Before the

Federal Communications Commission

**Washington, D.C. 20554**

+----------------------------------+---+-------------------------------+
| In the Matter of                 | ) | WCB/Pricing No. 04-01         |
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| Verizon Petition for Pricing     | ) |                               |
| Flexibility for                  |   |                               |
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| Special Access and Dedicated     |   |                               |
| Transport Services               | ) |                               |
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|                                  | ) |                               |
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|                                  | ) |                               |
|                                  |   |                               |
|                                  | ) |                               |
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|                                  | ) |                               |
+----------------------------------+---+-------------------------------+

**MEMORANDUM OPINION AND ORDER**

Adopted: May 12, 2004 Released: May 12, 2004

By the Chief, Wireline Competition Bureau:

# introduction

1.  On January 16, 2004, the Verizon Telephone Companies (Verizon) filed
    a petition seeking pricing flexibility for special access and
    dedicated transport services in designated geographic areas.
    Specifically, Verizon has applied for Phase I and Phase II relief
    for four additional MSAs within its service territory. [^1]
    As detailed below, the Commission established the parameters for
    granting pricing flexibility for special access and dedicated
    transport services in its *Pricing Flexibility Order*.[^2] In doing
    so, the Commission recognized the importance of granting pricing
    flexibility to incumbent local exchange carriers (LECs) as
    competition develops in the market for interstate access services
    "to ensure that our regulations do not unduly interfere with the
    operation of those markets."[^3] For the reasons that follow, we
    grant Verizon's petition.[^4]

# Background

2.  To recover the costs of providing interstate access services,
    incumbent LECs charge interexchange carriers (IXCs) and end users
    for access services in accordance with the Commission's Part 69
    access charge rules.[^5] In the *Access Charge Reform First Report
    and Order*, the Commission adopted a market-based approach to access
    charge reform, pursuant to which it would relax restrictions on
    incumbent LEC pricing as competition emerges.[^6] At that time, the
    Commission deferred resolution of the specific timing and degree of
    pricing flexibility to a future order.[^7] Subsequently, in the
    *Pricing Flexibility Order*, the Commission provided detailed rules
    for implementing the market-based approach.[^8]

3.  The framework the Commission adopted in the *Pricing Flexibility
    Order* grants progressively greater flexibility to LECs subject to
    price cap regulation as competition develops, while ensuring
    that: (1) price cap LECs do not use pricing flexibility to deter
    efficient entry or engage in exclusionary pricing behavior; and (2)
    price cap LECs do not increase rates to unreasonable levels for
    customers that lack competitive alternatives.[^9] In addition, the
    reforms are designed to facilitate the removal of services from
    price cap regulation as competition develops in the marketplace,
    without imposing undue administrative burdens on the Commission or
    the industry.[^10]

4.  In keeping with these goals, the Commission established a framework
    for granting price cap LECs greater flexibility in the pricing of
    interstate access services once they make a competitive showing, or
    satisfy certain "triggers," to demonstrate that market conditions in
    a particular area warrant the relief they seek. Pricing flexibility
    for special access and dedicated transport services[^11] is
    available in two phases, based on an analysis of competitive
    conditions in individual metropolitan statistical areas (MSAs).[^12]

5.  [Phase I Pricing Flexibility]{.underline}. A price cap LEC that
    obtains Phase I relief is allowed to offer, on one day's notice,
    contract tariffs[^13] and volume and term discounts for qualifying
    services, so long as the services provided pursuant to contract are
    removed from price caps.[^14] To protect those customers that may
    lack competitive alternatives, a price cap LEC receiving Phase I
    flexibility must maintain its generally available price cap
    constrained tariffed rates for these services.[^15] To obtain Phase
    I relief, a price cap LEC must meet triggers designed to demonstrate
    that competitors have made irreversible, sunk investments in the
    facilities needed to provide the services at issue. In particular,
    to receive pricing flexibility for dedicated transport and special
    access services (other than channel terminations to end users), a
    price cap LEC must demonstrate that unaffiliated competitors have
    collocated in at least 15 percent of the LEC's wire centers within
    an MSA, or have collocated in wire centers accounting for 30 percent
    of the LEC's revenues from these services within an MSA.[^16] In
    both cases, the price cap LEC also must show, with respect to *each*
    wire center, that at least one collocator is relying on transport
    facilities provided by an entity other than the incumbent LEC.[^17]

