section 251(g) of the Act.[^339] For the reasons set
     forth below, we forbear from application of this requirement to the
     BOCs, and waive the requirement with respect to their independent
     incumbent LEC affiliates.

118. Section 10 of the Act is an integral part of the "pro-competitive,
     de‑regulatory national framework" established in the
     Telecommunications Act of 1996.[^340] Section 10 provides that the
     Commission shall forbear from applying any provision of the Act, or
     any of the Commission's regulations, if the Commission makes
     certain findings with respect to such provisions or
     regulations.[^341] Specifically, the Commission is required to
     forbear from any such provision or regulation if it determines
     that: (1) enforcement of the provision or regulation is not
     necessary to ensure the telecommunications carriers' charges,
     practices, classifications, or regulations are just, reasonable,
     and not unjustly or unreasonably discriminatory; (2) enforcement of
     the provision or regulation is not necessary to protect consumers;
     and (3) forbearance is consistent with the public interest.[^342]
     In making such determinations, the Commission also must consider
     "whether forbearance from enforcing the provision or regulation
     will promote competitive market conditions."[^343] We conclude
     below that continued application of the EA Scripting Requirement to
     the BOCs and their independent incumbent LEC affiliates is no
     longer justified. We thus find that forbearance from application of
     this requirement to the BOCs satisfies the requirements for
     forbearance in section 10 of the Act, and that waiver of these
     requirements is appropriate for their independent incumbent LEC
     affiliates.

#### Discussion

119. Section 10(a)(1) of the Act requires that we consider whether the
     EA Scripting Requirement is "necessary to ensure that the charges,
     practices, and classifications, or regulations by, for, or in
     connection with \[these carriers' long distance telecommunications
     services\] are just and reasonable and are not unjustly or
     unreasonably discriminatory."[^344]

120. The EA Scripting Requirement was designed to foster fair
     competition in the provision of stand-alone long distance service
     at a time when competition in the provision of stand-alone long
     distance services was nascent and there was little, if any,
     competition in the provision of local exchange service.[^345] Since
     that time, market conditions have changed substantially, greatly
     reducing the benefits of the EA Scripting Requirement.

121. First, there is significant evidence that the stand-alone long
     distance market is becoming a fringe market.[^346] In particular,
     the stand-alone long distance competition that the EA Scripting
     Requirement was designed to protect has largely given way to
     competition between service bundles that include both local
     exchange and long distance service or "any distance" minutes that
     can be used for both local exchange and long distance
     calling.[^347] For example, service bundles are increasingly
     available from cable operators and interconnected VoIP
     providers.[^348] Wireless telephone subscribers also regularly use
     their "any distance" minutes for long distance calling.[^349]
     Indeed, the entity whose market position was the original focus of
     the EA Scripting Requirement, AT&T:[^350] (1) no longer is an
     independent interexchange carrier competing primarily in the
     stand-alone long distance market;[^351] (2) actually had started to
     "harvest" stand-alone long distance customers by increasing rates
     prior to merging with a BOC;[^352] and (3) now, as a BOC and
     incumbent LEC, apparently encourages consumers to subscribe to a
     local and long distance service bundle rather than a stand-alone
     long distance product.[^353]

122. Second, the minority of consumers that still take stand-alone long
     distance services now have additional options available for making
     long distance calls. As discussed above, the majority of
     residential customers also subscribes to mobile wireless services
     and can use their buckets of minutes to make long distance calls at
     zero marginal cost. And all residential customers also have the
     option of making long distance calls using transaction services,
     such as prepaid calling cards. These alternative methods of making
     long distance calls, which were not readily available when the EA
     Scripting Requirement was adopted, enable residential customers to
     engage in usage substitution.[^354] Despite the development of
     these competitive alternatives, the EA Scripting Requirement
     focuses solely on alternative presubscribed wireline long distance
     providers. Instead of increasing consumer awareness of competitive
     alternatives, we find that the artificially narrow focus of the EA
     Scripting Requirement may, in fact, confuse or mislead consumers
     and cause them not to investigate alternative means of making long
     distance calls. We further find that competition for stand-alone
     long distance services would function better absent the potential
     marketplace-distorting effects of the current EA scripting
     requirement. As previously found by the Commission, "competition is
     the most effective means of ensuring that the charges, practices,
     classifications, and regulations . . . are just and reasonable, and
     not unjustly or unreasonably discriminatory."[^355] Accordingly, we
     conclude that the first prong of the section 10 forbearance test is
     satisfied.

123. Section 10(a)(2) of the Act requires that we determine whether the
     EA Scripting Requirement is "necessary for the protection of
     consumers."[^356] As explained above, consumers have significant
     competitive alternatives available to them in the stand-alone long
     distance market, as well as numerous options for bundled service
     offerings by, among others, LECs, cable operators and
     interconnected VoIP providers. As discussed above, however, we find
     that the current EA Scripting Requirement is likely to distort
     competition for stand-alone long distance services by focusing
     solely on one type of competitive alternative. Thus, rather than
     being necessary for the protection of consumers, we find that the
     current EA Scripting Requirement could hinder consumers' awareness
     of competitive alternatives, and we find that the second prong of
     the section 10 forbearance test is satisfied.

124. Section 10(a)(3) of the Act requires that we determine whether
     forbearance from enforcement of the EA Scripting Requirement "is
     consistent with the public interest."[^357] For the reasons
     described above, we find that the current EA Scripting Requirement
     could distort competition and harm consumers, and thus we find that
     forbearance from that requirement is in the public interest. We
     also note that the EA Scripting Requirement imposes unnecessary
     costs on the BOCs.[^358] Even without the EA Scripting Requirement,
     the BOCs' local customers will retain the right to obtain long
     distance service from a long distance carrier other than the BOC.
     In cases in which customers ask whether they can obtain long
     distance service from another carrier or select a stand-alone long
     distance service, the BOCs remain subject to nondiscrimination
     obligations and must allow customers to exercise their rights under
     the remaining equal access obligations.[^359] Accordingly, we
     conclude that the third prong of the forbearance test is satisfied.

125. Moreover, we find that our analysis of the EA Scripting Requirement
     would not vary for any of the BOCs. Given that we find the BOCs to
     be similarly situated with regard to the factors relevant to
     forbearance from the EA Scripting Requirement, we conclude that it
     is reasonable to forbear for Verizon and Qwest, as well as for
     AT&T. Thus, we exercise our authority under section 10(a) to
     forbear from application of the EA Scripting Requirement to BOCs as
     a class.[^360]

126. Finally, for similar reasons as indicated above with respect to our
     waiver of section 64.1903, we find good cause to waive the EA
     Scripting Requirement for the BOCs' independent incumbent LEC
     affiliates.[^361] As previously discussed with respect to our
     waiver of section 64.1903 of the Commission's rules, we find it
     more sensible for the BOC incumbent LECs and their independent
     incumbent LEC affiliates to operate pursuant to a uniform
     regulatory framework, particularly where the independent incumbent
     LEC operations are a relatively small portion of AT&T's and
     Verizon's local operations. These special circumstances convince us
     that it is consistent with the public interest to deviate from the
     general EA Scripting Requirement.[^362] We reject, however, ACS's
     request to broaden AT&T's forbearance request to include all
     independent incumbent LECs at this time, nor do we find it
     appropriate to grant a waiver for such carriers here.[^363] Given
     the potential for significant differences in competitive
     circumstances[^364] and the lack of record with regard to
     non-BOC-affiliate, independent incumbent LECs, we do not extend
     this regulatory relief to these carriers at this time. The
     Commission is currently considering whether there is a continued
     need for the EA Scripting Requirement for independent incumbent
     LECs in a separate proceeding, and the independent incumbent LECs
     also otherwise remain free to seek relief from the EA Scripting
     Requirement.[^365]

### Effective Date

127. Consistent with section 10 of the Act and our rules, the
     Commission's forbearance and EA Scripting Requirement waiver
     decisions shall be effective on Friday, August 31, 2007.[^366] The
     time for appeal shall run from the release date of this Memorandum
     Opinion and Order.

# Procedural Matters

## Final Regulatory Flexibility Act Certification

128. [Final Regulatory Flexibility Certification]{.underline}. The
     Regulatory Flexibility Act of 1980, as amended (RFA)[^367] requires
     that a regulatory flexibility analysis be prepared for rulemaking
     proceedings, unless the agency certifies that "the rule will not
     have a significant economic impact on a substantial number of small
     entities."[^368] The RFA generally defines "small entity" as having
     the same meaning as the terms "small business," "small
     organization," and "small governmental jurisdiction."[^369] In
     addition, the term "small business" has the same meaning as the
     term "small business concern" under the Small Business Act.[^370] A
     small business concern is one which: (1) is independently owned and
     operated; (2) is not dominant in its field of operation; and (3)
     satisfies any additional criteria established by the Small Business
     Administration (SBA).[^371] In the context of this Regulatory
     Flexibility analysis, SBA regulations define small wired
     telecommunications carriers as entities with fewer than 1,500
     employees.[^372]

129. In this Report and Order, the Commission establishes a new
     framework to govern the provision of in-region, long distance
     services by AT&T, Qwest, and Verizon. This new framework replaces
     burdensome regulation with less intrusive measures that protect
     important customer interests while allowing AT&T, Qwest, and
     Verizon to respond to marketplace demands efficiently and
     effectively. The issues addressed by the Commission in this Report
     and Order directly affect only the BOCs and their affiliates, which
     do not qualify as small entities under the RFA. In particular, none
     of the BOCs is a small entity because each BOC is an affiliate of a
     Regional Holding Company (RHC), and all of the BOCs or their RHCs
     have more than 1,500 employees. Insofar as this Report and Order
     applies to other BOC or RHC affiliates, those affiliates are
     controlled by the BOCs or by the RHC. Accordingly, they are not
     "independently owned and operated" entities for purposes of the
     RFA.

130. Therefore, we certify that that the requirements adopted in this
     Report and Order will not have a significant economic impact on a
     substantial number of small entities. The Commission will send a
     copy of the Report and Order including a copy of this final
     certification, in a report to Congress pursuant to the Small
     Business Regulatory Enforcement Fairness Act of 1996. *See* 5
     U.S.C. § 801(a)(1)(A). In addition, a summary of the Report and
     Order and this certification will be sent to the Chief Counsel for
     Advocacy of the Small Business Administration, and will be
     published in the Federal Register.[^373]

## Paperwork Reduction Act

131. The actions in this Report and Order include new or modified
     information collection requirements subject to the Paperwork
     Reduction Act of 1995 (PRA), Public Law 104-13. It will be
     submitted to the Office of Management and Budget (OMB) for review
     under Section 3507(d) of the PRA. OMB, the general public, and
     other Federal agencies are invited to comment on the modified
     information collection requirements contained in this proceeding.
     In addition, we note that pursuant to the Small Business Paperwork
     Relief Act of 2002, Public Law 107-198,[^374] we previously sought
     specific comment on how the Commission might "further reduce the
     information collection burden for small business concerns with
     fewer than 25 employees."

132. We have assessed the effects of the new or modified information
     collection requirements adopted in this Report and Order and find
     that they do not affect businesses with fewer than 25 employees.

## Congressional Review Act

133. The Commission will include a copy of this Report and Order in a
     report to be sent to Congress and the Government Accountability
     Office pursuant to the Congressional Review Act. *See* 5 U.S.C. §
     801(a)(1)(A).

## Accessible Formats

134. To request materials in accessible formats for people with
     disabilities (Braille, large print, electronic files, audio
     format), send an e-mail to <fcc504@fcc.gov> or call the Consumer &
     Governmental Affairs Bureau at 202-418-0530 (voice) or 202-418-0432
     (TTY). Contact the FCC to request reasonable accommodations for
     filing comments (accessible format documents, sign language
     interpreters, CART, etc.) by e‑mail: FCC504@fcc.gov; phone:
     202-418-0530 or TTY: 202-418-0432.

# ORDERING CLAUSES

135. Accordingly, IT IS ORDERED that, pursuant to sections 1, 2, 4(i),
     4(j), 201-204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152,
     154(i), 154(j), 201-204, 214, 220(a), 251, 252, 271, 272, and
     303(r), the Report and Order IS ADOPTED.

136. IT IS FURTHER ORDERED, pursuant to sections 1, 2, 4(i), 4(j),
     201-204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152,
     154(i), 154(j), 201-204, 214, 220(a), 251, 252, 271, 272, and
     303(r), the Petition for Extension of Section 272 Obligations of
     Southwestern Bell Telephone Co. in the States of Arkansas and
     Missouri that Legacy AT&T Corp. filed September 24, 2004 in WC
     Docket No. 02-112; the Petition for Extension of Section 272
     Obligations of Verizon in the State of Massachusetts that Legacy
     AT&T Corp. filed February 29, 2004 in WC Docket No. 02-112; the
     Petition for Extension of Section 272 Obligations of Southwestern
     Bell Telephone Co. in the States of Kansas and Oklahoma that Legacy
     AT&T Corp. filed December 8, 2003 in WC Docket No. 02-112; and the
     Petition for Extension of Section 272 Obligations of Southwestern
     Bell Telephone Co. in the State of Texas in WC Docket No. 02-112
     that Legacy AT&T Corp. filed April 10, 2003 in WC Docket No. 02-112
     ARE DENIED.

137. IT IS FURTHER ORDERED, pursuant to sections 1, 2, 4(i), 4(j),
     201-204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152,
     154(i)-154(j), 201-204, 214, 220(a), 251, 252, 271, 272, and
     303(r), that section 64.1903 of the Commission's rules IS WAIVED as
     applied to Southern New England Telephony Company and the General
     Telephone Operating Companies, subject to the conditions set forth
     in this Report and Order.

138. IT IS FURTHER ORDERED, pursuant to sections 1.103(a) and 1.427(b)
     of the Commission's rules, 47 C.F.R. §§ 1.103(a), 1.427(b), that
     this Report and Order SHALL BE EFFECTIVE 30 days after publication
     of notice of the Report and Order in the FEDERAL REGISTER, subject
     to Office of Management and Budget (OMB) approval for new or
     modified information collection requirements.

139. IT IS FURTHER ORDERED, pursuant to sections 1, 2, 4(i), 4(j), 10,
     201-204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152,
     154(i), 154(j), 160, 201-204, 214, 220(a), 251, 252, 271, 272, and
     303(r) that AT&T's Petition for Forbearance, filed June 2, 2006, IS
     GRANTED in part, to the extent set forth herein.

140. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), 201-204,
     251(g), and 303(r) of the Communications Act of 1934, as amended,
     47 U.S.C. §§ 151, 154(i)-154(j), 201-204, 251(g), and 303(r), and
     section 1.3 of the Commission's rules, 47 C.F.R. § 1.3, that the
     Equal Access Scripting Requirement IS WAIVED as applied to Southern
     New England Telephone Company and the General Telephone Operating
     Companies as described in the Memorandum Opinion and Order,
     effective on August 31, 2007.

141. IT IS FURTHER ORDERED, pursuant to section 10 of the Communications
     Act of 1934, as amended, 47 U.S.C. § 160, and section 1.103(a) of
     the Commission's rules, 47 C.F.R. § 1.103(a), that the Memorandum
     Opinion and Order SHALL BE EFFECTIVE on August 31, 2007. Pursuant
     to sections 1.4 and 1.13 of the Commission's rules, 47 C.F.R. §§
     1.4, 1.13, the time for appeal from that Memorandum Opinion and
     Order shall run from its release date.

142. IT IS FURTHER ORDERED that the Commission's Consumer and
     Governmental Affairs Bureau, Reference Information Center, SHALL
     SEND a copy of this Order, including the Final Regulatory
     Flexibility Certification, to the Chief Counsel for Advocacy of the
     Small Business Administration.

     FEDERAL COMMUNICATIONS COMMISSION

     Marlene H. Dortch

     Secretary

**APPENDIX A**

**Comments to Notice of Proposed Rulemaking**

**in** WC Docket No. 02-112

  ----------------------------------- -----------------------------------
  **Commenter**                       **Abbreviation**

  Association for Local               ALTS
  Telecommunications Services         

  AT&T Corp.                          Legacy AT&T

  BellSouth Corporation               Legacy BellSouth

  The Competitive Telecommunications  COMPTEL
  Association                         

  Assistant Professor Reza Dibadj,    Dibadj
  University of Miami School of       
  Business Administration             

  Focal Communications Corp.,         Focal Communications
  Pac-West Telecomm, US LEC Corp.     

  MCI                                 Legacy MCI

  Missouri Public Service Commission  Missouri Commission

  National Association of State       NASUCA
  Utility Consumer Advocates          

  New Jersey Division of the          NJ Ratepayer
  Ratepayer Advocate                  

  New York State Department of Public NY Dept. Public Service
  Service                             

  Pennsylvania Public Utility         Pennsylvania Commission
  Commission                          

  Public Service Commission of        Wisconsin Commission
  Wisconsin                           

  Public Service Commission of        Missouri Commission
  Missouri                            

  Public Utility Commission of Texas  Texas Commission

  Qwest Services Corporation          Qwest

  SBC Communications, Inc.            Legacy SBC

  Sprint Corporation                  Sprint

  State of Texas, Office of Attorney  Texas AG
  General                             

  Time Warner Telecom                 Time Warner Telecom

  Touch America Holdings, Inc., *et   Touch America
  al.*                                

  United States Telecom Association   USTA

  Western Wireless Corp.              Western Wireless

  Verizon                             Verizon

  Washington Utilities and            Washington Commission
  Transportation Commission           

  WorldCom                            WorldCom

  Wyoming Public Service Commission   Wyoming Commission
  ----------------------------------- -----------------------------------

**Comments to Further Notice of Proposed Rulemaking**

**in** WC Docket No. 02-112

  ----------------------------------- -----------------------------------
  **Commenter**                       **Abbreviation**

  Ad Hoc Telecommunications Users     Ad Hoc
  Committee                           

  Americatel Corporation              Americatel

  AT&T Corp.                          Legacy AT&T

  AT&T Wireless Services, Inc.        AT&T Wireless

  BellSouth Corporation               Legacy BellSouth
  ----------------------------------- -----------------------------------

  ----------------------------------- -----------------------------------
  Coalition of Incumbent Independent  Coalition of Independent ILECS
  Local Exchange Carriers             

  Independent Telephone &             ITTA
  Telecommunications Alliance         

  BT Americas Inc.                    BT Americas

  California Public Utilities         California Commission
  Commission                          

  GVNW Consulting, Inc.               GVNW

  MCI                                 Legacy MCI

  National Telecommunications         NTCA
  Cooperative Association             

  New Jersey Division of the          NJ Ratepayer
  Ratepayer Advocate                  

  Public Utility Commission of Texas  Texas Commission

  Qwest Services Corporation          Qwest

  Sage Telecom Inc.                   Sage

  SBC Communications, Inc.            Legacy SBC

  Sprint Corporation                  Sprint

  State of Texas, Office of Attorney  Texas AG
  General                             

  United States Telecom Association   USTA

  VarTec Telecom, Inc., Excel         VarTec *et al.*
  Telecommunications, Inc., &         
  eMeritus Communications             

  Verizon                             Verizon

  Working Assets Long Distance        Working Assets

  WorldCom                            WorldCom

  Z-Tel Communications, Inc.          Z-Tel
  ----------------------------------- -----------------------------------

**Reply Comments to Notice of Proposed Rulemaking**

**in WC Docket No. 02-112**

  ----------------------------------- -----------------------------------
  **Reply Commenter**                 **Abbreviation**

  AT&T Corp.                          Legacy AT&T

  BellSouth Corporation               Legacy BellSouth

  Covad Communications                Covad

  NASUCA                              NASUCA

  New Jersey Division of the          NJ Ratepayer
  Ratepayer Advocate                  

  Nextel Communications, Inc.         Nextel

  SBC Communications Inc.             Legacy SBC

  Sprint Corporation                  Sprint

  United States Telecom Association   USTA

  Verizon                             Verizon

  WorldCom                            WorldCom
  ----------------------------------- -----------------------------------

**Reply Comments to Further Notice of Proposed Rulemaking**

**in WC Docket No. 02-112**

  ----------------------------------- -----------------------------------
  **Reply Commenter**                 **Abbreviation**

  Association for Local               ALTS
  Telecommunications Services         

  AT&T Corp.                          Legacy AT&T

  BellSouth Corporation               Legacy BellSouth

  Coalition of Incumbent Independent  Coalition of Independent ILECS
  Local Exchange Carriers             

  General Communication, Inc.         General Communication

  MCI                                 Legacy MCI

  New Jersey Division of the          NJ Ratepayer
  Ratepayer Advocate                  

  SBC Communications Inc.             Legacy SBC

  Sprint Corporation                  Sprint

  Time Warner Telecom                 Time Warner Telecom

  United States Telecom Association   USTA

  Verizon                             Verizon
  ----------------------------------- -----------------------------------

**Comments to AT&T Petition for Forbearance**

**In WC Docket No. 06-120**

  ----------------------------------- -----------------------------------
  **Commenter**                       **Abbreviation**

  ACS of Anchorage, Inc.              ACS

  COMPTEL                             COMPTEL

  General Communication, Inc.         GCI

  McLeodUSA Telecommunications        McLeod
  Services, Inc.                      

  Sprint Nextel Corporation           Sprint Nextel

  NASUCA                              NASUCA

  Verizon                             Verizon
  ----------------------------------- -----------------------------------

**Reply Comments to AT&T Petition for Forbearance**

**In WC Docket No. 06-120**

  ----------------------------------- -----------------------------------
  **Commenter**                       **Abbreviation**

  ACS of Anchorage, Inc.              ACS

  AdHoc Telecommunications Users      AdHoc
  Committee                           

  AT&T Inc.                           AT&T

  COMPTEL                             COMPTEL

  General Communications, Inc.        GCI

  The National Association of State   NASUCA
  Utility Consumer Advocates          

  Verizon                             Verizon
  ----------------------------------- -----------------------------------

**APPENDIX B**

**MASS MARKET DATA**

+--------------+--------------+---------------------+-----------------+
| **Appendix   |              |                     |                 |
| B - Table    |              |                     |                 |
| 1**          |              |                     |                 |
|              |              |                     |                 |
| **AT&T's     |              |                     |                 |
| Market Share |              |                     |                 |
| for Mass     |              |                     |                 |
| Market       |              |                     |                 |
| Customers**  |              |                     |                 |
|              |              |                     |                 |
| **within its |              |                     |                 |
| Franchise    |              |                     |                 |
| Area         |              |                     |                 |
| (December    |              |                     |                 |
| 2006)**      |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| ** **        | **Long       | **Wireline and      | **Local and     |
|              | Distance     | Wireless Long       | Long Distance   |
|              | Services\*** | Distance            | Bundle\*\*\***  |
|              |              | Usage\*\***         |                 |
+--------------+--------------+---------------------+-----------------+
| **Alabama**  | **REDACTED** |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Arkansas** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **           |              |                     |                 |
| California** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **C          |              |                     |                 |
| onnecticut** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Florida**  |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Georgia**  |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Illinois** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Indiana**  |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Kansas**   |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Kentucky** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| *            |              |                     |                 |
| *Louisiana** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Michigan** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Missouri** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **M          |              |                     |                 |
| ississippi** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **North      |              |                     |                 |
| Carolina**   |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Nevada**   |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Ohio**     |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Oklahoma** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **South      |              |                     |                 |
| Carolina**   |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| *            |              |                     |                 |
| *Tennessee** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Texas**    |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| *            |              |                     |                 |
| *Wisconsin** |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Minimum**  |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Maximum**  |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| **Median**   |              |                     |                 |
+--------------+--------------+---------------------+-----------------+
| Source:      |              |                     |                 |
| \*Refer to   |              |                     |                 |
| Note 1.      |              |                     |                 |
| \*\*Refer to |              |                     |                 |
| Note 2.      |              |                     |                 |
| \*\*\*Refer  |              |                     |                 |
| to Note 3.   |              |                     |                 |
+--------------+--------------+---------------------+-----------------+

**Note 1 (Interstate Long Distance Services)**. For each AT&T franchise
area, we estimate AT&T's market share for interstate long distance
services as follows:

> MS~AT&T~ = Local~AT&T~ / (AT&T~PIC~ + COMP)
>
> Where MS~AT&T~ = AT&T's market share
>
> Local~AT&T~ = The total number of local service lines with a AT&T
> PIC.[^375]
>
> AT&T~PIC~ = The total number of AT&T local service lines with a
> PIC.[^376]
>
> COMP = The total number of competitive local service lines.[^377]

**Note 2 (Wireline and Wireless Interstate Long Distance Usage)**. We
attempt to account for wireline-wireless usage substitution by
including, in our market share calculations, estimates of the number of
residential mobile wireless customers that have not cut-the-cord.[^378]
We follow four steps for each AT&T franchise area.

[Step 1]{.underline}. We estimate the total number of customers that
have telephone service (whether wireline or mobile wireless) and the
number of customers that exclusively subscribe to mobile wireless
service (*i.e*., customers that have cut-the-cord). To do this we assume
10 percent of households have cut-the-cord[^379] and that the typical
wireline household has one wireline phone.[^380]

> (AT&T + COMP) = 0.90 \* C~telephone~
>
> Where C~telephone~ = The total number of customers that have telephone
> service (whether wireline or mobile wireless).
>
> AT&T = The total number of AT&T local service customers.[^381]
>
> COMP = The total number of competitive local service customers.[^382]
>
> Rearranging the expression yields,
>
> C~telephone~ = (AT&T + COMP)/0.90
>
> We estimate, Wireless~CTC~, the total number of customers that have
> cut-the-cord, by
>
> Wireless~CTC~ = C~telephone~ - AT&T - COMP

[Step 2]{.underline}. We estimate the total number of mobile wireless
customers by assuming that the percentage of households that subscribe
to mobile wireless services is 70 percent.[^383]

> Wireless = 0.70 \* C~telephone~
>
> Where Wireless = The total number of mobile wireless customers.
>
> C~telephone~ = The total number of customers that have telephone
> service (whether wireline or mobile wireless) (as derived in Step 1).

[Step 3]{.underline}. We estimate the total number of residential mobile
wireless customers that have not cut-the-cord, (*i.e.*, consumers that
subscribe to both mobile wireless service and wireline service).

> Wireless~Not-CTC~ = Wireless - Wireless~CTC~
>
> Where Wireless = The total number of mobile wireless customers (as
> derived above in Step 2).
>
> Wireless~CTC~ = The number of customers that have cut-the-cord (as
> derived above in Step 1).

[Step 4.]{.underline} Finally, we amend the market share formula in Note
1 above by adding to the numerator AT&T wireless customers that have not
cut-the-cord and by adding to the denominator Wireless service customers
that have not cut-the-cord.

> MS~AT&T~ = [\[]{.underline}Local~AT&T~ + AT&TWireless~Not-CTC~ \] /
>
> \[AT&T~PIC~ + COMP + Wireless~Not-CTC~ \]
>
> Where AT&TWireless~Not-CTC~ = AT&T Wireless customers that have not
> cut-the-cord[^384]
>
> Wireless~Not-CTC~ = Wireless subscribers that have not cut-the-cord
> (as derived in Step 3).

**Note 3 (Local and Long Distance Bundle)**. For each AT&T franchise
area, we calculate AT&T's share of the local and long distance service
bundle by focusing on residential wireline customers that purchase a
local and long distance service bundle from a single wireline provider
and residential mobile wireless customers that have cut-the-cord.

> MS~AT&T~ = \[AT&T~PIC~ + AT&TWireless~CTC\]~ /\[AT&T~AT&T~ + COMP +
> Wireless~CTC~\]
>
> Where AT&T~AT&T~ = The total number of AT&T local service customers
> with a AT&T PIC.[^385]
>
> AT&TWireless~CTC~ = AT&T Wireless customers that have
> cut-the-cord.[^386]
>
> Wireless~CTC~ = Wireless customers that have cut-the-cord (as derived
> in Note 2, Step 1).

+---------------+-----------+--------------------+--------------------+
| **Appendix    |           |                    |                    |
| B - Table 2** |           |                    |                    |
|               |           |                    |                    |
| **Verizon's   |           |                    |                    |
| Market Share  |           |                    |                    |
| for Mass      |           |                    |                    |
| Market        |           |                    |                    |
| Customers**   |           |                    |                    |
|               |           |                    |                    |
| **within its  |           |                    |                    |
| Franchise     |           |                    |                    |
| Area          |           |                    |                    |
| (December     |           |                    |                    |
| 2006)**       |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| ** **         | **Long    | **Wireline and     | **Local and Long   |
|               | Distance  | Wireless Long      | Distance           |
|               | Ser       | Distance           | Bundle\*\*\***     |
|               | vices\*** | Usage\*\***        |                    |
+---------------+-----------+--------------------+--------------------+
| **Arizona**   | **R       |                    |                    |
|               | EDACTED** |                    |                    |
+---------------+-----------+--------------------+--------------------+
| *             |           |                    |                    |
| *California** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **            |           |                    |                    |
| Connecticut** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **District of |           |                    |                    |
| Columbia**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Delaware**  |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Florida**   |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Idaho**     |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Illinois**  |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Indiana**   |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Ma          |           |                    |                    |
| ssachusetts** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Maryland**  |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Maine**     |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Michigan**  |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **North       |           |                    |                    |
| Carolina**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **New         |           |                    |                    |
| Hampshire**   |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **New         |           |                    |                    |
| Jersey**      |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Nevada**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **New York**  |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Ohio**      |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Oregon**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Penn        |           |                    |                    |
| sylvania/BA** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Penns       |           |                    |                    |
| ylvania/GTE** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Rhode       |           |                    |                    |
| Island**      |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **South       |           |                    |                    |
| Carolina**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Texas**     |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **            |           |                    |                    |
| Virginia/BA** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **V           |           |                    |                    |
| irginia/GTE** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Vermont**   |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| *             |           |                    |                    |
| *Washington** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Wisconsin** |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **West        |           |                    |                    |
| Virginia**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Minimum**   |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Maximum**   |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| **Median**    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+
| Source:       |           |                    |                    |
| \*Refer to    |           |                    |                    |
| Note 4.       |           |                    |                    |
| \*\*Refer to  |           |                    |                    |
| Note 5.       |           |                    |                    |
| \*\*\*Refer   |           |                    |                    |
| to Note 6.    |           |                    |                    |
+---------------+-----------+--------------------+--------------------+

**Note 4 (Interstate Long Distance Services).** For each Verizon
franchise area, we estimate Verizon's market share for interstate long
distance services as follows

> MS~VZ~ = Local~VZ~ / (Verizon~PIC~ + COMP)
>
> Where MS~VZ~ = Verizon's market share
>
> Local~VZ~ = The total number of local service customers with a Verizon
> PIC.[^387]
>
> Verizon~PIC~ = The total number of Verizon local service customers
> with a PIC.[^388] COMP = The total number of competitive local service
> lines.[^389]

**Note 5 (Wireline and Wireless Long Distance Usage).** We take into
account wireline-wireless usage substitution, and amend our estimates of
Verizon's market share of long distance service by including estimates
of the number of residential mobile wireless consumers that have not
cut-the cord. For each Verizon franchise area, we apply the four-step
procedure we described in Note 2 above with respect to AT&T. Similarly,
we modify our calculation of Verizon's market share for long distance
services by amending the numerator to include Verizon's wireless
customers that have not cut-the-cord and by amending the denominator to
include all mobile wireless service customers that have not
cut-the-cord.[^390]

> MS~VZ~ = [\[]{.underline}Local~VZ~ + VerizonWireless~Not-CTC~ \] /
> \[Verizon~PIC~ + COMP + Wireless~Not-CTC~ \]
>
> Where VerizonWireless~Not-CTC~ = Verizon Wireless subscribers that
> have not cut-the- cord.[^391]
>
> Wireless~Not-CTC~ = Wireless subscribers that have not cut-the-cord
> (as derived in Step 3).

**Note 6 (Local and Long Distance Bundle).** For each Verizon franchise
area, we calculate Verizon's market share of the local and long distance
service bundle by focusing on residential consumers that purchase a
local and long distance service bundle from a single provider and
residential mobile wireless consumers that have cut-the-cord. We apply
the procedures described in Note 2, Step 1 to the Verizon data to
incorporate these mobile wireless consumers that have cut-the-cord into
our analysis.

> MS~VZ~ = \[Verizon~VZ~ + VerizonWireless~CTC\]~ / \[Verizon~vz~ +
> COMP + Wireless~CTC~\]
>
> Where Verizon~VZ~ = The total number of Verizon local service
> customers with a Verizon PIC.[^392]
>
> VerizonWireless~CTC~ = Verizon Wireless customers that have
> cut-the-cord.[^393]
>
> COMP = The total number of competitive local service lines.[^394]
>
> Wireless~CTC~ = Wireless customers that have cut-the-cord (as derived
> in Note 2, Step 1 for the Verizon franchise area).

