Before the

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

In the Matter of	)

)

Application by Verizon New England	)

Inc., Bell Atlantic Communications,	)

Inc. (d/b/a Verizon Long Distance),	)

NYNEX Long Distance Company	)	CC Docket No. 02-7

(d/b/a Verizon Enterprise Solutions),	)

Verizon Global Networks Inc., and	)

Verizon Select Services Inc., for	)

Authorization to Provide In-Region,	)

InterLATA Services in Vermont	)

_______________________________________________________

EVALUATION OF THE

UNITED STATES DEPARTMENT OF JUSTICE

_______________________________________________________

Charles A. James	R. Hewitt Pate

Assistant Attorney General	Deputy Assistant Attorney General

Antitrust Division

Margaret A. Ward	Michael L. Katz

Counsel to the Assistant Attorney General	Deputy Assistant Attorney General

Communications with respect to this document should be addressed to:

Nancy M. Goodman

Chief

W. Robert Majure	Benjamin D. Brown

Assistant Chief	Katherine E. Brown

J. Parker Erkmann

John Henly	Lauren J. Fishbein

Jeffrey Prisbrey

Economists	Attorneys

Economic Regulatory Section	Telecommunications and Media

Enforcement Section

February 21, 2002

Table of Contents

Table of Contents	ii

Index of Full Citations	iii

Introduction and Summary	1

I.	Vermont Public Service Board Review	2

II.	The Department's Evaluation	4

III.	Conclusion	8

INDEX OF FULL CITATIONS
Short Citation	Full Citation
DOJ Evaluations and Related Materials
DOJ Arkansas/Missouri Evaluation	Evaluation of the U.S. Department of Justice, In re: Joint Application by SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell Communications Services, Inc. d/b/a Southwestern Bell Long Distance for Provision of In-Region InterLATA Services in Arkansas and Missouri, FCC CC Docket No. 01-194 (Sept. 24, 2001), available at <http://www.usdoj.gov/atr/public/comments/sec271/
sec271.htm>.
DOJ Georgia/Louisiana Evaluation	Evaluation of the U.S. Department of Justice, In re: Joint Application by BellSouth Corporation, BellSouth Telecommunications, Inc., and BellSouth Long Distance, Inc. for Provision of In-Region InterLATA Services in Georgia and Louisiana, FCC CC Docket No. 01-277 (Nov. 6, 2001), available at <http://www.usdoj.gov/atr/public/comments/
sec271/sec271.htm>.
DOJ Kansas/Oklahoma Evaluation	Evaluation of the U.S. Department of Justice, In re: Joint Application by SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell Communications Services, Inc. d/b/a Southwestern Bell Long Distance for Provision of In-Region InterLATA Services in Kansas and Oklahoma, FCC CC Docket No. 00-217 (Dec. 4, 2001), available at <http://www.usdoj.gov/atr/public/comments/sec271/
sec271.htm>.
DOJ Local Competition Comments	Comments of the U.S. Department of Justice, In re: Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, FCC CC Docket No. 96-98 (May 16, 1996).
DOJ Missouri I Evaluation	Evaluation of the U.S. Department of Justice, In re: Application of SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell Communications Services, Inc. d/b/a Southwestern Bell Long Distance for Provision of In-Region InterLATA Services in Missouri, FCC CC Docket No. 01-88 (May 9, 2001), available at <http://www.usdoj.gov/atr/public/comments/sec271/ sec271.htm>.
DOJ New Jersey Evaluation	Evaluation of the U.S. Department of Justice, In re: Application by Verizon New Jersey Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions), Verizon Global Networks Inc., and Verizon Select Services Inc., for Authorization to Provide In-Region, InterLATA Services in New Jersey, FCC CC Docket No. 01-347 (Jan. 28, 2002), available at <http://www.usdoj.gov/atr/public/
comments/sec271/sec271.htm>.
DOJ Pennsylvania Evaluation	Evaluation of the U.S. Department of Justice, In re: Application by Verizon Pennsylvania Inc., Verizon Long Distance, Verizon Enterprise Solutions, Verizon Global Networks Inc., and Verizon Select Services Inc., for Authorization to Provide In-Region, InterLATA Services in Pennsylvania, FCC CC Docket No. 01-138 (July 26, 2001), available at <http://www.usdoj.gov/atr/public/comments/
sec271/sec271.htm>.
DOJ Rhode Island Evaluation	Evaluation of the U.S. Department of Justice, In re: Application by Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions), Verizon Global Networks Inc., and Verizon Select Services Inc., for Authorization to Provide In-Region, InterLATA Services in Rhode Island, FCC CC Docket No. 01-
324 (Jan. 4, 2002), available at <http://www.fcc.gov/