6.  Higher thresholds apply for obtaining Phase I pricing flexibility
    for channel terminations between a LEC\'s end office and an end user
    customer. A competitor collocating in a LEC end office continues to
    rely on the LEC's facilities for the channel termination between the
    end office and the customer premises, at least initially, and thus
    is more susceptible to exclusionary pricing behavior by the
    LEC.[^18] As a result, a price cap LEC must demonstrate that
    unaffiliated competitors have collocated in at least 50 percent of
    the LEC's wire centers within an MSA, or have collocated in wire
    centers accounting for 65 percent of the LEC's revenues from these
    services within an MSA.[^19] Again, the LEC also must demonstrate,
    with respect to each wire center, that at least one collocator is
    relying on transport facilities provided by an entity other than the
    incumbent LEC.[^20]

7.  [Phase II Pricing Flexibility]{.underline}. A price cap LEC that
    receives Phase II relief is allowed to offer dedicated transport and
    special access services free from the Commission's Part 69 rate
    structure and Part 61 price cap rules. The LEC, however, is required
    to file, on one day's notice, generally available tariffs for those
    services for which it receives Phase II relief.[^21] To obtain Phase
    II relief, a price cap LEC must meet triggers designed to
    demonstrate competition for the services at issue within the MSA is
    sufficient to preclude the incumbent from exploiting any individual
    market power over a sustained period. To obtain Phase II relief for
    dedicated transport and special access services (other than channel
    terminations to end users), a price cap LEC must demonstrate that
    unaffiliated competitors have collocated in at least 50 percent of
    the LEC's wire centers within an MSA, or have collocated in wire
    centers accounting for 65 percent of the LEC's revenues from these
    services within an MSA.[^22] Higher thresholds apply for obtaining
    Phase II pricing flexibility relief for channel terminations between
    a LEC end office and an end user customer. To obtain such relief, a
    price cap LEC must demonstrate that unaffiliated competitors have
    collocated in at least 65 percent of the LEC's wire centers within
    an MSA, or have collocated in wire centers accounting for 85 percent
    of the LEC's revenues from these services within an MSA.[^23] Once
    again, the LEC also must demonstrate, with respect to each wire
    center, that at least one collocator is relying on transport
    facilities provided by an entity other than the incumbent LEC.[^24]

# DISCUSSION

## Petitions and Comments

8.  Verizon seeks pricing flexibility for certain dedicated transport
    and special access services listed in its petition and set forth in
    Appendix A of this order.[^25] Appendix B sets forth the various
    forms of pricing flexibility (Phase I or Phase II) requested by
    Verizon and lists the MSAs for which the relief is requested.

9.  AT&T filed comments in opposition to Verizon's petition. [^26]
    Specifically, AT&T contends that it demonstrates in its Petition for
    Rulemaking[^27] that price cap LECs are charging unjust and
    unreasonable rates in areas where they have already received pricing
    flexibility. In asking the Commission to institute a moratorium on
    any further grants of pricing flexibility pending a rulemaking
    proceeding, AT&T asserts that ARMIS reports for 2001 show that the
    dominant incumbent LECs are earning rates of return dramatically
    higher than the 11.25 percent that was found to be just and
    reasonable in 1990.[^28] AT&T argues that these rates of return are
    even more unreasonable in light of the lower inflation and debt
    interest rates that prevail today. Citing language from the
    Commission's recent *Triennial Review Order*, AT&T notes that the
    Commission itself has found that the competitive entry that has
    occurred in the special access market is limited to the very highest
    capacity services (i.e., OC-n level services).[^29] AT&T also
    contends that the triggers for pricing flexibility fail to measure
    whether meaningful competition exists for the relevant services.
    Thus, AT&T alleges that the Bells' month-to-month special access
    rates are uniformly higher in areas in which they have received
    Phase II pricing flexibility than they are in areas still subject to
    price caps.[^30] AT&T does not, however, challenge Verizon's showing
    that it meets the Commission's established requirements for pricing
    flexibility.