**APPENDIX C**

**ENTERPRISE MARKET DATA**

+----------------+---------------+----------+-------------------------+
| **Appendix C - |               |          |                         |
| Table 1**      |               |          |                         |
|                |               |          |                         |
| **AT&T Market  |               |          |                         |
| Share -- Large |               |          |                         |
| Enterprise     |               |          |                         |
| Customers      |               |          |                         |
| (2006)**       |               |          |                         |
+================+===============+==========+=========================+
| **Long         |               |          |                         |
| Distance       |               |          |                         |
| Services**     |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **State**      | **Market      | **HHI**  | **Rivals**              |
|                | Share**       |          |                         |
+----------------+---------------+----------+-------------------------+
| **Alabama**    | **REDACTED**  |          |                         |
+----------------+---------------+----------+-------------------------+
| **Arkansas**   |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **California** |               |          |                         |
+----------------+---------------+----------+-------------------------+
| *              |               |          |                         |
| *Connecticut** |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Florida**    |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Georgia**    |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Illinois**   |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Indiana**    |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Kansas**     |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Kentucky**   |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Louisiana**  |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Michigan**   |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Missouri**   |               |          |                         |
+----------------+---------------+----------+-------------------------+
| *              |               |          |                         |
| *Mississippi** |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Nevada**     |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **North        |               |          |                         |
| Carolina**     |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Ohio**       |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Oklahoma**   |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **South        |               |          |                         |
| Carolina**     |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Tennessee**  |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Texas**      |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Wisconsin**  |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Minimum**    |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Maximum**    |               |          |                         |
+----------------+---------------+----------+-------------------------+
| **Median**     |               |          |                         |
+----------------+---------------+----------+-------------------------+

+-----------------+---------------+-----------+-----------------------+
| **Appendix C -  |               |           |                       |
| Table 1**       |               |           |                       |
|                 |               |           |                       |
| **AT&T Market   |               |           |                       |
| Share - Large   |               |           |                       |
| Enterprise      |               |           |                       |
| Customers       |               |           |                       |
| (2006) -        |               |           |                       |
| Continued**     |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **T-1           |               |           |                       |
| Services**      |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **State**       | **Market      | **HHI**   | **Rivals**            |
|                 | Share**       |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Alabama**     | **REDACTED**  |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Arkansas**    |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **California**  |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Connecticut** |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Florida**     |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Georgia**     |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Illinois**    |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Indiana**     |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Kansas**      |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Kentucky**    |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Louisiana**   |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Michigan**    |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Missouri**    |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Mississippi** |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Nevada**      |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **North         |               |           |                       |
| Carolina**      |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Ohio**        |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Oklahoma**    |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **South         |               |           |                       |
| Carolina**      |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Tennessee**   |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Texas**       |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Wisconsin**   |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Minimum**     |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Maximum**     |               |           |                       |
+-----------------+---------------+-----------+-----------------------+
| **Median**      |               |           |                       |
+-----------------+---------------+-----------+-----------------------+

+-----------------+---------------+----------+------------------------+
| **Appendix C -  |               |          |                        |
| Table 1**       |               |          |                        |
|                 |               |          |                        |
| **AT&T Market   |               |          |                        |
| Share - Large   |               |          |                        |
| Enterprise      |               |          |                        |
| Customers       |               |          |                        |
| (2006) --       |               |          |                        |
| Continued**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **T-3           |               |          |                        |
| Services**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **State**       | **Market      | **HHI**  | **Rivals**             |
|                 | Share**       |          |                        |
+-----------------+---------------+----------+------------------------+
| **California**  | **REDACTED\   |          |                        |
|                 | **            |          |                        |
+-----------------+---------------+----------+------------------------+
| **Connecticut** |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Florida**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Georgia**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Illinois**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Indiana**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Louisiana**   |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Michigan**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Missouri**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Mississippi** |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **North         |               |          |                        |
| Carolina**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Ohio**        |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Oklahoma**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **South         |               |          |                        |
| Carolina**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Tennessee**   |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Texas**       |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Wisconsin**   |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Minimum**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Maximum**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Median**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Frame Relay   |               |          |                        |
| Services**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **California**  | **REDACTED**  |          |                        |
+-----------------+---------------+----------+------------------------+
| **Florida**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Texas**       |               |          |                        |
+-----------------+---------------+----------+------------------------+

+-----------------+---------------+----------+------------------------+
| **Appendix C -  |               |          |                        |
| Table 1**       |               |          |                        |
|                 |               |          |                        |
| **AT&T Market   |               |          |                        |
| Share - Large   |               |          |                        |
| Enterprise      |               |          |                        |
| Customers       |               |          |                        |
| (2006) --       |               |          |                        |
| Continued**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **State**       | **Market      | **HHI**  | **Rivals**             |
|                 | Share**       |          |                        |
+-----------------+---------------+----------+------------------------+
| **ATM           |               |          |                        |
| Services**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **California**  | **REDACTED**  |          |                        |
+-----------------+---------------+----------+------------------------+
| **Florida**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Georgia**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Illinois**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Michigan**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Missouri**    |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **North         |               |          |                        |
| Carolina**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Ohio**        |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Texas**       |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Minimum**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Maximum**     |               |          |                        |
+-----------------+---------------+----------+------------------------+
| **Median**      |               |          |                        |
+-----------------+---------------+----------+------------------------+
| Source: AT&T    |               |          |                        |
| Apr. 23, 2007   |               |          |                        |
| *Ex Parte*      |               |          |                        |
| Letter, Exh. 4  |               |          |                        |
| (State-wide     |               |          |                        |
| data). Staff    |               |          |                        |
| calculations    |               |          |                        |
| are done for    |               |          |                        |
| markets with at |               |          |                        |
| least 30        |               |          |                        |
| observations.   |               |          |                        |
| Large           |               |          |                        |
| Enterprise      |               |          |                        |
| Customers are   |               |          |                        |
| businesses with |               |          |                        |
| at least 250    |               |          |                        |
| employees.      |               |          |                        |
+-----------------+---------------+----------+------------------------+

+-------------------------+-------------+-------------+---------------+
| **Appendix C - Table    |             |             |               |
| 2**                     |             |             |               |
|                         |             |             |               |
| **Verizon Market        |             |             |               |
| Share - Large           |             |             |               |
| Enterprise Customers    |             |             |               |
| (2006)**                |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Franchise Area**      | **Market    | **HHI**     | **Rivals**    |
|                         | Share**     |             |               |
+-------------------------+-------------+-------------+---------------+
| **Long Distance         |             |             |               |
| Services -- Bell        |             |             |               |
| Atlantic**              |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **District of           | *           |             |               |
| Columbia**              | *REDACTED** |             |               |
+-------------------------+-------------+-------------+---------------+
| **Delaware**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Massachusetts**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maryland**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maine**               |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **New Hampshire**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **New Jersey**          |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **New York**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Pennsylvania**        |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Rhode Island**        |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Virginia**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Vermont**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **West Virginia**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Minimum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maximum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Median**              |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Long Distance         |             |             |               |
| Services -- GTE**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **California**          | *           |             |               |
|                         | *REDACTED** |             |               |
+-------------------------+-------------+-------------+---------------+
| **Florida**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Illinois**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Indiana**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Michigan**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Ohio**                |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Texas**               |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Washington**          |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Wisconsin**           |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Minimum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maximum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Median**              |             |             |               |
+-------------------------+-------------+-------------+---------------+

+-------------------------+-------------+-------------+---------------+
| **Appendix C - Table    |             |             |               |
| 2**                     |             |             |               |
|                         |             |             |               |
| **Verizon Market        |             |             |               |
| Share - Large           |             |             |               |
| Enterprise Customers    |             |             |               |
| (2006)**                |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Franchise Area**      | **Market    | **HHI**     | **Rivals**    |
|                         | Share**     |             |               |
+-------------------------+-------------+-------------+---------------+
| **T-1 Services -- Bell  |             |             |               |
| Atlantic**              |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **District of           | *           |             |               |
| Columbia**              | *REDACTED** |             |               |
+-------------------------+-------------+-------------+---------------+
| **Delaware**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Massachusetts**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maryland**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maine**               |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **New Hampshire**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **New Jersey**          |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **New York**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Pennsylvania**        |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Rhode Island**        |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Virginia**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Vermont**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **West Virginia**       |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Minimum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maximum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Median**              |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **T-1 Services -- GTE** |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **California**          | *           |             |               |
|                         | *REDACTED** |             |               |
+-------------------------+-------------+-------------+---------------+
| **Florida**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Illinois**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Indiana**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Michigan**            |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **North Carolina**      |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Ohio**                |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Texas**               |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Washington**          |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Wisconsin**           |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Minimum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Maximum**             |             |             |               |
+-------------------------+-------------+-------------+---------------+
| **Median**              |             |             |               |
+-------------------------+-------------+-------------+---------------+

+------------------------+--------------+-------------+---------------+
| **Appendix C - Table   |              |             |               |
| 2**                    |              |             |               |
|                        |              |             |               |
| **Verizon Market       |              |             |               |
| Share - Large          |              |             |               |
| Enterprise Customers   |              |             |               |
| (2006)**               |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Franchise Area**     | **Market     | **HHI**     | **Rivals**    |
|                        | Share**      |             |               |
+------------------------+--------------+-------------+---------------+
| **T-3 Services -- Bell |              |             |               |
| Atlantic**             |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Massachusetts**      | **REDACTED** |             |               |
+------------------------+--------------+-------------+---------------+
| **Maryland**           |              |             |               |
+------------------------+--------------+-------------+---------------+
| **New Jersey**         |              |             |               |
+------------------------+--------------+-------------+---------------+
| **New York**           |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Pennsylvania**       |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Virginia**           |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Minimum**            |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Maximum**            |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Median**             |              |             |               |
+------------------------+--------------+-------------+---------------+
| **T-3 Services --      |              |             |               |
| GTE**                  |              |             |               |
+------------------------+--------------+-------------+---------------+
| **California**         | **REDACTED** |             |               |
+------------------------+--------------+-------------+---------------+
| **Florida**            |              |             |               |
+------------------------+--------------+-------------+---------------+
| **ATM Services -- Bell |              |             |               |
| Atlantic**             |              |             |               |
+------------------------+--------------+-------------+---------------+
| **New Jersey**         | **REDACTED** |             |               |
+------------------------+--------------+-------------+---------------+
| **New York**           |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Pennsylvania**       |              |             |               |
+------------------------+--------------+-------------+---------------+
| **Virginia**           |              |             |               |
+------------------------+--------------+-------------+---------------+

+-----------------------+---------------+--------------+--------------+
| **Appendix C - Table  |               |              |              |
| 2**                   |               |              |              |
|                       |               |              |              |
| **Verizon Market      |               |              |              |
| Share - Large         |               |              |              |
| Enterprise Customers  |               |              |              |
| (2006)**              |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Franchise Area**    | **Market      | **HHI**      | **Rivals**   |
|                       | Share**       |              |              |
+-----------------------+---------------+--------------+--------------+
| **ATM Services --     |               |              |              |
| GTE**                 |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Florida**           | **REDACTED**  |              |              |
+-----------------------+---------------+--------------+--------------+
| **Frame Relay -- Bell |               |              |              |
| Atlantic**            |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **District of         | **REDACTED**  |              |              |
| Columbia**            |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Massachusetts**     |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Maryland**          |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **New Jersey**        |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **New York**          |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Pennsylvania**      |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Virginia**          |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Minimum**           |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Maximum**           |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Median**            |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Frame Relay         |               |              |              |
| Services -- GTE**     |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **California**        | **REDACTED**  |              |              |
+-----------------------+---------------+--------------+--------------+
| **Florida**           |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Illinois**          |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Indiana**           |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Texas**             |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Minimum**           |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Maximum**           |               |              |              |
+-----------------------+---------------+--------------+--------------+
| **Median**            |               |              |              |
+-----------------------+---------------+--------------+--------------+
| Source: Verizon Apr.  |               |              |              |
| 19, 2007 *Ex Parte*   |               |              |              |
| Letter, Exh. 4.5      |               |              |              |
| (State Franchise area |               |              |              |
| ). Data are presented |               |              |              |
| for the combined Bell |               |              |              |
| Atlantic and GTE      |               |              |              |
| franchise areas for   |               |              |              |
| two states,           |               |              |              |
| Pennsylvania and      |               |              |              |
| Virginia. Staff       |               |              |              |
| calculations are done |               |              |              |
| for markets with at   |               |              |              |
| least 30              |               |              |              |
| observations. Large   |               |              |              |
| Enterprise Customers  |               |              |              |
| are businesses with   |               |              |              |
| at least 250          |               |              |              |
| employees.            |               |              |              |
+-----------------------+---------------+--------------+--------------+

+-------------------+-------------+-------+---------------------------+
| **Appendix C -    |             |       |                           |
| Table 3**         |             |       |                           |
|                   |             |       |                           |
| **AT&T Market     |             |       |                           |
| Share -           |             |       |                           |
| Small/Medium      |             |       |                           |
| Enterprise        |             |       |                           |
| Customers         |             |       |                           |
| (2006)**          |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Long Distance   |             |       |                           |
| Services**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **State**         | **Market    | **    | **Rivals**                |
|                   | Share**     | HHI** |                           |
+-------------------+-------------+-------+---------------------------+
| **Alabama**       | *           |       |                           |
|                   | *REDACTED** |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Arkansas**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **California**    |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Connecticut**   |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Florida**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Georgia**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Illinois**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Indiana**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Kansas**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Kentucky**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Louisiana**     |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Michigan**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Missouri**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Mississippi**   |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **North           |             |       |                           |
| Carolina**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Nevada**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Ohio**          |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Oklahoma**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **South           |             |       |                           |
| Carolina**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Tennessee**     |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Texas**         |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Wisconsin**     |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Minimum**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Maximum**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Median**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+

+-------------------+-------------+-------+---------------------------+
| **Appendix C -    |             |       |                           |
| Table 3**         |             |       |                           |
|                   |             |       |                           |
| **AT&T Market     |             |       |                           |
| Share -           |             |       |                           |
| Small/Medium      |             |       |                           |
| Enterprise        |             |       |                           |
| Customers (2006)  |             |       |                           |
| Continued**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **State**         | **Market    | **    | **Rivals**                |
|                   | Share**     | HHI** |                           |
+-------------------+-------------+-------+---------------------------+
| **T-1 Services**  |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Alabama**       | *           |       |                           |
|                   | *REDACTED** |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Arkansas**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **California**    |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Connecticut**   |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Florida**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Georgia**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **IL**            |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Illinois**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Kansas**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Kentucky**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Louisiana**     |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Michigan**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Missouri**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Mississippi**   |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **North           |             |       |                           |
| Carolina**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Nevada**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Ohio**          |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Oklahoma**      |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **South           |             |       |                           |
| Carolina**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Tennessee**     |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Texas**         |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Wisconsin**     |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Minimum**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Maximum**       |             |       |                           |
+-------------------+-------------+-------+---------------------------+
| **Median**        |             |       |                           |
+-------------------+-------------+-------+---------------------------+

+-----------------+------------+------------+-------------------------+
| **Appendix C -  |            |            |                         |
| Table 3**       |            |            |                         |
|                 |            |            |                         |
| **AT&T Market   |            |            |                         |
| Share -         |            |            |                         |
| Small/Medium    |            |            |                         |
| Enterprise      |            |            |                         |
| Customers       |            |            |                         |
| (2006)          |            |            |                         |
| Continued**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **State**       | **Market   | **HHI**    | **Rivals**              |
|                 | Share**    |            |                         |
+-----------------+------------+------------+-------------------------+
| **T-3           |            |            |                         |
| Services**      |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **California**  | **         |            |                         |
|                 | REDACTED** |            |                         |
+-----------------+------------+------------+-------------------------+
| **Florida**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Georgia**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Illinois**    |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Indiana**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Michigan**    |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Missouri**    |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **North         |            |            |                         |
| Carolina**      |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Ohio**        |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Tennessee**   |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Texas**       |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Wisconsin**   |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Minimum**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Maximum**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Median**      |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Frame Relay** |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **California**  | **         |            |                         |
|                 | REDACTED** |            |                         |
+-----------------+------------+------------+-------------------------+
| **Texas**       |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **ATM           |            |            |                         |
| Services**      |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **California**  | **         |            |                         |
|                 | REDACTED** |            |                         |
+-----------------+------------+------------+-------------------------+
| **Florida**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Illinois**    |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Michigan**    |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Ohio**        |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Texas**       |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Minimum**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Maximum**     |            |            |                         |
+-----------------+------------+------------+-------------------------+
| **Median**      |            |            |                         |
+-----------------+------------+------------+-------------------------+
| Source: AT&T    |            |            |                         |
| Apr. 23, 2007   |            |            |                         |
| *Ex Parte*      |            |            |                         |
| Letter, Exh. 4  |            |            |                         |
| (State-wide     |            |            |                         |
| data). Staff    |            |            |                         |
| calculations    |            |            |                         |
| are done for    |            |            |                         |
| markets with at |            |            |                         |
| least 30        |            |            |                         |
| observations.   |            |            |                         |
| Small/Medium    |            |            |                         |
| Enterprise      |            |            |                         |
| Customers are   |            |            |                         |
| defined as      |            |            |                         |
| businesses with |            |            |                         |
| 5 to 249        |            |            |                         |
| employees.      |            |            |                         |
+-----------------+------------+------------+-------------------------+

+-----------------------+-------------+------------+------------------+
| **Appendix C - Table  |             |            |                  |
| 4**                   |             |            |                  |
|                       |             |            |                  |
| **Verizon Market      |             |            |                  |
| Share - Small/Medium  |             |            |                  |
| Enterprise Customers  |             |            |                  |
| (2006)**              |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Franchise Area**    | **Market    | **HHI**    | **Rivals**       |
|                       | Share**     |            |                  |
+-----------------------+-------------+------------+------------------+
| **Long Distance       |             |            |                  |
| Services -- Bell      |             |            |                  |
| Atlantic**            |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Delaware**          | *           |            |                  |
|                       | *REDACTED** |            |                  |
+-----------------------+-------------+------------+------------------+
| **District of         |             |            |                  |
| Columbia**            |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maine**             |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maine**             |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maryland**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Massachusetts**     |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **New Hampshire**     |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **New Jersey**        |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **New York**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Pennsylvania**      |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Rhode Island**      |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Vermont**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Virginia**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **West Virginia**     |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Minimum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maximum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Median**            |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Long Distance       |             |            |                  |
| Services -- GTE**     |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **California**        | *           |            |                  |
|                       | *REDACTED** |            |                  |
+-----------------------+-------------+------------+------------------+
| **Florida**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Illinois**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Indiana**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **North Carolina**    |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Ohio**              |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Oregon**            |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Texas**             |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Washington**        |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Wisconsin**         |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Minimum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maximum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Median**            |             |            |                  |
+-----------------------+-------------+------------+------------------+

+----------------------+-------------+-----------+--------------------+
| **Appendix C - Table |             |           |                    |
| 4**                  |             |           |                    |
|                      |             |           |                    |
| **Verizon Market     |             |           |                    |
| Share - Small/Medium |             |           |                    |
| Enterprise Customers |             |           |                    |
| (2006) --            |             |           |                    |
| Continued**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Franchise Area**   | **Market    | **HHI**   | **Rivals**         |
|                      | Share**     |           |                    |
+----------------------+-------------+-----------+--------------------+
| **T-1 Services -     |             |           |                    |
| Bell Atlantic**      |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Delaware**         | *           |           |                    |
|                      | *REDACTED** |           |                    |
+----------------------+-------------+-----------+--------------------+
| **District of        |             |           |                    |
| Columbia**           |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Maine**            |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Maryland**         |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Massachusetts**    |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **New Hampshire**    |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **New Jersey**       |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **New York**         |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Pennsylvania**     |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Rhode Island**     |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Vermont**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Virginia**         |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **West Virginia**    |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Minimum**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Maximum**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Median**           |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **T-1 Services -     |             |           |                    |
| GTE**                |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **California**       | *           |           |                    |
|                      | *REDACTED** |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Florida**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Illinois**         |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Indiana**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Michigan**         |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **North Carolina**   |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Ohio**             |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Oregon**           |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Texas**            |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Washington**       |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Wisconsin**        |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Minimum**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Maximum**          |             |           |                    |
+----------------------+-------------+-----------+--------------------+
| **Median**           |             |           |                    |
+----------------------+-------------+-----------+--------------------+

+-----------------------+-------------+------------+------------------+
| **Appendix C - Table  |             |            |                  |
| 4**                   |             |            |                  |
|                       |             |            |                  |
| **Verizon Market      |             |            |                  |
| Share - Small/Medium  |             |            |                  |
| Enterprise Customers  |             |            |                  |
| (2006) -- Continued** |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Franchise Area**    | **Market    | **HHI**    | **Rivals**       |
|                       | Share**     |            |                  |
+-----------------------+-------------+------------+------------------+
| **T-3 Services --     |             |            |                  |
| Bell Atlantic**       |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Massachusetts**     | *           |            |                  |
|                       | *REDACTED** |            |                  |
+-----------------------+-------------+------------+------------------+
| **New Jersey**        |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **New York**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Pennsylvania**      |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Virginia**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Minimum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maximum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Median**            |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **T-3 Services --     |             |            |                  |
| GTE**                 |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **California**        | *           |            |                  |
|                       | *REDACTED** |            |                  |
+-----------------------+-------------+------------+------------------+
| **ATM Services --     |             |            |                  |
| Bell Atlantic**       |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Massachusetts**     | *           |            |                  |
|                       | *REDACTED** |            |                  |
+-----------------------+-------------+------------+------------------+
| **New Jersey**        |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **New York**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Pennsylvania**      |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Virginia**          |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Minimum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Maximum**           |             |            |                  |
+-----------------------+-------------+------------+------------------+
| **Median**            |             |            |                  |
+-----------------------+-------------+------------+------------------+

+------------------------+--------------+------------+-----------------+
| **Appendix C - Table   |              |            |                 |
| 4**                    |              |            |                 |
|                        |              |            |                 |
| **Verizon Market       |              |            |                 |
| Share - Small/Medium   |              |            |                 |
| Enterprise Customers   |              |            |                 |
| (2006)**               |              |            |                 |
|                        |              |            |                 |
| **Continued**          |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Franchise Area**     | **Market     | **HHI**    | **Rivals**      |
|                        | Share**      |            |                 |
+------------------------+--------------+------------+-----------------+
| **Frame Relay -- Bell  |              |            |                 |
| Atlantic**             |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Maine**              | **REDACTED** |            |                 |
+------------------------+--------------+------------+-----------------+
| **Maryland**           |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Massachusetts**      |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **New Hampshire**      |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **New Jersey**         |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **New York**           |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Pennsylvania**       |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Virginia**           |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **West Virginia**      |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Minimum**            |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Maximum**            |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Median**             |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Frame Relay -- GTE** |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **California**         | **REDACTED** |            |                 |
+------------------------+--------------+------------+-----------------+
| **Florida**            |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Illinois**           |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Indiana**            |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Texas**              |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Minimum**            |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Maximum**            |              |            |                 |
+------------------------+--------------+------------+-----------------+
| **Median**             |              |            |                 |
+------------------------+--------------+------------+-----------------+
| Source: Verizon Apr.   |              |            |                 |
| 19, 2007 *Ex Parte*    |              |            |                 |
| Letter, Exh. 4.5       |              |            |                 |
| (State Franchise area  |              |            |                 |
| ). Data are presented  |              |            |                 |
| for the combined Bell  |              |            |                 |
| Atlantic and GTE       |              |            |                 |
| franchise areas for    |              |            |                 |
| two states,            |              |            |                 |
| Pennsylvania and       |              |            |                 |
| Virginia. Staff        |              |            |                 |
| calculations are done  |              |            |                 |
| for markets with at    |              |            |                 |
| least 30 observations. |              |            |                 |
| Small/Medium           |              |            |                 |
| Enterprise Customers   |              |            |                 |
| are businesses with 5  |              |            |                 |
| to 249 employees.      |              |            |                 |
+------------------------+--------------+------------+-----------------+

+----------------------------+-------------+---------+----------------+
| **Appendix C - Table 5**   |             |         |                |
|                            |             |         |                |
| **AT&T Market Share -      |             |         |                |
| Large Enterprise Customers |             |         |                |
| (2006)**                   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **MSA**                    | **Market    | **HHI** | **Rivals**     |
|                            | Share**     |         |                |
+----------------------------+-------------+---------+----------------+
| **Long Distance Services** |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Appltn-Oshksh-Nee WI**   | *           |         |                |
|                            | *REDACTED** |         |                |
+----------------------------+-------------+---------+----------------+
| **Atlanta-Sndy Spr GA**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Baton Rouge-Pierr LA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Brmnghm-Hoovr-Cll AL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Charlotte-Gast NC-SC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Chicago-Npr IL-IN-WI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Cincinnati OH-KY-IN**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Cleveland-Akron OH**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Columbus-Marion OH**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Dallas-FT Worth TX**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Dayton-Springfld OH**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Detroit-Warrn-Flt MI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Ft Wayne-Huntgton IN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Gr Rapids-Muskegn MI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Greenvll-Spartnbg SC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Grnsboro-WnstSalm NC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Hartford-Wilmntic CT**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Houston-Baytown TX**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Indianapls-Andrsn IN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Jackson-Yazoo Cty MS**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Kansas City MO-KS**      |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Knoxvlle-Seviervl TN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Las Vegas-Paradse NV**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Lexington-Fayette KY**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Little Rock-PnBlf AR**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Los Angeles-LngBc CA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Louisvlle-Elzb KY-IN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Madison-Baraboo WI**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Miami-Ft Lauderdl FL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Milwaukee-Racine WI**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Nashville-Davidsn TN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **New Orleans-Mtrie LA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **New York-Newrk NY-NJ**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Oklahoma Ct-Shnee OK**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Orlando-Villages FL**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Raleigh-Durham NC**      |             |         |                |
+----------------------------+-------------+---------+----------------+

+----------------------------+-------------+---------+----------------+
| **Appendix C - Table 5**   |             |         |                |
|                            |             |         |                |
| **AT&T Market Share -      |             |         |                |
| Large Enterprise Customers |             |         |                |
| (2006) Continued**         |             |         |                |
+----------------------------+-------------+---------+----------------+
| **MSA**                    | **Market    | **HHI** | **Rivals**     |
|                            | Share**     |         |                |
+----------------------------+-------------+---------+----------------+
| **Long Distance Services** |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Sacramento-Arden CA**    | *           |         |                |
|                            | *REDACTED** |         |                |
+----------------------------+-------------+---------+----------------+
| **San Antonio TX**         |             |         |                |
+----------------------------+-------------+---------+----------------+
| **San Diego CA**           |             |         |                |
+----------------------------+-------------+---------+----------------+
| **San Jose-San Fran CA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **St Louis-St Chrls MO**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Tampa-St Petrsbrg FL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Toledo-Fremont OH**      |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Tulsa-Bartlsvlle OK**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Minimum**                |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Maximum**                |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Median**                 |             |         |                |
+----------------------------+-------------+---------+----------------+
| **T-1 Services**           |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Appltn-Oshksh-Nee WI**   | *           |         |                |
|                            | *REDACTED** |         |                |
+----------------------------+-------------+---------+----------------+
| **Atlanta-Sndy Spr GA**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Baton Rouge-Pierr LA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Brmnghm-Hoovr-Cll AL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Charlotte-Gast NC-SC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Chicago-Npr IL-IN-WI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Cincinnati OH-KY-IN**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Cleveland-Akron OH**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Columbia-Newberry SC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Columbus-Marion OH**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Dallas-FT Worth TX**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Dayton-Springfld OH**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Detroit-Warrn-Flt MI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Ft Wayne-Huntgton IN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Gr Rapids-Muskegn MI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Greenvll-Spartnbg SC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Grnsboro-WnstSalm NC**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Hartford-Wilmntic CT**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Houston-Baytown TX**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Huntsvlle-Decatur AL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Indianapls-Andrsn IN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Jackson-Yazoo Cty MS**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Kansas City MO-KS**      |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Knoxvlle-Seviervl TN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Las Vegas-Paradse NV**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Lexington-Fayette KY**   |             |         |                |
+----------------------------+-------------+---------+----------------+

+----------------------------+-------------+---------+----------------+
| **Appendix C - Table 5**   |             |         |                |
|                            |             |         |                |
| **AT&T Market Share -      |             |         |                |
| Large Enterprise Customers |             |         |                |
| (2006) Continued**         |             |         |                |
+----------------------------+-------------+---------+----------------+
| **MSA**                    | **Market    | **HHI** | **Rivals**     |
|                            | Share**     |         |                |
+----------------------------+-------------+---------+----------------+
| **T-1 Services**           |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Little Rock-PnBlf AR**   | *           |         |                |
|                            | *REDACTED** |         |                |
+----------------------------+-------------+---------+----------------+
| **Los Angeles-LngBc CA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Louisvlle-Elzb KY-IN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Madison-Baraboo WI**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Miami-Ft Lauderdl FL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Milwaukee-Racine WI**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Nashville-Davidsn TN**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **New Orleans-Mtrie LA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **New York-Newrk NY-NJ**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Oklahoma Ct-Shnee OK**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Orlando-Villages FL**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Peoria-Canton IL**       |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Raleigh-Durham NC**      |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Sacramento-Arden CA**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **San Antonio TX**         |             |         |                |
+----------------------------+-------------+---------+----------------+
| **San Diego CA**           |             |         |                |
+----------------------------+-------------+---------+----------------+
| **San Jose-San Fran CA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **St Louis-St Chrls MO**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Tampa-St Petrsbrg FL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Toledo-Fremont OH**      |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Tulsa-Bartlsvlle OK**    |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Witchita-Winfield KS**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Minimum**                |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Maximum**                |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Median**                 |             |         |                |
+----------------------------+-------------+---------+----------------+
| **T-3 Services**           |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Atlanta-Sndy Spr GA**    | *           |         |                |
|                            | *REDACTED** |         |                |
+----------------------------+-------------+---------+----------------+
| **Chicago-Npr IL-IN-WI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Dallas-FT Worth TX**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Detroit-Warrn-Flt MI**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Houston-Baytown TX**     |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Kansas City MO-KS**      |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Los Angeles-LngBc CA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Miami-Ft Lauderdl FL**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **San Jose-San Fran CA**   |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Minimum**                |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Maximum**                |             |         |                |
+----------------------------+-------------+---------+----------------+
| **Median**                 |             |         |                |
+----------------------------+-------------+---------+----------------+

+-----------------------+--------------+----------+-------------------+
| **Appendix C - Table  |              |          |                   |
| 5**                   |              |          |                   |
|                       |              |          |                   |
| **AT&T Market Share - |              |          |                   |
| Large Enterprise      |              |          |                   |
| Customers (2006) -    |              |          |                   |
| Continued**           |              |          |                   |
+=======================+==============+==========+===================+
| **MSA**               | **Market     | **HHI**  | **Rivals**        |
|                       | Share**      |          |                   |
+-----------------------+--------------+----------+-------------------+
| **ATM Services**      |              |          |                   |
+-----------------------+--------------+----------+-------------------+
| **Chicago-Npr         | **REDACTED** |          |                   |
| IL-IN-WI**            |              |          |                   |
+-----------------------+--------------+----------+-------------------+
| **Los Angeles-LngBc   |              |          |                   |
| CA**                  |              |          |                   |
+-----------------------+--------------+----------+-------------------+
| **San Jose-San Fran   |              |          |                   |
| CA**                  |              |          |                   |
+-----------------------+--------------+----------+-------------------+
| **Frame Relay         |              |          |                   |
| Services**            |              |          |                   |
+-----------------------+--------------+----------+-------------------+
| **Los Angeles-LngBc   | **REDACTED** |          |                   |
| CA**                  |              |          |                   |
+-----------------------+--------------+----------+-------------------+
| Source: AT&T Apr. 23, |              |          |                   |
| 2007 *Ex Parte*       |              |          |                   |
| Letter, Exh. 4 (MSA   |              |          |                   |
| data). Staff          |              |          |                   |
| calculations based    |              |          |                   |
| upon product          |              |          |                   |
| market/geographic     |              |          |                   |
| area combinations     |              |          |                   |
| with at least 30      |              |          |                   |
| observations. Large   |              |          |                   |
| Enterprise Customers  |              |          |                   |
| are defined as        |              |          |                   |
| businesses with at    |              |          |                   |
| least 250 employees.  |              |          |                   |
+-----------------------+--------------+----------+-------------------+

+----------------------------+----------------+---------+--------------+
| **Appendix C - Table 6**   |                |         |              |
|                            |                |         |              |
| **AT&T Market Share -      |                |         |              |
| Small/Medium Enterprise    |                |         |              |
| Customers (2006)**         |                |         |              |
+----------------------------+----------------+---------+--------------+
| **MSA**                    | **Market       | **HHI** | **Rivals**   |
|                            | Share**        |         |              |
+----------------------------+----------------+---------+--------------+
| **Long Distance Services** |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Appltn-Oshksh-Nee WI**   | **REDACTED**   |         |              |
+----------------------------+----------------+---------+--------------+
| **Ashville-Brevard NC**    |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Atlanta-Sndy Spr GA**    |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Baton Rouge-Pierr LA**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Brmnghm-Hoovr-Cll AL**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Charlotte-Gast NC-SC**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Chicago-Npr IL-IN-WI**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Chttnoog-Clevl TN-GA**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Cincinnati OH-KY-IN**    |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Cleveland-Akron OH**     |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Colmbus-Auburn GA-AL**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Columbia-Newberry SC**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Columbus-Marion OH**     |                |         |              |
+----------------------------+----------------+---------+--------------+
| **CorpusChr-Kingsvl TX**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Dallas-FT Worth TX**     |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Dayton-Springfld OH**    |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Deltona-Daytona FL**     |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Detroit-Warrn-Flt MI**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Fresno-Madera CA**       |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Ft Wayne-Huntgton IN**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Gr Rapids-Muskegn MI**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Greenvll-Spartnbg SC**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Grnsboro-WnstSalm NC**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Gulfport-Biloxi MS**     |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Hartford-Wilmntic CT**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Houston-Baytown TX**     |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Huntsvlle-Decatur AL**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Indianapls-Andrsn IN**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Jackson-Yazoo Cty MS**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Kansas City MO-KS**      |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Knoxvlle-Seviervl TN**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Lafayette-Acadana LA**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Lansing-Owosso MI**      |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Las Vegas-Paradse NV**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Lexington-Fayette KY**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Little Rock-PnBlf AR**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Los Angeles-LngBc CA**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Louisvlle-Elzb KY-IN**   |                |         |              |
+----------------------------+----------------+---------+--------------+
| **Lubbock-Levelland TX**   |                |         |              |
+----------------------------+----------------+---------+--------------+

