Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | File No. EB-00-018           |
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| Net2000 Communications, Inc.,    | ** |                              |
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| Complainant,                     | *  |                              |
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| Verizon - Washington, D.C., Inc. | *  |                              |
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| Verizon -- Maryland, Inc., and   | ** |                              |
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| Verizon -- Virginia, Inc.,       | *  |                              |
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**Memorandum Opinion and Order**

**Adopted: December 21, 2001 Released: January 9, 2002**

By the Commission:

# I. INTRODUCTION {#i.-introduction .unnumbered}

1.  In this Memorandum Opinion and Order, we deny a complaint filed by
    Net2000 Communications Services, Inc. ("Net2000") against Verizon --
    Washington, D.C., Inc., Verizon -- Maryland, Inc. and Verizon --
    Virginia, Inc. (collectively, "Verizon" or "Defendants") pursuant to
    section 208 of the Communications Act of 1934, as amended
    ("Act").[^1] As more specifically detailed below, we find that
    Verizon did not violate the Act or our rules by denying Net2000's
    requests for the conversion of certain special access circuits to
    enhanced extended links ("EELs").

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II. **BACKGROUND**

    **A. The Parties**

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2.  Net2000 is a competitive local exchange carrier ("CLEC") that
    provides local exchange, exchange access, and interexchange
    telephone services within the service areas of the Defendants and
    other local exchange carriers.[^2] The Defendants are corporate
    subsidiaries of Verizon Communications Inc.[^3] Each is a common
    carrier that maintains its headquarters in and provides local
    exchange telephone services to the public within the state indicated
    by its name.[^4] The Defendants are also incumbent local exchange
    carriers ("ILECs") within the meaning of Section 251(h) of the
    Act.[^5]

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B.  **The Right of CLECs to Have Special Access Circuits Obtained from
    ILECs Converted or Re-Priced as Unbundled Network Elements**

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3.  Our rules implementing Section 251(c)(3) of the Act[^6] require
    ILECs, upon request, to "convert" or re-price certain special access
    circuits into a combination of unbundled network elements called an
    "enhanced extended link" or "EEL." While not an unbundled network
    element itself, an EEL is comprised of an unbundled loop (including
    multiplexing/concentration equipment) and unbundled dedicated
    transport.[^7] The conversion of existing tariffed special access
    circuits to EELs will, in many cases, significantly reduce the
    CLEC's expense and commensurately decrease the ILEC's income for
    those facilities.[^8]

4.  The Complaint before us concerns Net2000's efforts to have its
    special access circuits converted to EELs and Verizon's responses to
    those efforts. The facts underlying Net2000's Complaint are largely
    undisputed.[^9] On the other hand, the parties substantially dispute
    the applicable rules used to convert special access circuits to
    EELs. Consequently, a brief review of the statute and the relevant
    Commission orders is necessary to understand the positions and
    actions of the parties with respect to the EEL conversion requests
    at issue.

5.  In our First Report and Order in *Implementation of the Local
    Competition Provisions in the Telecommunications Act of 1996*
    ("*Local Competition Order*"),[^10] we prescribed rules to implement
    section 251(c)(3) and specified that local loops[^11] and
    interoffice transmission facilities[^12] were among the "network
    elements" that ILECs were required to provided to requesting
    carriers on an unbundled basis. We also stated in section 51.315(b)
    that "an incumbent LEC shall not separate requested network elements
    that the incumbent LEC currently combines."[^13] The implementation
    of section 51.315(b) was stayed and the rule was subsequently
    vacated by the Eighth Circuit in *Iowa Utilities Board v. FCC.*[^14]
    The United States Supreme Court reversed in *AT&T Corp. v. Iowa
    Utilities Board,* thus reinstating section 51.315(b) of our
    rules.[^15] The Supreme Court, however, also determined that the
    Commission did not apply the appropriate criteria, in accordance
    with section 251(d)(2) of the Act,[^16] in specifying in section
    51.319 the minimum "network elements" that must be provided to
    requesting carriers by ILECs. It therefore vacated section 51.319
    and remanded this issue to the Commission for its reevaluation using
    appropriate criteria.[^17]

6.  On remand, we issued the *UNE Remand Order* and reinstated section
    51.315(b). There we concluded that ILECs were required to provide
    requesting carriers access to combinations of loops and dedicated
    transport network elements that are currently combined and purchased
    through special access tariffs, and moreover, "requesting carriers
    \[were\] entitled to obtain such existing loop-transport
    combinations at unbundled network element prices."[^18]

7.  Shortly after the *UNE Remand Order* was released, however, we
    issued an order supplementing that decision[^19] to respond to
    serious policy concerns relating to the potential for ILECs to be
    required to re-price a large part of their exchange access
    facilities at the much lower "unbundled network element" rates.[^20]
    The Commission modified the *UNE Remand Order* to provide that,
    pending consideration and resolution of these policy concerns in the
    pending Fourth Further Notice of Proposed Rulemaking,[^21]
    "interexchange carriers ("IXCs") may not convert special access
    services to combinations of unbundled loops and transport network
    elements, whether or not the IXCs self-provide entrance facilities
    (or obtain them from third parties)." The Commission emphasized,
    however, that "\[t\]his constraint does not apply if an IXC uses
    combinations of unbundled network elements to provide a significant
    amount of local exchange service, in addition to exchange access
    service, to a particular customer." [^22]

8.  We also stated that it would "not be necessary for incumbent LECs
    and requesting carriers to undertake an auditing process to monitor
    whether or not requesting carriers are using unbundled network
    access solely to provide exchange access service."[^23] Rather, we
    stated that an ILEC must allow requesting carriers to "self-certify
    that they are providing a significant amount of local exchange
    service," in order that their ability to convert their facilities to
    combinations of unbundled loops and transport network elements "will
    not be delayed."[^24]