10. In response, Verizon contends that the arguments regarding the
    Commission's pricing flexibility rules and triggers are merely
    collateral attacks on the *Pricing Flexibility Order* and that the
    only issue relevant to this proceeding is whether the petitioner has
    satisfied the criteria for a grant of pricing flexibility.[^31]
    Verizon also contends that AT&T's moratorium request is, in essence,
    "a request that such petitions be denied regardless of the merits."
    [^32] Verizon further contends that, since its instant petition
    satisfies the current pricing flexibility rules, "unless and until
    the Commssion changes it rules...there is no legal basis for the
    Commission to deny a petition that meets those rules."[^33]

## Adequacy of the Pricing Flexibility Rules

11. As a threshold matter, we reject AT&T's arguments regarding the
    adequacy of the Commission's pricing flexibility rules to identify
    competitive markets. We have stated repeatedly that we will not
    consider collateral challenges to the *Pricing Flexibility Order*
    when reviewing a pricing flexibility petition.[^34] In this
    proceeding, we restrict ourselves to determining whether the
    petition satisfies the requirements for pricing flexibility for
    special access and dedicated transport services set forth in the
    Commission's rules.

12. We also reject AT&T's request for a moratorium on all pricing
    flexibility petitions until we have acted on its petition to
    reregulate special access services. The Commission's rules in effect
    at this time provide for a grant of pricing flexibility where the
    incumbent LEC has made the required evidentiary showing.

## C. Competitive Showing Required for Pricing Flexibility {#c.-competitive-showing-required-for-pricing-flexibility .unnumbered}

13. Pricing flexibility may be granted upon the satisfaction of certain
    competitive showings. An incumbent LEC bears the burden of proving
    that it has satisfied the applicable triggers for the pricing
    flexibility it seeks for each MSA.[^35] For special access and
    dedicated transport services, the Commission established two means
    of satisfying this requirement. In the first, the incumbent must
    show: (1) the total number of wire centers in the MSA; (2) the
    number and location of the wire centers in which competitors have
    collocated; (3) the name, in each wire center on which the incumbent
    bases its petition, of at least one collocator that uses transport
    facilities owned by a provider other than the incumbent to transport
    traffic from that wire center; and (4) that the percentage of wire
    centers in which competitors have collocated and use competitive
    transport satisfies the trigger the Commission adopted with respect
    to the pricing flexibility sought by the incumbent LEC.[^36]
    Alternatively, the incumbent must show: (1) the total base
    period[^37] revenues generated by the services for which the
    incumbent seeks relief in the MSA for which the incumbent seeks
    relief; (2) the name, in each wire center on which the incumbent
    bases its petition, of at least one collocator that uses transport
    facilities owned by a provider other than the incumbent to transport
    traffic from that wire center; and (3) that the wire centers in
    which competitors have collocated and use competitive transport
    account for a sufficient percentage of the incumbent's base period
    revenues generated by the services at issue within the relevant MSA
    to satisfy the trigger the Commission adopted for the pricing
    flexibility sought by the incumbent LEC.[^38]

14. With respect to each MSA,Verizon chose the latter, revenue-based
    alternative to demonstrate that it has met the applicable
    trigger(s).[^39] For its data calculations, Verizon began by
    attributing revenues to specific wire centers.[^40] Verizon
    extracted the underlying revenue data from its Carrier Access
    Billing System (CABS).[^41] In the former Bell Atlantic areas,
    Verizon extracted information from year 2002 billing records at the
    circuit level, apportioning mileage-based revenue between wire
    centers as appropriate.[^42] In the former GTE areas, Verizon
    extracted information from year 2002 billing records at the product
    or service level, apportioning revenue by applying the ratio of a
    particular wire center's mileage revenue to the larger circuit's
    total mileage revenue.[^43] Whenever a wire center was not
    identifiable in Verizon's billing databases, Verizon apportioned the
    revenue to its wire centers in the same proportion suggested by the
    majority of the data, including wire center information.[^44]

15. Verizon identified those MSAs that qualify for pricing flexibility
    by: (1) assigning wire centers to individual MSAs; (2) calculating
    end user channel termination revenue, together with all other
    special access and dedicated transport revenue earned in each
    MSA; (3) calculating end user channel termination revenue, together
    with all other special access and dedicated transport revenue, that
    was attributable to each collocated wire center within the MSA;
    and (4) calculating the percentage of such revenue earned in the
    collocated wire centers against the total revenues earned in the
    MSA.[^45]

16. Finally, Verizon stated pursuant to section 1.774(e)(ii) of the
    Commission's rules that it provided the required notice to the
    relevant collocators on which this application is based.[^46]
    Verizon also stated that it inspected all of the relevant wire
    centers for collocators and the presence of operational non-Verizon
    collocation transport facilities.[^47]

17. After reviewing Verizon's verification method, as described in the
    petition, together with the data provided in the public and
    confidential versions of its petition and in its reply, we find that
    Verizon has met the applicable triggers in section 1.774 of the
    Commission's rules.[^48] Based upon a review of the information
    submitted, we conclude that Verizon has satisfied its burden of
    demonstrating that it has met the applicable requirements for each
    of the various services and MSAs for which it requests relief.