+---------------------------+---------------+--------+---------------+
| **Appendix C - Table 6**  |               |        |               |
|                           |               |        |               |
| **AT&T Market Share -     |               |        |               |
| Small/Medium Enterprise   |               |        |               |
| Customers (2006) -        |               |        |               |
| Continued**               |               |        |               |
+---------------------------+---------------+--------+---------------+
| **MSA**                   | **Market      | *      | **Rivals**    |
|                           | Share**       | *HHI** |               |
+---------------------------+---------------+--------+---------------+
| **Long Distance           |               |        |               |
| Services**                |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Macon-Wrnr-Robins GA**  | **REDACTED**  |        |               |
+---------------------------+---------------+--------+---------------+
| **Madison-Baraboo WI**    |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Miami-Ft Lauderdl FL**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Milwaukee-Racine WI**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Mobile-Daphne AL**      |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Montgomry-Alx Cty AL**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Nashville-Davidsn TN**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **New Orleans-Mtrie LA**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **New York-Newrk NY-NJ**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Oklahoma Ct-Shnee OK**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Orlando-Villages FL**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Peoria-Canton IL**      |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Raleigh-Durham NC**     |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Rockford-Freeport IL**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Sacramento-Arden CA**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Saginaw-Bay City MI**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **San Antonio TX**        |               |        |               |
+---------------------------+---------------+--------+---------------+
| **San Diego CA**          |               |        |               |
+---------------------------+---------------+--------+---------------+
| **San Jose-San Fran CA**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Shreveprt-Bossier LA**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **St Louis-St Chrls MO**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Tampa-St Petrsbrg FL**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Toledo-Fremont OH**     |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Tulsa-Bartlsvlle OK**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Witchita-Winfield KS**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Youngstwn-Wrrn OH-PA**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Minimum**               |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Maximum**               |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Median**                |               |        |               |
+---------------------------+---------------+--------+---------------+
| **T-1 Services**          |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Appltn-Oshksh-Nee WI**  | **REDACTED**  |        |               |
+---------------------------+---------------+--------+---------------+
| **Ashville-Brevard NC**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Atlanta-Sndy Spr GA**   |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Baton Rouge-Pierr LA**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Brmnghm-Hoovr-Cll AL**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Charlotte-Gast NC-SC**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Chicago-Npr IL-IN-WI**  |               |        |               |
+---------------------------+---------------+--------+---------------+
| **Chttnoog-Clevl TN-GA**  |               |        |               |
+---------------------------+---------------+--------+---------------+

+--------------------------+---------------+--------+-----------------+
| **Appendix C - Table 6** |               |        |                 |
|                          |               |        |                 |
| **AT&T Market Share -    |               |        |                 |
| Small/Medium Enterprise  |               |        |                 |
| Customers (2006)         |               |        |                 |
| Continued**              |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **MSA**                  | **Market      | *      | **Rivals**      |
|                          | Share**       | *HHI** |                 |
+--------------------------+---------------+--------+-----------------+
| **T-1 Services**         |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Cincinnati OH-KY-IN**  | **REDACTED**  |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Cleveland-Akron OH**   |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Columbia-Newberry SC** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Columbus-Marion OH**   |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **CorpusChr-Kingsvl TX** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Dallas-FT Worth TX**   |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Dayton-Springfld OH**  |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Deltona-Daytona FL**   |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Detroit-Warrn-Flt MI** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Fresno-Madera CA**     |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Ft Wayne-Huntgton IN** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Gr Rapids-Muskegn MI** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Greenvll-Spartnbg SC** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Grnsboro-WnstSalm NC** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Hartford-Wilmntic CT** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Houston-Baytown TX**   |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Huntsvlle-Decatur AL** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Indianapls-Andrsn IN** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Jackson-Yazoo Cty MS** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Kansas City MO-KS**    |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Knoxvlle-Seviervl TN** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Lafayette-Acadana LA** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Lansing-Owosso MI**    |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Las Vegas-Paradse NV** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Lexington-Fayette KY** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Little Rock-PnBlf AR** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Los Angeles-LngBc CA** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Louisvlle-Elzb KY-IN** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Madison-Baraboo WI**   |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Miami-Ft Lauderdl FL** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Milwaukee-Racine WI**  |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Mobile-Daphne AL**     |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Montgomry-Alx Cty AL** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Nashville-Davidsn TN** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **New Orleans-Mtrie LA** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **New York-Newrk NY-NJ** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Oklahoma Ct-Shnee OK** |               |        |                 |
+--------------------------+---------------+--------+-----------------+
| **Orlando-Villages FL**  |               |        |                 |
+--------------------------+---------------+--------+-----------------+

+------------------------------+---------------+--------+-------------+
| **Appendix C - Table 6**     |               |        |             |
|                              |               |        |             |
| **AT&T Market Share -        |               |        |             |
| Small/Medium Enterprise      |               |        |             |
| Customers (2006) Continued** |               |        |             |
+------------------------------+---------------+--------+-------------+
| **MSA**                      | **Market      | *      | **Rivals**  |
|                              | Share**       | *HHI** |             |
+------------------------------+---------------+--------+-------------+
| **T-1 Services**             |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Peoria-Canton IL**         | **REDACTED**  |        |             |
+------------------------------+---------------+--------+-------------+
| **Raleigh-Durham NC**        |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Rockford-Freeport IL**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Sacramento-Arden CA**      |               |        |             |
+------------------------------+---------------+--------+-------------+
| **San Antonio TX**           |               |        |             |
+------------------------------+---------------+--------+-------------+
| **San Diego CA**             |               |        |             |
+------------------------------+---------------+--------+-------------+
| **San Jose-San Fran CA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Shreveprt-Bossier LA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **St Louis-St Chrls MO**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Tampa-St Petrsbrg FL**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Toledo-Fremont OH**        |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Tulsa-Bartlsvlle OK**      |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Witchita-Winfield KS**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Youngstwn-Wrrn OH-PA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Minimum**                  |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Maximum**                  |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Median**                   |               |        |             |
+------------------------------+---------------+--------+-------------+
| **T-3 Services**             |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Chicago-Npr IL-IN-WI**     | **REDACTED**  |        |             |
+------------------------------+---------------+--------+-------------+
| **Dallas-FT Worth TX**       |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Houston-Baytown TX**       |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Los Angeles-LngBc CA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **San Jose-San Fran CA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **ATM Services**             |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Chicago-Npr IL-IN-WI**     | **REDACTED**  |        |             |
+------------------------------+---------------+--------+-------------+
| **Los Angeles-LngBc CA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **San Jose-San Fran CA**     |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Frame Relay**              |               |        |             |
+------------------------------+---------------+--------+-------------+
| **Los Angeles-LngBc CA**     | **REDACTED**  |        |             |
+------------------------------+---------------+--------+-------------+
| Source: AT&T Apr. 23, 2007   |               |        |             |
| *Ex Parte* Letter, Exh. 4    |               |        |             |
| (MSA data). Staff            |               |        |             |
| calculations based upon      |               |        |             |
| markets with at least 30     |               |        |             |
| observations. Small/Medium   |               |        |             |
| Enterprise Customers are     |               |        |             |
| businesses with 5 to 249     |               |        |             |
| employees.                   |               |        |             |
+------------------------------+---------------+--------+-------------+

+--------------------------+-------------+-------------+-------------+
| **Appendix C - Table 7** |             |             |             |
|                          |             |             |             |
| **Verizon Market Share - |             |             |             |
| Large Enterprise         |             |             |             |
| Customers (2006)**       |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **MSA**                  | **Market    | **HHI**     | **Rivals**  |
|                          | Share**     |             |             |
+--------------------------+-------------+-------------+-------------+
| **Long Distance Services |             |             |             |
| -- Bell Atlantic**       |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Albany-Schenectdy NY** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **Boston-Cambrdg MA-NH** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Bridgeport-Stmfrd CT** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Buffalo-Niagra Fl NY** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **New York NY-NJ-PA**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Providence RI-MA**     |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Rochester NY**         |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Worcester MA**         |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Allentown-Bethlhm PA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Baltimore-Towson MD**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Harrisbrg-Carlisl PA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Phildlph PA-NJ-DE-MD** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Pittsburgh PA**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Richmond VA**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Scranton-WilkesBr PA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Virginia Beach VA-NC** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Washngtn DC-MD-VA-WV** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **York-Hanover PA**      |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Minimum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Maximum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Median**               |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Long Distance Services |             |             |             |
| -- GTE**                 |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Akron OH**             | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **Austin-Round Rock TX** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Charlotte-Gstn NC-SC** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Chicago-Npr IL-IN-WI** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Cincinnati OH-KY-IN**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Cleveland-Elyria OH**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Columbus OH**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Dallas-Fort Worth TX** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Dayton OH**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Detroit-Wrn-Lvnia MI** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Grand Rapids-Wyo MI**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Greenville SC**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Houston-Baytown TX**   |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Indianapolis IN**      |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Los Angeles-LngBc CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Madison WI**           |             |             |             |
+--------------------------+-------------+-------------+-------------+

+--------------------------+-------------+-------------+-------------+
| **Appendix C - Table 7** |             |             |             |
|                          |             |             |             |
| **Verizon Market Share - |             |             |             |
| Large Enterprise         |             |             |             |
| Customers (2006)         |             |             |             |
| (Continued)**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **MSA**                  | **Market    | **HHI**     | **Rivals**  |
|                          | Share**     |             |             |
+--------------------------+-------------+-------------+-------------+
| **Long Distance Services |             |             |             |
| -- GTE (Continued)**     |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Milwaukee-Wauksha WI** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **Portland-Vncvr OR-WA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Riversd-SnBrn-Ont CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Sacramento-Arden CA**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Antonio TX**       |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Francisco-Okl CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Jose-Sunnyvle CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Seattle-Tacoma WA**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Tampa-St Petersbrg     |             |             |             |
| FL**                     |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Toledo OH**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Minimum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Maximum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Median**               |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **T-1 Services -- Bell   |             |             |             |
| Atlantic**               |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Albany-Schenectdy NY** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **Boston-Cambrdg MA-NH** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Bridgeport-Stmfrd CT** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Buffalo-Niagra Fl NY** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **New York NY-NJ-PA**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Providence RI-MA**     |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Rochester NY**         |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Springfield MA**       |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Syracuse NY**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Worcester MA**         |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Allentown-Bethlhm PA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Baltimore-Towson MD**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Harrisbrg-Carlisl PA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Phildlph PA-NJ-DE-MD** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Pittsburgh PA**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Richmond VA**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Scranton-WilkesBr PA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Virginia Beach VA-NC** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Washngtn DC-MD-VA-WV** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **York-Hanover PA**      |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Minimum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Maximum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Median**               |             |             |             |
+--------------------------+-------------+-------------+-------------+

+--------------------------+-------------+-------------+-------------+
| **Appendix C - Table 7** |             |             |             |
|                          |             |             |             |
| **Verizon Market Share - |             |             |             |
| Large Enterprise         |             |             |             |
| Customers (2006)         |             |             |             |
| (Continued)**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **MSA**                  | **Market    | **HHI**     | **Rivals**  |
|                          | Share**     |             |             |
+--------------------------+-------------+-------------+-------------+
| **T-1 Services -- GTE**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Austin-Round Rock TX** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **Charleston SC**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Charlotte-Gstn NC-SC** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Chicago-Npr IL-IN-WI** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Cincinnati OH-KY-IN**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Cleveland-Elyria OH**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Columbia SC**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Columbus OH**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Dallas-Fort Worth TX** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Dayton OH**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Detroit-Wrn-Lvnia MI** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Elkhart-Goshen IN**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Fort Wayne IN**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Grand Rapids-Wyo MI**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Greenville SC**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Houston-Baytown TX**   |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Indianapolis IN**      |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Lakeland FL**          |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Los Angeles-LngBc CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Madison WI**           |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Milwaukee-Wauksha WI** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Oxnard-Thous Oaks CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Peoria IL**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Portland-Vncvr OR-WA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Riversd-SnBrn-Ont CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Sacramento-Arden CA**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Antonio TX**       |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Francisco-Okl CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Jose-Sunnyvle CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Seattle-Tacoma WA**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Spokane WA**           |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Tampa-St Petersbrg     |             |             |             |
| FL**                     |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Toledo OH**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Minimum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Maximum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Median**               |             |             |             |
+--------------------------+-------------+-------------+-------------+

+--------------------------+-------------+-------------+-------------+
| **Appendix C - Table 7** |             |             |             |
|                          |             |             |             |
| **Verizon Market Share - |             |             |             |
| Large Enterprise         |             |             |             |
| Customers (2006)         |             |             |             |
| (Continued)**            |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **MSA**                  | **Market    | **HHI**     | **Rivals**  |
|                          | Share**     |             |             |
+--------------------------+-------------+-------------+-------------+
| **T-3 Services -- Bell   |             |             |             |
| Atlantic**               |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Boston-Cambrdg MA-NH** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **New York NY-NJ-PA**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Baltimore-Towson MD**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Phildlph PA-NJ-DE-MD** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Washngtn DC-MD-VA-WV** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **T-3 Services -- GTE**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Chicago-Npr IL-IN-WI** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **Dallas-Fort Worth TX** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Houston-Baytown TX**   |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Los Angeles-LngBc CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **San Francisco-Okl CA** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Frame Relay -- Bell    |             |             |             |
| Atlantic**               |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Boston-Cambrdg MA-NH** | *           |             |             |
|                          | *REDACTED** |             |             |
+--------------------------+-------------+-------------+-------------+
| **New York NY-NJ-PA**    |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Baltimore-Towson MD**  |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Phildlph PA-NJ-DE-MD** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Pittsburgh PA**        |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Washngtn DC-MD-VA-WV** |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Minimum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Maximum**              |             |             |             |
+--------------------------+-------------+-------------+-------------+
| **Median**               |             |             |             |
+--------------------------+-------------+-------------+-------------+

+--------------------------+--------------+---------+------------------+
| **Appendix C - Table 7** |              |         |                  |
|                          |              |         |                  |
| **Verizon Market Share - |              |         |                  |
| Large Enterprise         |              |         |                  |
| Customers (2006)         |              |         |                  |
| (Continued)**            |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **MSA**                  | **Market     | **HHI** | **Rivals**       |
|                          | Shares**     |         |                  |
+--------------------------+--------------+---------+------------------+
| **Frame Relay -- GTE**   |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Chicago-Npr IL-IN-WI** | **REDACTED** |         |                  |
+--------------------------+--------------+---------+------------------+
| **Cincinnati OH-KY-IN**  |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Cleveland-Elyria OH**  |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Dallas-Fort Worth TX** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Detroit-Wrn-Lvnia MI** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Houston-Baytown TX**   |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Los Angeles-LngBc CA** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Milwaukee-Wauksha WI** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Portland-Vncvr OR-WA** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Riversd-SnBrn-Ont CA** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Sacramento-Arden CA**  |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **San Antonio TX**       |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **San Francisco-Okl CA** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Seattle-Tacoma WA**    |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Tampa-St Petersbrg     |              |         |                  |
| FL**                     |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Minimum**              |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Maximum**              |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Median**               |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **ATM Services -- Bell   |              |         |                  |
| Atlantic**               |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **New York NY-NJ-PA**    | **REDACTED** |         |                  |
+--------------------------+--------------+---------+------------------+
| **Washngtn DC-MD-VA-WV** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **ATM Services -- GTE**  |              |         |                  |
+--------------------------+--------------+---------+------------------+
| **Chicago-Npr IL-IN-WI** | **REDACTED** |         |                  |
+--------------------------+--------------+---------+------------------+
| **Los Angeles-LngBc CA** |              |         |                  |
+--------------------------+--------------+---------+------------------+
| Source: Verizon Apr. 20, |              |         |                  |
| 2007 *Ex Parte* Letter,  |              |         |                  |
| Exh. 4.5 (MSA data).     |              |         |                  |
| Staff calculations based |              |         |                  |
| upon product             |              |         |                  |
| market/geographic area   |              |         |                  |
| combinations with at     |              |         |                  |
| least 30 observations.   |              |         |                  |
| Large Enterprise         |              |         |                  |
| Customers are defined as |              |         |                  |
| businesses with at least |              |         |                  |
| 250 employees.           |              |         |                  |
+--------------------------+--------------+---------+------------------+

+-----------------------+----------------+-------------+--------------+
| **Appendix C - Table  |                |             |              |
| 8**                   |                |             |              |
|                       |                |             |              |
| **Verizon Market      |                |             |              |
| Share - Small/Medium  |                |             |              |
| Enterprise Customers  |                |             |              |
| (2006)**              |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**   |
|                       | Share**        |             |              |
+-----------------------+----------------+-------------+--------------+
| **Long Distance       |                |             |              |
| Services -- Bell      |                |             |              |
| Atlantic**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Albany-Schenectdy   | **REDACTED**   |             |              |
| NY**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Binghamton NY**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Boston-Cambrdg      |                |             |              |
| MA-NH**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Bridgeport-Stmfrd   |                |             |              |
| CT**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Buffalo-Niagra Fl   |                |             |              |
| NY**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Burlington VT**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Manchester-Nashua   |                |             |              |
| NH**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **New York NY-NJ-PA** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Portland-S Prtlnd   |                |             |              |
| ME**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Poughkeepsie-Nwbr   |                |             |              |
| NY**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Providence RI-MA**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Rochester NY**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Springfield MA**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Syracuse NY**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Worcester MA**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Allentown-Bethlhm   |                |             |              |
| PA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Baltimore-Towson    |                |             |              |
| MD**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Charleston WV**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Erie PA**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Harrisbrg-Carlisl   |                |             |              |
| PA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Lancaster PA**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Phildlph            |                |             |              |
| PA-NJ-DE-MD**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Pittsburgh PA**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Reading PA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Richmond VA**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Roanoke VA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Scranton-WilkesBr   |                |             |              |
| PA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Trenton-Ewing NJ**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Virginia Beach      |                |             |              |
| VA-NC**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Washngtn            |                |             |              |
| DC-MD-VA-WV**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **York-Hanover PA**   |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Youngstwn-Wrrn      |                |             |              |
| OH-PA**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Minimum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Maximum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Median**            |                |             |              |
+-----------------------+----------------+-------------+--------------+

+-----------------------+----------------+-------------+-------------+
| **Appendix C - Table  |                |             |             |
| 8**                   |                |             |             |
|                       |                |             |             |
| **Verizon Market      |                |             |             |
| Share - Small/Medium  |                |             |             |
| Enterprise Customers  |                |             |             |
| (2006) - Continued**  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**  |
|                       | Share**        |             |             |
+-----------------------+----------------+-------------+-------------+
| **Long Distance       |                |             |             |
| Services -- GTE**     |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Akron OH**          | **REDACTED**   |             |             |
+-----------------------+----------------+-------------+-------------+
| **Ann Arbor MI**      |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Asheville NC**      |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Austin-Round Rock   |                |             |             |
| TX**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Bakersfield CA**    |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Beaumont-Pt Arthr   |                |             |             |
| TX**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Canton-Massillon    |                |             |             |
| OH**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Charleston SC**     |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Charlotte-Gstn      |                |             |             |
| NC-SC**               |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Chicago-Npr         |                |             |             |
| IL-IN-WI**            |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Cincinnati          |                |             |             |
| OH-KY-IN**            |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Cleveland-Elyria    |                |             |             |
| OH**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Columbia SC**       |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Columbus OH**       |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Corpus Christi TX** |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Dallas-Fort Worth   |                |             |             |
| TX**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Dayton OH**         |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Detroit-Wrn-Lvnia   |                |             |             |
| MI**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Durham NC**         |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Elkhart-Goshen IN** |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Evansville IN-KY**  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Fort Wayne IN**     |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Fresno CA**         |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Grand Rapids-Wyo    |                |             |             |
| MI**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Greenville SC**     |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Houston-Baytown     |                |             |             |
| TX**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Indianapolis IN**   |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Kalamazoo-Portage   |                |             |             |
| MI**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Lakeland FL**       |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Lansing-E Lansing   |                |             |             |
| MI**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Los Angeles-LngBc   |                |             |             |
| CA**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Madison WI**        |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Milwaukee-Wauksha   |                |             |             |
| WI**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Oxnard-Thous Oaks   |                |             |             |
| CA**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Peoria IL**         |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Portland-Vncvr      |                |             |             |
| OR-WA**               |                |             |             |
+-----------------------+----------------+-------------+-------------+
| **Riversd-SnBrn-Ont   |                |             |             |
| CA**                  |                |             |             |
+-----------------------+----------------+-------------+-------------+

+-----------------------+----------------+-------------+--------------+
| **Appendix C - Table  |                |             |              |
| 8**                   |                |             |              |
|                       |                |             |              |
| **Verizon Market      |                |             |              |
| Share - Small/Medium  |                |             |              |
| Enterprise Customers  |                |             |              |
| (2006) - Continued**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**   |
|                       | Share**        |             |              |
+-----------------------+----------------+-------------+--------------+
| **Long Distance       |                |             |              |
| Services -- GTE**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Rockford IL**       | **REDACTED**   |             |              |
+-----------------------+----------------+-------------+--------------+
| **Sacramento-Arden    |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Salem OR**          |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Salinas CA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Antonio TX**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Francisco-Okl   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Jose-Sunnyvle   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Santa Barbara CA**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Santa Rosa-Petlma   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Sarasota-Bradentn   |                |             |              |
| FL**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Seattle-Tacoma WA** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **South Bend-Msh      |                |             |              |
| IN-MI**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Spokane WA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Springfield IL**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **St Louis MO-IL**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Stockton CA**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Tampa-St Petersbrg  |                |             |              |
| FL**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Toledo OH**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Minimum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Maximum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Median**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-1 Services --     |                |             |              |
| Bell Atlantic**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Albany-Schenectdy   | **REDACTED**   |             |              |
| NY**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Boston-Cambrdg      |                |             |              |
| MA-NH**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Bridgeport-Stmfrd   |                |             |              |
| CT**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Buffalo-Niagra Fl   |                |             |              |
| NY**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Burlington VT**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Manchester-Nashua   |                |             |              |
| NH**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **New York NY-NJ-PA** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Portland-S Prtlnd   |                |             |              |
| ME**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Poughkeepsie-Nwbr   |                |             |              |
| NY**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Providence RI-MA**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Rochester NY**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Springfield MA**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Syracuse NY**       |                |             |              |
+-----------------------+----------------+-------------+--------------+

+-----------------------+----------------+-------------+--------------+
| **Appendix C - Table  |                |             |              |
| 8**                   |                |             |              |
|                       |                |             |              |
| **Verizon Market      |                |             |              |
| Share - Small/Medium  |                |             |              |
| Enterprise Customers  |                |             |              |
| (2006) - Continued**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**   |
|                       | Share**        |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-1 Services --     |                |             |              |
| Bell Atlantic         |                |             |              |
| (Continued)**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Utica-Rome NY**     | **REDACTED**   |             |              |
+-----------------------+----------------+-------------+--------------+
| **Worcester MA**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Allentown-Bethlhm   |                |             |              |
| PA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Baltimore-Towson    |                |             |              |
| MD**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Charleston WV**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Harrisbrg-Carlisl   |                |             |              |
| PA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Lancaster PA**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Phildlph            |                |             |              |
| PA-NJ-DE-MD**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Pittsburgh PA**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Reading PA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Richmond VA**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Roanoke VA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Scranton-WilkesBr   |                |             |              |
| PA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Trenton-Ewing NJ**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Virginia Beach      |                |             |              |
| VA-NC**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Washngtn            |                |             |              |
| DC-MD-VA-WV**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **York-Hanover PA**   |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Youngstwn-Wrrn      |                |             |              |
| OH-PA**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Minimum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Maximum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Median**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-1 Services --     |                |             |              |
| GTE**                 |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Akron OH**          | **REDACTED**   |             |              |
+-----------------------+----------------+-------------+--------------+
| **Ann Arbor MI**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Asheville NC**      |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Austin-Round Rock   |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Beaumont-Pt Arthr   |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Canton-Massillon    |                |             |              |
| OH**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Charleston SC**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Charlotte-Gstn      |                |             |              |
| NC-SC**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Chicago-Npr         |                |             |              |
| IL-IN-WI**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Cincinnati          |                |             |              |
| OH-KY-IN**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Cleveland-Elyria    |                |             |              |
| OH**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Columbia SC**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Columbus OH**       |                |             |              |
+-----------------------+----------------+-------------+--------------+

+-----------------------+----------------+-------------+--------------+
| **Appendix C - Table  |                |             |              |
| 8**                   |                |             |              |
|                       |                |             |              |
| **Verizon Market      |                |             |              |
| Share - Small/Medium  |                |             |              |
| Enterprise Customers  |                |             |              |
| (2006)- Continued**   |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**   |
|                       | Share**        |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-1 Services -- GTE |                |             |              |
| (Continued)**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Corpus Christi TX** | **REDACTED**   |             |              |
+-----------------------+----------------+-------------+--------------+
| **Dallas-Fort Worth   |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Davenport-Moln      |                |             |              |
| IA-IL**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Dayton OH**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Detroit-Wrn-Lvnia   |                |             |              |
| MI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Durham NC**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Elkhart-Goshen IN** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Evansville IN-KY**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Fort Wayne IN**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Fresno CA**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Grand Rapids-Wyo    |                |             |              |
| MI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Greenville SC**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Houston-Baytown     |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Indianapolis IN**   |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Kalamazoo-Portage   |                |             |              |
| MI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Lakeland FL**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Lansing-E Lansing   |                |             |              |
| MI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Los Angeles-LngBc   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Madison WI**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **McAllen-Edinburg    |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Milwaukee-Wauksha   |                |             |              |
| WI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Oxnard-Thous Oaks   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Peoria IL**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Portland-Vncvr      |                |             |              |
| OR-WA**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Riversd-SnBrn-Ont   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Rockford IL**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Sacramento-Arden    |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Salem OR**          |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Antonio TX**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Francisco-Okl   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Jose-Sunnyvle   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Santa Barbara CA**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Sarasota-Bradentn   |                |             |              |
| FL**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Seattle-Tacoma WA** |                |             |              |
+-----------------------+----------------+-------------+--------------+

+-----------------------+----------------+-------------+--------------+
| **Appendix C - Table  |                |             |              |
| 8**                   |                |             |              |
|                       |                |             |              |
| **Verizon Market      |                |             |              |
| Share - Small/Medium  |                |             |              |
| Enterprise Customers  |                |             |              |
| (2006) - Continued**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**   |
|                       | Share**        |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-1 Services -- GTE |                |             |              |
| (Continued)**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **South Bend-Msh      | **REDACTED**   |             |              |
| IN-MI**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Spokane WA**        |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Springfield IL**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **St Louis MO-IL**    |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Stockton CA**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Tampa-St Petersbrg  |                |             |              |
| FL**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Toledo OH**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Minimum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Maximum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Median**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-3 Services Bell   |                |             |              |
| Atlantic**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Boston-Cambrdg      | **REDACTED**   |             |              |
| MA-NH**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **New York NY-NJ-PA** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Washngtn            |                |             |              |
| DC-MD-VA-WV**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **T-3 Services GTE**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Chicago-Npr         | **REDACTED**   |             |              |
| IL-IN-WI**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Dallas-Fort Worth   |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Los Angeles-LngBc   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Francisco-Okl   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **ATM Services --     |                |             |              |
| Bell Atlantic**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **New York NY-NJ-PA** | **REDACTED**   |             |              |
+-----------------------+----------------+-------------+--------------+
| **Chicago-Npr         |                |             |              |
| IL-IN-WI**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Los Angeles-LngBc   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Frame Relay         |                |             |              |
| Services -- Bell      |                |             |              |
| Atlantic**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Boston-Cambrdg      | **REDACTED**   |             |              |
| MA-NH**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **New York NY-NJ-PA** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Baltimore-Towson    |                |             |              |
| MD**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Phildlph            |                |             |              |
| PA-NJ-DE-MD**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Pittsburgh PA**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Washngtn            |                |             |              |
| DC-MD-VA-WV**         |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Minimum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Maximum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Median**            |                |             |              |
+-----------------------+----------------+-------------+--------------+

+-----------------------+----------------+-------------+--------------+
| **Appendix C - Table  |                |             |              |
| 8**                   |                |             |              |
|                       |                |             |              |
| **Verizon Market      |                |             |              |
| Share - Small/Medium  |                |             |              |
| Enterprise Customers  |                |             |              |
| (2006) - Continued**  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **MSA**               | **Market       | **HHI**     | **Rivals**   |
|                       | Share**        |             |              |
+-----------------------+----------------+-------------+--------------+
| **Frame Relay         |                |             |              |
| Services -- GTE**     |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Charlotte-Gstn      | **REDACTED**   |             |              |
| NC-SC**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Chicago-Npr         |                |             |              |
| IL-IN-WI**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Cleveland-Elyria    |                |             |              |
| OH**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Columbus OH**       |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Dallas-Fort Worth   |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Detroit-Wrn-Lvnia   |                |             |              |
| MI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Houston-Baytown     |                |             |              |
| TX**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Indianapolis IN**   |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Los Angeles-LngBc   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Milwaukee-Wauksha   |                |             |              |
| WI**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Portland-Vncvr      |                |             |              |
| OR-WA**               |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Sacramento-Arden    |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Francisco-Okl   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **San Jose-Sunnyvle   |                |             |              |
| CA**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Seattle-Tacoma WA** |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Tampa-StPetersbrg   |                |             |              |
| FL**                  |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Minimum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Maximum**           |                |             |              |
+-----------------------+----------------+-------------+--------------+
| **Median**            |                |             |              |
+-----------------------+----------------+-------------+--------------+
| Source: Verizon Apr.  |                |             |              |
| 20, 2007 *Ex Parte*   |                |             |              |
| Letter, Exh. 4.5 (MSA |                |             |              |
| data). Staff          |                |             |              |
| calculations are done |                |             |              |
| for markets with at   |                |             |              |
| least 30              |                |             |              |
| observations.         |                |             |              |
| Small/Medium          |                |             |              |
| Enterprise Customers  |                |             |              |
| are defined as        |                |             |              |
| businesses with 5 to  |                |             |              |
| 249 employees.        |                |             |              |
+-----------------------+----------------+-------------+--------------+

+----------------+-------------------------+---------------------------+
| **Appendix C - |                         |                           |
| Table 9**      |                         |                           |
|                |                         |                           |
| **Long         |                         |                           |
| Distance       |                         |                           |
| Services       |                         |                           |
| Provided to    |                         |                           |
| Multi-Location |                         |                           |
| Enterprises    |                         |                           |
| (Fourth        |                         |                           |
| Quarter,       |                         |                           |
| 2006)**        |                         |                           |
+----------------+-------------------------+---------------------------+
| **Provider**   | **Market Share          | **Market Share            |
|                | (Revenues)**            | (Minutes)**               |
+----------------+-------------------------+---------------------------+
| **AT&T/BS**    | **REDACTED**            |                           |
+----------------+-------------------------+---------------------------+
| **Verizon**    |                         |                           |
+----------------+-------------------------+---------------------------+
| **JA\***       |                         |                           |
+----------------+-------------------------+---------------------------+
| **Qwest**      |                         |                           |
+----------------+-------------------------+---------------------------+
| **Other**      |                         |                           |
+----------------+-------------------------+---------------------------+
| **Total**      |                         |                           |
+----------------+-------------------------+---------------------------+
| **HHI**        |                         |                           |
+----------------+-------------------------+---------------------------+
| Source: AT&T   |                         |                           |
| May 1, 2007    |                         |                           |
| *Ex Parte*     |                         |                           |
| Letter, Exh.   |                         |                           |
| 5a. Market     |                         |                           |
| shares are for |                         |                           |
| customers      |                         |                           |
| purchasing     |                         |                           |
| more than      |                         |                           |
| **             |                         |                           |
| \[REDACTED\]** |                         |                           |
| of services    |                         |                           |
| per year.      |                         |                           |
| *See* Letter   |                         |                           |
| from Frank S.  |                         |                           |
| Simone,        |                         |                           |
| Executive      |                         |                           |
| Director,      |                         |                           |
| Federal        |                         |                           |
| Regulatory,    |                         |                           |
| AT&T, to       |                         |                           |
| Marlene H.     |                         |                           |
| Dortch,        |                         |                           |
| Secretary,     |                         |                           |
| FCC, WC Docket |                         |                           |
| No. 02-112,    |                         |                           |
| Exh. 5a.       |                         |                           |
| (filed Mar.    |                         |                           |
| 29, 2007)      |                         |                           |
| (AT&T Mar. 29, |                         |                           |
| 2007 *Ex       |                         |                           |
| Parte*         |                         |                           |
| Letter).       |                         |                           |
|                |                         |                           |
| \* "JA" is an  |                         |                           |
| alias for      |                         |                           |
| another        |                         |                           |
| carrier that   |                         |                           |
| was listed in  |                         |                           |
| the            |                         |                           |
| confidential   |                         |                           |
| data submitted |                         |                           |
| by AT&T.       |                         |                           |
+----------------+-------------------------+---------------------------+

**APPENDIX D**

**WHOLESALE LONG DISTANCE VOICE AND DATA MARKETS**

+------------------+---------------------------------------------------+
| **Appendix D -   |                                                   |
| Table 1**        |                                                   |
|                  |                                                   |
| **Wholesale      |                                                   |
| Service Revenues |                                                   |
| (%)**            |                                                   |
+------------------+---------------------------------------------------+
| **Wholesale      |                                                   |
| Voice Long       |                                                   |
| Distance         |                                                   |
| (2006)**         |                                                   |
+------------------+---------------------------------------------------+
| **Carrier**      | **Market Share**                                  |
+------------------+---------------------------------------------------+
| **AT&T**         | **REDACTED**                                      |
+------------------+---------------------------------------------------+
| **Verizon**      |                                                   |
+------------------+---------------------------------------------------+
| **JA\***         |                                                   |
+------------------+---------------------------------------------------+
| **Qwest**        |                                                   |
+------------------+---------------------------------------------------+
| **EG\***         |                                                   |
+------------------+---------------------------------------------------+
| **Other**        |                                                   |
+------------------+---------------------------------------------------+
| **Total**        |                                                   |
+------------------+---------------------------------------------------+
| **HHI**          |                                                   |
+------------------+---------------------------------------------------+
| **Wholesale Data |                                                   |
| Revenue (2006)** |                                                   |
+------------------+---------------------------------------------------+
| **Carrier**      | **Market Share**                                  |
+------------------+---------------------------------------------------+
| **AT&T**         | **REDACTED**                                      |
+------------------+---------------------------------------------------+
| **Verizon**      |                                                   |
+------------------+---------------------------------------------------+
| **JA\***         |                                                   |
+------------------+---------------------------------------------------+
| **Qwest**        |                                                   |
+------------------+---------------------------------------------------+
| **EG\***         |                                                   |
+------------------+---------------------------------------------------+
| **Other**        |                                                   |
+------------------+---------------------------------------------------+
| **Total**        |                                                   |
+------------------+---------------------------------------------------+
| **HHI**          |                                                   |
+------------------+---------------------------------------------------+
| Source: AT&T May |                                                   |
| 1, 2007 *Ex      |                                                   |
| Parte* Letter,   |                                                   |
| Exh. 5b.         |                                                   |
|                  |                                                   |
| \* "JA" and "EG" |                                                   |
| are aliases for  |                                                   |
| other carriers   |                                                   |
| that were listed |                                                   |
| in the           |                                                   |
| confidential     |                                                   |
| data submitted   |                                                   |
| by AT&T.         |                                                   |
+------------------+---------------------------------------------------+

**JOINT STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS AND\
COMMISSIONER JONATHAN S. ADELSTEIN,**

**CONCURRING IN PART, DISSENTING IN PART**

** **

**Re: **      ***Section 272(f)(1) Sunset of the BOC Separate Affiliate
and Related Requirements; 2000 Biennial Regulatory Review Separate
Affiliate Requirements of Section 64.1903 of the Commission's Rules;
Petition of AT&T Inc. for Forbearance Under 47 U.S.C. § 160(c) with
Regard to Certain Dominant Carrier Regulations for In-Region,
Interexchange Services*, WC Docket No. 02-112, CC Docket No. 00-175, WC
Docket No. 06-120, Report and Order and Memorandum Opinion and Order
(Aug. 31, 2007).**

 

            In this Order, the Commission allows the Bell Operating
Companies (BOCs) to provide long-distance services on an integrated
basis and subject to non-dominant carrier regulations, as long as they
comply with targeted safeguards adopted in this Order and with their
continuing statutory and regulatory obligations.  We support this
relief, with the conditions and commitments included herein, because the
Commission must take into account the changing long-distance market.