9.  Thereafter, the Commission, on June 2, 2000, released a
    *Supplemental Order Clarification*.[^25] This order was adopted by
    the Commission in response to a joint submission by several ILECs
    and CLECs requesting that the Commission "clarify the *Supplemental
    Order* regarding the minimum amount of local service a requesting
    carrier must provide in order to convert special access services to
    combinations of unbundled loop and dedicated transport network
    elements."[^26] We defined more precisely the "significant amount of
    local exchange service" threshold for circuit conversion by adopting
    three "safe harbor" scenarios that a circuit must meet to be
    eligible for EEL conversion.[^27] The first two prescribed
    safe-harbor options are applicable to carriers whose operations are
    collocated in at least one ILEC central office. The third option
    applies to requesting carriers, such as Net2000, whose operations
    are not collocated at ILEC offices. Besides the significant amount
    of local exchange traffic requirement, the third option had two
    additional requirements: (1) when a loop-transport combination
    includes multiplexing (*e.g.*, DS1 multiplexed to DS3 level), each
    of the individual DS1 circuits must meet these requirements; and (2)
    the loop-transport combination must not be connected to the
    incumbent LEC's tariffed services.[^28]

10. The Commission reiterated that ILECs "must allow requesting carriers
    to self-certify that the are providing a significant amount of local
    exchange service over combinations of unbundled elements."[^29]
    Although the procedures specified in the *Supplemental Order* did
    not permit ILECs to conduct audits to verify that the requesting
    carriers complied with the local exchange usage requirements, the
    Commission determined that, in light of its action to continue the
    temporary constraints on usage, it should permit the ILECs to
    conduct limited audits for this purpose, but only subsequent to the
    processing of the requesting carriers' conversion orders.[^30]

    **C. Net2000's Conversion Requests and Verizon's Responses Thereto**

11. In the instant matter, Net2000 made written requests for the
    conversion of its special access circuits to EELs subsequent to the
    *UNE Remand Order*. These requests were interspersed among the other
    subsequent relevant orders. The first such request was made on March
    23, 2000. Net2000 requested that Verizon convert 24 DS1 special
    access circuits in the District of Columbia to EELs.[^31] In an
    accompanying letter, Net2000 certified that the circuits provided "a
    significant amount of local exchange service to the particular
    customers served by those facilities."[^32] Verizon subsequently
    rejected Net2000's conversion request because, according to Verizon,
    it failed to conform to the Commission's requirements.[^33]

12. On May 9, 2000, Net2000 sent its second conversion request letter to
    Verizon. In this letter, Net2000 requested that *all* of its special
    access circuits be converted to EELs, retroactively to the effective
    date of the *UNE Remand Order*, February 17, 2000.[^34] Net2000
    again "self-certified that Net2000's special access circuits
    \[were\] used to provide a significant amount of local exchange
    service to the particular customers served by those
    facilities."[^35] Verizon rejected the conversion request again
    stating that it was defective.[^36]

13. On October 17, 2000, Net2000 sent another letter to Verizon, in
    which Net2000 made its third request for the conversion of its
    circuits.[^37] This letter was in response to Verizon's objections
    that the May 9, 2000 conversion request was invalid, in part,
    because Net2000 had not specified the circuits to be converted. With
    this conversion request, Net2000 provided a list, specifically
    identifying the circuits subject to the conversion request. Net2000
    stated that this list comprised all of its circuits in service.
    Net2000 with that request also confirmed the self-certification
    contained in its prior May 9, 2000 letter.[^38]

14. Verizon responded on October 20, 2000,[^39] stating that it would
    begin to process this latest conversion request and that the
    circuits that are converted would be re-priced retroactively from
    the first day of the month following the date of the request, in
    this case November 1, 2000. Verizon, however, did not complete its
    processing of Net2000's October 17, 2000 conversion request until
    December 1, 2000 -- after the complaint and answer were filed in
    this proceeding.[^40]

15. On December 15, 2000, Net2000 sent its fourth letter and requested
    the conversion of additional DS3 circuits, containing some of the
    previously requested DS1 circuits for which conversion had been
    denied by Verizon on the grounds that they were commingled with
    prohibited tariffed services. It also submitted a list for
    conversion of additional circuits currently in service that were
    omitted from the conversion list attached to its October 17, 2000
    letter. Net2000 confirmed its May 9, 2000 self-certification that
    all of its special access circuits were "used to provide a
    significant amount of local exchange service to the particular
    customers served by those facilities in accord with the orders of
    the Federal Communications Commission." With respect to the
    additional circuits requested in the letter, Net2000 stated that
    "these special access circuits are used to provide a significant
    amount of local exchange service to the particular customers served
    by those facilities in accord with option 3 of the FCC *Supplemental
    Order Clarification.*"[^41]

16. Verizon reported by letter of March 15, 2001 that it had completed
    processing of Net2000's December 15, 2000 conversion request as well
    as the supplemental circuit data that Net2000 provided pursuant to
    its October 17, 2000 request for circuits in the District of
    Columbia, Maryland, Virginia, New Jersey and Pennsylvania. Some
    DS1s, however, were rejected because, according to Verizon, they
    violated our "co-mingling" prohibition.[^42]

    **D. Pleadings and Procedural History**

17. Net2000's Complaint was filed on November 6, 2000. It sets forth
    three counts. In Count I, Net2000 contends that Verizon's failure to
    accept Net2000's self-certifications and refusal to convert special
    access circuits requested by Net2000 in compliance with our
    applicable orders constituted an "unjust and unreasonable practice
    under section 201(b) of the Communications Act, 47 U.S.C. § 201(b).
    In Count II, Net2000 charges that Verizon's attempts to conduct an
    alleged pre-conversion audit of Net2000's conversion requests
    constitutes an unlawful use restriction in violation of Section
    251(c) of the Act and our rules and order thereunder. In Count III,
    Net2000 contends that Verizon's failure to allow conversion of
    special access circuits to EELs is a violation of the cancellation
    and reconfiguration provisions of Verizon's special access tariff,
    and as such, violates section 203(a) and (c) of the Act. Further,
    Net2000 contends, Verizon has unlawfully imposed a prohibition on
    the transport of tariffed and unbundled network element ("UNE")
    traffic over a shared DS3 circuits, and by failing to include and
    describe this practice in its effective special access tariff,
    Verizon is operating in violation of Section 203(a) and (c) of the
    Act.