    **IV. ORDERING CLAUSES**

18. Accordingly, IT IS ORDERED that, pursuant to section 1.774 of the
    Commission\'s Rules, 47 C.F.R. § 1.774, and the authority delegated
    by sections 0.91 and 0.291 of the Commission\'s Rules, 47 C.F.R. §§
    0.91 and 0.291, and the *Pricing Flexibility Order,* the petition
    filed by Verizon Telephone Companies, Inc. IS GRANTED to the extent
    detailed herein.

    FEDERAL COMMUNICATIONS COMMISSION

    William F. Maher, Jr.

    Chief, Wireline Competition Bureau

    **APPENDIX A**

    **SERVICES QUALIFYING FOR PRICING FLEXIBILITY**

    **[Verizon-East]{.underline}** **[Verizon-West]{.underline}**

    **[Special Access Basket]{.underline}** **[Special Access
    Basket]{.underline}**

    Metallic Metallic

    Enterprise Service Telegraph

    Telegraph Voice Grade

    Voice Grade WATS Access Line

    WATS Access Line Program Audio

    Program Audio Video Connect

    Video Wideband Analog

    Wideband Analog Wideband Data

    Wideband Data DDS

    DDS Fractional T1 (FT1)

    DS1 European T1 (ET1)

    DS3 MetroLAN

    SONET Services DS1

    Fiber Distributed Data Interface (FDDI) DS3

    Internet Protocol Routing Service (IPRS) Fiber Connect

    Facilities Management Service (FMS) Optical Networking Services

    Frame Relay Services TCP/IP

    DSL (Digital Subscriber Line) Services Frame Relay Services

    TLS (Transparent LAN Service) DSL (Digital Subscriber Line) Services

    SMDS (Switced Multi-Megabit Data Services TLS (Transparent LAN
    Service)

    ATM (Asynchronous Transfer Mode) Services ATM (Asynchronous Transfer
    Mode) Services

    **[Trunking Basket]{.underline} [Trunking Basket]{.underline}**

    Metallic Metallic

    VG VG

    DS1 Fractional T1 (FT1)

    DS3 DS1

    SONET Services DS3

    Facilities Management Services (FMS) Optical Networking Services

    **APPENDIX B**

    **[PRICING FLEXIBILITY RELIEF FOR DEDICATED TRANSPORT AND SPECIAL
    ACCESS SERVICES]{.underline}**

    **MSA Type of Relief Requested**

    Dutchess County NY Phase II

    Flint MI Phase I

    Houston TX Phase I

    Elkhart-Goshen IN Phase II

    **[PRICING FLEXIBILITY RELIEF FOR CHANNEL TERMINATIONS TO END
    USERS]{.underline}**

    **MSA Type of Relief Requested**

    Elkhart-Goshan IN Phase I

[^1]: *See* Verizon Petition for Pricing Flexibility for Special Access
    and Dedicated Transport Services (filed Jan. 16, 2004); *Pleading
    Cycle Established for Verizon Petition for Pricing Flexibility for
    Special Access and Dedicated Transport Services*, WCB/Pricing 04-01,
    Public Notice, 19 FCC Rcd 1084 (Wireline Comp. Bur., 2004).

[^2]: *See* *Access Charge Reform,* CC Docket No. 96-262, Fifth Report
    and Order, 14 FCC Rcd 14221 (1999) (*Pricing Flexibility Order*),
    *aff'd*, *WorldCom, Inc. v. FCC*, 238 F.3d 449 (D.C. Cir. 2001)
    (*WorldCom*). The *Pricing Flexibility Order* also addressed
    flexibility for switched access services, but those services are not
    at issue in the Verizon petition.

[^3]: *Pricing Flexibility Order*, 14 FCC Rcd at 14224.

[^4]: In the *Pricing Flexibility Order*, the Commission amended its
    rules expressly to delegate authority to the Chief, Common Carrier
    Bureau (now called the Wireline Competition Bureau), to act on
    petitions for pricing flexibility involving special access and
    dedicated transport services. *See* 47 C.F.R. § 0.291(j)(1).