 

We cannot fully join this decision because we are concerned that the
Order does not fully take into account the significant
consolidation that has taken place in the marketplace and what this
means for consumers.  Nor does the Order put in place a comprehensive
mechanism for monitoring changes in the marketplace (*e.g.*, in the
long-distance, wireless, and access markets) that would enable the
Commission to reliably make decisions. Consumers will not be well-served
if the Commission allows the competitive options to dwindle to a choice
of bundles from a duopoly of providers.  With this concern in mind, we
cannot support the decision to reach beyond the rulemaking proceeding to
use forbearance to take away equal access scripting -- a long-standing
and useful tool for consumers seeking information about competitive
options.

 

This Order finally addresses the important issue of what rules should
govern the BOCs' provision of long-distance services after the sunset
of Section 272 separate affiliate and related requirements.  After much
urging, we are pleased that the Commission here engages in a credible
analysis of the need for alternative safeguards.  Indeed, there are
notable changes in the long distance market for which the Commission
must account. 

 

We also support the combination of conditions -- some voluntarily
offered, others not -- that address concerns which the separate
affiliate rules were designed, at least in part, to address -- such as
cost shifting, non-discrimination and the availability of competitive
service for all consumers.  Not all customers have benefited equally
from changes in the marketplace because of a lack of effective choice of
providers.  We therefore appreciate the commitments made by AT&T and
Verizon to offer calling plans targeted for residential consumers who
make relatively few long-distance calls and to provide call detail
information to enable consumers to make informed decisions about the
most cost effective long-distance plans.  We are grateful to Consumers
Union and others who have drawn much-needed attention to these issues. 
The needs of low-volume consumers are too often overlooked, even though
they have a real need for our vigilance.

 

As the Commission did in the *Qwest Section 272 Sunset Forbearance
Order*, here we make a number of important findings regarding the
potential for price and performance discrimination.  Notably, the Order
acknowledges that incumbent providers retain the ability to raise their
rivals' costs, and the Order maintains dominant carrier regulation for
critical access services used by alternative long-distance providers. 
The Order correctly concludes that certain requirements of Section 272
will continue to apply, and it adopts rules for imputation and reporting
that should help the Commission and competitors evaluate whether the
petitioner is engaging in price discrimination.  In addition, we are
pleased that the Order makes permanent the BOCs' current commitments via
merger orders and the *Qwest 272 Sunset Forbearance Order* to comply
with special access performance metrics in order to ensure that they do
not engage in non-price discrimination in the provision of special
access services. 

 

We have consistently stated our view that competition must mean more for
consumers than a choice between two providers -- a cable and a telephone
company -- and that such a result would represent an unfortunate
back-sliding for consumers.  So while we are pleased that the Order
acknowledges the rapid changes to the long-distance market, we are also
aware that some of these changes favor incumbent providers.  It is
imperative for the Commission rigorously to monitor the effect of these
safeguards. We would have preferred that the Commission adopt a formal,
comprehensive mechanism for verifying whether the predictions in this
Order prove accurate. 

 

In particular, the evidence in this record shows that the BOCs have
enjoyed dramatic success in the long distance market in a relatively
short period of time, particularly among consumers who choose bundles of
local and long distance service.  So, we are disappointed that the
Commission reaches beyond the rulemaking proceeding to grant forbearance
from the long-standing equal access scripting rules that require
customers be informed of their right to select the long-distance
provider of their choice.  Given the BOCs' high share of the bundled
marketplace, we dissent to this portion of the Order as the Commission
should not be taking this valuable tool away from consumers.

 

For these reasons, we concur in part and dissent in part.

**STATEMENT OF**

**COMMISSIONER DEBORAH T. TATE**

** **

**Re:       *Section 272(f)(1) Sunset of the BOC Separate Affiliate and
Related Requirements; 2000 Biennial Regulatory Review Separate Affiliate
Requirements of Section 64.1903 of the Commission's Rules; Petition of
AT&T Inc. for Forbearance Under 47 U.S.C. § 160(c) with Regard to
Certain Dominant Carrier Regulations for In-Region, Interexchange
Services*, WC Docket No. 02-112, CC Docket No. 00-175, WC Docket No.
06-120, Report and Order and Memorandum Opinion and Order (Aug. 31,
2007).**

In this decision we establish a new framework to govern the provision of
in-region, long distance services by the Bell Operating Companies and
their independent incumbent local exchange carrier affiliates. Once
again we recognize the significant competition that exists in the long
distance market. I support moving away from regulation where the record
shows that a competitive market exists, rendering those regulations
unnecessary. Today's decision takes a carefully balanced approach,
providing regulatory relief to the incumbent Bell Operating Companies,
allowing them to respond to marketplace demands efficiently and
effectively, but ensuring that less intrusive or less costly regulation
remains that protects important consumer interests and competition.
Accordingly, I support today's Order removing legacy regulations where
robust competition has rendered those regulations no longer necessary to
maintain a competitive market.

**STATEMENT OF**

**COMMISSIONER ROBERT M. McDOWELL**

**Re: *Section 272(f)(1) Sunset of the BOC Separate Affiliate and
Related Requirements; 2000 Biennial Regulatory Review Separate Affiliate
Requirements of Section 64.1903 of the Commission's Rules; Petition of
AT&T Inc. for Forbearance Under 47 U.S.C. Sec. 160(c) with Regard to
Certain Dominant Carrier Regulations for In-Region Interchange
Services,* WC Docket No. 02- 112, CC Docket No. 00-175, and WC Docket
No. 06-120, Report and Order and Memorandum Opinion and Order**

***Petition of AT&T Inc. for Forbearance Under 47 U.S.C. § 160(c) with
Regard to Certain Dominant Carrier Regulations for In-Region,
Interexchange Services*, WC Docket No. 06‑120, Memorandum Opinion and
Order**

In these orders, we grant relief from dominant carrier regulation of the
Bell Operating Companies' (BOCs') in-region, interstate, long distance
services. This is a classic instance where regulation had been
appropriate to protect emerging competitors and consumers, but where the
relevant market has become sufficiently competitive to warrant less
onerous regulation, while continuing to protect consumers.

In place of the outmoded regulation, we establish a more appropriate
regulatory framework that responds to the level of competition in the
long distance services market and is uniformly applicable to all the
BOCs. One of those safeguards is the adoption of special access metrics
that were approved in the *BOC Merger Orders* and the *Qwest Section 272
Sunset Forbearance Order*. This is an example where a condition of
specific mergers has market-wide validity. I am pleased to support
adoption of this narrowly-tailored requirement on a uniform basis. Our
order today also establishes regulatory parity.

While we grant relief to the BOCs, the independent incumbent local
exchange carriers continue to be subjected to regulation that may be
ripe for a lighter regulatory touch. If those carriers choose to seek
such relief, I would seriously consider those requests based on relevant
substantiation of their competitive situations.

I thank Chairman Martin for his leadership and hard work on these orders
and I am delighted to support his effort.

[^1]: For ease of exposition, we use the term "in-region, long distance"
    to refer collectively to the telecommunications services that this
    Order addresses. This term encompasses: (1) the in-region, domestic,
    interLATA telecommunications services and the in-region,
    international telecommunications services that the BOCs were
    previously required to provide only through section 272 separate
    affiliates; (2) the in-region, domestic, interstate, interexchange
    telecommunications services and in-region, international
    telecommunications services that the BOCs' independent incumbent LEC
    affiliates are required to provide only through rule 64.1903
    separate affiliates; and (3) the BOCs' in-region, interstate,
    intraLATA, interexchange telecommunications services. Each of these
    groups of services includes high-capacity services as well as
    traditional voice services.

[^2]: *See Petition of Qwest Communications International Inc. for
    Forbearance from Enforcement of the Commission's Dominant Carrier
    Rules As They Apply After Section 272 Sunsets*, WC Docket No.
    05-333, Memorandum Opinion and Order, 22 FCC Rcd 5207 (2007) (*Qwest
    Section 272 Sunset Forbearance Order*).

[^3]: *See* 47 U.S.C. § 272; *Qwest Section 272 Sunset Forbearance
    Order*, 22 FCC Rcd at 5213, para. 9.

[^4]: We note that certain of our actions in this Order apply to
    interstate, international, and intrastate telecommunications
    services, while other actions we take today apply only to interstate
    and international telecommunications services. For example, our
    actions regarding structural requirements for BOC provision of
    in-region, interLATA telecommunications services apply to certain
    *interstate*, *international*, and *intrastate* telecommunications
    services. In contrast, our actions regarding dominant carrier
    regulation, however, apply only to certain *interstate* and
    *international* telecommunications services. The competitive
    safeguards we adopt below may apply only to interstate and
    international services, or to interstate, international, and
    intrastate services, depending on the safeguard. No action that we
    take in this order affects the requirements imposed by section 112
    of the Consolidated Appropriations Act of 2005 or the regulation of
    the "interstate switched wholesale service elements" addressed in
    that Act.  *See* Consolidated Appropriations Act, 2005, Pub. L. No.
    108-447, 118 Stat. 2809 (2004) (addressing, among other things, the
    regulation of AT&T Alascom's offering of certain services).

[^5]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5235-37, paras. 55-58 (conditionally granting Qwest's forbearance
    request so that Qwest could provide its in-region, interstate,
    interLATA telecommunications services without complying with all the
    requirements of section 272 and the Commission's implementing rules,
    and without being subject to section 203 and certain dominant
    carrier tariffing, price cap, rate of return, discontinuance, and
    transfer of control rules).

[^6]: *Policy and Rules Concerning Rates for Competitive Common Carrier
    Services and Facilities Authorizations Therefor*, CC Docket No.
    79-252, Notice of Inquiry and Proposed Rulemaking, 77 FCC 2d 308
    (1979); First Report and Order, 85 FCC 2d 1 (1980) (*Competitive
    Carrier First Report and Order*); Further Notice of Proposed
    Rulemaking, 84 FCC 2d 445 (1981); Second Further Notice of Proposed
    Rulemaking, FCC 82-187, 47 Fed. Reg. 17308 (1982); Second Report and
    Order, 91 FCC 2d 59 (1982) (*Competitive Carrier Second Report and
    Order*); Order on Reconsideration, 93 FCC 2d 54 (1983); Third
    Further Notice of Proposed Rulemaking, 48 Fed. Reg. 28292 (1983);
    Third Report and Order, 48 Fed. Reg. 46791 (1983); Fourth Report and
    Order, 95 FCC 2d 554 (1983) (*Competitive Carrier Fourth Report and
    Order*), *vacated*, *AT&T v. FCC*, 978 F.2d 727 (D.C. Cir. 1992),
    *cert. denied*, *MCI Telecommunications Corp. v. AT&T*, 509 U.S. 913
    (1993); *Policy and Rules Concerning Rates for Competitive Carrier
    Services and Facilities Authorizations Therefor*, Fifth Report and
    Order, 98 FCC 2d 1191 (1984) (*Competitive Carrier Fifth Report and
    Order*); Sixth Report and Order, 99 FCC 2d 1020 (1985), *vacated*,
    *MCI Telecommunications Corp. v. FCC*, 765 F.2d 1186 (D.C. Cir.
    1985) (*Competitive Carrier Sixth Report and Order*), *aff'd*, *MCI
    v. AT&T*, 512 U.S. 218 (1994) (collectively, the *Competitive
    Carrier* proceeding); *see* 47 C.F.R. § 61.3(q), (y).

[^7]: *Competitive Carrier First Report and Order*, 85 FCC 2d at 10-11,
    para. 26.

[^8]: *Id.* at 20, para. 54.

[^9]: *Id.* at 11, para. 27. Specifically, nondominant carriers
    generally are not subject to direct rate regulation, are subject to
    reduced tariff obligations, and are accorded presumptive streamlined
    treatment under section 214 of the Act. *See id.* at 30-49, paras.
    85-147; *see also* 47 C.F.R. §§ 1.773(a)(ii), 61.23(c), 63.03(b),
    63.71(c).

[^10]: *See Competitive Carrier First Report and Order*, 85 FCC 2d at
    22-23, para. 62. With respect to long distance market shares, the
    Commission found that AT&T had "significant market power" in the
    Message Telecommunications Service (MTS) and Wide Area
    Telecommunications Service (WATS) market and in the private line
    service market. *Id.* at 23, paras. 63-64. With respect to control
    of bottleneck facilities, the Commission found that "\[c\]ontrol of
    bottleneck facilities is present when a firm or group of firms has
    sufficient command over some essential commodity or facility in its
    industry or trade to be able to impede new entrants." *Id.* at
    21-22, para. 59. AT&T was found to have such control by virtue of
    the fact that it controlled "access to 80% of the nation's
    telephones." *Id.* at 22-23, para. 62.

[^11]: *Motion of AT&T Corp. to be Reclassified as a Non-Dominant
    Carrier*, Order, 11 FCC Rcd 3271 (1995) (*AT&T Reclassification
    Order*).

[^12]: *Id*. at 3294, para. 39.

[^13]: *Id*. at 3284, para. 17.

[^14]: *Id.* at 3356, para. 163.

[^15]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996) (1996 Act). The 1996 Act amended the Communications Act.

[^16]: *See United States v. American Tel. & Tel. Co*., 552 F. Supp.
    131, 227 (D.D.C. 1982) (*United States v. AT&T*), *aff'd sub. nom.
    Maryland v. United States*, 460 U.S. 101 (1983); *see also SBC
    Communications Inc. v. FCC*, 138 F.3d 410, 412 (D.C. Cir. 1998)
    (stating that "\[d\]ivestiture was called for, in large part,
    because it was thought 'that a corporation that enjoyed a monopoly
    on local calls would ineluctably leverage that bottleneck control in
    the interexchange (long distance) market'") (quoting *United States
    v. Western Elec. Co.*, 969 F.2d 1231, 1238 (D.C. Cir. 1992)).

[^17]: Under the 1996 Act, a "local access and transport area" (LATA) is
    "a contiguous geographic area--- (A) established before the date of
    enactment of the \[1996 Act\] by a \[BOC\] such that no exchange
    area includes points within more than 1 metropolitan statistical
    area, consolidated metropolitan statistical area, or State, except
    as expressly permitted under the AT&T Consent Decree; or (B)
    established or modified by a \[BOC\] after such date of enactment
    and approved by the Commission." 47 U.S.C. § 153(25).

[^18]: *See* 47 U.S.C. § 271(b)(2).

[^19]: 47 U.S.C. § 271.

[^20]: *Id*. The Commission adopted rules implementing section 272 in
    the *Non-Accounting* and *Accounting Safeguards Orders*. *See*
    *Implementation of the Accounting Safeguards Under the
    Telecommunications Act of 1996*, CC Docket No. 96-150, Report and
    Order, 11 FCC Rcd 17539 (1996) (*Accounting Safeguards Order*);
    Order on Reconsideration, 14 FCC Rcd 11396 (1996); Second Order on
    Reconsideration, 15 FCC Rcd 1161 (2000); *Implementation of the
    Non-Accounting Safeguards of Section 271 and 272 of the
    Communications Act of 1934, as amended*, CC Docket No. 96-149, First
    Report and Order and Further Notice of Proposed Rulemaking, 11 FCC
    Rcd 21905 (1996) (*Non-Accounting Safeguards Order*); First Order on
    Reconsideration, 12 FCC Rcd 2297 (1997) (*First Order on
    Reconsideration*), Second Order on Reconsideration, 12 FCC Rcd 8653
    (1997) (*Second Order on Reconsideration*), *aff'd sub nom. Bell
    Atlantic Tel. Cos. v. FCC*, 131 F.3d 1044 (D.C. Cir. 1997), Third
    Order on Reconsideration, 14 FCC Rcd 16299 (1999) (*Third Order on
    Reconsideration*).

[^21]: *See* 47 U.S.C. § 272(f)(1). We note that the section 272
    safeguards, other than those in section 272(e), sunset with respect
    to interLATA information services four years after enactment of the
    1996 Act. *See* 47 U.S.C. § 272(f)(2).

[^22]: 47 U.S.C. § 272(a)(1).

[^23]: 47 U.S.C. § 272(b)(1).

[^24]: 47 U.S.C. § 272(b)(2).

[^25]: *See* 47 U.S.C. §§ 272(b)(1), (b)(2), (b)(5).

[^26]: *See* 47 U.S.C. § 272(c)(1).

[^27]: 47 U.S.C. § 272(d).

[^28]: 47 U.S.C. § 272(e)(1); *see also* 47 U.S.C. §§ 251(c), (h).

[^29]: 47 U.S.C. § 272(e)(3).

[^30]: *See* 47 C.F.R. § 64.1903; *see also* *Regulatory Treatment of
    LEC Provision of Interexchange Services Originating in the LEC's
    Local Exchange Area and Policy and Rules Concerning the Interstate,
    Interexchange Marketplace*, CC Docket Nos. 96-149, 96-61, Second
    Report and Order in CC Docket No. 96-149 and Third Report and Order
    in CC Docket No. 96-61, 12 FCC Rcd 15756, 15763, para. 7 (1997)
    (*LEC Classification Order*), *recon. denied*, Second Order on
    Reconsideration and Memorandum Opinion and Order, 14 FCC Rcd 10771
    (1999) (*Second Reconsideration Order*). In the *Second
    Reconsideration Order*, the Commission relaxed these requirements
    for those independent incumbent LECs that provide in-region,
    interstate and international, interexchange telecommunications
    services exclusively through resale, by allowing them to do so
    through a separate corporate division subject to certain safeguards.
    *Second Reconsideration Order*, 14 FCC Rcd at 10777, para. 9; 47
    C.F.R. § 64.1903(b)(1). Independent incumbent LEC resellers still
    must maintain separate books of account, comply with the affiliate
    transaction rules, and acquire any services from the exchange
    company pursuant to tariff or generally available contract rates.
    *See generally* *Competitive Carrier Fifth Report and Order*, 98 FCC
    2d at 1197-205, paras. 8-18 (setting forth original separate
    subsidiary requirements for independent incumbent LECs, which were
    subsequently modified in the *LEC Classification* proceeding).

[^31]: *See* 47 C.F.R. § 64.1903 (providing the Commission's separate
    affiliate rules for independent incumbent LECs); *LEC Classification
    Order*, 12 FCC Rcd at 15849-15856, paras. 162-173; *Competitive
    Carrier Fifth Report and Order*, 98 FCC 2d at 1197-98, para. 8.

[^32]: *See* Letter from Michelle Sclater, Director, Federal Regulatory,
    AT&T, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112, at
    1 (filed Apr. 24, 2007) (AT&T Apr. 24, 2007 *Ex Parte* Letter)
    (stating that Southern New England Telephone Company (SNET) provides
    interstate long distance services through a section 272 separate
    affiliate); Letter from Joseph Jackson, Associate Director, Federal
    Regulatory, Verizon, to Marlene H. Dortch, Secretary, FCC, WC Docket
    No. 02-112, at 2 (filed May 8, 2007) (Verizon May 8, 2007 *Ex Parte*
    Letter) (indicating that the former GTE long distance companies that
    are designated as section 272 separate affiliates and the former GTE
    LECs comply with all provisions of section 272, other than section
    272(c), in their interactions with each other and with the former
    Bell Atlantic companies). We note that AT&T has two independent
    incumbent LEC affiliates, SNET and Woodbury Telephone Company
    (Woodbury). SNET is a price cap LEC for interstate ratemaking
    purposes, while Woodbury's interstate rates are set on a rate of
    return basis. AT&T, however, is in the process of integrating
    Woodbury into SNET. Once the integration process is complete, the
    combined entity will be a price cap LEC for interstate ratemaking
    purposes. Letter from Michelle Sclater, Director, Federal
    Regulatory, AT&T, to Marlene H. Dortch, Secretary, FCC, WC Docket
    No. 02-112, at 1 (filed Apr. 27, 2007) (AT&T Apr. 27, 2007 *Ex
    Parte* Letter); *see* AT&T Apr. 24, 2007 *Ex Parte* Letter at 1.

[^33]: *See* *LEC Classification Order*, 12 FCC Rcd at 15762-63, para.
    6, & 15802, para. 82.

[^34]: *See* *LEC Classification Order*, 12 FCC Rcd at 15802-03, para.
    83. In that Order, the Commission distinguished between "classical"
    (or "Stiglerian") market power, which "is the ability of a firm
    profitably to raise and sustain its price above the competitive
    level by restricting its own output," and "exclusionary" (or
    "Bainian") market power, which is the "ability of a firm profitably
    to raise and sustain its price significantly above the competitive
    level by raising its rivals' costs and thereby causing the rivals to
    restrain their output." *Id.* (citing Thomas G. Krattenmaker, Robert
    H. Lande & Steven C. Salop, *Monopoly Power and Market Power in
    Antitrust Law,* 76 [Geo. L. J.]{.smallcaps} 241, 249-53 (1987)).

[^35]: *LEC Classification Order*, 12 FCC Rcd at 15810-12*,* paras.
    96-97.

[^36]: *Id.* at 15812-33, paras. 98-130.

[^37]: *Id.* at 15804, para. 85.

[^38]: *Id.* at 15806-08, paras. 88-90.

[^39]: *See id.* at 15834-35, paras. 133-34. The Commission recognized,
    however, that the structural separation requirements in section 272
    would sunset with respect to in-region, interLATA telecommunications
    services three years after the BOCs were authorized to provide
    in-region, interLATA services unless the Commission extends such
    period by rule or order. *Id.* at 15835, n.391; *see* 47 U.S.C. §
    272(f)(1). We note that section 272(f)(3) preserves the Commission's
    authority to prescribe safeguards under other sections of the Act.
    *See* 47 U.S.C. § 272(f)(3).

[^40]: *LEC Classification Order*, 12 FCC Rcd at 15835, para. 134 n.391.

[^41]: *Section 272(f)(1) Sunset of the BOC Separate Affiliate and
    Related Requirements*, WC Docket No. 02-112, Memorandum Opinion and
    Order, 17 FCC Rcd 26869, 26870, paras. 1-2, nn.5, 8 (2002) (*Sunset
    Order*) (citing *LEC Classification Order*, 12 FCC Rcd at 1576,
    para. 4 n.12); *see also Competitive Carrier Fifth Report and
    Order*, 98 FCC 2d at 1198-99, para. 9 n.23 (determining that the
    Commission would classify the BOCs as dominant in the provision of
    interstate, interLATA telecommunications services until it
    determined what safeguards, if any, would be necessary for the BOCs
    or their affiliates to qualify for nondominant treatment).

[^42]: *See Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5212, para. 7 (citing *Application by Qwest Communications
    International Inc*. *for Authorization To Provide In-Region,
    InterLATA Services in Arizona,* WC Docket No. 03-194, Memorandum
    Opinion and Order, 21 FCC Rcd 7169 (2003)).

[^43]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at 5212,
    para. 54.

[^44]: *See* 47 C.F.R. §§ 61.19-61.25.

[^45]: 47 C.F.R. § 61.19.

[^46]: *See* 47 C.F.R. § 61.55.

[^47]: *See LEC Classification Order*, 12 FCC Rcd at 15834-36, paras.
    133-34; *see also* *Sunset Order*, 17 FCC Rcd at 26869-71, paras.
    1-2, nn.5, 8.

[^48]: 47 C.F.R. § 61.58.

[^49]: 47 C.F.R. § 61.38(i)-(ii).

[^50]: *See* 47 C.F.R. § 61.58.

[^51]: *See* 47 C.F.R. §§ 61.41-61.49. As discussed in part III.c, other
    dominant carrier requirements include certain price cap, rate of
    return, discontinuance, transfer of control, contract filings, and
    reporting requirements.

[^52]: *Section 272(f)(1)* *Sunset of the BOC Separate Affiliate and
    Related Requirements*, WC Docket No. 02-112, Notice of Proposed
    Rulemaking, 17 FCC Rcd 9916 (2002) (*Section 272 Sunset Notice*).

[^53]: *Id.* at 9917, para. 1, & 9920, para. 10.

[^54]: *Id.* at 9917, para. 1.

[^55]: *Section 272(f) Sunset of the BOC Separate Affiliate and Related
    Requirements*, WC Docket No. 02-112, Further Notice of Proposed
    Rulemaking, 18 FCC Rcd 10914 (2003) (*Section 272 Sunset and
    Independent LEC Further NPRM*).

[^56]: *Section 272 Sunset and Independent Incumbent LEC Further NPRM*,
    18 FCC Rcd at 10914-15, para. 2; *see also* *2000 Biennial
    Regulatory Review Separate Affiliate Requirements of Section 64.1903
    of the Commission's Rules*, CC Docket No. 00-175, Notice of Proposed
    Rulemaking, 16 FCC Rcd 17270 (2001) (*Independent Incumbent LEC
    NPRM*). For purposes of citing to the record, we use the format
    "NPRM Comments or NPRM Reply" when referring to comments or reply
    comments filed in response to the *Section 272 Sunset Notice*, and
    "FNPRM Comments or FNPRM Reply" when referring to comments or reply
    comments filed in response to the *Section 272 Sunset and
    Independent Incumbent LEC Further NPRM*.

[^57]: Petition of AT&T Inc. for Forbearance under 47 U.S.C. § 160(c)
    with Regard to Certain Dominant Carrier Regulations for In-Region,
    Interexchange Services, WC Docket No. 06-120, at 1, 37-38 (filed
    June 2, 2006) (AT&T Petition). On June 23, 2006, the Wireline
    Competition Bureau (Bureau) issued a public notice inviting comment
    on the AT&T Petition. *See Pleading Cycle Established for Petition
    of AT&T Inc. for Forbearance under 47 U.S.C. § 160(c) with Regard To
    Certain Dominant Carrier Regulations for In-Region, Interexchange
    Services*, WC Docket No. 06-120, Public Notice, 21 FCC Rcd 6862 (WCB
    2006). On May 30, 2007, the Bureau, pursuant to section 10(c) of the
    Act, extended by 90 days (until August 31, 2007) the date by which
    the petition shall be deemed granted in the absence of a Commission
    decision that the petition fails to meet the standards for
    forbearance under section 10(a) of the Act. *Petition of AT&T Inc.
    for Forbearance under 47 U.S.C. § 160(c) with Regard to Certain
    Dominant Carrier Regulations for In-Region, Interexchange Services*,
    WC Docket No. 06-120, Order, 22 FCC Rcd 9960 (WCB 2007). AT&T also
    requested that the Commission forbear from applying certain dominant
    carrier regulations to in-region, interstate, interexchange
    services, including international services, provided by any AT&T
    affiliates, and from applying the Commission's separate affiliate
    requirements for independent incumbent local exchange carriers
    (independent incumbent LECs) to AT&T's provision of interexchange
    services in AT&T's independent incumbent LEC service areas. AT&T
    Petition at 31-36.

[^58]: *See Investigation of Access and Divestiture Related Tariffs,
    Allocation Plan Waivers and Tariffs*, CC Docket No. 83-1145 Phase I,
    Memorandum Opinion and Order, 101 FCC 2d 935, 949-50, para. 40 (CCB
    1985), *recon. denied*, 102 FCC 2d 503 (1985) (*Equal Access
    Allocation Tariff Order*); *Non-Accounting Safeguards Order*, 11 FCC
    Rcd at 22046, para. 292; *Application of BellSouth Corp., et al.
    Pursuant to Section 271 of the Communications Act of 1934, as
    amended, To Provide In-Region, InterLATA Services in South
    Carolina*, CC Docket No. 97-208, Memorandum Opinion and Order, 13
    FCC Rcd 539, 667-72, paras. 231-39 (1997) (*BellSouth South Carolina
    Order*) (stating that BOCs are permitted to market their own long
    distance services as long as their marketing scripts fulfill the
    equal access requirements), *aff'd,* *BellSouth Corp. v. FCC*, 162
    F.3d 678 (D.C. Cir. 1998).

[^59]: *See* 47 U.S.C. § 251(g). In general terms, section 251(g)
    requires continued compliance with equal access and
    nondiscrimination requirements established prior to the enactment of
    the Telecommunications Act of 1996 by court order, consent decree,
    or the Commission until those requirements are explicitly superseded
    by subsequent Commission action.

[^60]: Petition of Qwest Communications International Inc. for
    Forbearance from Enforcement of the Commission's Dominant Carrier
    Rules As They Apply After Section 272 Sunset Pursuant to 47 U.S.C.
    §160, at 1 (filed Nov. 22, 2005), as amended by Petition of Qwest
    Communications International Inc. for Forbearance from Enforcement
    of the Commission's Dominant Carrier Rules As They Apply After
    Section 272 Sunset Pursuant To 47 U.S.C. § 160 (filed Nov. 30, 2005)
    (Qwest Petition).

[^61]: *See Qwest S**ection 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5235-37, paras. 55-58.

[^62]: *See id.* at 5233, para. 51. Qwest committed to providing certain
    calling plans and billing information to address the Commission's
    concern that Qwest's residential customers who make relatively few
    interstate long distance calls and who do not also subscribe to
    wireless or broadband Internet access service may not be able to
    avoid the impact of a price increase by engaging in usage
    substitution. *Id*. at 5233, para. 52, & 5243-44, paras. 71-72.

[^63]: *See id.* at 5233-34, para. 53.

[^64]: *See* *id.* at 5233-35, paras. 53-54.

[^65]: *See* *id.* at 5208, para. 1.

[^66]: *See, e.g.*, *Competitive Carrier First Report and Order*, 85 FCC
    2d at 19, para. 51, & 20-21, paras. 55-56.

[^67]: *See LEC Classification Order*, 12 FCC Rcd at 15802-04, paras.
    83-85.

[^68]: A relevant product market has been defined as the smallest group
    of competing products for which a hypothetical monopoly provider of
    the products would profitably impose at least a "'small but
    significant and nontransitory' increase in price." Horizontal Merger
    Guidelines, issued by the U.S. Department of Justice and the Federal
    Trade Commission, §§ 1.11, 1.12 (Apr. 2, 1992, revised Apr. 8, 1997)
    (*DOJ/FTC Guidelines*); *see also Application of EchoStar
    Communications Corporation, General Motors Corporation, and Hughes
    Electronics Corporation*, CS Docket No. 01-348, Hearing Designation
    Order, 17 FCC Rcd 20559, 20605-06, para. 106 (2002)
    (*EchoStar/DirecTV Order*). A relevant geographic market has been
    defined "as the region where a hypothetical monopolist that is the
    only producer of the relevant product in the region would profitably
    impose at least a 'small but significant and nontransitory' increase
    in the price of the relevant product, assuming that the prices of
    all products provided elsewhere do not change." *EchoStar/DirecTV
    Order*, 17 FCC Rcd at 20609, para. 117 (citing *DOJ/FTC Guidelines*
    § 1.21). We reject Americatel's request to establish a working group
    to commission studies to determine the relevant service market
    because the Commission has extensive expertise in defining
    telecommunications markets. *See* Americatel FNPRM Erratum Comments
    at 10. We also reject legacy BellSouth's suggestion that we need not
    conduct a detailed market analysis to determine whether the BOCs
    have market power. Legacy BellSouth FNPRM Comments at 5; s*ee,
    e.g*., *AT&T Inc. and BellSouth Corporation Application for Transfer
    of Control*, WC Docket No. 06-74, Memorandum Opinion and Order, 22
    FCC Rcd 5662, 5711-18, paras. 89-102 (2007) (*AT&T/BellSouth
    Order*); *SBC Communications Inc. and AT&T Corp. Applications for
    Approval of Transfer of Control*, WC Docket No. 05-65, Memorandum
    Opinion and Order, 20 FCC Rcd 18290, 18336-47, paras. 82-96 (2005)
    (*SBC/AT&T Order*); *Verizon Communications Inc. and MCI, Inc.
    Application for Approval of Transfer of Control*, WC Docket No.
    05-75, Memorandum Opinion and Order, 20 FCC Rcd 18433, 18477-86,
    paras. 82-97 (2005) (*Verizon/MCI Order*); *Qwest Section 272 Sunset
    Forbearance Order*, 22 FCC Rcd at 5217-20, paras. 15-20. We use the
    term "*BOC Merger Orders*" to refer collectively to the *SBC/AT&T
    Order*, the *Verizon/MCI Order*, and the *AT&T/BellSouth Order*.

[^69]: *See infra* parts 1.(a) (classical market power analysis for
    in-region, interstate, long distance services); III.b (classical
    market power analysis for in-region, international
    telecommunications services).