    **III. DISCUSSION**

## Verizon Did Not Violate Section 201(b) and Section 251(c) of the Act and Our Orders by Refusing to Convert Net2000's Designated Special Access Circuits to EELs Despite Net2000's Self-Certification

18. Count I of Net2000's complaint asserts that Verizon's refusal to
    convert promptly Net2000's designated special access circuits to
    EELs was an unjust and unreasonable practice in violation of section
    201(b) of the Act and of our Orders. Net2000 contends that once it
    had certified to Verizon that the requested circuits carried a
    "significant amount of local exchange service traffic,"[^43] Verizon
    was obligated to convert those circuits to EELs. Verizon was not
    permitted, according to Net2000, to challenge that
    self-certification prior to conversion. We disagree with Net2000's
    characterization of Verizon's actions. Although an ILEC may not
    question, prior to conversion, the requesting carrier's
    self-certification of the substantial use of the circuits for local
    exchange service, ILECs are not required to convert circuits when
    the requested circuits do not on their face meet the other
    requirements specified for conversion.

19. Net2000 made three conversion requests prior to the filing of its
    complaint and one further conversion request, following up on its
    prior requests, after the complaint had been filed, but before the
    close of the record in this proceeding. In the case of each request,
    Net2000 claims that Verizon conducted a pre-conversion audit
    prohibited by the Commission's rules and refused to convert certain
    designated circuits as a result.[^44] We disagree and believe that
    the record reflects that Verizon did not audit Net2000's
    certification claims regarding its carriage of a significant amount
    of local exchange traffic over the circuits in question. Rather,
    Verizon accepted Net2000's certification, but refused to convert
    circuits that it believed did not meet the criteria for conversion
    prescribed by our rules.

20. Verizon refused to process Net2000's March 23, 2000 conversion
    request because it believed that at that time we required conversion
    only of circuits that terminate in collocation arrangements.[^45]
    Thus, Verizon's refusal to convert the requested circuits requested
    did not result from its refusal to accept Net2000 self-certification
    that the requested circuits were used for "a significant amount of
    local exchange traffic." Instead, the request was denied because in
    Verizon's view, the conversion request did not, on its face, meet
    the Commission's requirements for conversion. While we disagree with
    Verizon's interpretation of our requirements, as set forth below, we
    find that the March 23 requests contained other defects that
    justified Verizon's denial of Net2000's requests.[^46]

21. Consistent with its treatment of Net2000's March 23 requests,
    Verizon did not process Net2000's May 9, 2000 conversion request
    because it believed at that time that the applicable Commission
    orders only permitted conversion of circuits that terminated in
    collocated arrangements.[^47] Nevertheless we find that Verizon was
    justified in denying this request because of Net2000's failure to
    specify the circuits to be converted. In any case, Verizon did not
    reject or ignore this request because of its refusal to accept
    Net2000's self-certification.

22. Verizon did proceed to process Net2000's October 17, 2000 and
    December 15, 2000 requests. During the course of processing, it
    discovered that some of the circuits requested for conversion were
    no longer in service, could not be located in Verizon's records, or
    did not comprise EELs. In some cases, it was discovered that the DS1
    circuits requested for conversion were multiplexed onto DS3 circuits
    that would continue to be provided via tariff and Verizon refused to
    convert these circuits because it believed that this would violate
    the Commission's prohibition against co-mingling under Option 3 of
    EELs with tariffed services. Verizon, however, had not refused to
    convert any circuits because it failed to accept Net2000's
    certification that the circuits were used to provide a significant
    amount of local exchange services.

23. Our orders require that "once a requesting carrier certifies that it
    is providing a significant amount of local exchange service," an
    ILEC must begin processing the requests without delay.[^48] We
    conclude, however, that while an ILEC may not question the
    requesting carrier's self-certification of substantial use for local
    exchange service, the ILEC is not required to convert circuits when
    in fact they do not meet the other requirements specified for
    conversion by the Commission. Accordingly, Net2000 has failed to
    support the contention that Verizon refused to accept Net2000's
    self-certification in violation of the Act or our rules. Because
    Net2000 has failed to demonstrate that Verizon conducted a
    pre-conversion audit in contradiction of our rules, Net2000's second
    count relating to the alleged audit of Net2000's conversion requests
    is also denied.

## Verizon Did Not Refuse to Convert Special Access Circuits to EELs That Met Our Requirements for Conversion In Violation of The Act and Our Rules

24. As discussed above, an ILEC may refuse to convert a designated
    special access circuit so long as it fails to satisfy our criteria
    for conversion. Net2000 contends however that Verizon violated the
    Act and our rules by improperly refusing to convert EEL-eligible
    circuits. Verizon refused to convert the designated special access
    circuits because (1) the circuits did not terminate in a collocation
    space, (2) all the DS1s multiplexed onto the DS3s do not satisfy the
    EEL conversion criteria, and (3) a loop/transport combination cannot
    be combined with an access service. Net2000 alleges that none of
    these reasons for denial was lawful. We deny Net2000's claims that
    Verizon's refusal to convert the designated special access circuits
    violated our rules and will address each issue separately below.