[^5]: 47 C.F.R. Part 69. Part 69 establishes two basic categories of
    access services: special access services and switched access
    services. *Compare* 47 C.F.R. § 69.106 *with id.* § 69.114. Special
    access services employ dedicated facilities that run directly
    between the end user and an IXC point of presence (POP), the
    physical plant where an IXC connects its network with the LEC
    network. Charges for special access services generally are divided
    into channel termination charges and channel mileage charges.
    Channel termination charges recover the costs of facilities between
    the customer's premises and the LEC end office and the costs of
    facilities between the IXC POP and the LEC serving wire center. *See
    id.* §§ 69.703(a). Channel mileage charges recover the costs of
    facilities (also known as interoffice facilities) between the LEC
    serving wire center and the LEC end office serving the end user.
    *See* *Pricing Flexibility Order*, 14 FCC Rcd at 14226-27.

[^6]: *Access Charge Reform*, CC Docket No. 96-262, First Report and
    Order, 12 FCC Rcd 15982 (1997) (*Access Charge Reform First Report
    and Order*), *aff'd, Southwestern Bell v. FCC,* 153 F.3d 523 (8^th^
    Cir. 1998).

[^7]: *Access Charge Reform First Report and Order*, 12 FCC Rcd at
    15989.

[^8]: *Pricing Flexibility Order*, 14 FCC Rcd at 14225 (citing *Access
    Charge Reform First Report and Order*, 12 FCC Rcd at 15989,
    16094-95).

[^9]: *Pricing Flexibility Order*, 14 FCC Rcd at 14225. The Commission
    instituted price cap regulation for the Regional Bell Operating
    Companies (RBOCs) and GTE in 1991, and permitted other LECs to adopt
    price cap regulation voluntarily, subject to certain conditions.
    *Policy and Rules Concerning Rates for Dominant Carriers*, CC Docket
    No. 87-313, Second Report and Order, 5 FCC Rcd 6786, 6818-20 (1990).
    The *Pricing Flexibility Order* applies only to LECs that are
    subject to price cap regulation.

[^10]: *Pricing Flexibility Order*, 14 FCC Rcd at 14225*.*

[^11]: For purposes of pricing flexibility proceedings, "dedicated
    transport services" refer to services associated with entrance
    facilities, direct-trunked transport, and the dedicated component of
    tandem-switched transport. *Pricing Flexibility Order*, 14 FCC Rcd
    at 14234. These services are defined in 47 C.F.R. § 69.2(qq)
    (entrance facilities), § 69.2(oo) (direct-trunked transport), and §
    69.2(ss) (tandem-switched transport).

[^12]: *See* 47 C.F.R. § 22.909(a) (definition of MSA).

[^13]: A contract tariff is a tariff based on an individually negotiated
    service contract. *See Competition in the Interstate Interexchange
    Marketplace,* CC Docket No. 90-132, Report and Order, 6 FCC Rcd
    5880, 5897 (1991) (*Interexchange Competition Order*); 47 C.F.R. §
    61.3(o). *See also* 47 C.F.R. § 61.55 (describing required
    composition of contract-based tariffs).

[^14]: *Pricing Flexibility Order,* 14 FCC Rcd at 14287.

[^15]: *Id.* at 14234-35.

[^16]: *Id.* at 14274, 14277-81; 47 C.F.R.§ 69.709(b).

[^17]: 47 C.F.R. § 69.709(b).

[^18]: *Pricing Flexibility Order*, 14 FCC Rcd at 14279.

[^19]: *Pricing Flexibility Order*, 14 FCC Rcd at 14280-81; 47 C.F.R.§
    69.711(b).

[^20]: 47 C.F.R. § 69.711(b).

[^21]: *Id.* at 14299-14301; 47 C.F.R. § 69.727(b)(3).

[^22]: *Pricing Flexibility Order*, 14 FCC Rcd at 14299; 47 C.F.R. §
    69.709(c).

[^23]: *Pricing Flexibility Order*, 14 FCC Rcd at 14235; 47 C.F.R. §
    69.711(c).

[^24]: 47 C.F.R. § 69.711(c).

[^25]: *See supra* para. 1. We note that the Bureau previously granted
    Verizon Phase I and II pricing flexibility for certain special
    access and channel termination services in various geographic areas
    across the country*. See Verizon Petitions for Pricing Flexibility
    for Special Access and Dedicated Transport Services* WCB/Pricing
    Nos. 02-33 and 00-24, Memorandum Opinion and Order, 18 FCC Rcd 6237
    (Wireline Comp. Bur. 2003) and 16 FCC Rcd 5889 (Com. Car. Bur.
    2001), respectively. *See also Petition of Verizon for Pricing
    Flexibility for Special* *Access and Dedicated Transport Services*,
    CCB/CPD File No. 01-27, Memorandum Opinion and Order, 17 FCC Rcd
    5359 (Com. Car. Bur. 2002).