[^70]: *See infra* part III.c. Commenters generally support this
    analytic approach. *See, e.g.*, Legacy AT&T FNPRM Comments at 2,
    8-11; Legacy BellSouth FNPRM Comments at 7-8; NJ Ratepayer FNPRM
    Comments at 2-3; Qwest FNPRM Comments at 7-8; VarTec *et al*. FNPRM
    Comments at 3-4; Verizon FNPRM Comments at 21-27; Legacy SBC FNPRM
    Comments at 15, 23-37; Americatel FNPRM Reply at 7-12.

[^71]: *See Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5224-31, paras. 32-46.

[^72]: *A**T&T/BellSouth Order*, 22 FCC Rcd at 5711-18, paras. 89-104;
    *SBC/AT&T Order,* 20 FCC Rcd at 18336-46, paras. 82-99; *Verizon/MCI
    Order*, 20 FCC Rcd at 18477-87, paras. 83-100; *Qwest Section 272
    Sunset Forbearance Order*, 22 FCC Rcd at 5217-20, paras. 15-20. In
    prior proceedings, the Commission has defined mass market customers
    as residential and small business customers that purchase
    standardized offerings of communications services. *See, e.g.*,
    *Application of WorldCom, Inc. and MCI Communications Corporation
    for Transfer of Control of MCI Communications Corporation to
    WorldCom, Inc.*, CC Docket No. 97-211, Memorandum Opinion and Order,
    13 FCC Rcd 18025, 18040, para. 24 (1998) (*WorldCom/MCI Order*);
    *Application of Ameritech Corp. and SBC Communications Inc. for
    Consent to Transfer Control of Corporations Holding Commission
    Licenses and Lines Pursuant to Sections 214 and 310(d) of the
    Communications Act*, CC Docket No. 98-141, Memorandum Opinion and
    Order, 14 FCC Rcd 14712, 14746, para. 68 (1999) (*SBC/Ameritech
    Order*). We reject commenters' suggestions that we adopt a different
    approach for identifying relevant mass market services because these
    commenters do not explain why their proposed approaches would
    improve our mass market analysis. *See, e.g.*, Americatel FNPRM
    Comments at 10 (requesting that a working group be established to
    commission studies to determine the relevant mass market service
    categories); Legacy BellSouth FNPRM Comments at 5 (claiming that the
    Commission need not engage in a detailed market analysis).

[^73]: *AT&T/BellSouth Order*, 22 FCC Rcd at 5670-71, paras. 16-17;
    *SBC/AT&T Order*, 20 FCC Rcd at 18336-37, para. 84; *Verizon/MCI
    Order*, 20 FCC Rcd at 18477-78, para. 85; *Qwest Section 272 Sunset
    Forbearance Order*, 22 FCC Rcd at 5218, para. 17. As the Commission
    explained, a consumer requires "access" in order to connect to a
    communications network, whether it be a wireline telephone network,
    a mobile wireless network, or the public Internet. Because a mass
    market consumer today can choose one or more access providers, his
    demand for usage -- *i.e.*, how much of a service he actually
    consumes -- will be determined by the set of access providers he has
    chosen, the prices and terms set by those access providers, and
    other personal characteristics of the consumer. Thus, for example,
    if a consumer has a wireless phone, a wireline phone, and a
    broadband connection plus an interconnected voice over Internet
    Protocol (VoIP) service subscription, he can make a long distance
    call either using his wireline or wireless phones or through the
    broadband connection using his VoIP subscription. To the extent that
    consumers view these choices as reasonable substitutes, they are in
    the same product market for purposes of our analysis. *See*
    *EchoStar/DirecTV Order*, 17 FCC Rcd at 20606, para. 106. While some
    commenters express concern about the inclusion of services provided
    over alternative platforms such as wireless or VoIP because they
    might not act as a competitive constraint, consistent with our
    precedent, we include such services in our product markets only to
    the extent that they are, in fact, a substitute for the BOCs' and
    their independent incumbent LEC affiliates' services for access
    and/or usage. *See, e.g.*, Sage FNPRM Comments at 9-15; NJ Ratepayer
    FNPRM Reply at 2-3; Legacy AT&T FNPRM Comments at 16-18; VarTec *et
    al*. FNPRM Comments at 5; Sprint FNPRM Comments at 4; Legacy MCI
    FNPRM Reply at 4-5.

[^74]: In the *BOC Merger Orders* and the *Qwest Section 272 Sunset
    Forbearance Order*, the Commission determined that the stand-alone
    market was becoming a fringe market based upon documentary evidence
    submitted in those proceedings. There is no information in this
    proceeding that causes us to reconsider this conclusion. *See*
    *AT&T/BellSouth Order*, 22 FCC Rcd at 5715-16, para. 97; *SBC/AT&T
    Order*, 20 FCC Rcd at 18342, para. 91; *Verizon/MCI Order*, 20 FCC
    Rcd at 18483, para. 92; *Qwest Section 272 Sunset Forbearance
    Order*, 22 FCC Rcd at 5217, para. 16.

[^75]: *See* *AT&T/BellSouth Order*, 22 FCC Rcd at 5715-17, paras.
    97-100; *SBC/AT&T Order*, 20 FCC Rcd at 18336, para. 82;
    *Verizon/MCI Order*, 20 FCC Rcd at 18477, para. 83; *Qwest Section
    272 Sunset Forbearance Order*, 22 FCC Rcd at 5217-19, paras. 16-18.

[^76]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5218, para. 17; *AT&T/BellSouth Order*, 22 FCC Rcd at 5711, para.
    89, n.261; *SBC/AT&T Order*, 20 FCC Rcd at 18347, n.309;
    *Verizon/MCI Order*, 20 FCC Rcd at 18489, n.308.

[^77]: *See, e.g.*, *Qwest Section 272 Sunset Forbearance Order*, 22 FCC
    Rcd at 5218, para. 17 (finding that customers substitute, at least
    to some extent, mobile wireless services and transaction services
    for long distance calls made through their presubscribed wireline
    carrier); *AT&T/BellSouth Order*, 22 FCC Rcd at 5716-17, paras.
    98-100; *SBC/AT&T Order*, 20 FCC Rcd at 18342-44, paras. 92-94
    (same); *Verizon/MCI Order*, 20 FCC Rcd at 18484-85, paras. 93-95
    (same); *see also* Letter from Michelle Sclater, Director, Federal
    Regulatory, AT&T, to Marlene H. Dortch, Secretary, FCC, WC Docket
    No. 02-112, at 2 and Attach. at 4 (filed Apr. 24, 2007) (AT&T Apr.
    24, 2007 *Ex Parte* Letter) (stating that as of December 2005, more
    than 70 percent of households in the United States have a wireless
    phone).

[^78]: Our consideration of these two alternative market share measures
    responds to certain parties' concerns regarding the treatment of
    mobile wireless services in the analysis. *Compare, e.g*., Sage
    Comments at 9-10 (arguing that our analysis should not include
    mobile wireless services) *with,* *e.g*., Letter from Brett A.
    Kissel, Associate Director, Federal Regulatory, SBC, to Marlene H.
    Dortch, Secretary, FCC, WC Docket No. 02-112, Attach. at 12-15
    (filed Dec. 16, 2003) (arguing that we must consider the effects of
    mobile wireless services on the demand for wireline interexchange
    telecommunications services); Letter from Mary L. Henze, Assistant
    Vice President, Federal Regulatory, BellSouth, to Marlene H. Dortch,
    Secretary, FCC, WC Docket No. 02-112, Attach. 2 at 2-3 (filed Oct.
    21, 2003); Letter from Dee May, Vice President, Federal Regulatory,
    Verizon, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112,
    Attach. at 7-10 (Feb. 13, 2004). We note that, because of
    limitations in available data, our calculations do not include
    over-the-top VoIP services or transaction services (such as prepaid
    calling cards). The exclusion of these services will tend to
    overstate AT&T's and Verizon's market positions. For the reasons
    given in the *BOC Merger Orders*, we reject Verizon's assertion that
    email and instant messaging are significant competitive alternatives
    to traditional wireline services provided to mass market consumers.
    *Compare, e.g*., Letter from Dee May, Vice President, Federal
    Regulatory, Verizon, to Marlene H. Dortch, Secretary, FCC, WC Docket
    No. 02-112, at 12-13 (filed Feb. 15, 2007) (Verizon Feb. 15, 2007
    *Ex Parte* Letter) *with, e.g.*, *SBC/AT&T Order,* 20 FCC Rcd at
    18342, para. 91, n.282 (recognizing that email and instant messaging
    have qualitative differences from voice services); *Verizon/MCI
    Order,* 20 FCC Rcd at 18484, para. 92 n.282 (same).

[^79]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18323, para. 60;
    *Verizon/MCI Order*, 20 FCC Rcd at 18465, para. 60; *see generally
    DOJ/FTC Guidelines* at § 1.12.

[^80]: For example, Verizon offers a number of unlimited all-distance
    domestic calling plans for \$35 to \$50 per month; a usage-based
    plan with a \$6 monthly recurring charge and a \$0.05 per minute
    usage-based charge; and a usage-based plan with a \$3 monthly
    recurring charge and a \$0.10 per minute usage-based charge (for
    consumers that also purchase a qualifying local service plan). *See*
    Verizon Feb. 15, 2007 *Ex Parte Letter*, Ex. 6;
    <http://www22.verizon.com/ForYourHome/sas/sas_localplans.aspx>
    (visited May 2, 2007). AT&T offers an unlimited all-distance calling
    plan for approximately \$33.00 per month and a usage based plan with
    a \$2.99 monthly recurring charge and a \$0.10 per minute
    usage-based charge. *See*
    <http://www.consumer.att.com/plans/long_distance> (visited May 2,
    2007).

[^81]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5243-44, paras. 71-72; *AT&T Reclassification Order*, 11 FCC Rcd at
    3315-16, paras. 84-85.

[^82]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5219-20, paras. 19-20; *AT&T/BellSouth Order*, 22 FCC Rcd at
    5717-18, paras. 101-02; *SBC/AT&T Order*, 20 FCC Rcd at 18344-45,
    paras. 95-96; *Verizon/MCI Order*, 20 FCC Rcd at 18485-86, paras.
    95-96 (concluding that it no longer makes sense for the Commission
    to subdivide the mass market into discrete product markets for local
    and long distance voice services); *see also* Letter from Mary L.
    Henze, Assistant Vice President, Federal Regulatory, BellSouth, to
    Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112, Attach.
    (filed May 26, 2004); Letter from Brett A. Kissel, Associate
    Director, Federal Regulatory, SBC, to Marlene H. Dortch, Secretary,
    FCC, WC Docket No. 02-112, Attach. at 4-12 (filed Dec. 16, 2003);
    Letter from Dee May, Vice President-Federal Regulatory, Verizon, to
    Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112, Attach at
    13-14 (filed July 9, 2004).

[^83]: The economics literature generally discusses two types of
    bundles: a pure bundle, where the bundled services are only sold
    together and are not sold individually; and a mixed bundle, where
    the bundled services are sold individually, as well as in a package.
    In a mixed bundle, the package generally is sold at a discount
    relative to the sum of the individual service component prices.
    *See, e.g.*, Barry Nalebuff, *Bundling, Tying and Portfolio
    Effects*, DTI Economics Paper No. 1, at 14-15 (2003), *available at*
    http://www.dti.gov.uk/files/file14774.pdf. There is significant
    variation across providers as to whether they offer a pure bundle or
    a mixed bundle of communications services.

[^84]: As of June 2006, 59 percent of regional BOC retail local consumer
    lines and 85 percent of competitive local service lines were
    presubscribed to the local provider's long distance service,
    compared with 52 percent of regional BOC lines and 80 percent of
    competitive local service lines as of June 2005. *See* Local
    Telephone Competition: Status as of June 30, 2006, at Table 6
    (Industry Analysis and Technology Div., WCB Jan. 2007) (*2007 Local
    Competition Report*); Local Telephone Competition: Status as of June
    30, 2005, at Table 6 (Industry Analysis and Technology Div., WCB
    Apr. 2006) (*2006 Local Competition Report*); s*ee also SBC/AT&T
    Order*, 20 FCC Rcd at 18344-45, paras. 95-96; *Verizon/MCI Order*,
    20 FCC Rcd at 18485-86, paras. 96-97. As of December 2006, the
    proportion of Verizon's and AT&T's residential local consumer lines
    that also were pre-subscribed to the carrier's long distance
    services were respectively **\[REDACTED\]** and **\[REDACTED\]**.
    Figures are calculated from data submitted in this record. *See*
    Letter from Joseph Jackson, Associate Director, Federal Regulatory,
    Verizon, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112,
    Exhs. 1.A.1, 1.A.2 (filed Mar. 27, 2007) (Verizon Mar. 27, 2007 *Ex
    Parte* Letter); Letter from Joseph Jackson, Associate Director,
    Federal Regulatory, Verizon, to Marlene H. Dortch, Secretary, FCC,
    WC Docket No. 02-112, Exhs. 1.A.1.a, 1.A.2.a (filed Apr. 3, 2007)
    (Verizon Apr. 3, 2007 *Ex Parte* Letter); Letter from Joseph
    Jackson, Associate Director, Federal Regulatory, Verizon, to Marlene
    H. Dortch, Secretary, FCC, WC Docket No. 02-112, Exh. 1.A.1.b (filed
    Apr. 5, 2007) (Verizon Apr. 5, 2007 *Ex Parte* Letter); Letter from
    Joseph Jackson, Associate Director, Federal Regulatory, Verizon, to
    Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112, at 2 (filed
    Apr. 17, 2007) (Verizon Apr. 17, 2007 *Ex Parte* Letter) ("MCI is
    the presubscribed long-distance carrier to approximately
    **\[REDACTED\]** of residential lines for which MCI is the local
    provider"); Letter from Frank S. Simone, Executive Director, Federal
    Regulatory, AT&T, to Marlene H. Dortch, Secretary, FCC, WC Docket
    No. 02-112, Exhs. 1.a, 1.a.i, 1.a.ii, 1.d, 1.f, and 2 (filed Apr.
    23, 2007) (AT&T Apr. 23, 2007 *Ex Parte* Letter).

[^85]: We note that the Commission had anticipated that a bundled
    product market might become a relevant product market sometime after
    the BOCs completed the section 271 process. *See, e.g.*,
    *Applications of NYNEX Corporation and Bell Atlantic Corporation for
    Consent to Transfer Control of NYNEX Corporation and Its
    Subsidiaries*, Memorandum Opinion and Order, 12 FCC Rcd 19985,
    20010-11, paras. 39-42 (1997) (*Bell Atlantic/NYNEX Order*);
    *WorldCom/MCI Order*, 13 FCC Rcd at 18038-39, para. 22 n.60. Verizon
    completed the section 271 process in March 2003 and AT&T completed
    the section 271 process in October 2003. *See* *Section 272 Sunsets
    for Verizon Communications Inc. in the District of Columbia and the
    States of Maryland and West Virginia by Operation of Law on March
    19, 2006 Pursuant to Section 272(f)(1)*, WC Docket No. 02-112,
    Public Notice, 21 FCC Rcd 2949 (WCB 2006); *Section 272 Sunsets for
    AT&T in the States of Illinois, Indiana, Ohio and Wisconsin by
    Operation of Law on October 15, 2006, Pursuant to Section
    272(f)(1)*, WC Docket No. 02-112, Public Notice, 21 FCC Rcd 11738
    (WCB 2006).

[^86]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5219-20, para. 20; *AT&T/BellSouth Order*, 22 FCC Rcd at 5717-18,
    para. 102; *SBC/AT&T Order*, 20 FCC Rcd at 18344-45, paras. 95-96;
    *Verizon/MCI Order*, 20 FCC Rcd at 18486, para. 97.

[^87]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5219-20, para. 20; *AT&T/BellSouth Order*, 22 FCC Rcd at 5717-18,
    para. 102; *SBC/AT&T Order*, 20 FCC Rcd at 18344-45, paras. 95-96;
    *Verizon/MCI Order*, 20 FCC Rcd at 18486, para. 97; *see also* *2007
    Local* *Competition Report*, at Table 2.

[^88]: Promotional information for facilities-based VoIP providers
    generally appears to focus on bundled offerings. *See,* *e.g.*,
    Optimum Voice, What is It?, *available at*
    http://www.optimum.com/voice/what.jsp (visited Feb. 16, 2007)
    (Cablevision's product "offers unlimited local, regional and
    long-distance calling within the United States, Puerto Rico and
    Canada"); Comcast, Services for You, *available at*
    http://www.comcast.com/Benefits/VoiceBenefits.ashx?.link1k=59
    (visited Feb. 16, 2007) (offering "unlimited local and long
    distance"); Time Warner Cable, Unlimited Calling, *available at*
    http://www.timewarnercable.com/corporate/products/digitalphone/unlimitedcallingdigitalphone.html
    (visited Feb. 16, 2007) (offering "unlimited calls anywhere in the
    U.S. and Canada for one low monthly price"). Mobile wireless service
    providers likewise promote bundled offerings. *See, e.g.*, Cingular
    Wireless, Cingular Plans, *available at*
    http://www.cingular.com/cell-phone-service/cell-phone-plans/?\_requestid=87830
    ("Never pay domestic long distance or roaming charges!"); T-Mobile,
    T-Mobile Stick Together, *available at*
    http://www.t-mobile.com/templates/generic.aspx?passet=Pln_Lst_MyFavesLrnDemo
    ("Unlimited nationwide calling to any five numbers\* on any network,
    even landlines."); Verizon Wireless, America's Choice, *available
    at*
    http://www.verizonwireless.com/b2c/store/controller?item=planFirst&action=viewPlanList&sortOption=priceSort&typeId=1&subTypeId=1&catId=323
    ("Unlimited Domestic Long Distance").

[^89]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18321-22, para. 57;
    *Verizon/MCI Order*, 20 FCC Rcd at 18463, para. 56.

[^90]: The specific technology used by the individual enterprise
    customer depends on availability, needed capacity, services
    required, and desired service quality levels. Enterprise services
    could include multiple DS0 circuits or high-capacity circuits of DS1
    or higher bandwidth, such as DS3 and OCn circuits. *See, e.g.*,
    *Review of the Section 251 Unbundling Obligations of Incumbent Local
    Exchange Carriers; Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996; Deployment of
    Wireline Services Offering Advanced Telecommunications Capability*,
    CC Docket Nos. 01-338, 96-98, 98-147, Report and Order and Order on
    Remand and Further Notice of Proposed Rulemaking, 18 FCC Rcd 16978,
    17155-56, para. 298 (2003) (*Triennial Review Order*) (discussing
    services typically purchased by enterprise customers). A DS0 is a
    two-wire basic connection, which operates at 64,000 bits per second
    (bps), the worldwide standard speed for digitizing voice
    conversation using pulse code modulation. [Harry
    Newton]{.smallcaps}, [Newton's Telecom Dictionary]{.smallcaps}, 324
    (22nd ed., 2006) (defining "DS-0") ([Newton's Telecom
    Dictionary]{.smallcaps}). A DS1 is a four-wire connection equivalent
    to 24 DS0s. A DS3 is equivalent to 28 DS1s. These circuits may be
    purchased by customers from state and federal tariffs. *See
    Triennial Review Order*, 18 FCC Rcd at 17155-56, para. 298.

[^91]: Frame Relay is a data service that allows local area networks
    (LANs) to be connected across a public network. *See*
    [Telecommunications Industry Association]{.smallcaps}, [2006
    Telecommunications Market Review and Forecast]{.smallcaps} 138
    (2006) ([TIA 2006 Market Review]{.smallcaps}). A T-1 provides the
    same speed and capacity service as a DS1. *See Triennial Review
    Order*, 18 FCC Rcd at 17104-05, para. 202 n.634. Similarly, a T-3
    provides the same speed and capacity service as a DS3.

[^92]: ATM service can guarantee different quality of service levels to
    meet various customer needs. ATM offers higher reliability and
    greater capacity because it combines the advantages of
    circuit-switched and packet-switched networks, guaranteeing the
    delivery of information that is intolerant of delays, while
    allocating bandwidth more efficiently. *See* [TIA 2006 Market
    Review]{.smallcaps} at 140-42.

[^93]: Gigabit Ethernet is a LAN standard that allows a network to
    accommodate the high-bandwidth requirements of converged voice,
    video, and data network applications. *See* [TIA 2006 Market
    Review]{.smallcaps} at 125.

[^94]: Enterprises are increasing their use of IP Virtual Private
    Networks (IP-VPNs), which deliver private network services over
    shared IP-based backbones; and carriers are migrating to
    Multiprotocol Label Switching (MPLS), which provides label switching
    to move packets between network locations. *See* [TIA 2006 Market
    Review]{.smallcaps} at 134-36. MPLS is similar to other
    circuit-switched, ATM, and Frame Relay network protocols, except
    that MPLS is not dependent on a particular technology. *See, e.g.*,
    MPLS Resource Center, *The MPLS FAQ*, available at
    http://www.mplsrc.com/faq1.shtml#MPLS%20History (visited July 31,
    2006).

[^95]: *See SBC/AT&T Order*, 20 FCC Rcd at 18322, para. 57.

[^96]: *See SBC/AT&T Order*, 20 FCC Rcd at 18322, para. 58; *Verizon/MCI
    Order*, 20 FCC Rcd at 18464, para. 58; *see* *a**lso* AT&T Apr. 23,
    2007 *Ex Parte* Letter, Exhs. 3, 4; Letter from Frank S. Simone,
    Executive Director, Federal Regulatory, AT&T, to Marlene H. Dortch,
    Secretary, FCC, WC Docket No. 02-112, Attach. (filed May 1, 2007)
    (AT&T May 1, 2007 *Ex Parte* Letter); Verizon Mar. 27, 2007 *Ex
    Parte* Letter, Attach. at 26-27; Letter from Joseph Jackson,
    Associate Director, Federal Regulatory, Verizon, to Marlene H.
    Dortch, Secretary, FCC, WC Docket No. 02-112, Exh. 4.5 (filed Apr.
    19, 2007) (Verizon Apr. 19, 2007 *Ex Parte* Letter).

[^97]: From 1997 through 2002, the number of Frame Relay ports more than
    tripled to 1.3 million; since then, however, the market has shifted
    to IP-VPNs, and Frame Relay port growth has dropped. *See* [TIA 2006
    Market Review]{.smallcaps} at 140. From 2000 through 2005, ATM
    service revenues nearly tripled, from \$1.1 billion to \$2.70
    billion. *Id.* at 143. The number of ATM ports in the United States
    reached a peak of 40,000 in 2005, however, and that number was
    expected to decline thereafter. *Id.* at 142. As newer technologies
    emerge, ATM's role as a backbone technology appears to be declining
    as enterprise customers increase their use of IP-VPNs. *Id*.

[^98]: Our analysis of particular product markets is determined by the
    availability of data in this record. AT&T May 1, 2007 *Ex Parte*
    Letter, Attach; AT&T Apr. 23, 2007 *Ex Parte* Letter, Exh. 4
    (state-wide and MSA data); Verizon Apr. 19, 2007 *Ex Parte* Letter,
    Exh. 4.5 (franchise area data); Verizon Apr. 20, 2007 *Ex Parte*
    Letter, Exh. 4.5 (MSA data). AT&T and Verizon have independently
    provided data for their regions from a third party vendor
    (Harte-Hanks). These data are based on a telecommunications survey
    that queries businesses about their contracting for services,
    including long distance voice services, ATM, Frame Relay, T1, and T3
    services. Harte-Hanks surveys businesses on a rolling basis
    throughout the year and periodically updates the information for
    each business in its survey. The data AT&T and Verizon provided was
    extracted from the Harte-Hanks database during April 2007. *See*
    Letter from Michelle Sclater, Director, Federal Regulatory, AT&T, to
    Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112 at 1 (filed
    May 9, 2007) (AT&T May 9, 2007 *Ex Parte* Letter); Verizon May 8,
    2007 *Ex Parte* Letter, at 2. In general, we limit our analysis to
    geographic areas with at least 30 observations. We exclude the
    "UNSPECIFIED" category from our analysis because it represents
    incomplete responses. *Qwest Section 272 Sunset Forbearance Order*,
    22 FCC Rcd at 5221-22, para. 23 n.82.

[^99]: *See, e.g.*, *Qwest Section 272 Sunset Forbearance Order*, 22 FCC
    Rcd at 5222, para. 24; *AT&T/BellSouth Order*, 22 FCC Rcd at 5699,
    para. 66; *SBC/AT&T Order*, 20 FCC Rcd at 18323, para. 60;
    *Verizon/MCI Order*, 20 FCC Rcd at 18465, para. 60.

[^100]: *See, e.g.*, *Qwest Section 272 Sunset Forbearance Order*, 22
    FCC Rcd at 5222, para. 24; *AT&T/BellSouth Order*, 22 FCC Rcd at
    5699, para. 66; *SBC/AT&T Order*, 20 FCC Rcd at 18323-24, para. 61;
    *Verizon/MCI Order*, 20 FCC Rcd at 18465-66, para. 61; AT&T Apr. 23,
    2007 *Ex Parte* Letter, Exh. 3; AT&T May 1, 2007 *Ex Parte* Letter,
    Attach; Verizon Mar. 27, 2007 *Ex Parte* Letter, Attach. at 26-27.

[^101]: *See, e.g.*, *Qwest Section 272 Sunset Forbearance Order*, 22
    FCC Rcd at 5222, para. 24; *AT&T/BellSouth Order*, 22 FCC Rcd at
    5699, para. 66; *SBC/AT&T Order*, 20 FCC Rcd at 18323-24, para. 61;
    *Verizon/MCI Order*, 20 FCC Rcd at 18465-66, para. 61; AT&T Apr. 23,
    2007 *Ex Parte* Letter, Exh. 3; AT&T May 1, 2007 *Ex Parte* Letter,
    Attach; Verizon Mar. 27, 2007 *Ex Parte* Letter, Attach. at 26-27.

[^102]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18323-24, para. 61;
    *Verizon/MCI Order*, 20 FCC Rcd at 18465-66, para. 61; AT&T Apr. 23,
    2007 *Ex Parte* Letter, Exh. 3; AT&T May 1, 2007 *Ex Parte* Letter,
    Attach; Verizon Mar. 27, 2007 *Ex Parte* Letter, Attach. at 26-27.
    Our analysis of particular enterprise customer classes is determined
    by the availability of data in this record. The Harte-Hanks customer
    count data for enterprise customers submitted by AT&T and Verizon is
    segmented into **\[REDACTED\]**. *See* AT&T Apr. 23, 2007 *Ex Parte*
    Letter, Exh. 4 (state-wide and MSA data); Verizon Apr. 19, 2007 *Ex
    Parte* Letter, Exh. 4.5 (state franchise data); Verizon Apr. 20,
    2007 *Ex Parte* Letter, Exh. 4.5 (MSA data). These business segments
    do not, however, generally conform to the categorization schemes
    used by AT&T or Verizon, and in a number of cases include markets
    with fewer than 30 observations. We therefore analyze two customer
    classes utilizing aggregated Harte-Hanks data: small/medium and
    large.

[^103]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd
    at 5222-23, paras. 25-28; *AT&T/BellSouth Order*, 22 FCC Rcd at
    5700-01, paras. 68-69 & 5718, paras. 103-104; *SBC/AT&T Order*, 20
    FCC Rcd at 18324, para. 62 & 18345-46, paras. 97-99; *Verizon/MCI
    Order*, 20 FCC Rcd at 19466-67, paras. 62-63, & 18486-87, paras.
    98-100. Our market analyses above and in the *Qwest Section 272
    Sunset Forbearance Order* consider the competitive circumstances in
    each BOC in-region state, and therefore respond to certain parties'
    arguments that the levels of competition in particular states
    require that we maintain the safeguards in those states.

[^104]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd
    at 5222-23, para. 26; *AT&T/BellSouth Order*, 22 FCC Rcd at 5718,
    para. 104; *SBC/AT&T Order*, 20 FCC Rcd at 18346, para. 99;
    *Verizon/MCI Order*, 20 FCC Rcd at 18487, para. 100. We reject the
    BOCs' suggestions that we define the relevant geographic market for
    mass market services as the nation or their respective regions.
    *See, e.g.*, Verizon FNPRM Reply at 17 (calculating market shares on
    a national basis). Although the Commission only distinguished
    between a BOC's in-region territory and its out-of region territory
    in the *LEC Classification Order*, the Commission stated that "the
    market to purchase \[a long distance\] plan is a localized market,
    not a national one." *LEC Classification Order*, 12 FCC Rcd at
    15794, para. 66; *see also* *SBC/AT&T Order,* 20 FCC Rcd at
    18345-46, paras. 97-98; *Verizon/MCI Order,* 20 FCC Rcd at 18486-87,
    paras. 98-99. We further recognize that the competitive choices
    customers face may vary within a state (*e.g.*, cable companies may
    provide cable VoIP in some areas of a state but not others), and
    that a BOC might be able to offer more localized promotions for
    bundled service offerings. Although these factors suggest that we
    should define the relevant geographic market at a more disaggregated
    level than a BOC's or independent incumbent LEC's franchise area
    within each of its in-region states, the data in the record are not
    sufficiently detailed for us to perform such a disaggregated
    analysis. We find, however, as we did in the *BOC Merger Orders* and
    the *Qwest Section 272 Sunset Forbearance Order*, that analyzing the
    data at the franchise level is reasonable, particularly given that
    AT&T's and Verizon's pricing for stand-alone long distance service
    does not vary within their respective franchise areas. *See*
    <http://www22.verizon.com/Residential/Phone/Long+Distance/Long+Distance.htm>
    *(*visited May 7, 2007); <http://www.att.com/gen/general?pid=7908>
    (visited May 7, 2007).

[^105]: AT&T Apr. 23, 2007 *Ex Parte* Letter, Exh. 4 (state-wide and
    MSA-level data); Verizon Apr. 19, 2007 *Ex Parte* Letter, Exh. 4.5
    (franchise area data); Verizon Apr. 20, 2007 *Ex Parte* Letter, Exh.
    4.5 (MSA data). To avoid relying on results that are based on too
    few observations, we present results only for those markets for
    which there are at least 30 observations. *See, e.g., Qwest Section
    272 Sunset Forbearance Order*, 22 FCC Rcd at 5222-23, para. 26,
    n.88; *SBC/AT&T* *Order*, 20 FCC Rcd at 18324-25, para. 62 (same).

[^106]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18325, para. 63;
    *Verizon/MCI Order*, 20 FCC Rcd at 18467, para. 63.

[^107]: The Commission previously has recognized that large business
    customers with multiple locations throughout the United States may
    constitute a separate relevant product market. *See,* *e.g.*,
    *SBC/AT&T Order*, 20 FCC Rcd at 18325, para. 63; *Verizon/MCI
    Order*, 20 FCC Rcd at 18467, para. 63; AT&T May 1, 2007 *Ex Parte*
    Letter, Exh. 5a.

[^108]: As discussed below, we do not include over-the-top VoIP in this
    market analysis because of data limitations. *See* *infra* para. 41.
    This will tend to result in an overstatement of Verizon's and AT&T's
    respective market shares.

[^109]: *See, e.g.*, AT&T Apr. 23, 2007 *Ex Parte* Letter, Exh. 4 (state
    data and MSA data); AT&T May 1, 2007 *Ex Parte* Letter, Attach.;
    Verizon Apr. 19, 2007 *Ex Parte* Letter, Exh. 4.5 (franchise area
    data); Verizon Apr. 20, 2007 *Ex Parte* Letter, Exh. 4.5 (MSA data).

[^110]: As indicated previously, *see supra* para. 20, we rely in this
    Order on the Commission's prior finding, in the *Qwest Section 272
    Sunset Forbearance Order*, that Qwest lacks classical market power
    in the provision of in-region, interstate, long distance services.
    Therefore, the analysis below focuses on AT&T and Verizon.

[^111]: We find it appropriate to rely on the more recent data cited in
    this Order, rather than market share estimates cited by the
    Commenters. *See, e.g.*, Legacy AT&T FNPRM Reply at 27-28; Texas AG
    FNPRM Comments at 2; Texas Commission FNPRM Comments at 4-5; Legacy
    AT&T June 8, 2004 *Ex Parte* Letter, Attach. Declaration of Lee
    Selwyn, para. 32 and Appendix.

[^112]: *See infra* paras. 47-48.

[^113]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5243-44, paras. 71-72; *AT&T Reclassification Order*, 11 FCC Rcd at
    3313-14, paras. 81-82.

[^114]: *See* *AT&T/BellSouth Order*, 22 FCC Rcd at 5720, n.308;
    *SBC/AT&T Order*, 20 FCC Rcd at 18347, n.309; *Verizon/MCI Order*,
    20 FCC Rcd at 18489, n.308.

[^115]: Appendix B, Table 1, Note 1, Table 2, and Note 4. Our analysis
    of concentration in the mass market relies upon data for residential
    customers because of the administrative difficulty of distinguishing
    small business data from data for other classes of businesses. An
    analysis of market shares of residential consumers is likely to
    accurately represent an analysis of market shares for the entire
    mass market because residential customers and small businesses have
    similar demand patterns are served primarily through mass marketing
    techniques, purchase similar volumes and types of communications
    services, and would likely face the same competitive alternatives
    within a geographic market. Thus, we conclude that a market share
    analysis for residential consumers is likely to accurately represent
    Verizon's and AT&T's respective positions in the mass market as a
    whole. *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18347, para.
    102, n.307; *Verizon/MCI Order*, 20 FCC Rcd at 18488, para. 103,
    n.306.

[^116]: Appendix B, Table 1. We base our analysis of the stand-alone
    long distance market on AT&T's and Verizon's telephone exchange
    service customers with a PIC, AT&T's and Verizon's interexchange
    customers that do not subscribe to AT&T's and Verizon's local
    service, the number of resold lines leased by the BOC's competitors,
    the number of commercially negotiated lines leased by AT&T's and
    Verizon's competitors, and the BOC's estimates of facilities-based
    lines. *See* Appendix B, Notes 1 and 4. This analysis implicitly
    assumes that customers that receive local services from a
    competitive local service provider generally subscribe to that
    carrier for their interstate, long distance services. We believe
    this to be a reasonable assumption given that 85 percent of
    residential lines receiving service from a competitive LEC are
    presubscribed to the competitive LEC's long distance services. *2007
    Local* *Competition Report*, at Table 6.