### ILECs Were Required to Convert Special Access Circuits That Did Not Terminate In Collocation Arrangements

25. Verizon argues that the conversion of special access circuits to
    EELs that do not terminate in collocated arrangements was not
    required by the Commission in its *UNE Remand Order* or in its
    *Supplemental Order.* It contends that this was not required until
    the Commission issued its *Supplemental Order Clarification,* which
    set forth "safe-harbor option 3, as a basis for which non-collocated
    carriers are permitted to request the conversion of their special
    access circuits.[^49] Verizon relies principally on the following
    language from the *UNE Remand Order*:

    In particular, any requesting carrier that is collocated in a
    serving wire center is free to order loops and transport to that
    serving wire center as unbundled network elements because those
    elements meet the unbundling standard, as discussed above. Moreover,
    to the extent those unbundled network elements are already combined
    as a special access circuit, the incumbent may not separate them
    under rule 51.315(b), which was reinstated by the Supreme Court. In
    such situations, it would be impermissible for an incumbent LEC to
    require that a requesting carrier provided a certain amount of local
    service over such facilities.[^50]

26. Although the language quoted above specifically addressed the
    situation of collocated carriers, we did not state or imply that
    only collocated carriers had a right to use unbundled network
    elements or convert special access circuits to EELs. Indeed,
    following the paragraph relied upon by Verizon, we specifically
    clarified "that interexchange carriers are entitled to use unbundled
    dedicated transport from their POP to a serving wire center in order
    to provide local telephone exchange service."[^51] This language
    recognizes the viability of a conversion to an EEL in a
    non-collocation network configuration. Also, as Verizon points out,
    our *Supplemental Order* specifically modified paragraph 486 in the
    *UNE Remand Order*, to the extent that that paragraph would have
    allowed collocated carriers to convert their special access circuits
    to EELs without any restrictions requiring local exchange service
    use.[^52] However, the language in the *Supplemental Order*
    permitting the conversion of special access to EELs for use "to
    provide a significant amount of local exchange service" clearly
    applies to both collocated and non-collocated situations.[^53]

27. Finally, we note that Verizon does not dispute that the term
    "significant amount of local exchange service" in safe-harbor Option
    3 relates to non-collocated circuits. Since nothing in the
    *Supplemental Order Clarification* suggest that the Commission
    intended to make a change in any collocation requirement, we find
    this to be further evidence that special access circuits that did
    not terminate in collocation arrangements were eligible for
    conversion to EELs.

### All Individual DS1 Circuits Multiplexed Onto DS3 Circuits Must Meet the Applicable Local Exchange Service Use Criteria to Have DS3s Converted to EELs

28. Net2000 argues that whether circuits are used for "a significant
    amount of local exchange service" and therefore qualify for
    conversion to EEL should be judged on an "end-user-by-end-user
    basis." It should not matter, Net2000 contends, whether a dedicated
    DS1 between the CLEC's office and the customer's premises that is
    used to provide local exchange service is carried on a multiplexed
    DS3 transport channel that includes other DS1s used for other
    services.[^54] It proposes that DS3 circuits derived from both
    EEL-eligible and non-EEL-eligible DS1 circuits be priced utilizing
    "ratcheting," similar to mixed use DS3 circuits carrying both
    special access and switched assess DS1s,[^55] so that proportionate
    unbundled network element rates would apply to the converted DS1s
    and proportionate special access rates would apply to the
    non-converted DS1s.[^56] The arguments made by Net2000, however,
    ignore the specific language of Option 3. There is no provision
    anywhere in the *Supplemental Order Clarification*, or in prior
    orders for "ratcheting." The language of Option 3 clearly and
    specifically requires that "\[w\]hen a loop-transport combination
    includes multiplexing (*e.g.*, DS1 multiplexed to DS3 level), each
    of the individual DS1 circuits must meet \[the substantial local
    exchange service use\] criteria."[^57] There is no ambiguity in this
    language. Although Net2000 argues that it would be better if CLECs
    were permitted to convert only the parts of their DS3s that are used
    to provide local exchange service and to continue to obtain the
    remaining parts of the DS3s by tariff, this clearly is not permitted
    under our rules.

### The Commission's Rules prohibit the "Co-mingling" or Combining of Unbundled Network Elements with Access Services on the Same Facilities 

29. As described above, for a DS3 circuit to meet the conversion
    criteria under Option 3 of the *Supplemental Order Clarification*,
    all of its derived DS1 circuits must meet the prescribed
    "significant local exchange service" criteria. In addition, we
    specified that, "\[t\]his option does not allow loop-transport
    combinations to be connected to the incumbent LEC's tariffed
    services."[^58] This restriction prevents Net2000, for example, from
    converting a DS1 special access circuit from its customer's premises
    and terminating at a local Verizon switching center, which is
    connected to a mixed use DS3 facility between the Verizon switching
    center and a Net2000 operating office. In that case, Net2000 must
    continue to obtain the DS3 circuit under tariff because the DS3
    circuit contains exchange access, interstate or other traffic that
    does not qualify as "significant local exchange service" use under
    the prescribed criteria. Accordingly, Net2000 is prevented from
    converting not only the mixed use DS3 but also any DS1 circuits
    connected to the tariffed DS3.

