Evaluation Of The United States Department Of Justice

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May 25, 2001

Index of Full Citations

Introduction and Summary

1. The Local Telecommunications Markets in Verizon's Connecticut Service Area
2. Recommendations and Conclusions

Verizon's application to offer long distance services in Connecticut relies in large part on its successful one for long distance entry in New York. The Department of Justice does not oppose Verizon's section 271 application given the following unique circumstances. First, Verizon's Connecticut service area is extremely limited: Verizon is the incumbent local exchange provider in two communities adjacent to New York that have a total of only 60,000 lines. Second, Verizon serves Connecticut CLECs by means of the same New York-based operations that were reviewed by the Federal Communications Commission in December 1999 when Verizon's section 271 application was approved for New York.⁽¹⁾ In addition, Verizon and the Connecticut Department of Public Utility Control ("Connecticut DPUC") have agreed to implement in Connecticut the outcomes of many continuing and future local competition proceedings pertaining to Verizon's operations in New York.

I. The Local Telecommunications Markets in Verizon's Connecticut Service Area

Verizon is the incumbent local exchange provider in only two Connecticut communities, Greenwich and Byram, which adjoin Verizon's service area in New York. These two communities are part of the New York metropolitan area and are wholly located within LATA 132 -- the local access and transport area that includes New York City, Long Island, and Westchester County, New York. Greenwich and Byram contain approximately 31,000 residential lines and 25,000 business lines, which represent only 2 percent of the access lines in Connecticut.⁽²⁾

Based on Verizon's figures, CLECs serve more than 2,500 lines in Greenwich and Byram, or nearly 5 percent of Verizon's total lines in service.⁽³⁾ This aggregate level of CLEC penetration is approximately half of what it was in New York at the time Verizon filed for section 271 approval there.⁽⁴⁾ The overwhelming majority of these CLEC lines in Connecticut are business lines.⁽⁵⁾ About 2000, or 80 percent, of the CLEC lines are resold lines.⁽⁶⁾ CLECs also provide approximately 550 lines over their own facilities and about 285 lines using unbundled loops.⁽⁷⁾ There are approximately 350 CLEC DSL lines.⁽⁸⁾ CLECs have made virtually no use of the UNE-platform.⁽⁹⁾ This limited use of the UNE-platform in Verizon's Connecticut service area contrasts with that in New York, where the use of the UNE-platform accounts for rapid CLEC expansion.⁽¹⁰⁾

Verizon asserts that it provides the same wholesale products and services at the same rates and in the same manner, using its New York systems, processes, and procedures, because the limited number of lines it owns in Connecticut are part of Verizon's New York operations.⁽¹¹⁾ Indeed, this is not a case in which the systems used in two states are functionally the same; Verizon serves wholesale customers in Connecticut using its New York systems.⁽¹²⁾

Further, Verizon has been ordered by the Connecticut DPUC to implement in Connecticut the outcomes of a number of continuing and future New York Public Service Commission ("PSC") local competition proceedings. Verizon must implement in Connecticut any changes to its New York unbundled network elements ("UNE") and collocation tariffs within 10 business days following the New York PSC's approval.⁽¹³⁾ Verizon is required to provide in Connecticut all UNE combinations that it currently provides in New York and to revise its Connecticut UNE-platform tariff to reflect any changes to its New York tariff.⁽¹⁴⁾

In addition, Verizon has committed to the Connecticut DPUC to revise its Connecticut tariffs and its Statement of Generally Available Terms and Conditions to mirror the terms and conditions decided in the New York DSL Collaborative and New York PSC proceedings as well as in decisions implementing the Commission's Line Sharing and UNE Remand Orders.⁽¹⁵⁾

Finally, to ensure adequate performance for Connecticut CLECs, the Connecticut DPUC ordered Verizon to submit performance reports for Connecticut CLECs in the same format as it reports to the New York PSC and the Commission.⁽¹⁶⁾ Verizon is required to import into Connecticut any changes to its performance reporting that are made in New York.⁽¹⁷⁾ In addition, the Connecticut Performance Assurance Plan ("PAP") will remain identical to the New York PAP by automatically incorporating any modifications of the New York PAP.⁽¹⁸⁾

II. Recommendations and Conclusions

This application is unique. Verizon provides wholesale products and services to a very limited area of Connecticut using its New York-based operations and has committed to implement in Connecticut the outcomes of many local competition proceedings pertaining to its operations in New York. For these reasons the Department does not oppose Verizon's section 271 application.

May 25, 2001

1. See generally FCC New York Order.

2. Verizon Brief at 4, 9-10; Verizon Lacouture/Ruesterholz Decl. ¶ 8. The Connecticut LATA is an independent service area and the vast majority of access lines in the state are served by the incumbent local exchange carrier, Southern New England Telephone Company, which is now owned by SBC. Verizon Taylor Decl. ¶ 28.

3. Verizon Taylor Decl. ¶ 39 & Attach. A at 1 tbl.1.

4. In New York, at the time of Verizon's application for section 271 approval, CLECs served approximately 8.9 percent of total access lines. DOJ New York Evaluation at 9. Although market shares are an important factor in the Department's analysis, we have previously opined that small market shares held by competitors or even the absence of entry, standing alone, are neither conclusive evidence that a market remains closed to competition nor a basis for denying an application under section 271. See, e.g., DOJ Oklahoma I Evaluation at 29-30; DOJ Louisiana II Evaluation at 26-27.