[^117]: Appendix B, Table 2.

[^118]: We follow the procedure set forth in Appendix B, Notes 1 and 4,
    to calculate these percentages. *See* AT&T Apr. 23, 2007 *Ex Parte*
    Letter, Exhs. 1.a, 1.a.i, 1.a.ii, 1.d, 1.f, 2; Verizon Mar. 27, 2007
    *Ex Parte* Letter, Exhs. 1.A.1, 1.A.2, 1.A.4; Verizon Apr. 3, 2007
    *Ex Parte* Letter, Exh. 1.A.1.a, 1.A.1.b, 1.A,2.a; Verizon Apr. 13,
    2007 Exh. 2 Supplement *Ex Parte* Letter, Exh. 2B.

[^119]: This analysis focuses on those customers that subscribe to
    *both* a wireline and a mobile wireless service. Our analysis
    assumes that 10 percent of households have "cut-the-cord" (*i.e.*,
    no longer subscribe to local or long distance service from a
    wireline carrier), and that 70 percent of households subscribe to a
    mobile wireless services provider. *See* *Qwest Section 272 Sunset
    Forbearance Order*, 22 FCC Rcd at 5225-26, para. 34; AT&T Apr. 24,
    2007 *Ex Parte* Letter at 2, Attach. at 4 (citing December 2005
    Yankee Report that 70 percent of households have a mobile wireless
    phone). We follow the procedure set forth in Appendix B, notes 2 and
    5, to estimate AT&T's and Verizon's market shares.

[^120]: Appendix B, Tables 1 and 2.

[^121]: Appendix B, Tables 1 and 2.

[^122]: *See* AT&T Apr. 24, 2007 *Ex Parte* Letter at 2, Attach. at 4
    (citing December 2005 Yankee Report that 70 percent of households
    have a mobile wireless phone); *High-Speed Services for Internet
    Access: Status as of June 30, 2006*, at Table 3 (Industry Analysis
    and Technology Div., WCB Jan. 2007) (*High-Speed Services Jan. 2007
    Report*), *available at*
    http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-270128A1.pdf.

[^123]: We note that, while our analysis is intended to focus on
    consumers that subscribe to both a mobile wireless service and a
    wireline long distance service and thus can engage in usage
    substitution, our methodology makes a number of simplifying
    assumptions, including: failing to exclude wireline consumers that
    do not subscribe to a mobile wireless service; and failing to
    exclude consumers with mobile wireless plans that have a wireline
    service but no wireline presubscribed interexchange carrier. We
    conclude the offsetting effects of these simplifications are likely
    to result in a slight overestimate of AT&T's and Verizon's market
    share.

[^124]: Our analysis here focuses on those customers that subscribe to
    local and long distance services from the same carrier as a bundle.
    Our analysis for wireless customers only considers customers who
    have "cut-the-cord." Consumers that subscribe to local service from
    one carrier and long distance service from another carrier are
    included in our analysis of the stand-alone long distance market.
    *See supra* part III.a.(i).

[^125]: Appendix B, Table 1. Like our analysis of the stand-alone long
    distance market, *see supra* n.Error: Reference source not found,
    our analysis of this bundled market assumes that 10 percent of
    households have "cut-the-cord." We follow the procedure set forth in
    Appendix B, notes 3 and 6, to estimate AT&T's and Verizon's shares
    of the bundled market.

[^126]: Appendix B, Table 2.

[^127]: *See, e.g.*, *AT&T Reclassification Order*, 11 FCC Rcd at 3346,
    para. 139.

[^128]: *See* AT&T Apr. 24, 2007 *Ex Parte* Letter at 2, Attach. at 4
    (citing December 2005 Yankee Report that 70 percent of households
    have a mobile wireless phone); *High-Speed Services Jan. 2007
    Report* at Table 3. We note that these market developments have
    occurred since the Commission adopted the *LEC Classification Order*
    in 1997. Specifically, at that time, personal communications service
    (PCS) carriers were only beginning to initiate services in a
    relatively small number of markets. *See Implementation of Section
    6002(b) of the Omnibus Budget Reconciliation Act of 1993*, Second
    Report, 12 FCC Rcd 11266, 11290 (1997) (reporting that PCS licensees
    had initiated services in portions of 29 major trading areas).
    Mobile wireless carriers had not yet begun to offer regional or
    national calling plans that permit consumers to place what would
    have been toll calls without incurring additional per minute
    charges. *See* *Annual Report and Analysis of Competitive Market
    Conditions With Respect to Commercial Mobile Services*, 16 FCC Rcd
    13350, 13377 (2001) (reporting that, in 1998, AT&T became the first
    wireless carrier to offer a large bucket of minutes plan with a
    regional or national footprint, but that virtually all of the major
    operators offered similar plans by 2001). Further, few customers had
    access to, or subscribed to broadband Internet access services.
    *High-Speed Services Jan. 2007 Report* at Table 3 (showing less than
    3.2 million subscribers nationwide in 2000).

[^129]: The "own-price elasticity" of demand refers to the percentage
    change in the quantity demanded of a particular service that results
    from a change in the price of that service.

[^130]: *AT&T/BellSouth Order*, 22 FCC Rcd at 5716, paras. 98-99;
    *SBC/AT&T Order,* 20 FCC Rcd at 18342-43, paras. 93-94; *Verizon/MCI
    Order*, 20 FCC Rcd at 18484-86, paras. 93-94.

[^131]: *See* Appendix B, Tables 1 and 2. Facilities-based residential
    competitive local service lines have increased from **\[REDACTED\]**
    to **\[REDACTED\]** within AT&T's franchise areas and from
    **\[REDACTED\]** to **\[REDACTED\]** within Verizon's franchise
    areas. *See, e.g*., AT&T April 23, 2007 *Ex Parte* Letter, Exh. 1.f;
    Verizon March 27, 2007 Ex Parte Letter, Exh. 1.f; Verizon April 13,
    2007 *Ex Parte* Letter, Exh. 1.f.4, and notes accompanying Appendix
    B, Tables 1 and 2.

[^132]: *High-Speed Services Jan. 2007 Report* at Table 3. We base this
    conclusion on the Commission's findings in the *SBC/AT&T Order* and
    *Verizon/MCI Order. See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at
    18369-72, paras. 147-52; *Verizon/MCI Order*, 20 FCC Rcd at
    18337-40, paras. 86-88. There is no evidence in the record to
    suggest that consumers within the legacy BellSouth region would view
    VoIP services differently than would consumers in the legacy SBC
    region.

[^133]: *See Annual Report and Analysis of Competitive Market Conditions
    with Respect to Commercial Mobile Services*, WT Docket No. 06-17,
    Eleventh Report, 21 FCC Rcd 10947, 11009-11, paras. 157-61 (2006)
    (*Eleventh CMRS Competition Report*).

[^134]: *See, e.g.*, *id.* at 11027, para. 206; *Universal Service
    Contribution Methodology*, WC Docket No. 06-122, Report and Order
    and Notice of Proposed Rulemaking, 21 FCC Rcd 7518 (2006)
    (*Universal Service Contribution Methodology Order*), *aff'd in
    part, vacated in part*, *Vonage Holdings Corp. v. FCC*, 489 F.3d
    1232 (D.C. Cir. 2007). We find the studies of price elasticity for
    intraLATA services in Arizona and Oregon cited by legacy AT&T
    inapposite to our analysis of interLATA services, and find,
    moreover, that legacy AT&T's argument is inconsistent with the
    evidence of increasing access and usage substitution for traditional
    wireline long distance services.

[^135]: *LEC Classification Order,* 12 FCC Rcd at 15811, para. 97.

[^136]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18369-72, paras.
    147-52; *Verizon/MCI Order*, 20 FCC Rcd at 18510-12, paras. 145-51.

[^137]: AT&T's Basket One services included residential and small
    business services. *See AT&T Reclassification Order*, 11 FCC Rcd at
    3277, para. 8.

[^138]: *See AT&T Reclassification Order*, 11 FCC Rcd at 3315, para. 84;
    *see also Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5243-44, para. 71 (Qwest committed for two years to freeze the
    per-minute prices for two calling plans that it currently offers
    which are tailored to the needs of those customers who make few long
    distance calls and who do not subscriber to wireless or broadband
    Internet access service. Qwest also committed not to increase the
    monthly fee that applies to one of these plans by more than one
    dollar.).

[^139]: *See Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5244, para. 72.

[^140]: *See* Appendix C, Tables 1-8.

[^141]: The HHI is calculated as the sum of the squares of the market
    shares of each firm participating in a relevant market. The HHI can
    range from nearly zero in the case of an atomistic market to 10,000
    in the case of a pure monopoly. Because the HHI is based on the
    squares of the market shares of the participants, it gives
    proportionately greater weight to carriers with larger market
    shares. *See* *DOJ/FTC Guidelines* at § 1.5. We only report the
    median market share for services with sufficient data in at least
    five geographic markets. In Appendix C, we report market share
    information for all relevant services and all relevant geographic
    markets in which there are sufficient data.

[^142]: Our analysis of AT&T's and Verizon's market positions are based
    upon data AT&T and Verizon obtained from third parties. *See* AT&T
    Apr. 23, 2007 *Ex Parte* Letter, Exh. 4 (state-wide and MSA data);
    Verizon Apr. 19, 2007 *Ex Parte* Letter, Attach. 4.5 (franchise area
    data); Verizon Apr. 20, 2007 *Ex Parte* Letter, Exh. 4.5 (MSA-level
    data). The business segments reported in the third party data do not
    generally conform to the categorization schemes used by AT&T or
    Verizon, and thus, may overstate or understate the actual level of
    concentration in each relevant geographic market. *See supra* para.
    26. In general, we limit our analysis to geographic areas with at
    least 30 observations. We exclude the "UNSPECIFIED" category from
    our analysis because it represents incomplete responses.

[^143]: Appendix C, Table 1. AT&T's market share ranges from
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]** to
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]**.

[^144]: *Id*. AT&T's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^145]: *Id*. AT&T's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^146]: *Id*. AT&T's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**. We do not report figures for
    Frame Relay data services because of insufficient data for these
    services. *See* Appendix C, Table 1.

[^147]: Appendix C, Table 2. Bell Atlantic's market share ranges from
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]** to
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]**.

[^148]: *Id*. GTE's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^149]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**.

[^150]: *Id*. GTE's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^151]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**. We do not report
    figures for T-3 services in GTE's franchise areas or ATM data
    services in Bell Atlantic's franchise areas or GTE's territories
    because we have insufficient data for fewer than **\[REDACTED\]** of
    these franchise areas. *See* Appendix C, Table 2.

[^152]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**.

[^153]: *Id*. GTE's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^154]: Appendix C, Table 3. AT&T's market share ranges from
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]** to
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]**.

[^155]: *Id*. AT&T's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^156]: *Id*. AT&T's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^157]: *Id*. AT&T's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**. *See* Appendix C, Table 3 for
    individual state results for Frame Relay services within AT&T's
    franchise areas with more than 30 observations.

[^158]: Appendix C, Table 4. Bell Atlantic's market share ranges from
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]** to
    **\[REDACTED\]** with an accompanying HHI of **\[REDACTED\]**.

[^159]: *Id*. GTE's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^160]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**.

[^161]: *Id*. GTE's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^162]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**. Refer to Appendix C,
    Table 4 for individual franchise area results for T-3 services (GTE
    franchise area). We do not report figures in the text because fewer
    than **\[REDACTED\]** geographic areas have sufficient data for our
    analysis.

[^163]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**. We do not report
    figures for ATM services in the GTE franchise area in the text
    because fewer than **\[REDACTED\]** geographic areas have sufficient
    data for our analysis.

[^164]: *Id*. Bell Atlantic's market share ranges from **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]**
    with an accompanying HHI of **\[REDACTED\]**.

[^165]: *Id*. GTE's market share ranges from **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]** to **\[REDACTED\]** with an
    accompanying HHI of **\[REDACTED\]**.

[^166]: Appendix C, Table 9.

[^167]: *Id.* These estimates are based upon services provided to the
    largest purchasers of telecommunications services (*i.e.*,
    enterprise customers spending at least \$1,000,000 annually). AT&T
    May 1, 2007 *Ex Parte L*etter, Exh. 5a. Verizon estimates it has a
    **\[REDACTED\]** percent market share for long distance voice
    services provided to all business customers, but it is unable to
    distinguish national, multi-locational enterprise customers from
    other types of enterprise customers. Letter from Joseph Jackson,
    Associate Director, Federal Regulatory, Verizon, to Marlene H.
    Dortch, Secretary, FCC, WC Docket No. 02-112 at 1, Exh. 5.1 (filed
    Apr. 12, 2007) (Verizon Apr. 12, 2007 *Ex Parte* Letter).

[^168]: *See SBC/AT&T Order*, 20 FCC Rcd at 18332-33, para. 76;
    *Verizon/MCI Order*, 20 FCC Rcd at 18474, para. 76.

[^169]: *See SBC/AT&T Order*, 20 FCC Rcd at 18332-33, para. 75;
    *Verizon/MCI Order*, 20 FCC Rcd at 18474, para. 75.

[^170]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18369, para. 147;
    *Verizon/MCI Order*, 20 FCC Rcd at 18510, para. 146; *WorldCom/MCI
    Order*, 13 FCC Rcd at 18041-42, para. 28.

[^171]: *See supra* parts 1.(b) (Retail Enterprise Competition), 1.(a)
    (Mass Market Competition).

[^172]: We note that individual customers of wholesale, interstate, long
    distance services are, like larger, multi-location enterprise
    customers, likely to require access to service at multiple
    geographic locations, often throughout the United States or a region
    thereof. *See supra* part 1.(b) (Retail Enterprise Competition).

[^173]: *See, e.g.*, *SBC/AT&T Order*, 20 FCC Rcd at 18369, para. 148;
    *Verizon/MCI Order*, 20 FCC Rcd at 18510, para. 147.

[^174]: We note that this approach is consistent with our definition of
    the relevant geographic markets for larger multi-location enterprise
    customers with a nationwide presence. *See supra* part 1.(b) (Retail
    Enterprise Competition).

[^175]: *See* *SBC/AT&T Order*, 20 FCC Rcd at 18369-18371, para.
    149-151; *Verizon/MCI Order*, 20 FCC Rcd at 18510-18512, para.
    148-151.

[^176]: Appendix D, Table 1 and 2.

[^177]: *Id. See* *SBC/AT&T Order*, 20 FCC Rcd at 18370, para. 150;
    *Verizon/MCI Order*, 20 FCC Rcd at 18511, para. 149; *see also AT&T
    Reclassification Order*, 11 FCC Rcd at 3308, paras. 70, 72;
    *WorldCom/MCI Order,* 13 FCC Rcd at 18052-56, paras. 43-50 &
    18066-67, para. 70.

[^178]: *See* *SBC/AT&T Order*, 20 FCC Rcd at 18370, para. 150;
    *Verizon/MCI Order*, 20 FCC Rcd at 18511, para. 149.

[^179]: Appendix D, Tables 1 and 2.

[^180]: We do not consider whether AT&T, Verizon, or Qwest should be
    classified as dominant based on an affiliation with a foreign
    carrier that has market power on the foreign end of a U.S. route.
    Qwest and AT&T have certified that none of their international
    affiliates are classified as dominant pursuant to section 63.10 of
    the Commission rules, 47 C.F.R. § 63.10. *See* AT&T Apr. 24, 2007
    *Ex Parte* Letter at 1-2; Letter from Timothy M. Boucher, Qwest
    Corporate Counsel, to Marlene H. Dortch, Secretary, FCC, WC Docket.
    No. 05-333, at 1 (filed Jan. 22, 2007) (Qwest Jan. 22, 2007 *Ex
    Parte* Letter). Although Verizon has been classified as dominant on
    three international routes (U.S.-Dominican Republic, U.S.-Gibraltar,
    and U.S.-Venezuela) based on its affiliations with foreign carriers,
    Verizon has terminated these affiliations. Specifically, Verizon
    Communications sold its Verizon Dominicana affiliate to America
    Movil on December 1, 2006, and was reclassified as nondominant on
    the U.S.-Dominican Republic route on June 20, 2007. *See*
    *International Authorizations Granted*, Report No. TEL-01159, Public
    Notice, 22 FCC Rcd 11176, 11177 (2007). Verizon sold its interest in
    Gibtelecom Limited to Slovene Telekom on April 24, 2007, and filed
    for reclassification as nondominant on the U.S.-Gibraltar route.
    *See* Verizon International FCC Licensees Application to Modify
    Regulatory Classification on the U.S.-Gibraltar Route, File No.
    ITC-MOD-20070514-00322 (filed May 14, 2007). Verizon tendered its
    entire interest in, and the Bolivarian Republic of Venezuela assumed
    operational control of, Compañia Anónima Nacional Teléfonos de
    Venezuela (CANTV) as of May 21, 2007, and Verizon filed for
    reclassification as nondominant on the U.S.-Venezuela route. *See*
    Verizon International FCC Licensees Application to Modify Regulatory
    Classification from Dominant to Non-Dominant on the U.S.-Venezuela
    Route, File No. ITC-MOD-20070524-00323 (filed May 24, 2007).

[^181]: Facilities-based IMTS refers to services provided using
    international transmission facilities owned in whole or in part by
    the carrier providing the service. *See* *2005 International
    Telecommunications Data* at 3 (Strategic Analysis and Negotiations
    Div., International Bur. Apr. 2007) (*2005 Section 43.61 Report)*.

[^182]: International private line service is the provision by a U.S.
    carrier of dedicated connectivity between points in the United
    States and foreign destinations. *See Verizon/MCI Order*, 20 FCC Rcd
    at 18519, para. 168. Private line facilities are offered to the
    public in sizes ranging from 64-Kbps circuits (DS0) up to very high
    speed trunks equivalent to 1,890 64-Kbps circuits (STM-1), or
    higher. *Id*.

[^183]: *2005 Section 43.61 Report* at Table D.

[^184]: *Id*.

[^185]: AT&T's market share is less than **\[REDACTED\]** percent on all
    but **\[REDACTED\]** of the 247 international routes. The exceptions
    are: **\[REDACTED\]**). Verizon's market share is less than
    **\[REDACTED\]** percent on all but **\[REDACTED\]** of 247
    international routes, with the following exceptions:
    **\[REDACTED\]**). As noted, the routes where AT&T and Verizon's
    market share exceed **\[REDACTED\]** percent generally are "thin"
    routes, which would be unlikely to support a significant number of
    additional providers. *See* Verizon May 8, 2007 *Ex Parte* Letter at
    1 & Attach.; Letter from Frank S. Simone, Executive Director,
    Federal Regulatory, AT&T, to Marlene H. Dortch, Secretary, FCC, WC
    Docket No. 02-112 at 1 & Attach. (filed May 4, 2007) (AT&T May 4,
    2007 *Ex Parte* Letter); *2005 Section 43.61 Report*, at Table A.

[^186]: *Verizon/MCI Order*, 20 FCC Rcd at 18518, para. 166;
    *AT&T/BellSouth Order*, 22 FCC Rcd at 5744-45, para. 167.

[^187]: *Verizon/MCI Order*, 20 FCC Rcd at 18518, para. 167*; see also
    AT&T/BellSouth Order*, 22 FCC Rcd at 5745, para. 168.

[^188]: In 2005, there were 46 carriers that competed in the U.S.
    markets for international private line services. The shares of total
    U.S. international private lines were only **\[REDACTED\]** percent
    for AT&T, **\[REDACTED\]** percent for Qwest, and **\[REDACTED\]**
    percent for Verizon. *See* Verizon May 8, 2007 *Ex Parte* Letter at
    1 & Attach.; AT&T May 4, 2007 *Ex Parte* Letter at 1 & Attach.;
    *2005 Section 43.61 Report*, at Table A*.* Although AT&T, Verizon,
    and Qwest had substantial market shares on certain routes, many of
    these routes are thin routes. Moreover, the existence of substantial
    U.S. international transport capacity, from which private lines are
    derived, makes it unlikely that providers of private line service
    with large market shares on any route can exercise market power. In
    2005, private lines comprised approximately 4 percent of all lit
    U.S. submarine cable capacity, which is the primary transmission
    medium for non-thin route private lines. *See 2005 Circuit Status
    Report*, Tables 5 and 7 (Jan. 19, 2007).

[^189]: *See Verizon/MCI Order*, 20 FCC Rcd at 18520, para. 171.

[^190]: *Id*.

[^191]: *See supra* part 1.(a); Appendix B; *Qwest Section 272 Sunset
    Forbearance Order*, 22 FCC Rcd at 5224-25, para. 32 & Appendix B.

[^192]: *See supra* part 1.(b).

[^193]: *See, e.g.*, *Verizon/MCI Order*, 20 FCC Rcd at 18518, para.
    166. Most of the 45 facilities-based IMTS carriers and all of the 46
    international private line carriers listed above provide service to
    enterprise customers.

[^194]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd
    at 5231, para. 47; *LEC Classification Order*, 12 FCC Rcd at
    15812-13, paras. 98, 100.

[^195]: *See, e.g.*, Legacy BellSouth FNPRM Comments at 7-9; Legacy SBC
    FNPRM Comments at 16-20; Verizon FNPRM Comments at 11-18; Verizon
    Feb. 15, 2007 *Ex Parte* Letter at 2-15.

[^196]: *See, e.g.*, Legacy BellSouth FNRPM Reply at 5-8; Verizon Feb.
    15, 2007 *Ex Parte* Letter at 15-25.

[^197]: *See, e.g.*, *LEC Classification Order*, 12 FCC Rcd at 15835,
    para. 134; Legacy AT&T NPRM Comments at 12-14 (arguing that BOCs
    continue to retain and exercise market power through their control
    of bottleneck facilities); Legacy AT&T FNPRM Comments at 8-21
    (same); AdHoc FNPRM Reply at 3-5 (arguing that incumbent LECs
    continue to dominate local exchange and exchange access markets).

[^198]: *Section 272 Sunset and Independent Incumbent LEC Further NPRM*,
    18 FCC Rcd at 10932-36, paras. 29-43.

[^199]: AT&T, Qwest, and Verizon also provide in-region, interstate,
    intraLATA, long distance services, which are interexchange
    telecommunications services that cross state lines but remain within
    a single LATA. *See* *Access Charge Reform*, CC Docket Nos. 96-262,
    94-1, 98-157, CCB/CPD File No. 98-63, Fifth Report and Order and
    Further Notice of Proposed Rulemaking, 14 FCC Rcd 14221, 14245,
    para. 48 (1999) (*Pricing Flexibility Order*) (explaining that
    "\[i\]nterstate intraLATA toll calls are calls that leave an
    immediate local calling area and cross state lines but remain within
    a single LATA, such as some calls from Chicago, Illinois, to Gary,
    Indiana"), *aff'd* *sub nom.* *WorldCom, Inc. v. FCC*, 238 F.3d 449
    (D.C. Cir. 2001). We find there is no practical distinction between
    these services and the BOCs' in-region, interstate, interLATA, long
    distance services.

[^200]: *See LEC Classification Order*, 12 FCC Rcd at 15762-63, para. 6
    (concluding that "regulating BOC in-region interLATA affiliates as
    dominant carriers generally would not help to prevent improper
    allocation of costs, discrimination by the BOCs against rivals of
    their interLATA affiliates, or price squeezes by the BOCs or the BOC
    interLATA affiliates").

[^201]: *See LEC Classification Order*, 12 FCC Rcd at 15835, para. 134.

[^202]: *See supra* part A.(iv); *see also* Verizon Feb. 15, 2007 *Ex
    Parte* Letter at 2-21 (arguing there is extensive competition for
    mass market voice services from cable, wireless, over-the-top VoIP,
    traditional competitive LECs, and broadband over power line (BPL)
    providers).

[^203]: Our market analysis also makes clear that competition may be
    expected to constrain AT&T, Qwest, and Verizon in both the mass
    market and in the market for enterprise customers. *See* *supra* at
    parts 1.(a) (AT&T and Verizon mass market analysis) & 1.(b) (AT&T
    and Verizon enterprise market analysis); para. 21 (determining that
    it is appropriate to rely on the Commission's finding that Qwest
    lacks classical market power with regard to in-region, interstate,
    long distance services).

[^204]: *LEC Classification Order*, 12 FCC Rcd at 15804, para. 85,
    15806-08, paras. 88-90, & 15812-33, paras. 98-130; *see Qwest
    Section 272 Sunset Forbearance Order*, 22 FCC Rcd at 5233, para. 51.

[^205]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5233, para. 52, & paras. 71-72; *see* *AT&T Reclassification Order*,
    11 FCC Rcd at 3313-14, paras. 81-82.

[^206]: *See* *supra* market analysis of usage substitution part
    III.a.(iii).

[^207]: *See* *infra* part III.b.

[^208]: *See* Letter from Frank Simone, Executive Director-Federal
    Regulatory, AT&T, to Marlene Dortch, Secretary, FCC, WC Docket Nos.
    02-112, 06-120, at 1-2 (filed Aug. 15, 2007) (AT&T Aug. 15, 2007 *Ex
    Parte*); Letter from Susanne A. Guyer, Senior Vice President,
    Federal Regulatory Affairs, Verizon, to Marlene Dortch, Secretary,
    FCC, WC Docket No. 02-112, at 1-2 (filed Aug. 21, 2007) (Verizon
    Aug. 21, 2007 *Ex Parte*).

[^209]: *See* AT&T Aug. 15, 2007 *Ex Parte* at 2; Verizon Aug. 21, 2007
    *Ex Parte* at 2.

[^210]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5243-44, paras. 71-72.

[^211]: *LEC Classification Order*, 12 FCC Rcd at 15804, para. 85
    ("dominant carrier regulations are generally designed to prevent a
    carrier from raising prices by restricting its output rather than to
    prevent a carrier from raising its prices by raising its rivals'
    costs"); *id*. at 15818, para. 106 & 15832, para. 129 (the
    Commission also concluded that dominant carrier regulation would not
    prevent improper cost shifting, and would not be necessary or
    appropriate to constrain the BOC and its affiliate from attempting
    to execute a predatory price squeeze).

[^212]: *See, e.g.*, *LEC Classification Order,* 12 FCC Rcd at 15815-19,
    paras. 103-08, 15821-26, paras. 111-19, 15829-33, paras. 125-30, &
    15847-15857, paras. 158-75 (describing the incentives, ability, and
    means for an incumbent LEC to improperly allocate costs, engage in
    price and non-price discrimination, and engage in a price squeeze);
    *Implementation of the Non-Accounting Safeguards of Sections 271 and
    272 of the Communications Act of 1934, as Amended and Regulatory
    Treatment of LEC Provision of Interexchange Services Originating in
    the LEC's Local Exchange Area*, WC Docket No, 96-149, Notice of
    Proposed Rulemaking, 11 FCC Rcd 18877, 18944, para. 139 (1996)
    (*Non-Accounting Safeguards NPRM*) (BOCs could use market power in
    the provision of local exchange and exchange access services to
    discriminate against interLATA affiliates' competitors to gain an
    advantage for their interLATA affiliates).

[^213]: *See infra* part 4.

[^214]: *See, e.g*., Legacy BellSouth FNPRM Comments at 22-28 (claiming
    that dominant carrier regulation imposes significant costs and
    burdens with no countervailing benefits to consumers); Qwest FNPRM
    Comments at 21-23 (same); *LEC Classification Order,* 12 FCC Rcd at
    15806-08, paras. 88-90.

[^215]: *See, e.g*., SBC FNPRM Comments at 6 (arguing that dominant
    carrier regulation impedes competition because the dominant carrier
    must provide advance notice of new service offerings and price
    changes to competitors); *LEC Classification Order,* 12 FCC Rcd at
    15806-08, paras. 88-90.

[^216]: *See, e.g*., Verizon FNRPM Comments at 28 (arguing the advance
    notice requirement under dominant competition would stifle
    competition); Verizon Feb. 15, 2007 *Ex Parte* Letter at 29 (arguing
    that dominant carrier regulation would "hinder deployment of
    advanced broadband networks and services"); *LEC Classification
    Order,* 12 FCC Rcd at 15805-07, paras. 87-88.

[^217]: *See, e.g*., Legacy BellSouth FNPRM Comments at 22-28; Legacy
    SBC FNPRM Comments at 4; Verizon FNPRM Comments at 28-29; *see also*
    Verizon Feb. 15, 2007 *Ex Parte* Letter at 29 (stating that
    "re-regulating" Verizon and other carriers as dominant will reduce
    efficiency, increase costs, and hinder deployment of broadband
    services); *LEC Classification Order,* 12 FCC Rcd at 15806-08,
    paras. 88-90. We reject the arguments of certain commenters that
    dominant carrier regulation should be maintained, since the
    commenters implicitly assume that structural safeguards are
    necessary. *See, e.g.*, Texas AG FNPRM Comments at 1; Legacy AT&T
    FNPRM Comments at 47-53; NJ Ratepayer FNPRM Reply at 2; Sprint FNPRM
    Reply at 4. Rather, as we discuss below, we find that the
    alternative regulatory framework we adopt in this Order is more
    appropriate than the regulatory safeguards that previously had
    applied to the BOCs and their independent incumbent LEC affiliates.

[^218]: *LEC Classification Order*, 12 FCC Rcd at 15838, para. 138; *see
    also* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5247, para. 81.

[^219]: 47 C.F.R. § 63.10 (regulatory classification of U.S.
    international carriers); *see* *LEC Classification Order*, 12 FCC
    Rcd at 15838-39, para. 139 (preserving rules designed to address the
    incentives and ability of a foreign carrier to discriminate against
    the rivals of its U.S. affiliate).

[^220]: *See supra* note Error: Reference source not found.

[^221]: *See* 47 C.F.R. § 63.10.

[^222]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5235, para. 55.

[^223]: *See* 47 U.S.C. § 203; 47 C.F.R. §§ 61.31-61.38 (tariffing
    requirements for dominant carriers); *see also* 47 C.F.R. § 61.43
    (requiring annual price cap filings); *Policy and Rules Concerning
    the Interstate, Interexchange Marketplace, Implementation of Section
    254(g) of the Communications Act of 1934*, CC Docket No. 96-61,
    Second Report and Order, 11 FCC Rcd 20730 (1996) (*Detariffing
    Order*); *Policy and Rules Concerning the Interstate, Interexchange
    Marketplace, Implementation of Section 254(g) of the Communications
    Act of 1934*, CC Docket No. 96-61, Order on Reconsideration, 12 FCC
    15014 (1997) (*Detariffing Reconsideration Order*); *Policy and
    Rules Concerning the Interstate, Interexchange Marketplace,
    Implementation of Section 254(g) of the Communications Act of 1934*,
    CC Docket No. 96-61, Second Order on Reconsideration and Erratum, 14
    FCC Rcd 6004 (1999) (*Detariffing Second Reconsideration Order*).

[^224]: 47 C.F.R. § 61.42(d)(4) (interexchange basket for services that
    are not classified as access services).

[^225]: 47 C.F.R. § 61.28 (tariffing requirements for dominant
    international carriers).

[^226]: *See supra* paras. 60-63 (addressing in-region, international
    telecommunications services).

[^227]: *See* 47 C.F.R. § 63.03 (procedures for domestic transfer of
    control applications); 47 C.F.R. § 63.19 (procedures for
    discontinuing international services); 47 C.F.R. § 63.21 (conditions
    that apply to international section 214 authorizations); 47 C.F.R. §
    63.23 (conditions that apply to resale-based international common
    carriers); 47 C.F.R. §§ 63.60-90 (definitions, rules, and procedures
    that apply to the discontinuance, reduction, outage, and impairment
    of services).

[^228]: Our finding with respect to section 63.03 extends only to those
    circumstances in which the BOCs seek to assign or transfer control
    of assets used solely for the purpose of providing in-region,
    interstate or international, long distance services or to transfer
    control of an affiliate that does not jointly own any assets with
    another entity that uses such assets to provide services that are
    subject to dominant carrier regulation.

[^229]: 47 C.F.R. § 43.51 (filing of carrier contracts and concessions).

[^230]: For convenience, in this part, we use the term "section 272
    safeguards" to refer exclusively to those section 272 safeguards
    that have sunset. This term excludes the safeguards in section
    272(e).

[^231]: *See Section 272 Sunset Notice*, 17 FCC Rcd at 9920, para. 9.

[^232]: *See id*.

[^233]: *See supra* part III.c.

[^234]: *See id*.

[^235]: *See LEC Classification Order*, 12 FCC Rcd at 15762-63, para. 6
    (stating that, "\[i\]n light of the requirements established by, and
    pursuant to, sections 271 and 272, together with other existing
    Commission rules, we conclude that the BOCs will not be able to use,
    or leverage, their market power in the local exchange or exchange
    access markets to such an extent that their section 272 interLATA
    affiliates could profitably raise and sustain prices of in-region,
    interstate, domestic, interLATA services significantly above
    competitive levels by restricting the affiliate\'s own output").

[^236]: *See, e.g*., Legacy BellSouth NPRM Comments at 18-19 (arguing
    that continuing safeguards will protect competition more efficiently
    and at a lesser expense than section 272 requirements); *see also*
    Qwest NPRM Comments at 13 (describing that costs of section 272
    requirements stem from inefficiencies in maintaining separate
    networks and workforces); Legacy SBC NPRM Comments at 7 (claiming
    that as a result of the section 272 requirements, SBC must duplicate
    resources, which its competitors do not); Verizon NPRM Comments at 8
    (stating that "continuing the 272 separate affiliate requirements
    will distort competition and discourage investment and innovation").

[^237]: *See* 47 U.S.C. § 272(b); *see generally* *Accounting Safeguards
    Order*, 11 FCC Rcd 17539; *Non-Accounting Safeguards Order*, 11 FCC
    Rcd 21905; Qwest NPRM Comments at 13; Verizon NPRM Comments at 9-11.