30. Net2000 argues that the prohibition against co-mingling "applies to
    the connection of converted circuits to tariffed circuits and not to
    the provisioning of EEL-eligible circuits over the same facilities
    also used to support additional services." "Any other
    interpretation," Net2000 contends, "renders the Commission's option
    to convert multiplexed circuits at non-collocated arrangements
    meaningless, since a carrier would be forced to convert *each* and
    *every* DS1 circuit riding a DS3 circuit in every instance."[^59]
    Net2000 again makes policy arguments that, whatever their merits,
    are inconsistent with the actual language of the rule in effect at
    the time of its requests, as clarified in Option 3. The criteria
    prescribed in the Commission's *Supplemental Order Clarification*
    under Option 3 without ambiguity prohibit the conversion of DS3s
    carrying mixed traffic and also prohibit the conversion of otherwise
    EEL-eligible circuits which connect to non-eligible DS3.[^60] The
    Commission, moreover, in its *Supplemental Order Clarification*
    specifically refused to modify these restrictions. At paragraph 28,
    we stated:

    We further reject the suggestion that we eliminate the prohibition
    on "co-mingling" (*i.e.*, combining loops or loop-transport
    combinations with tariffed special access services) in the local
    usage options discussed above. We are not persuaded on this record
    that removing this prohibition would not lead to the use of
    unbundled network elements by IXCs solely or primarily to bypass
    special access services."[^61]

### Converted Circuits Need Not Be Re-Priced Retroactive to the Date of the *UNE Remand Order*

31. Net2000 contends that all of its existing special access circuits
    should be converted to EEL pricing, effective February 17, 2000,
    which is the effective date of our *UNE Remand Order.*[^62] Verizon
    has taken the position that it will make the re-pricing effective on
    the first day of the month following the date of each valid
    conversion request by Verizon. In this regard, Verizon rejected the
    March 23, 2000 and May 9, 2000 requests as invalid, because of lack
    of collocation, specificity, and improper co-mingling. It accepted
    Net2000's request as valid and agreed to re-pricing eligible
    requested circuits, as of November 1, 2000 for the circuits
    requested on October 17, 2000 and the additional circuits
    supplementing the October 17, 2000 request. It has also agreed to
    re-price the circuits requested on December 15, 2000, effective
    January 1, 2001.[^63]

32. There is no basis for Net2000's claim that all of its special access
    circuits should be re-priced from the effective date of the *UNE
    Remand Order.* The *UNE Remand Order* did not automatically convert
    all eligible special access circuits to EELs on the effective date
    of that order. We held that, in accordance with section 251(c)(3) of
    the Act and section 51.315(b) of the Rules, the ILECs had a duty to
    provide such conversion to a "requesting telecommunications
    carrier." Accordingly, ILECs were under no obligation to provide
    conversions unless and until such conversions were requested.
    Verizon's proposal to make the conversions effective on the first
    day of the month after they are requested is reasonable and in
    accord with the requirements of the Act and our orders.

### Summary -- Verizon Did Not Unlawfully Refuse to Comply With Net2000's Requests to Convert Special Access Circuits to EELs

33. Net2000 has not shown that Verizon has refused to convert any
    circuits requested by it that met the criteria for conversion
    prescribed by the Commission. We conclude that Verizon should not
    have rejected Net2000's March 23, 2000 conversion request on the
    grounds that only circuits terminating in collocated arrangements
    were eligible for conversion. We conclude, however, that the
    requested circuits were, in any event, ineligible for conversion
    because those circuits were subject to the significant amount of
    local exchange service requirement articulated in our *Supplemental
    Order*[^64] and more precisely addressed under Option 3 of our
    *Supplemental Order Clarification*.[^65] Thus Net2000's March 23,
    2000 request for conversion of circuits under the identical scenario
    described in Option 3 but in conflict with that Option's co-mingling
    restriction was inappropriate.[^66] Net2000's May 9, 2000 request
    was defective because there was no identification of the circuits
    requested for conversion. Furthermore, Net2000's request for
    conversion of all of its special access circuits was also
    inappropriate for the reasons stated above concerning their March
    23, 2000 request. In the case of Net2000's subsequent conversion
    requests on October 17, 2000 and December 15, 2000, Verizon was
    justified in denying conversion for the requested circuits which, on
    their face, violated the Commission's co-mingling prohibition under
    Option 3 or did not meet the definition of an EEL.

34. We note, however, that the re-pricing of none of the circuits
    requested by Net2000 had been implemented when the record closed in
    this proceeding. Verizon in its letters of December 1, 2000 and
    March 15, 2001, reporting on its processing of Net2000's requests,
    stated that it would proceed to implement the re-pricing of eligible
    circuits only after Net2000 had notified it to proceed and Net2000
    had executed a amendment to its interconnection agreement with
    Verizon containing terms governing the provision of EELs.[^67]

35. We conclude that it was reasonable for Verizon to request that
    Net2000 confirm that it wished to go ahead with the conversions
    before implementation. Verizon had calculated that the conversions
    requested by Net2000 would result in relatively large termination
    liability and minimum period charges as a result of conversion of
    special access circuits being provided in accordance with Verizon's
    term tariff offering. Net2000 should be given the opportunity to
    cancel or modify its request to avoid or minimize such charges.[^68]

36. With respect to the need for the execution of an amendment to the
    interconnection agreement between the parties, Verizon contends that
    without such an amendment it would have no vehicle to provide or
    bill for the non-tariffed loop/transport combinations.[^69] Net2000
    contends, on the other hand, that an amendment is unnecessary
    because "the existing agreements already provide for access to UNE
    combinations, of which the EEL is an example."[^70] Net2000,
    moreover, has objected to the amendments proposed by Verizon because
    it believes that this language will lessen its flexibility in
    acquiring facilities from Verizon.[^71] The record in this
    proceeding does not permit us to determine whether an amendment to
    the parities' existing interconnection agreement is necessary for
    the implementation of Net2000's conversion requests or whether the
    amendments proposed by Verizon are appropriate for this purpose.
    Although Verizon's proposed amendments are attached to its Answer in
    this proceeding, the existing interconnection agreement is not part
    of the record. Verizon's attorney had advised the Commission staff
    in the initial status conference, herein, that we would not be
    required to rule on this issue in this proceeding.[^72]
    Unfortunately, the parties, apparently, have not yet agreed upon
    whether and how their interconnection agreement should be revised.
    In this regard, each party blames the other for their failure to
    reach an agreement.[^73]