5. Verizon Taylor Decl. Attach. A at 1 tbl.1.

6. Verizon Taylor Decl. ¶ 39 & Attach. A at 1 tbl.1.

7. Id.

8. Verizon Brief at 9; Verizon Lacouture/Ruesterholz Decl. ¶ 126.

9. Verizon Brief at 47; Verizon Lacouture/Ruesterholz Decl. ¶¶ 284-85.

10. At the time of Verizon's section 271 application in New York, approximately 152,000 lines there were served through the UNE-platform. FCC New York Order ¶ 14. By February 2001, CLECs in New York served approximately 1.5 million additional customers over the UNE-platform. Verizon Brief Attach. A.4.

11. Verizon Brief at 9. Verizon asserts that the wholesale operations and systems that it uses to serve CLECs in Greenwich and Byram are identical to those its uses to serve CLECs in New York. Id. at 11. Verizon serves wholesale customers in Greenwich and Byram through the same operations centers used in New York, including the Telecommunications Industry Services Operations Centers, which process CLEC orders, the Regional CLEC Coordination Center, which facilitates and coordinates the provisioning of CLEC orders, and the Regional CLEC Maintenance Center, which supports wholesale trouble reporting and repair issues. Id. Verizon reports that these operations centers use the same operations support systems and processes to serve Greenwich and Byram as it uses to serve New York, including the electronic application to application pre-ordering and ordering interfaces, the Service Order Processor used to process CLEC orders, the Service Order Analysis and Control system used to control the provisioning process, the Loop Facility Assignment and Control System used to reserve or assign facilities to an order, the Work Force Administration system used to dispatch field technicians, the Repair Trouble Administration System used to handle repair requests, and the same testing systems to detect and analyze problems on a circuit. Verizon McLean/Wierzbicki Decl. ¶¶ 15, 69, 72, 74.

The central office serving Byram is physically located in Port Chester, NY, and Verizon operates two garages in Port Chester that perform the operations, installation, and maintenance for customers in Greenwich and Byram (as well as for customers throughout Westchester County, NY). Verizon Brief at 10. Verizon has thirteen employees in the Greenwich central office -- twelve central office technicians and one manager to whom these technicians report -- all of whom report to higher level managers that are stationed in New York. Id. Verizon asserts that these employees have received the same training and are subject to the same procedures for central office technicians as Verizon employees based in New York. Id.

12. Verizon Brief at 9. The Commission set out the evidentiary showing necessary to establish that an applicant's OSS in the state at issue is the same as the OSS in a state where that applicant has already received section 271 approval. FCC Kansas/Oklahoma Order ¶¶ 103-70; see also DOJ Kansas/Oklahoma Evaluation at 28-36.

13. Verizon Brief at 12; CTDPUC UNE Tariff Decision at 10-11; CTDPUC Collocation Tariff Decision at 4; CTDPUC Comments at 12 ("The CTDPUC has approved UNE and collocation tariffs that contain rates, terms and conditions contained in Verizon's New York tariffs. The CTDPUC fully expects these tariffs will continue to mirror Verizon's New York tariffs.").

14. Verizon Brief at 12; CTDPUC UNE Combination Tariff Decision at 16; CTDPUC Comments at 13.

15. Final CTDPUC Decision at 12 & n.24. The New York DSL Collaborative is working to develop, among other things, a specialized ordering process to support line splitting and the migration from other arrangements such as UNE-platform and line sharing to line splitting. Id; Verizon Brief at 43. Verizon has agreed to an implementation schedule that calls for it to conduct a pilot of new OSS capabilities in June 2001 and to implement them throughout the former Bell Atlantic (Verizon East) footprint by October. Verizon Brief at 43; Verizon Lacouture/Ruesterholz Decl. ¶ 237.

16. Final CTDPUC Decision at 11, 15.

17. Id.; Verizon Brief at 13.

18. The only allowable exception is the amount of monetary penalties for unsatisfactory performance. Verizon Brief at 13, 71; Verizon Canny/Abesamis Decl. ¶¶ 15, 116; Final CTDPUC Decision at 15. Although the Connecticut and New York PAPs will remain identical, in application it may be more difficult to make statistically significant determinations that Verizon's performance in Connecticut is out of parity because of the small number of CLEC orders there. The Department also notes that Verizon has no separate Change Control Assurance Plan ("CCAP") for Connecticut. See Verizon Canny/Abesamis Decl. ¶ 164. Verizon has stated that it will make bill credits available to CLECs operating only in Connecticut in proportion to their availability in New York, if Verizon's performance in Connecticut is unsatisfactory pursuant to the standards of its New York CCAP. Id. However, a CLEC that operates in both New York and Connecticut will not receive bill credits for poor change control performance based on its Connecticut lines. See id. The Department recognizes that because there are so few lines in Connecticut this omission will have little practical effect, but in states where the incumbent shares common operational support systems and where the number of lines are greater than in Connecticut, such an omission could diminish the quality of the post-section 271 enforcement remedies available.