[^238]: *See* Legacy SBC NPRM Reply at 15-17 (arguing that competitors
    that can integrate their local and long distance operations are at
    an advantage, especially with respect to complex services to large
    business customers that want end-to-end services); *see also* USTA
    NPRM Comments at 7. The Commission has previously found that
    structural separation may sacrifice innovation, efficiency, and
    economies of scale and scope. *See, e.g.*, *Amendment of Sections
    64.702 of the Commission\'s Rules and Regulations* *(Third Computer
    Inquiry); and Policy and Rules Concerning Rates for Competitive
    Common Carrier Services and Facilities Authorizations Thereof
    Communications Protocols under Section 64.702 of the Commission\'s
    Rules and Regulations*, CC Docket No. 85-229, Report and Order, 104
    FCC 2d 958, 964, para. 3 (1986) (*Computer III Phase I Order*)
    (finding that the decreased efficiency and innovation imposed by
    structural safeguards outweighed their benefits); *Non-Accounting
    Safeguards Order*, 11 FCC Rcd at 21911, 21913, paras. 7, 13;
    *Non-Accounting Safeguards Second Order on Reconsideration*, 12 FCC
    Rcd at 8683, para. 55; *COMSAT Corporation Petition Pursuant to §
    10(c) of the Communications Act of 1934, as amended, for Forbearance
    from Dominant Carrier Regulation and for Reclassification as a
    Non-Dominant Carrier*, IB Docket No. 98-60, CC Docket No. 80-654,
    Order and Notice of Proposed Rulemaking, 13 FCC Rcd 14083, 14165,
    para. 166 (1998) (finding that "Comsat's continued dominance in the
    provision of switched voice, private line and occasional-use video
    services in non-competitive markets is not sufficient reason to
    continue structural separation because the costs would exceed the
    benefits").

[^239]: *See supra* part III.a.(ii) (evidence indicating that a majority
    of consumers purchase local and long distance services from a single
    provider today). *See, e.g.*, Verizon Feb. 15, 2007 *Ex Parte*
    Letter at 26, nn.126, 127 (citing J.D. Power & Associates Press
    Release, *J.D. Power & Associates Reports: Three-Quarters of
    Households Now Bundle Local and Long-Distance Telephone Service with
    One Provider* (July 13, 2005); D. Lemelin, In-Stat, *Wireline
    Remains in Decline: US Wireline Service* 2005 (Mar. 2006)) (stating
    that local and long distance services are offered to consumers in
    competitive bundles).

[^240]: *See* 47 U.S.C. § 272(b); *see also* 47 C.F.R. § 53.203.

[^241]: *See, e.g.*, Verizon NPRM Comments, Jeannie H. Diefenderfer
    Decl. at 1-3 (discussing the inefficiencies associated with
    providing broadband services through a multiple affiliate
    structure).

[^242]: In today's market, vendors typically do not develop equipment
    according to artificial demarcations between local and long distance
    calling or between voice and data. A prohibition against joint
    ownership would prevent a BOC from purchasing these unified
    platforms for its local and long distance services and thus prevent
    the BOC from deploying a new platform as quickly as its competitors.
    *See, e.g.*, Legacy SBC NPRM Comments at 8. A prohibition on joint
    ownership of facilities could hinder a BOC from developing
    innovative VoIP products that integrate legacy services, such as
    local and long distance voice. *See, e.g.*, Qwest NPRM Comments at
    13-14 (stating that separate affiliate requirement would prevent an
    RBOC from purchasing a next generation switch that handles local and
    long distance calls).

[^243]: Opportunity cost is the value of a foregone alternative action.
    Slow and ill-coordinated decision making imposes opportunity costs
    that include the forgone services that could have been provided in
    the absence of artificial dividing lines between a company's
    decision makers. *See Section 272(b)(1)'s "Operate Independently"
    Requirement for Section 272 Affiliates*, WC Docket No. 03-228, CC
    Docket Nos. 96-149, 98-141, 01-337, Report and Order in WC Docket
    No. 03-228, Memorandum Opinion and Order in CC Docket Nos. 96-149,
    98-141, 01-337, 19 FCC Rcd 5102, 5120, para. 30 n.100 (2004) (*OI&M
    Order*) (citing *The MIT Dictionary of Modern Economics* 315 (David
    W. Pearce ed., 4th ed. 1996)). We are also guided by the fact that
    the BOCs have quantified substantial costs associated with the
    section 272 separate affiliate requirement. *See, e.g.*, Legacy SBC
    NPRM Comments at 8; Verizon NPRM Comments at 9; Legacy SBC NPRM
    Reply at 16.

[^244]: *See, e.g.*, Legacy AT&T NPRM Comments at 7-10 (arguing that the
    272 safeguards are critical tools to promote competition); Sprint
    NPRM Comments at 6-16 (supporting extension of the 272 safeguards);
    Missouri Commission NPRM Comments at 4 (suggesting the Commission
    extend the section 272 separate affiliate safeguards); Pennsylvania
    Commission NPRM Comments at 4 (same); Texas Commission NPRM Comments
    at 3 (same); Wyoming Commission NPRM Comments at 2 (same); NASUCA
    NPRM Comments at 2, 6 (urging the Commission to extend by rule the
    section 272 safeguards); NJ Ratepayer NPRM Comments at 4-5 (same).
    Because our decision not to extend the section 272 safeguards
    applies throughout each BOC region, we deny legacy AT&T's petitions
    to extend those safeguards in particular BOC, in-region states.
    *See* Legacy AT&T, Petition for Extension of Section 272 Obligations
    of Southwestern Bell Telephone Co. in the States of Arkansas and
    Missouri, WC Docket No. 02-112 (filed Sept. 24, 2004) (Legacy AT&T
    Arkansas and Missouri Petition); Legacy AT&T, Petition for Extension
    of Section 272 Obligations of Verizon in the State of Massachusetts,
    WC Docket No. 02-112 (filed Feb. 29, 2004) (Legacy AT&T
    Massachusetts Petition); Legacy AT&T, Petition for Extension of
    Section 272 Obligations of Southwestern Bell Telephone Co. in the
    States of Kansas and Oklahoma, WC Docket No. 02-112 (filed Dec. 8,
    2003) (Legacy AT&T Kansas and Oklahoma Petition); Legacy AT&T,
    Petition for Extension of Section 272 Obligations of Southwestern
    Bell Telephone Co. in the State of Texas, WC Docket No. 02-112
    (filed April 10, 2003) (Legacy AT&T Texas Petition).

[^245]: *See* *infra* part 4; *see also* *Qwest Section 272 Sunset
    Forbearance Order,* 22 FCC Rcd at 5240-43, paras. 64-70; *Computer
    III Phase I Order*, 104 FCC 2d at 964, para. 3 (abolishing
    structural separation requirement upon a finding that targeted
    nonstructural requirements were sufficient to address discrimination
    and cross-subsidization concerns); *OI&M Order*, 19 FCC Rcd at
    5112-15, paras. 18-22; *see also, e.g.*, *Non-Accounting Safeguards
    Order*, 11 FCC Rcd at 21983-84, 21986, 21991, paras. 162, 167-68,
    179; *Non-Accounting Safeguards Second Order on Recon.*, 12 FCC Rcd
    at 8683, para. 55; *Competitive Carrier Fifth Report and Order*, 98
    FCC 2d at 1197-98, para. 8 (determining that "\[w\]hile structural
    separation decreases opportunities for cost-shifting and
    anticompetitive conduct, it can also decrease efficiency and affect
    the interexchange carrier's ability to compete").

[^246]: Commenters, such as state commissions, legacy AT&T, legacy MCI,
    Sprint, and Covad, argue variously that structural separation is
    necessary because local telephone competition has not taken root;
    that the BOCs discriminate in their special access services
    provisioning; that cross-subsidies are difficult to detect; and that
    the BOCs maintain market power. *See, e.g.*, Legacy AT&T NPRM
    Comments at 10-34 (arguing *inter alia* that the BOCs maintain
    significant market power in all markets and engage in improper cost
    shifting); Covad NPRM Reply at 1-5 (claiming the section 272
    safeguards provide a "bulwark" against abuses of monopoly power);
    Legacy MCI FNPRM Comments at 16-20 (arguing that a separate
    affiliate requirement remains necessary to protect against a price
    squeeze from the BOCs); Sprint NPRM Comments at 7-16 (claiming the
    BOCs remain dominant in the local and exchange access markets and
    behavior warrants strong regulatory safeguards); Missouri Commission
    NPRM Comments at 4 (asserting that without the section 272 audit
    process, there is no way to detect and deter discrimination and
    anticompetitive behavior); Texas Commission FNPRM Comments at 4
    (arguing that without separate books of account, it will be
    practically impossible to evaluate complaints by competitors of
    practices such as discrimination and cross-subsidization); Texas AG
    NPRM Reply at 1, 3 (arguing that BOCs possess substantial market
    power and that the BOCs have all been fined for violating statutory
    and regulatory obligations).

[^247]: *See, e.g.*, NJ Ratepayer NPRM Comments at 38 (recommending the
    Commission apply section 64.1903 safeguards to the BOCs); NJ
    Ratepayer FNPRM Comments at 4-6 (same).

[^248]: For example, an independent incumbent LEC's long distance
    affiliate must maintain separate books of account from the
    independent incumbent LEC, must purchase services from the
    independent incumbent LEC pursuant to the incumbent LEC's tariffs,
    and is forbidden from jointly owning transmission or switching
    facilities with the independent incumbent LEC affiliate. *See* 47
    C.F.R. § 64.1903 (providing the Commission's separate affiliate
    rules for independent incumbent LECs). Of course, the rule 64.1903
    safeguards differ in some respects from the section 272 structural
    safeguards. Thus, the costs are not identical.

[^249]: *AT&T Corp. v. FCC*, 369 F.3d 554, 556 (D.C. Cir. 2004) (*AT&T
    v. FCC*). *AT&T v. FCC* involved judicial review of the Commission's
    decision to allow the section 272 safeguards, other than those in
    section 272(e), to sunset in the state of New York without
    explaining why those safeguards should not be extended and without
    addressing whether alternative safeguards should replace the
    safeguards that had sunset. *Id.* at 558-60; *see Section 272
    Sunsets for Verizon in New York State by Operation of Law on
    December 23, 2002 Pursuant to Section 272(f)(1)*, CC Docket No.
    02-112, Public Notice, 17 FCC Rcd 26864 (2002) (*Verizon New York
    Sunset Notice*). The court held that section 272(f)(1) does not
    require the Commission to issue a reviewable decision prior to
    allowing the safeguards to sunset through operation of law and
    indicated that the Commission would resolve through rulemaking any
    open questions regarding whether safeguards are needed for the BOCs'
    provision of in-region, interLATA telecommunications services. *AT&T
    v. FCC*, 369 F.3d at 362-63.

[^250]: 47 U.S.C. § 272(f)(1); *see AT&T v. FCC*, 369 F.3d at 360.

[^251]: *AT&T v. FCC*, 362 F.3d at 362-63. Because our decision not to
    extend the section 272 safeguards applies throughout each BOC
    region, we deny legacy AT&T's petitions to extend those safeguards
    in particular BOC, in-region states. *See* Legacy AT&T, Petition for
    Extension of Section 272 Obligations of Southwestern Bell Telephone
    Co. in the States of Arkansas and Missouri, WC Docket No. 02-112
    (filed Sept. 24, 2004); Legacy AT&T, Petition for Extension of
    Section 272 Obligations of Verizon in the State of Massachusetts, WC
    Docket No. 02-112 (filed Feb. 29, 2004); Legacy AT&T, Petition for
    Extension of Section 272 Obligations of Southwestern Bell Telephone
    Co. in the States of Kansas and Oklahoma, WC Docket No. 02-112
    (filed Dec. 8, 2003); Legacy AT&T, Petition for Extension of Section
    272 Obligations of Southwestern Bell Telephone Co. in the State of
    Texas, WC Docket No. 02-112 (filed April 10, 2003).

[^252]: *See supra* para. 9.

[^253]: AT&T Apr. 24, 2007 *Ex Parte* Letter at 1; Verizon May 8, 2007
    *Ex Parte* Letter, at 2. The franchise areas of these independent
    incumbent LECs, (former GTE, former SNET, and Woodbury) represent
    only a small percentage of the total company franchise areas and a
    comparable percentage of their in-region, interstate, interexchange
    telecommunications services.

[^254]: Under section 64.1903 of our rules, the BOCs' independent
    incumbent LEC affiliates that provide in-region, interstate,
    interexchange telecommunications services or in-region,
    international services are required to maintain separate books of
    account from the independent incumbent LEC and to purchase services
    from the independent incumbent LEC pursuant to the incumbent LEC's
    tariffs. 47 C.F.R. § 64.1903(a). Section 64.1903 of the Commission's
    rules also forbids incumbent LECs' affiliates from jointly owning
    transmission or switching facilities with the independent incumbent
    LEC. 47 C.F.R. § 64.1903(a).

[^255]: *See supra* n.Error: Reference source not found.

[^256]: The Commission may waive its rules when good cause is
    demonstrated. 47 C.F.R. § 1.3; *see also WAIT Radio v. FCC*, 418
    F.2d 1153, 1159 (D.C. Cir. 1969) (*WAIT Radio*), *cert. denied*, 409
    U.S. 1027 (1972). The Commission may exercise its discretion to
    waive a rule where the particular facts make strict compliance
    inconsistent with the public interest. *See Northeast Cellular
    Telephone Co. v. FCC*, 897 F.2d 1164, 1166 (D.C. Cir. 1990)
    (*Northeast Cellular*). In doing so, the Commission may take into
    account considerations of hardship, equity, or more effective
    implementation of overall policy on an individual basis. *See* *WAIT
    Radio*, 418 F.2d at 1159; *Northeast Cellular*, 897 F.2d at 1166.
    Waiver of the Commission's rules is therefore appropriate if special
    circumstances warrant a deviation from the general rule, and such
    deviation will serve the public interest. *Northeast Cellular*, 897
    F.2d at 1166.

[^257]: *See infra* part III.b. In addition, as discussed below, other
    existing safeguards apply to the BOC independent incumbent LEC
    affiliates, such as accounting and tariffing rules. *See infra* part
    III.a.

[^258]: We condition this waiver on AT&T's and Verizon's independent
    incumbent LECs' compliance with all of the safeguards we impose in
    this Order on the BOCs. We also condition this waiver as applied to
    Woodbury on its integration into SNET and on its operating as a
    price cap LEC for interstate ratemaking purposes once the
    integration process is complete. *See supra* note Error: Reference
    source not found; *see also* AT&T Apr. 27, 2007 *Ex Parte* Letter at
    1 (stating that Woodbury will be integrated into SNET, effective
    June 1, 2007).

[^259]: BOCs are not subject to price cap regulation for: (1) the
    exchange access services for which they have been granted phase II
    pricing flexibility; and (2) certain of their services that are
    provided pursuant to rate of return regulation. *See Pricing
    Flexibility Order*, 14 FCC Rcd 14221; *see* *also* 47 U.S.C. §§
    203(b), 204(a)(3); 47 C.F.R. §§ 61.38, 61.41, 61.58; *Implementation
    of Section 402(b)(1)(A) of the Telecommunications Act of 1996*, CC
    Docket No. 96-187, Report and Order, 12 FCC Rcd 2170, 2182, para.
    19, 2188, para. 31, 2191-92, para. 40, & 2202-03, para. 67 (1997);
    *Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C.
    § 160(c) in the Omaha Metropolitan Statistical Area*, WC Docket No.
    04-223, Memorandum Opinion and Order, 20 FCC Rcd 19415, 19424, para.
    15 (2005) (*Qwest Omaha Order*), *review denied in part, dismissed
    in part*, *Qwest Corp. v. FCC*, 2007 WL 860987 (D.C. Cir. Mar. 23,
    2007).

[^260]: For example, BOCs are required to file on an annual basis a cost
    allocation manual describing how they allocate costs between
    regulated and nonregulated activities, and to have an independent
    auditor audit that cost allocation manual every two years. *See* 47
    C.F.R. §§ 43.21(d), 64.901-64.905; *see also* 47 C.F.R. §§ 32.23(c),
    32.5280. BOCs are subject to certain reporting requirements under
    ARMIS. *See Automated Reporting Requirements for Certain Class A and
    Tier 1 Telephone Companies (Parts 31, 43, 67, and 69 of the FCC\'s
    Rules)*, CC Docket No. 86-182, Report and Order, 2 FCC Rcd 5770
    (1987) (*ARMIS Order*), *modified on recon.*, 3 FCC Rcd 6375 (1988)
    (*ARMIS Reconsideration Order*); *see also* 47 C.F.R. § 43.21.

[^261]: 47 U.S.C. § 251(g); *MTS and WATS Market Structure, Phase III*,
    Docket No. 78-72, Report and Order, 100 FCC 2d 860 (1985);
    *Investigation into the Quality of Equal Access Services*,
    Memorandum Opinion and Order, 60 Rad. Reg. 2d (P&F) 417, 419, 1986
    WL 291752 (1986). We note that in part B, *infra*, we forbear from
    application of the EA Scripting Requirement to the BOCs and find
    good cause to waive the EA Scripting Requirement for the BOCs'
    independent incumbent LEC affiliates. However, all other equal
    access obligations continue to apply.

[^262]: 47 U.S.C. § 251.

[^263]: 47 U.S.C. § 271(d)(6). Section 271 does not apply to the BOCs'
    independent incumbent LEC affiliates.

[^264]: 47 U.S.C. §§ 201, 202.

[^265]: 47 U.S.C. § 272(e)(1), (e)(3); *see infra* part A.(ii). We note
    that the safeguards adopted in the *Non-Accounting Safeguards* and
    the *Accounting Safeguards Orders* to implement these provisions
    also remain in effect.

[^266]: 47 U.S.C. § 202(a).

[^267]: 47 U.S.C. § 272(e)(1).

[^268]: *Unbundled Access to Network Elements; Review of the Section 251
    Unbundling Obligations of Incumbent Local Exchange Carriers*, WC
    Docket No. 04-313, CC Docket No. 01-338, Order on Remand, 20 FCC Rcd
    2533, 2574-75, para. 65 (2004) (*Triennial Review Remand Order*)
    (subsequent history omitted).

[^269]: 47 U.S.C. § 271(d)(6).

[^270]: *See* 47 U.S.C. § 251(c)(2); *cf*. *Time Warner Cable Request
    for Declaratory Ruling that Competitive Local Exchange Carriers May
    Obtain Interconnection Under Section 251 of the Communications Act
    of 1934, as Amended, to Provide Wholesale Telecommunications
    Services to VoIP Providers*, WC Docket No. 06-55, Memorandum Opinion
    and Order, 22 FCC Rcd 3308 (WCB 2007) (clarifying that wholesale
    telecommunications carriers are entitled to the same rights as
    retail telecommunications carriers under sections 251(a) and 251(b),
    ensuring that new entrants have the ability to interconnect to
    incumbent LECs).

[^271]: 47 U.S.C. § 251(g); *MTS and WATS Market Structure, Phase III*,
    Docket No. 78-72, Report and Order, 100 FCC 2d 860 (1985);
    *Investigation into the Quality of Equal Access Services*,
    Memorandum Opinion and Order, 60 Rad. Reg. 2d (P&F) 417, 419, 1986
    WL 291752 (1986).

[^272]: *See Section 272 Sunset and Independent Incumbent LEC Further
    NPRM*, 18 FCC Rcd at 10934, para. 40.

[^273]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5238-39, para. 62; *see also* 47 C.F.R. § 32.23(a).

[^274]: *See Accounting Safeguards Order*, 11 FCC Rcd 17539, 17655,
    para. 257 (concluding "interLATA telecommunications services should
    be treated like nonregulated activities for federal accounting
    purposes whenever these services are provided by any incumbent local
    exchange carrier through an affiliate").

[^275]: *See* *Accounting Safeguards Order*, 11 FCC Rcd 17539, 17573
    para. 76 (noting that treatment of out-of-region and certain types
    of incidental interLATA services as nonregulated for accounting
    purposes will achieve greater accuracy in safeguarding against
    cross-subsidization and will lessen the chance that costs associated
    with such services are inadvertently assigned to a local exchange or
    exchange access category).

[^276]: *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd
    at 5239, para. 62, n.179 (citing *Accounting Safeguards Order*, 11
    FCC Rcd at 17573, para. 76); *see also Accounting Safeguards Order*,
    11 FCC Rcd at 17572-73, para. 74 (concluding that "if interLATA
    telecommunications services . . . that may be provided by incumbent
    local exchange carriers on an integrated basis, were treated as
    regulated for accounting purposes, our part 64 rules would not
    prevent any improper cost allocations that may occur between local
    exchange and exchange access services and these interLATA
    telecommunications services"); *id*. at 17572, para. 75 (stating
    that "we can most efficiently and comprehensively satisfy sections
    254(k) and 271(h) if, solely for federal accounting purposes, we
    treat like nonregulated activities both out-of-region and certain
    types of incidental interLATA services that may be provided by
    incumbent local exchange carriers on an integrated basis"); *id*. at
    17573, para. 76 (stating that "the Part 36 jurisdictional
    separations process and the Part 69 access charge process were not
    designed to prevent subsidization of competitive telecommunications
    services by subscribers to exchange and exchange access services").

[^277]: 47 C.F.R. § 64.903.

[^278]: *See supra* part A.(ii).

[^279]: *Qwest Petition for Pricing Flexibility for Special Access and
    Dedicated Transport Services*, CCB/CPD No. 02-01, Memorandum Opinion
    and Order, 17 FCC Rcd 7363 (WCB 2002); *Petition of Ameritech
    Illinois, et al., for Pricing Flexibility*, CCB/CPD Nos. 00-26,
    00-23, 00-25, Memorandum Opinion and Order, 16 FCC Rcd 5889 (Com.
    Car. Bur. 2001); *Verizon Petitions for Pricing Flexibility for
    Special Access and Dedicated Transport Services*, CCB/CPD Nos.
    00-24, 00-28, Memorandum Opinion and Order, 16 FCC Rcd 5876 (Com.
    Car. Bur. 2001); *BellSouth Petition for Pricing Flexibility for
    Special Access and Dedicated Transport Services*, CCB/CPD No. 00-20,
    Memorandum Opinion and Order, 15 FCC Rcd 24588 (Com. Car. Bur.
    2000).

[^280]: 47 C.F.R. § 69.731; *Pricing Flexibility Order*, 14 FCC Rcd at
    14307, para. 167.

[^281]: The BOCs' implementation of these metrics is reviewed as part of
    the biennial audits.

[^282]: *See AT&T/BellSouth Order*, 22 FCC Rcd at 5807, Appendix F
    (Special Access); *SBC/AT&T Merger Order*, 20 FCC Rcd at 18317-18,
    para. 51; *Verizon/MCI Order*, 20 FCC Rcd at 18459-60, para. 51;
    *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at 5243-44,
    paras. 71-72.

[^283]: 47 U.S.C. § 202(a) (requiring that common carriers refrain from
    "unjust or unreasonable discrimination in . . . practices . . . or
    services for or in connection with like communication service" and
    making it "unlawful for any common carrier . . . to make or give any
    undue or unreasonable preference or advantage to any particular
    person \[or\] class of persons, . . . or to subject any particular
    person \[or\] class of persons to any undue or unreasonable
    prejudice or disadvantage"); 47 U.S.C. § 272(e)(1) (requiring that a
    BOC "fulfill any requests from an unaffiliated entity for telephone
    exchange service and exchange access within a period no longer than
    the period in which it provides such telephone exchange service and
    exchange access to itself or to its affiliates"). Because we are
    extending the special access performance plans that the BOCs
    voluntarily submitted in prior proceedings, and which the Commission
    adopted as conditions of its orders in those proceedings, this Order
    does not terminate the independent obligation of the BOCs to
    implement those special access performance metrics pursuant to those
    prior orders. With regard to the BOCs, this requirement is therefore
    independent of their obligations to implement special access metrics
    as a result of their voluntary commitments in connection with the
    *BOC Merger Orders* and the *Qwest Section 272 Sunset Forbearance
    Order*.

[^284]: For example, the "Firm Order Confirmation Timeliness" metric
    should provide data measuring whether each AT&T, Verizon, and Qwest
    incumbent LEC confirms orders for the covered special access
    services within nondiscriminatory time frames. Similarly, the
    "Percent Installation Services Met" and "New Installation Trouble
    Report Rate" metrics should measure whether each of these carriers
    provisions these special access services to itself and its
    competitors in nondiscriminatory time frames and with
    nondiscriminatory levels of quality. In addition, the "Failure
    Rate/Trouble Rate" metric should measure whether each of these
    carriers provides its competitors with the same level of special
    access quality as that provided to its own operations. Finally, the
    "Average Repair Interval/Mean Time to Restore" metric should measure
    whether each of these carriers repairs covered special access
    services in a nondiscriminatory manner.

[^285]: Such reports shall be provided in an Excel spreadsheet format
    and shall be designed to demonstrate the BOCs' and, with regard to
    AT&T and Verizon, their independent incumbent LEC affiliates'
    monthly performance in delivering the covered interstate special
    access services within each of the states in their respective
    regions. These data shall be reported on an aggregated basis for
    interstate special access services as identified in the attachment.
    The BOCs and their independent incumbent LEC affiliates shall
    provide performance measurement results (broken down on a monthly
    basis) for each quarter to the Commission by the 45th day after the
    end of the quarter.

[^286]: *See, e.g.*, Legacy MCI FNPRM Comments at 19-23; Legacy MCI
    FNPRM Reply at 8-12; Ad Hoc FNPRM Comments at 17-18; Ad Hoc FNPRM
    Reply at 5-6; *see also Triennial Review Order*, 18 FCC Rcd at
    17012, para. 45 (recognizing that special access services provide
    competitors with wholesale inputs that they typically combine with
    other competitively provisioned services or facilities to build
    complete services for sale to retail customers), *corrected by*
    *Errata*, 18 FCC Rcd 19020 (2003), *aff'd in part, remanded in part,
    vacated in part*, *United States Telecom Ass'n v. FCC*, 359 F.3d 554
    (D.C. Cir. 2004) (*USTA II*), *cert. denied sub nom*. *National
    Ass'n Regulatory Util. Comm'rs v. United States Telecom Ass'n*, 534
    U.S. 925 (2004). Imposing dominant carrier regulation on AT&T,
    Verizon, and Qwest in their provision of in-region, long distance
    services will not address these commenters' concerns. Rather, the
    targeted safeguards adopted in this Order specifically address the
    BOCs' and their independent incumbent LECs' control over bottleneck
    access facilities. Accordingly, we find that, in comparison to
    dominant carrier regulation of those services, the safeguards
    adopted in this Order, together with other existing safeguards,
    provide a cost-effective means of limiting the AT&T, Verizon's, and
    Qwest's ability to use any market power they have in the local
    exchange and exchange access markets to impede competition in the
    enterprise market. We also decline to adopt a grooming metric
    requested by legacy MCI. *See* Legacy MCI FNPRM Comments at 12. We
    find that the record fails to demonstrate a current need for a
    grooming metric. To the extent that carriers believe a grooming
    metric is necessary, we encourage them to refresh the record to
    support its adoption. We note that both AT&T and Verizon have agreed
    to merger conditions that require that they "will not unreasonably
    discriminate in favor of \[their\] affiliates in establishing terms
    and conditions for grooming special access facilities." *See*
    *AT&T/BellSouth Order*, 22 FCC Rcd at 5807, Appendix F (Special
    Access); *SBC/AT&T Order,* 20 FCC Rcd at Appendix F (Special
    Access); *Verizon/MCI Order*, 20 FCC Rcd at Appendix G (Special
    Access). These merger conditions will continue to apply as described
    in the merger orders, regardless of whether AT&T and Verizon provide
    their in-region, interstate, long distance services directly,
    instead of through an affiliate as described in the conditions.

[^287]: Imputation is an accounting and regulatory device that is used
    in recognizing intra-company transactions. In the context of access
    services, this Commission and state commissions have long recognized
    the potential for LECs to use their control over their local
    networks to impede competition in services for which local network
    access is a needed input. Imputation requirements address this
    concern by requiring the BOC to recognize for accounting and other
    regulatory purposes charges for local network access equal to the
    amounts that an unaffiliated third party would pay for comparable
    access. *See,* *e.g.*, *Application of Access Charges to the
    Origination and Termination of Interstate, IntraLATA Services and
    Corridor Services*, Memorandum Opinion and Order, FCC 85-172, 1985
    FCC Lexis 3510, para. 9 & n.22 (Apr. 12, 1985) (*Corridor Services
    Order*) (requiring that LECs impute access charges to themselves in
    calculating their interstate, intraLATA toll rates); *see also 1998
    Biennial Regulatory Review -- Part 61 of the Commission's Rules and
    Related Tariffing Requirements*, CC Docket No. 98-131, Report and
    Order and First Order on Reconsideration, 14 FCC Rcd 12293, 12312,
    para. 53 (1999) (requiring that price cap LECs offering
    interexchange services impute to themselves the same access charges
    that they impose on interexchange carriers).

[^288]: 47 U.S.C. § 201(b) (requiring that all charges for interstate or
    foreign telecommunications services shall be "just and reasonable");
    47 U.S.C. § 202(a) (requiring that common carriers refrain from
    "unjust or unreasonable discrimination in . . . practices . . . or
    services for or in connection with like communication service" and
    making it "unlawful for any common carrier . . . to make or give any
    undue or unreasonable preference or advantage to any particular
    person \[or\] class of persons, . . . or to subject any particular
    person \[or\] class of persons to any undue or unreasonable
    prejudice or disadvantage"); 47 U.S.C. § 220(a) (authorizing the
    Commission to "prescribe the forms of any and all accounts, records,
    and memoranda to be kept by carrier subject to this Act"); 47 U.S.C.
    § 272(e)(3) (requiring each BOC that uses access to its local
    network for the provision of its own interLATA services to "impute
    to itself . . . an amount for access . . . that is no less than the
    amount charged to any unaffiliated interexchange carriers for such
    access").

[^289]: *Accounting Safeguards Order*, 11 FCC Rcd at 17577, para. 87
    (stating that "where a BOC charges different rates to different
    unaffiliated carriers for access to its telephone exchange service,
    the BOC must impute to its integrated operations the highest rate
    paid for such access by unaffiliated carriers").

[^290]: Section 272(e)(3) requires that each BOC "shall charge" its
    section 272 separate affiliate "an amount for access . . . that is
    no less than the amount charged to any unaffiliated interexchange
    carriers for such access." 47 U.S.C. § 272(e)(3).

[^291]: 47 C.F.R. § 69.727(a)(iii).

[^292]: 47 C.F.R. § 69.727(a)(iii). We note that AT&T and Verizon have
    agreed to merger conditions that, in the case of AT&T, preclude
    reliance on the provision of services to Verizon or Verizon's
    wireline affiliates and, in the case of Verizon, preclude reliance
    on the provision of services to AT&T or AT&T's wireline affiliates
    to meet the rule 69.727(a)(iii) requirement of provision of services
    to an unaffiliated customer. *See AT&T/BellSouth Order*, 22 FCC Rcd
    at 5807, Appendix F (Special Access); *SBC/AT&T Order*, 20 FCC Rcd
    at 18318, para. 51; *Verizon/MCI Order*, 20 FCC Rcd at 18459-60,
    para. 51. These merger conditions continue to apply as described in
    the merger orders, regardless of whether the in-region, interstate,
    long distance services are provided directly or through an affiliate
    instead of a section 272 affiliate as described in the conditions.
    We note further that both AT&T and Verizon have agreed to merger
    conditions that require that they "not provide special access
    offerings to \[their\] wireline affiliates that are not available to
    other similarly situated special access customers on the same terms
    and conditions." *See* *id.* These merger conditions continue to
    apply as described in the merger orders, regardless of whether the
    in-region, interstate, long distance services are offered directly
    instead of through a wireline affiliate as described in the
    conditions.

[^293]: 47 C.F.R. § 64.903 (cost allocation manual requirements).

[^294]: *See* *Accounting Safeguards Order*, 11 FCC Rcd at 17620, para.
    176 (directing that the BOCs treat services provided by their
    section 272 interLATA affiliates, such as affiliates providing
    in-region services, as nonregulated activities for accounting
    purposes). The *Accounting Safeguards Order* does not limit the
    applicability of nonregulated accounting treatment for services
    provided by section 272 separate affiliates to specific services.

[^295]: *See, e.g.*, Legacy SBC NPRM Comments at 5-8 (discussing the
    substantial costs imposed on BOCs by the section 272 separate
    affiliate requirements); Qwest NPRM Comments at 13-15 (discussing
    inefficiency costs associated with structural separation
    requirements); Verizon NPRM Comments at 2, 9-11 (discussing the
    burdens and costs of duplicative efforts resulting from the section
    272 separation requirements).

[^296]: 47 U.S.C. § 272(e)(3).

[^297]: 47 C.F.R. § 64.903(b) (accuracy of cost allocation manuals).

[^298]: 47 C.F.R. § 32.5280 (nonregulated operating revenue).

[^299]: 47 C.F.R. § 32.5280; *Accounting Safeguards Order,* 11 FCC Rcd
    at 17576-77, para. 86; *see also* 47 C.F.R. § 64.901(b)(1)
    (specifying that tariffed services, such as exchange access
    services, provided to a nonregulated operation must be charged to
    nonregulated activities at the tariffed rates and credited to the
    regulated revenue account for that service).

[^300]: These data values with explanatory footnotes are to be provided
    in FCC Report 43-01, ARMIS Annual Summary Report, table I, row 1045,
    columns (b) and (c); FCC Report 43-02, ARMIS USOA Report, table I-1,
    row 5280, column (b); and in FCC Report 43-03, ARMIS Joint Cost
    Report, table I, row 5280, columns (b), (d), and (j).

[^301]: *See* 47 C.F.R. § 32.5280(c) (specifying that separate
    subsidiary record categories be maintained for nonregulated
    revenues).

[^302]: *See, e.g.*, *ARMIS Order*, 2 FCC Rcd at 5772, para. 22; s*ee
    also* 47 C.F.R. § 43.21.