37. Verizon is required by our *UNE* *Remand Order, Supplemental Order*
    and *Supplemental Order Clarification* to promptly implement the
    conversion of eligible special access circuits to EELs upon
    request.[^74] Although an applicable governing interconnection
    agreement is required for Verizon to bill for any converted EELs,
    Verizon is not permitted to require CLECs to execute unneeded
    amendments or amendments with unfavorable terms as a condition to
    the conversion of their special access circuits to EELs.[^75]

38. We note that the dispute between the parties on the need for the
    execution of amendments to their interconnection agreement has not,
    so far, delayed the implementation of the conversion the circuits
    requested by Net2000. In this regard, Verizon has reasonably sought
    Net2000 confirmation before it proceeds with the conversions, in any
    event. Net2000 has not yet, as far as we are aware, confirmed its
    conversion request. Accordingly, even assuming that Verizon has
    proposed an unneeded requirement that Net2000 execute an amendment
    to their agreement as a means to restrict or delay the conversion of
    Net2000's special access circuits to EELs, such violation has not
    yet occurred and we need not rule on this issue now.

## Verizon Did Not Violate Section 203(a) and 203(c) of the Act By Failing to Convert Special Access Circuits to EELs, Retroactively to the Effective Date of Our *UNE Remand Order* or by Failing to Provide in its Special Access Tariffs That Tariffed and UNE Traffic May Not Be Transported Over a Shared DS3 Circuits 

39. In the Third Count of its Complaint, Net2000 contends that Verizon
    violated Section 203(a) of the Act by failing to convert special
    access circuits to EELs, retroactively to the effective date of the
    Commission's *Third Report and Order,* and "unlawfully imposing a
    prohibition on the transport of tariffed and UNE traffic over a
    shared DS3 circuit that is not set forth in Verizon's tariffs."[^76]

40. Net2000's section 203 claims in its complaint are difficult to
    follow. Net2000 fails to explain why it is necessary for Verizon to
    incorporate the rights and obligations for conversion of special
    access circuits in its tariffs. In any event, as we have concluded
    above, Verizon is not obligated by the applicable Commission orders
    to convert special access circuits to EELs retroactively to the
    effective date of the *Third Report and Order* or to permit the
    transport of tariffed and UNE traffic over a shared DS3 circuits. We
    therefore conclude that Net2000 has failed prove any section 203
    violations on the part of Verizon.

    **IV. CONCLUSIONS**

41. In light of all the forgoing, we conclude that Verizon did not
    conduct pre-conversion audits of Net2000's conversion requests in
    violation of the *Supplemental Order* and *Supplemental Order
    Clarification* in violation of section 201(b) of the Act. We
    conclude further that Verizon did not unlawfully refuse to convert
    eligible special access circuits to EELs in violation of section
    251(c) of the Act and the Commission's rules and orders implementing
    that section and that Verizon did not violate sections 203(a)
    and (c) of the Act by failing to allow conversion of special access
    circuits to EELs or by prohibiting the transport of tariffed and UNE
    traffic over shared DS3 circuits.

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V.  **ORDERING CLAUSE**

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42. ACCORDINGLY, IT IS ORDERED, pursuant to Sections 4(i), 4(j), 201,
    208, and 251 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 151, 154(i), 201, 208, 251 and Sections 0.111 and 0.311 of
    the Commissions Rules, 47 C.F.R. §§ 0.111 and 0.311 that the formal
    complaint of Net2000 Communications Services, Inc. against Verizon
    -- Washington, D.C., Inc., Verizon -- Maryland, Inc. and Verizon --
    Virginia, Inc. IS DENIED.

43. IT IS FURTHER ORDERED that this proceeding IS TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]: 47 U.S.C. § 208.

[^2]: *Net2000 Communications v. Verizon -- Washington, D.C.*, Formal
    Complaint, File No. EB-00-018, at ¶¶ 4-5 (filed Nov. 6, 2000)
    ("Complaint"); *Net2000 Communications v. Verizon -- Washington,
    D.C.*, Joint Statement of the Parties, File No. EB-00-MD-018, at ¶ 1
    (filed Dec. 7, 2000) ("Joint Statement").

[^3]: *Net2000 Communications v. Verizon -- Washington, D.C.*, Answer,
    File No. EB-00-018, at ¶ 6 (filed Nov. 22, 2000) ("Answer").

[^4]: Complaint at ¶ 6.

[^5]: 47 U.S.C. § 251(h). *See* Joint Statement at ¶2.

[^6]: *See generally*, 47 C.F.R. §§ 51.305 - .321. Section 251(c)(3). of
    the Act provides that ILECs have:

    > The duty to provide, to any requesting telecommunications carrier
    > for the provision of a telecommunications service,
    > nondiscriminatory access to network elements on an unbundled basis
    > at any technically feasible point on rates, terms, and conditions
    > that are just, reasonable, and nondiscriminatory in accordance
    > with the terms and conditions of the agreement and the
    > requirements of this section and section 252. An incumbent local
    > exchange carrier shall provide such unbundled network elements in
    > a manner that allows requesting carriers to combine such elements
    > in order to provide such telecommunication service.

[^7]: *See Implementation of Local Competition Provisions of the
    Telecommunications Act of 1996,* Third Report and Order and Fourth
    Further Notice of Proposed Rulemaking, 15 FCC Rcd 3696, 3906-3910,
    ¶¶ 474-482 (1999)("*UNE Remand*").

[^8]: 47 U.S.C. § 252(d)(1)(cost determined without reference to rate of
    return or other rate-based proceeding).

[^9]: Letter from Roderick A. Mette, Attorney, Market Disputes
    Resolution Division, Enforcement Bureau to the parties counsel
    (dated Dec. 15, 2000) (memorializing the oral rulings and agreements
    made in the initial status conference held on December 11, 2000 in
    File No. EB-00-MD-018).

[^10]: 11 FCC Rcd 15, 499 (1996).

[^11]: 47 C.F.R. § 51.319(a).