[^26]: AT&T Opposition To Verizon Petition For Pricing Flexibility For
    Special Access and Dedicated Transport Services at 2 (filed Feb. 2,
    2004) (AT&T Opposition).

[^27]: *AT&T Petition for Rulemaking to Reform Regulation of Incumbent
    Local Exchange Carrier Rates for Interstate Special Access
    Services*, RM No. 10593, Petition of AT&T (filed Oct. 15, 2002);
    *see also* *Wireline Competition Bureau Seeks Comment On AT&T\'s
    Petition For Rulemaking To Reform Regulation Of Incumbent Local
    Exchange Carrier Rates For Interstate Special Access Services,*
    Public Notice, 17 FCC Rcd 21530 (Wire. Comp. Bur. 2002).

[^28]: AT&T Opposition at 2.

[^29]: *Id.* at 2 (citing *Review of the Section 251 Unbundling
    Obligatons of Incumbent Local Exchange Carriers*, Report and Order
    and Order on Remand and Further Notice of Proposed Rulemaking, 18
    FCC Rcd 16978 (2003) (*Triennial Review Order*)).

[^30]: *Id*. at 3.

[^31]: Reply of Verizon at 1 (filed Feb. 12, 2004) (Verizon Reply).

[^32]: *Id*. at 2.

[^33]: *Id.*

[^34]: *See, e.g.,* *Petition of Ameritech Illinois, Ameritech Indiana,
    Ameritech Michigan, Ameritech Ohio, and Ameritech Wisconsin for
    Pricing Flexibility, Petition of Pacific Bell Telephone Company for
    Pricing Flexibility, Petition of Southwestern Bell Telephone Company
    for Pricing Flexibility*, File Nos. CCB/CPD 00-26, 00-23, 00-25,
    Memorandum Opinion and Order, 16 FCC Rcd 5889 (Com. Car. Bur. 2001).

[^35]: *Pricing Flexibility Order*, 14 FCC Rcd at 14309.

[^36]: 47 C.F.R. § 1.774(a)(3)(i)-(iv)(A).

[^37]: For price cap LECs, the "base period" is the 12-month period
    (*i.e.*, the calendar year) ending 6 months before the effective
    date of the LECs' annual access tariffs. 47 C.F.R. § 61.3(g).

[^38]: 47 C.F.R. §§ 1.774(a)(3)(i)-(iii), (iv)(B).

[^39]: Verizon Petition, Attachment B at 1-2.

[^40]: Verizon's methodology consisted of attributing revenue: (1) to
    the serving wire center, for entrance facilities and channel
    terminations between an IXC's POP and Verizon's serving wire center;
    (2) to the end office, for channel terminations between Verizon's
    end office and an end user customer; (3) 50 percent to each wire
    center on either end of dedicated services between Verizon wire
    centers; or (4) to the wire center where any other equipment and
    facilities providing service other than the above are located*. Id.*

[^41]: *Id.*

[^42]: Verizon's methodology for the former Bell Atlantic areas
    consisted of apportioning mileage revenue between specific ends of
    transmission paths: (1) 50 percent to each office, when both wire
    centers are Verizon offices; or (2) 100 percent to the Verizon
    office, when the other wire center is for another LEC's office.
    *Id.* at 2.

[^43]: Because the end points of mileage circuits could not be
    identified, Verizon's methodology for the former GTE areas consisted
    of apportioning mileage revenue between circuits: (1) 50 percent to
    each office, when both wire centers are Verizon offices; or (2) 100
    percent to the Verizon office, when the other wire center is another
    LEC's office. *Id.* at 3. Verizon then calculated a ratio in which
    the numerator was the particular wire center's mileage revenue, and
    the denominator was the total mileage revenue for all wire centers.
    *Id.* Finally, this ratio was applied to the total year 2002 mileage
    revenue (using December 2002 CABS billing data) to derive each
    particular wire center's year 2002 mileage revenue. *Id.*

[^44]: *Id.* at 4. The unidentified revenue is less than one percent of
    the total revenues in the MSAs for which Verizon seeks pricing
    flexibility. *Id.*

[^45]: *Id.* at 4.

[^46]: Verizon Petition, Attachment E.

[^47]: *Id.*, Attachment F.

[^48]: 47 C.F.R. § 1.774.