[^303]: *See, e.g.*, Legacy MCI FNPRM Comments at 19-23; Legacy MCI
    FNPRM Reply at 8-12; Ad Hoc Comments at 17-18; Ad Hoc Reply at 5-6.
    We reject legacy AT&T's and legacy MCI's calls for more intrusive
    imputation requirements. *See,* *e.g.*, Legacy MCI FNPRM Reply at
    14-16; Legacy AT&T FNPRM Comments at 51, 70 (arguing that the
    Commission should adopt rules requiring BOCs to impute access costs
    for each identifiable service offering, including each component in
    a bundled offering of multiple services, to prevent
    cross-subsidization). We find that the current regime with
    narrowly-targeted accounting and pricing safeguards remains adequate
    to address competitive concerns.

[^304]: *See* AT&T Aug. 15, 2007 *Ex Parte* at 1-2; Verizon Aug. 21,
    2007 *Ex Parte* at 1-2. Specifically, AT&T and Verizon each commit
    to offer a rate plan under which residential consumers with a local
    access line may obtain 1+ long distance telecommunications services
    at a rate of 12 cents per minute with no monthly minimum or monthly
    recurring charge. AT&T and Verizon both agree to make these rate
    plans available within 60 days of the effective date of this Order,
    and continuing for 36 months thereafter. *Id.*

[^305]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5243-44, para. 71. Specifically, for 24 months after the effective
    date of the *Qwest Section 272 Sunset Forbearance Order*, Qwest
    committed to freeze the per minute price of both its *Managed Long
    Distance Plan* (\$0.18 per minute; no monthly fee; predetermined
    monthly limit of \$20.00) and its *15 Cent Single Rate Plan* (\$0.15
    per minute, monthly fee of \$0.99). In addition, Qwest committed for
    the same period of time to charge no monthly fee for its *Managed
    Long Distance Plan* and not to raise the monthly fee for its *15
    Cent Single Rate Plan* by more than \$1.00. *See Qwest Section 272
    Sunset Forbearance Order*, 22 FCC Rcd at 5243, para. 71 n.204.

[^306]: *See* Letter from Chris Murray, Senior Counsel, Consumers Union,
    to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 02-112, 06-120
    (dated Aug. 17, 2007) (Consumers Union Aug. 17, 2007 *Ex Parte*)
    (expressing Consumers Union's support for AT&T's "significant"
    voluntary commitments with respect to low volume users).

[^307]: At a minimum, interexchange carriers must make their rates
    available to the public upon reasonable request in an easy to
    understand format and timely manner. *See* 47 C.F.R. § 42.10(a). An
    interexchange carrier that maintains a website also must make
    available its current rates, terms, and conditions for all of its
    interstate and international services on the website in a timely and
    easily accessible manner. *See* 47 C.F.R. § 42.10(b). Further,
    Consumers Union recommends that the carriers display the low volume
    plans "prominently" on their websites. Consumers Union Aug. 17, 2007
    *Ex Parte*. We expect that AT&T, Qwest, and Verizon will take such
    steps to ensure that consumers are informed of these plans.

[^308]: 47 U.S.C. § 201(b) (requiring that all charges for interstate or
    foreign telecommunications services shall be "just and reasonable");
    *see also* 47 U.S.C. § 272(f)(3) (stating that section 272(f) shall
    not be construed "to limit the authority of the Commission under any
    other section of this Act to prescribe safeguards consistent with
    the public interest, convenience, and necessity").

[^309]: We note that Qwest already provides this information to its
    residential long distance customers, and has committed to continue
    providing this information for a period of at least two years from
    the effective date of the *Qwest Section 272 Sunset Forbearance
    Order*. *See* *Qwest Section 272 Sunset Forbearance Order*, 22 FCC
    Rcd at 5244, para. 72.

[^310]: *See* AT&T Aug. 15, 2007 *Ex Parte* at 2. AT&T agrees to make
    this information available within 60 days of the effective date of
    this Order.

[^311]: *See* Verizon Aug. 21, 2007 *Ex Parte* at 2. Verizon agrees to
    make this service available within 60 days of the effective date of
    this Order. *Id.* We therefore reject any proposal to provide such
    usage information as a "subscription service." *Id.*

[^312]: *See supra* para. 76.

[^313]: *See supra* para. 82.

[^314]: *See supra* para. 83.

[^315]: *See supra* paras. 39-48.

[^316]: *See supra* parts A.(ii), A.(iv).

[^317]: *See supra* paras. 90-91, 96-105.

[^318]: *Brand X v. FCC*, 545 U.S. 967, 1002-03 (2005) (quoting *NCTA v.
    Gulf Power*, 534 U.S. 327, 339 (2001)).

[^319]: Legacy AT&T FNPRM Comments at 74-75 (arguing that a BOC, as the
    incumbent local service provider, has significant advantage over
    long distance competitors because the BOC may market its long
    distance services when consumers call to order local telephone
    service or to add an additional line); Working Assets FNPRM Comments
    at 4 (same).

[^320]: The Commission addressed BOC joint marketing of long distance
    services in an order denying legacy AT&T's formal complaint against
    Bell Atlantic-NY. *AT&T Corp. v. New York Telephone Company*, File
    No. EB-00-MD-011, Memorandum Opinion and Order, 15 FCC Rcd 19997,
    19999-20003, paras. 7-15 (2000) (*AT&T v. BA-NY Order*). We note
    that, subsequent to the *AT&T v. BA-NY Order*, legacy AT&T raised
    these same issues in its comments in the *Equal Access* proceeding.
    *See* Legacy AT&T Docket No. 02-39 Comments at 26-31; *Inquiry
    Concerning a Review of the Equal Access and Nondiscrimination
    Obligations Applicable to Local Exchange Carriers*, CC Docket No.
    02-39, Notice of Inquiry, 17 FCC Rcd 4015 (2002) (*Equal Access
    NOI*). The Wireline Competition Bureau (Bureau) recently requested
    that parties refresh the record in the *Equal Access NOI*
    proceeding. *Parties Asked to Refresh Record Regarding Review of
    Equal Access and Nondiscrimination Obligations Applicable to Local
    Exchange Carriers*, CC Docket No. 02-39, Public Notice, 22 FCC Rcd
    4553 (WCB 2007). Because the Commission's consideration of Legacy
    AT&T's arguments in the *Equal Access NOI* is pending, we decline to
    address those arguments here.

[^321]: Legacy MCI Section 272 FNPRM Comments at 5.

[^322]: *See Rules and Regulations Implementing the Telephone Consumer
    Protection Act of 1991*, CG Docket No. 02-278, Report and Order, 18
    FCC Rcd 14014 (2003) (*TCPA Order*). The Commission rejected legacy
    MCI's arguments for three reasons. First, the Commission noted that
    with the establishment of the national do-not-call registry,
    carriers are still permitted to telephone competitors' customers who
    have not placed their numbers on the national list. Second, the
    Commission explained that carriers will be able to call their prior
    and existing customers for 18 months after a previous purchase or
    transaction to market new products and services, such as local, long
    distance, or DSL services, as long as those customers have not asked
    to be placed on that carrier's company-specific, do-not-call list.
    Finally, the Commission pointed out that, for the remaining
    consumers with whom common carriers have no established business
    relationship and who are registered with the national do-not-call
    list, carriers may market to them using different advertising
    methods, such as direct mail. Because of the availability of
    consumers who have not registered for the national do-not-call list,
    and the 18-month window that enables competitors to contact
    customers who change from one provider to another, we find that
    these rules do not confer upon AT&T, Verizon, and Qwest an "unfair"
    advantage in marketing their services. *Id.* at 14085-86, para. 123.

[^323]: *See* Working Assets FNPRM Comments at 4; Legacy MCI FNPRM
    Comments at 45-46. The Commission has found that interpreting the
    Act to impose no additional obligations on the BOCs when they share
    CPNI with their section 272 affiliates than are imposed by section
    222 and the Commission's CPNI rules most reasonably reconciles the
    goals of section 222 and section 272. *Implementation of the
    Telecommunications Act of 1996: Telecommunications Carriers' Use of
    Customer Proprietary Information and Other Customer Information*,
    Second Report and Order, 13 FCC Rcd 8061 at paras. 158-169 (1998),
    *vacated sub nom.* *U.S. West, Inc. v. FCC*, 182 F.3d 1224 (10th
    Cir. 1999), *cert. denied*, 530 U.S. 1213 (2000); *see also
    Implementation of the Telecommunications Act of 1996:
    Telecommunications Carriers' Use of Customer Proprietary Information
    and Other Customer Information*, CC Docket Nos. 96-115, 96-149, and
    00-257, Third Report and Order and Third Further Notice of Proposed
    Rulemaking, 17 FCC Rcd 14860, 14919, para. 135 (2002) (stating that
    "\[o\]ur adoption today of an opt-out customer approval mechanism
    for the use of CPNI by carriers and their affiliates that provide
    communications-related services does not affect our prior statutory
    interpretation regarding the interplay between Sections 222 and 272,
    nor does it alter our ultimate conclusion that the term
    'information' in Section 272(c)(1) does not include CPNI").

[^324]: *See, e.g*., Legacy MCI FNPRM Comments at 24; Legacy AT&T FNPRM
    Comments at 45-46; *see also* *id.* at Selwyn Decl., pp. 66-67.

[^325]: *Detariffing of Billing and Collection Services*, CC Docket No.
    85-88, Report and Order, 102 FCC 2d 1150, at para. 34 (1986)
    (*Billing and Collection Detariffing Order*).

[^326]: *Billing and Collection Detariffing Order*, 102 FCC 2d 1150, at
    para. 53.

[^327]: *See, e.g.*, Legacy AT&T FNPRM Comments at 31-33; Legacy AT&T
    FNPRM Reply at 48-51; Legacy MCI FNPRM Reply at 2 (claiming that
    additional safeguards to reduce BOCs' special access rates are
    necessary); Legacy AT&T FNPRM Comments at 38-40 (arguing that the
    BOCs unlawfully offer discounts on switched access services to
    carriers, including the BOCs' own affiliates, based on growth in
    traffic).

[^328]: For example, carriers have the option of filing a complaint with
    the Commission if a carrier believes that a tariff contains an
    unlawful growth discount. *See* 47 U.S.C. § 208; *cf. BellSouth
    Telecommunications, Inc. v. FCC*, 469 F.3d 1052 (D.C. Cir. 2006)
    (vacating and remanding for further proceedings a Commission
    decision, in a section 208 complaint proceeding, that certain volume
    discounts for special access services violated sections 272(c)(1)
    and 272(e)(3)).

[^329]: *See,* *e.g.*, *Special Access Rates for Price Cap Local
    Exchange Carriers*, WC Docket No. 05-25, Order and Notice of
    Proposed Rulemaking, 20 FCC Rcd 1994 (2005) (*Special Access Pricing
    Reform NPRM*) (initiating a rulemaking to establish an appropriate
    regulatory regime for interstate special access charges once the
    Coalition for Affordable Local and Long Distance Service (CALLS)
    plan expires).

[^330]: *See, e.g.*, Legacy AT&T FNPRM Comments at 7-8, 40, 71
    (criticizing BOC implementation of the PIC process; calling for an
    independent PIC administrator; and seeking the implementation of a
    PIC administration performance metric); Working Assets FNPRM
    Comments at 5-6 (criticizing BOC implementation of the PIC process
    and calling for an independent PIC administrator); Legacy MCI FNPRM
    Comments at 28-31(criticizing BOC implementation of the PIC process;
    calling for an electronic authorization process; and seeking a
    reduction in the PIC change charge); COMPTEL NPRM Comments at 11-12
    (asserting that the BOCs process PIC changes in a discriminatory
    manner).

[^331]: Our rules require the LEC to promptly execute, without any
    unreasonable delay, PIC changes that have been verified by the
    submitting carrier. *See* 47 C.F.R. § 64.1120(a)(2). Our rules also
    state that no LEC shall implement a preferred carrier freeze unless
    the LEC confirms the subscriber's request to impose a freeze by the
    subscriber's: (a) written or electronically signed authorization;
    (b) electronic authorization; or (c) oral authorization through a
    qualified independent third party. *See* 47 C.F.R. § 64.1190. The
    BOC and their independent incumbent LEC affiliates, therefore, are
    prohibited by our rules from routinely placing PIC freezes on the
    accounts of customers who select that carrier or its affiliate for
    long distance service without first getting the proper authorization
    from the subscriber. Legacy AT&T FNPRM Comments at 40; *see also*
    Legacy MCI FNPRM Comments at 28-30.

[^332]: *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996, Policies and Rules
    Concerning Unauthorized Changes of Consumers Long Distance
    Carriers*, CC Docket No. 94-129, Third Report and Order and Second
    Order on Reconsideration, 15 FCC Rcd 15996, 16031, para. 76 (2000).

[^333]: *See, e.g.*, Legacy AT&T NPRM Comments at 41 (asserting that
    Verizon violated the Act in New York); Legacy AT&T Kansas and
    Oklahoma Petition at 10 (asserting violations in Kansas and
    Oklahoma); Legacy AT&T Massachusetts Petition at 10-11 (alleging
    violations of the Act by Verizon in Massachusetts); Sprint FNPRM
    Comments at 9-11 (alleging various violations by legacy SBC, Qwest,
    and Verizon).

[^334]: *See* Legacy AT&T Arkansas and Missouri Petition; Legacy AT&T
    Massachusetts Petition at 1 (discussing the levels of competition in
    Massachusetts); Legacy AT&T Kansas and Oklahoma Petition at 5, 7
    (discussing the levels of competition in Kansas and Oklahoma);
    Legacy AT&T Texas Petition at 5, 11-12 (discussing levels of
    competition in Texas). Commenters in various section 272 sunset
    proceedings raised arguments about the levels of competition in
    various states. *See, e.g.*, Texas Commission Reply at 1-2 (Legacy
    AT&T Texas Petition); Texas OAG Reply at 2 (Legacy AT&T Texas
    Petition).

[^335]: *See, e.g.*, Sprint Comments at 4 (Legacy AT&T Texas Petition)
    (arguing that section 272 safeguards should be extended); Sprint
    NRPM Comments at 6-11 (same); *see also, e.g.*, Texas Commission
    Reply at 1-2 (Legacy AT&T Texas Petition) (arguing that the
    Commission should not permit section 272 requirements to sunset in
    Texas.

[^336]: *See, e.g.*, Legacy AT&T NPRM Comments at 34-35 (arguing that a
    biennial audit in New York showed that Verizon's special access
    performance was discriminatory); *id.* at 41-42 (alleging PIC change
    violations by Verizon in New York); Sprint Comments (Legacy AT&T
    Texas Petition) at 15-18 (arguing that a biennial audit of legacy
    SBC failed to demonstrate compliance with section 272 in Texas);
    Sprint Reply (Legacy AT&T Texas Petition) at 2-3 (same); Legacy AT&T
    NPRM Comments at 36-37 (complaining that legacy SBC manipulated the
    biennial audit process in Texas); Legacy AT&T Reply (Legacy AT&T
    Texas Petition) at 10 (arguing that a biennial audit showed that
    legacy SBC gave favorable treatment to DSO, DS1, and DS3 orders from
    its affiliates); Legacy AT&T NPRM Comments at 36 (same); Texas
    Commission Comments (Legacy AT&T Texas Petition) at 2 (complaining
    that legacy SBC met the state performance requirements in only six
    of the first 31 months following its gaining section 271 authority
    in Texas).

[^337]: *See* AT&T Petition at 1, 4, 37. Appendix A provides a list of
    commenters on AT&T's Petition. We expressly limit the forbearance we
    grant here to the EA Scripting Requirement. The remainder of the
    AT&T Petition is addressed in a companion order that we release
    today. *See* *Petition of AT&T Inc. for Forbearance Under 47 U.S.C.
    § 160(c) with Regard to Certain Dominant Carrier Regulations for
    In‑Region, Interexchange Services*, WC Docket No. 06-120, Memorandum
    Opinion and Order, FCC 07‑160 (rel. Aug. 31, 2007); *see also supra*
    n. Error: Reference source not found.

[^338]: *See Equal Access Allocation Tariff Order*, 101 FCC 2d at
    949-50, para. 40; *Non-Accounting Safeguards Order*, 11 FCC Rcd at
    22046, para. 292; *BellSouth South Carolina Order*, 13 FCC Rcd at
    667-72, paras. 231-39 (stating that BOCs are permitted to market
    their own long distance services as long as they offer to read in
    random order a list of the names and, if requested, telephone number
    of all available interexchange carriers).

[^339]: *See* 47 U.S.C. § 251(g). In general terms, section 251(g)
    requires continued compliance with equal access and
    nondiscrimination requirements established prior to the enactment of
    the Telecommunications Act of 1996 by court order, consent decree,
    or the Commission until those requirements are explicitly superseded
    by subsequent Commission action.

[^340]: Telecommunications Act of 1996, Pub. Law No. 104-104, 110 Stat.
    56 (1996); *see also* Joint Explanatory Statement of the Committee
    of Conference, S. Conf. Rep. No. 230, 104th Cong., 2d Sess. 113.

[^341]: 47 U.S.C. § 160(a).

[^342]: 47 U.S.C. § 160(a)(1)-(3).

[^343]: 47 U.S.C. § 160(b).

[^344]: 47 U.S.C. § 160(a)(1).

[^345]: *See* AT&T Petition at 37; Verizon Comments, WC Docket No.
    06-120, at 7.

[^346]: *See* *SBC/AT&T Order*, 20 FCC Rcd at 18342, para. 91;
    *Verizon/MCI Order,* 20 FCC Rcd at 18483, para. 92; *AT&T/BellSouth
    Order*, 22 FCC Rcd at 5715-16, para. 97.

[^347]: *See* AT&T Comments, WC Docket No. 06-120, at 37; ACS Comments,
    WC Docket No. 06-120, at 3-4; Verizon Comments, WC Docket No.
    06-120, at 2-3, 7; *see also supra* paras. 23-27; *Qwest Section 272
    Sunset Forbearance Order*, 22 FCC Rcd at 5217-5220, paras. 16-20.

[^348]: *See supra* para. 27 & n.Error: Reference source not found.

[^349]: *See id*. As a result of these marketplace changes, legacy AT&T
    stopped marketing stand-alone long distance services to residential
    customers a number of years ago, and MCI reduced its marketing of
    such services. *See SBC/AT&T Order*, 20 FCC Rcd at 18342, para. 91;
    *Verizon/MCI Order*, 20 FCC Rcd at 18483, para. 92; *AT&T/BellSouth
    Order*, 22 FCC Rcd at 5715-16, para. 97.

[^350]: *See Equal Access Allocation Tariff Order*, 101 FCC 2d at 935,
    949-50, paras. 1, 40.

[^351]: *See SBC/AT&T Order*, 20 FCC Rcd at 18291-92, paras. 1-2.

[^352]: *See SBC/AT&T Order*, 20 FCC Rcd at 18348, para. 103 & n.313.

[^353]: *See SBC/AT&T Order*, 20 FCC Rcd at 18345, para. 96 & n.297;
    AT&T Petition at 37.

[^354]: *See* *SBC/AT&T Order*, 20 FCC Rcd at 18342-44, paras. 91-94;
    *Verizon/MCI Order*, 20 FCC Rcd at 18483-85, paras. 92-95;
    *AT&T/BellSouth Order*, 22 FCC Rcd at 5715-17, paras. 97-100; *see
    also* AT&T Petition at 9.

[^355]: *Petition of US West Communications, Inc. for a Declaratory
    Ruling Regarding the Provision of National Directory Assistance*,
    *Petition of US West Communications, Inc. for Forbearance*, CC
    Docket No. 97-172; *Use of N11 Codes and Other Abbreviated Dialing
    Arrangements*, CC Docket No. 92-105, Memorandum Opinion and Order,
    14 FCC Rcd 16252, 16270, para. 31 (1999). For the reasons stated
    above, we are not persuaded by commenters that contend that
    retention of the EA Scripting Requirement is necessary to prevent
    BOC dominance in the local exchange market from undermining
    competition in the long distance market. *See* COMPTEL Opposition,
    WC Docket No. 06-120, at 2, 11-12; NASUCA Comments, WC Docket No.
    06‑120, at 5-6; NASUCA Reply Comments, WC Docket No. 06-120, at 2-4;
    Sprint Nextel Opposition, WC Docket No. 06-120, at 6-7; COMPTEL
    Reply, WC Docket No. 06-120, at 3-4.

[^356]: 47 U.S.C. § 160(a)(2).

[^357]: 47 U.S.C. § 160(a)(3).

[^358]: *See* Verizon Comments, WC Docket No. 06-120, at 7-8; AT&T
    Petition at 37.

[^359]: *See BellSouth South Carolina Order*, 13 FCC Rcd at 671-72,
    para. 239.

[^360]: Section 10 provides for forbearance from "applying any
    regulation or any provision of the Act to a telecommunications
    carrier or telecommunications service, or *class of
    telecommunications carriers or telecommunications services*" if the
    Commission determines that the regulation at issue satisfies section
    10's three-prong test. 47 U.S.C. § 160(a) (emphasis added). Because
    the language in the AT&T Petition is couched in general terms and
    addresses the effect of this requirement on all of the BOCs, we
    understand the petition to request relief from the EA Scripting
    Requirement for all BOCs. *See* AT&T Petition at 37 ("Finally, the
    Commission should also forbear from enforcing equal access script
    requirements\[,\]" noting that "\[t\]hose requirements force AT&T
    and other BOCs to market their services inefficiently . . . ."). In
    addition, Verizon requests that the Commission eliminate the
    scripting requirement and other equal access requirements for all of
    the BOCs in this proceeding. *See* Verizon Comments, WC Docket No.
    06-120, at 10. Moreover, opponents to forbearance from the EA
    Scripting Requirement do not focus on factors that are unique to
    AT&T. Rather, they raise points that are relevant to the BOCs as a
    group. *See, e.g.,* NASUCA Comments, WC Docket No. 06-120, at 4-7;
    COMPTEL Opposition, WC Docket No. 06-120, at 11-12; NASUCA Reply at
    2-5. However, even if the AT&T Petition were viewed more narrowly,
    as a request only on its own behalf, we believe that it is
    reasonable to grant AT&T's request for forbearance from the EA
    Scripting Requirement and extend forbearance to the class as
    discussed above, given that the reasoning applies equally to all
    BOCs. We also note that the Commission has previously extended
    grants of forbearance on its own motion to include similarly
    situated carriers other than the individual petitioner. *See*
    *Petition of Core Communications, Inc. for Forbearance Under 47
    U.S.C. § 160(c) from Application of the ISP Remand Order*, Order, WC
    Docket No. 03-171, 19 FCC Rcd 20179, 20182, 20189, paras. 10, 27
    (2004), *petition for review denied*, *In re Core Communications,
    Inc.*, 455 F.3d 267 (D.C. Cir. 2006); *see also Federal-State Joint
    Board on Universal Service Petition of TracFone Wireless, Inc. for
    Forbearance from 47 U.S.C. § 214(e)(1)(A) and 47 C.F.R. §
    54.201(i)*, CC Docket No. 96-45, Order, 20 FCC Rcd 15095, 15098-99,
    para. 16 n.23 (2005).

[^361]: The Commission may waive its rules when good cause is
    demonstrated. 47 C.F.R. § 1.3; *see also WAIT Radio v. FCC*, 418
    F.2d 1153, 1159 (D.C. Cir. 1969) (*WAIT Radio*), *cert. denied*, 409
    U.S. 1027 (1972). The Commission may exercise its discretion to
    waive a rule where the particular facts make strict compliance
    inconsistent with the public interest. *See Northeast Cellular
    Telephone Co. v. FCC*, 897 F.2d 1164, 1166 (D.C. Cir. 1990)
    (*Northeast Cellular*). In doing so, the Commission may take into
    account considerations of hardship, equity, or more effective
    implementation of overall policy on an individual basis. *See* *WAIT
    Radio*, 418 F.2d at 1159; *Northeast Cellular*, 897 F.2d at 1166.
    Waiver of the Commission's rules is therefore appropriate if special
    circumstances warrant a deviation from the general rule, and such
    deviation will serve the public interest. *See Northeast Cellular*,
    897 F.2d at 1166.

[^362]: We thus deny as moot AT&T's request for forbearance from the EA
    Scripting Requirement to the extent that it extends to its
    independent incumbent LEC affiliates.

[^363]: *See* ACS Comments, WC Docket No. 06-120, at 5-8.

[^364]: *See* GCI Reply, WC Docket No. 06-120, at 8-11.

[^365]: *See* *Equal Access NOI*, 17 FCC Rcd 4015; *Parties Asked to
    Refresh Record Regarding Review of Equal Access and
    Nondiscrimination Obligations Applicable to Local Exchange
    Carriers*, CC Docket No. 02-39, Public Notice, 22 FCC Rcd 4553
    (2007).

[^366]: *See* 47 U.S.C. § 160(c) (deeming the petition granted as of the
    forbearance deadline if the Commission does not deny the petition
    within the time period specified in the statute); 47 C.F.R. §
    1.103(a) ("The Commission may, on its own motion or on motion by any
    party, designate an effective date that is either earlier or later
    in time than the date of public notice of such action.").

[^367]: The RFA, *see* 5 U.S.C. § 601 *et. seq*., has been amended by
    the Contract With America Advancement Act of 1996, Pub. L. No.
    104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the
    Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).

[^368]: 5 U.S.C. § 605(b).

[^369]: 5 U.S.C. § 601(6).

[^370]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C. S §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definition(s) in the Federal
    Register."

[^371]:  Small Business Act, 15 U.S.C. § 632.

[^372]: *See generally* 13 C.F.R. § 121.201; NAICS code 517110 (changed
    from 513310 in Oct. 2002).

[^373]: 5 U.S.C. § 605(b).

[^374]: *See* 44 U.S.C. § 3506(c)(4).

[^375]: Primary Interexchange Carrier (PIC) information for legacy AT&T
    lines and legacy SBC lines is reported in Exh. 1.a.i. PIC
    information for legacy BellSouth lines is reported in Exh. 1.a.ii,
    and PIC information for AT&T legacy lines within legacy BellSouth's
    region is reported in Exh. 2. Exhibit 2 reports statewide data and
    may overstate AT&T legacy PIC counts in the BOC's franchise areas.
    (AT&T Apr. 23, 2007 *Ex Parte* Letter, Exhs. 1a.i, 1a.ii, 2).

[^376]: *Id.*

[^377]: We estimate competitive lines by summing the number of AT&T's
    resold residential lines, AT&T's local wholesale complete (UNE-P)
    lines, and AT&T's estimate of facilities-based lines. *See* AT&T
    Apr. 23, 2007 *Ex Part*e Letter, Exh. 1.b, 1.d, 1.f. Consistent with
    Commission precedent, we assume all competitive local service
    customers have a PIC. *See,* *e.g.*, *Qwest Section 272 Sunset
    Forbearance Order*, 22 FCC Rcd at 5225, para. 33, n.99 (2007). This
    may result in a slight underestimate of AT&T's market share for
    interstate residential long distance service.

[^378]: We exclude wireless customers who have cut-the-cord because they
    cannot engage in usage substitution. We reject AT&T's estimates of
    the number of residential mobile wireless subscribers that have
    cut-the-cord because that estimate is for the state as a whole, and
    assumes a **\[REDACTED\]** percent penetration among residential
    consumers. The source document AT&T cites suggests a 61 percent
    penetration rate among residential consumers for 2006. AT&T Apr. 23,
    2007 *Ex Parte* Letter, Exh. 1.h, note 1 and IDC Attachment, pp.
    8-9.

[^379]: *Qwest Section 272 Sunset Forbearance Order*, 22 FCC Rcd at
    5225-26, para. 34, n.101. We note that AT&T's analysis assumes
    **\[REDACTED\]** percent of residential consumers have cut-the-cord.
    AT&T Apr. 23, 2007 *Ex Parte* Letter, Exh. 1.h, note 2.

[^380]: In December 2005, there were 95.6 million primary residential
    lines and 12.1 non-primary residential lines nationwide. *See*
    Trends in Telephone Service, Table 4, *available at*
    http:hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-270407A1.pdf.
    This suggests that 89 percent of households with wireline service
    have a single wireline phone.

[^381]: AT&T April 23, 2007 *Ex Parte* Letter, Exhs. 1.a., 1.d, 1.f.

[^382]: *See supra* n.Error: Reference source not found.

[^383]: AT&T Apr. 24, 2007 *Ex Parte* Letter at 2, Attach. at 4, citing
    a Yankee Group Report, "Pervasive Substitution Precedes Displacement
    and Fixed-Mobile Convergence in Latest Wireless Trends."

[^384]: We use the National Resource Utilization and Forecast (NRUF)
    database to estimate AT&T's share of mobile wireless numbers. *See*
    *Section 272(f)(1) Sunset of the BOC Separate Affiliate and Related
    Requirements; Information Derived from Numbering Resource
    Utilization and Forecast Report Data Placed Into the Record, Subject
    to Protective Order*, WC Docket No. 02-112, Public Notice, DA
    07-3727 (WCB rel. Aug. 24, 2007) (*NRUF Public Notice*); Letter from
    Brian Fontes, Vice President, Federal Regulatory, AT&T, to Marlene
    H. Dortch, Secretary, FCC, WC Docket No. 02-112 at 1 (filed May 9,
    2007) (AT&T May 9, 2007 *Ex Parte* Letter) (consenting to the
    inclusion of confidential NRUF data in the record in this
    proceeding). We estimate the number of AT&T mobile wireless
    customers that *have not* cut-the-cord by multiplying AT&T's share
    of mobile wireless numbers by the total number of mobile wireless
    service customers that have not cut-the-cord.

[^385]: *See supra* n.Error: Reference source not found. We include only
    those AT&T long distance customers that subscribe to an AT&T local
    service offering.

[^386]: We estimate the number of AT&T mobile wireless customers that
    have cut-the-cord by multiplying AT&T's share of mobile wireless
    numbers, as derived from the NRUF database, by the total number of
    mobile wireless customers that have cut-the-cord.

[^387]: Verizon Mar. 27, 2007 *Ex Parte* Letter, Exhs. 1.A.1, 1.A.2;
    Verizon Apr. 3, 2007 *Ex Parte* Letter, Exh. 1.A.1.b., 1.A.2.a;
    Verizon Apr. 13, 2007 *Ex Parte* Letter, Exh. 2 Supplement, Exh. 2B.
    Verizon provides PIC information for legacy MCI residential local
    lines on a state-wide basis. For each Verizon franchise area, we
    estimate the number of legacy MCI residential local lines with a
    legacy MCI PIC in two steps. First, we take the difference between
    Verizon's residential local lines that include legacy MCI local
    lines and Verizon's residential local line lines that exclude legacy
    MCI local lines. *See* Verizon Mar. 27, 2007 *Ex Parte* Letter, Exh.
    1.A.4; Verizon Apr. 3, 2007 *Ex Parte* Letter, Exh. 1.A.1.a. Verizon
    did not provide a combined count of its Verizon and legacy MCI local
    lines for its Bell Atlantic and GTE regions of Pennsylvania and
    Virginia. We estimate the number of combined Verizon/MCI lines for
    Verizon's Bell Atlantic region in Pennsylvania by multiplying the
    number of its combined Verizon/MCI lines for Pennsylvania as a whole
    by (the number of Bell Atlantic local lines in Pennsylvania divided
    by the total number of Verizon's local lines in Pennsylvania).
    Likewise, we estimate the number of combined Verizon/MCI lines for
    Verizon's GTE region in Pennsylvania by multiplying the number of
    its combined Verizon/MCI lines for Pennsylvania as a whole by (the
    number of GTE local lines in Pennsylvania divided by the total
    number of Verizon's local lines in Pennsylvania). We use the same
    method to estimate Verizon Bell Atlantic and GTE lines in Virginia.
    Second, we assume **\[REDACTED\]** percent of legacy MCI's local
    lines have a MCI PIC. Verizon Apr. 17, 2007 *Ex Parte* Letter at 2
    ("In December 2006, MCI or VZ was the presubscribed long-distance
    carrier for approximately **\[REDACTED\]** percent of residential
    lines for which the former MCI was the local provider.").

[^388]: *See supra* n. 387 and *Ex Parte* Letters cited therein for
    sources.

[^389]: *See supra* n. 387 and *Ex Parte* Letters cited therein for
    sources. We estimate the number of competitive lines by summing the
    number of Verizon's resold residential lines, the number of
    Verizon's residential wholesale advantage lines and Verizon's
    estimate of the number of facilities-based residential lines.
    Verizon Mar. 27, 2007 *Ex Parte* Letter, Exhs. 1.B, 1.D and 1.F;
    Verizon Apr. 5, 2007 *Ex Parte* Letter at 2-3, Exh. 1.F.3; Verizon
    Apr. 13, 2007 *Ex Parte* Letter, Specification 1 Supplement, Exhs.
    1.B.1, 1.D.1, 1.F.4. Consistent with Commission precedent, we assume
    all legacy MCI local service customers and all competitive local
    service customers have a PIC. (*See,* *e.g.,* *Qwest Section 272
    Sunset Forbearance Order*, 22 FCC Rcd at 5225, para. 33, n.99). This
    may result in a slight underestimate of Verizon's market share for
    long distance services.

[^390]: We exclude wireless customers who have cut-the-cord because they
    cannot engage in usage substitution.

[^391]: We use the NRUF database to estimate Verizon Wireless' share of
    mobile wireless numbers. *See* Letter from John T. Scott, III, Vice
    President & Deputy General Counsel, Regulatory Law, Verizon
    Wireless, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 02-112
    at 1 (filed May 8, 2007) (Verizon May 8, 2007 *Ex Parte* Letter)
    (consenting to the inclusion of confidential NRUF data in the record
    in this proceeding). We estimate the number of Verizon Wireless
    mobile wireless customers that have *not* cut-the-cord by
    multiplying Verizon Wireless' share of mobile wireless numbers by
    the total number of mobile wireless service customers that have not
    cut-the-cord (as derived in Step 3).

[^392]: *See supra* n.Error: Reference source not found. We include only
    those Verizon long distance customers that subscribe to a Verizon
    local service offering.

[^393]: We use the NRUF database to estimate Verizon Wireless's share of
    mobile wireless numbers. *See NRUF Public Notice*. We multiply this
    share by the estimate of the total number of mobile wireless
    customers that have cut-the-cord described in Note 2, Step 1.

[^394]: *See* *supra* n.Error: Reference source not found.