[^12]: 47 C.F.R. § 51.319(d).

[^13]: 47 C.F.R. § 51.315(b).

[^14]: 120 F.3d 753 (8^th^ Cir. 1997), *rev'd in part and aff'd in part,
    AT&T Corp. v. Iowa Utilities Board,* 525 U.S. 366 (1999), *on
    remand,* 219 F.3d 744 (8^th^ Cir. 2000), *cert. granted sub nom.,
    Verizon Communications, Inc. v. FCC,* 121 S.Ct. 877 (2001).

[^15]: *AT&T Corp. v. Iowa Utilities Board*, 525 U.S. at 393-95.

[^16]: 47 U.S.C. § 251(d).

[^17]: *AT&T Corp. v. Iowa Utilities Board*, 525 U.S. at 386-92.

[^18]: *UNE Remand Order*, 15 FCC Rcd 3696, 3909, ¶ 480.

[^19]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Supplemental Order, 15 FCC Rcd 1760
    (1999) ("*Supplemental Order*").

[^20]: *Id.* at 1761, ¶ 4.

[^21]: In the *Supplemental Order*, we also expanded the scope of the
    Fourth Further Notice of Proposed Rulemaking to seek comments "on
    whether there is any basis in the statute or our rules which
    incumbent LECs could decline to provide combinations of loops and
    transport network elements at unbundled network element prices."
    *Id.* at 1762, ¶ 6.

[^22]: *Id.* at 1760, ¶ 2.

[^23]: *Id.* at 1763, ¶ 6 n.9.

[^24]: *Id.*

[^25]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Supplemental Order Clarification,
    15 FCC Rcd 9587 (2000) ("*Supplemental Order Clarification*").

[^26]: *Id.* at 9591, ¶ 6. The need to modify the *Supplemental Order*
    also became evident upon consideration of the significant issues
    that were raised in comments in the expanded Fourth Further Notice
    of Proposed Rulemaking and the additional time that would be needed
    to resolve these issues. *Id.* at 9592-9598, ¶¶ 8-20.

[^27]: *Id.* at 9598, ¶ 21.

[^28]: *Id.* at 9599-9600, ¶ 22.

[^29]: *Id.* at 9602-03, ¶ 29.

[^30]: *Id.* at 9602-04, ¶¶ 29-32.

[^31]: Twenty-five circuits were specified in the March 23, 2000
    conversion request; however, one of the requested circuits belonged
    to another carrier. Complaint, ¶ 13, Ex. 6.

[^32]: Complaint, Ex. 1.

[^33]: Answer at ¶ 14, Attachment A, ¶¶ 4-6 (Verizon's account manager,
    responsible for Net2000's account, in meetings held on March 29,
    2000 and April 10, 2000 orally responded to the conversion request.
    In these meetings, and in a prior meeting held on March 14, 2000,
    she informed Net2000 that Verizon did not believe that that
    Net2000's conversion request was in conformity with the Commission's
    requirements. She stated that the FCC required the conversion of
    only circuits terminating in collocated arrangements and that the
    FCC prohibited the commingling of tariffed service with unbundled
    elements. She also advised Net2000 that, before it would process
    conversion orders, Net2000 was required to execute an amendment to
    its existing interconnection agreement with Verizon.).

[^34]: Complaint at ¶ 15.

[^35]: *Id.,* Ex. 2.

[^36]: Answer, ¶ 16, Attachment A, ¶ 6 (There was no immediate written
    response by Verizon to this request. Verizon and Net2000 personnel,
    however, did participate in several meetings and conference calls
    subsequently, in which Net2000 was informed of the reasons why
    Verizon believed that Net2000's conversion requests were defective.)

[^37]: Complaint, ¶ 18, Ex. 7.

[^38]: *Id.,* Ex. 6.

[^39]: *Id.,* Ex. 8.

[^40]: *Net2000 Communications v. Verizon -- Washington, D.C.*, Initial
    Brief of Net2000, File No. EB-00-018, Ex. 1, Letter from Susan Fox
    of Verizon to Anthony Hansel of Net2000 (dated Dec. 1, 2000). (The
    conversion of two DS3s was denied because they were switched access
    rather than special access circuits. Conversion of 17 DS1s was
    denied because the requested circuits were connected to tariffed
    switched access circuits, and the conversions of 53 DS1 circuits and
    1 DS3 circuit were denied because these circuits did not meet the
    definition of EEL. That is, the identified circuits consisted of two
    channel terminations connecting two end user premises to the same
    Verizon wire center. Finally, 33 of the requested DS1 circuits
    either could not be located on Verizon's billing record or the
    circuits had previously been disconnected.)

    Verizon reported that the conversion of the circuits it deemed
    eligible would result in a reduction of Net2000's monthly charges
    from \$323,301.02 to \$250,592.25 for the converted circuits.
    Because some of the eligible circuits had been purchased pursuant to
    the term plan provisions in Verizon's tariffs, however, the
    conversions would result in one-time termination liability and
    minimum period charges of \$974,376.42.)

[^41]: Initial Brief of Net2000, Ex. 2, Letter from Anthony Hansel of
    Net2000 to Deborah Kugelman of Verizon (dated Dec. 15, 2000).

[^42]: *Net2000 Communications v. Verizon -- Washington, D.C.*, Reply
    Brief of the Verizon Telephone Companies, File No. EB-00-018, Ex.
    A., Letter from Susan Fox of Verizon to Anthony Hansel of Net 2000
    (dated Mar. 15, 2001). Verizon reported that, based on its review,
    48 of the requested DS3 circuits and 579 of the requested DS1
    circuits were eligible for conversion, while it refused or was
    unable to convert 412 of the requested DS1 circuits and 6 of the
    requested DS3 circuits. Verizon's major reason for denial of
    conversion, in the case of 309 DS1 circuits, was that conversion was
    not permitted by the Commission's "co-mingling" prohibition under
    Option 3(*i.e.*, the requested DS1 circuits were multiplexed onto
    tariffed DS3 circuits that Net2000 did not request to be converted).
    Verizon stated that it was prepared to convert 10 of the 18 DS3
    circuits requested and 222 of the 309 DS1 circuits requested in the
    supplement to Net2000's October 17, 2000 request. Four DS3s
    duplicated circuits that had previously been requested for
    conversion and 4 of the requested DS3s could not be located in
    Verizon's billing records. 87 of the DS1s were rejected because
    Verizon believed that they violated our "co-mingling" prohibition
    under Option 3 because they were derived from DS3s that still would
    be provided under tariff.

    With respect to the additional circuits requested to be converted on
    December 15, 2000, Verizon agreed that 180 of the 264 DS1 circuits
    and 16 of the 17 DS3 circuits were eligible for conversion.
    Seventy-two of the DS1 circuits were rejected because Verizon
    believed that they violated our "co-mingling" prohibition under
    Option 3. The remaining DS1 circuits were rejected because the
    circuits identified either had been disconnected, were not found in
    Verizon's billing records or were being billed to a customer other
    than Net2000. Verizon denied conversion of one DS3 circuit because
    it consisted of only a channel termination without transport and
    therefore did not meet the definition of EEL.

[^43]: Complaint at ¶¶ 26-28.

[^44]: Initial Brief of Net2000 at 6.

[^45]: Verizon Reply Brief at 4.

[^46]: *See infra* ¶ 33.

[^47]: *Id.*

[^48]: *Id* at 9603, ¶ 30.

[^49]: Reply Brief of Verizon at 4; Answer at Part III, 13-14.

[^50]: *UNE Remand Order*, 15 FCC Rcd at 3912, ¶ 486.

[^51]: *Id.,* 15 FCC Rcd at 3919, ¶ 488.

[^52]: *Supplemental Order, supra.,* 15 FCC Rcd at 1761, ¶ 4.

[^53]: *Id.,* 15 FCC Rcd at 1762, ¶ 5.

[^54]: Initial Brief of Net2000 at 9-12.

[^55]: *See* Verizon, Tariff F.C.C. No. 1, Page 316.29.1, §
    7.2.14(C)(1)(e).

[^56]: Initial Brief of Net2000 at 14.

[^57]: *Supplemental Order*, 15 FCC Rcd at 9599, ¶ 22.

[^58]: *Supplemental Order*, 15 FCC Rcd at 9599, ¶ 22.

[^59]: Initial Brief of Net2000 at 12.

[^60]: *Supplemental Order Clarification*, 15 FCC Rcd at 9599-9600, ¶
    22.

[^61]: *Id.* at 9606, ¶ 28.

[^62]: Complaint at Legal Analysis ¶ 20.

[^63]: Reply Brief of Verizon at 6.

[^64]: *Supplemental Order*, 15 FCC Rcd at 1762, ¶ 5.

[^65]: *Supplemental Order Clarification*, 15 FCC Rcd at 9599-9600, ¶
    22.

[^66]: Although we do not grant Net2000's complaint under Option 3,
    parties are still able to file a waiver request as specified in the
    *Supplemental Order Clarification*. *Id.* at 9600, ¶ 28.

[^67]: Initial Brief of Net2000 at Ex. 1; Reply Brief of Verizon at
    Attachment A.

[^68]: *Net2000 Communications v. Verizon -- Washington, D.C.*, Reply
    Brief of Verizon, File No. EB-00-018, Attachment A (March 30,
    2001)(Letter from Susan Fox of Verizon to Anthony Hansel of Net2000,
    dated March 15, 2001 (Verizon calculated that the conversion of
    eligible circuits in the Supplemental October 17, 2000 request would
    result in a reduction of monthly charges from \$103,733 to \$75,595,
    but also would result in one-time termination liability and minimum
    period charges of \$407,198. Conversion of the additional circuits
    deemed eligible that were requested on December 15, 2000 would
    result in a reduction of monthly charges from \$90,070 to \$67,731,
    but would result in one-time termination liability and minimum
    period charges of \$377,138. Verizon stated that the effective date
    of the re-pricing for the circuits in the supplement to the October
    17, 2000 request would be November 1, 2000 and the effective date of
    the conversions requested on December 15, 2000 would be January 1,
    2001.); *Net2000 Communications v. Verizon -- Washington, D.C.*,
    Initial Brief of Net2000, File No. EB-00-018, Ex. 1 (Letter from
    Susan Fox of Verizon to Anthony Hansel of Net2000 (dated Dec. 1,
    2000). (Verizon reported that the conversion of the circuits it
    deemed eligible would result in a reduction of Net2000's monthly
    charges from \$323,301.02 to \$250,592.25 for the converted
    circuits. Because some of the eligible circuits had been purchased
    pursuant to the term plan provisions in Verizon's tariffs, however,
    the conversions would result in one-time termination liability and
    minimum period charges of \$974,376.42.)

[^69]: Reply Brief of Verizon at 7.

[^70]: Reply Brief of Net2000 at 5.

[^71]: December 15, 2000 Staff Letter, *supra.* at 2.

[^72]: *Id.*

[^73]: Reply Brief of Verizon at 7 and Reply Brief of Net 2000 at 5.

[^74]: See*, e.g.*, *UNE Remand Order*, 15 FCC Rcd 3696, 3909, ¶ 480;
    *Supplemental Order Clarification*, 15 FCC Rcd 9587, 9604, ¶ 33.

[^75]: Given that the parties' interconnection agreement already
    contains language for the provision of UNE combinations and that
    EELs are such combinations, we suspect that no ammendment would be
    necessary for the conversion of qualifying special access circuits
    to EELs.

[^76]: Complaint at ¶¶ 31-33, Legal Analysis, ¶¶ 20-23.