Bureaus/Common_Carrier/in-region_applications/>.
FCC Orders, Reports, and Related Materials
FCC Connecticut Order	Memorandum Opinion and Order, In re: Application of Verizon New York Inc., Verizon Long Distance, Verizon Enterprise Solutions, Verizon Global Networks Inc., and Verizon Select Services, Inc., for Authorization to Provide In-Region, InterLATA Services in Connecticut, 16 FCC Rcd 14,147 (July 20, 2001), available at <http://www.fcc.gov/

Bureaus/Common_Carrier/in-region_applications/>.
FCC Massachusetts Order	Memorandum Opinion and Order, In re: Application of Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions) and Verizon Global Networks Inc., for Authorization to Provide In-Region, InterLATA Services in Massachusetts, 16 FCC Rcd 8988 (Apr. 16, 2001), available at <http://www.fcc.gov/

Bureaus/Common_Carrier/in-region_applications/>.
FCC New York Order	Memorandum Opinion and Order, In re: Application by Bell Atlantic New York for Authorization Under Section 271 of the Communications Act To Provide In-Region, InterLATA Services in the State of New York, 15 FCC Rcd 75 (Dec. 22, 1999), aff'd, AT&T Corp. v. FCC, 220 F.3d 607 (D.C. Cir. 2000), available at <http://www.fcc.gov/

Bureaus/Common_Carrier/in-region_applications/>.
FCC Pennsylvania Order	Memorandum Opinion and Order, In re: Application of Verizon Pennsylvania Inc., Verizon Long Distance, Verizon Enterprise Solutions, Verizon Global Networks Inc., and Verizon Select Services, Inc., for Authorization to Provide In-Region, InterLATA Services in Pennsylvania, 16 FCC Rcd 17,419 (Sept. 19, 2001), available at <http://www.fcc.gov/

Bureaus/Common_Carrier/in-region_applications/>.
FCC Request for Comments	Comments Requested in Connection with Verizon's Section 271 Application for Rhode Island, FCC CC Docket No. 01-324, Public Notice DA 02-356 (Feb. 14, 2002).
Vermont State Commission Orders and Related Materials
Vermont PSB Section 271 Compliance Letter

Letter from Vermont Public Service Board to V. Louise McCarren, Verizon New England, In re: Application of Verizon New England Inc., d/b/a Verizon Vermont, for a Favorable Recommendation to Offer InterLATA Service Under 47 U.S.C. § 271, Vermont PSB Docket No. 6533 (Jan. 16, 2002).
Vermont PSB Comments	Comments on Federal Proceeding, In re: Application of Verizon New England Inc. d/b/a Verizon Vermont for a Favorable Recommendation to Offer InterLATA Services Under 47 U.S.C. § 271, Vermont PSB Docket No. 6533 (Feb. 6, 2002).
Vermont PSB C2C Guidelines Order	Order Approving Carrier-to-Carrier Standards, In re: Investigation into the Establishment of Wholesale Service Quality Standards for providers of Telecommunications Services in re: Phase I (Standards), Vermont PSB Docket No. 6255 (Dec. 12, 2002), attached to Verizon Br. App. I as Tab 3.
Vermont PSB Pricing Order I	Order Allowing SGAT to Take Effect, Addressing Future Procedures, Correcting February 4, 2000 Order and Closing Investigation, In re: Investigation into New England Telephone and Telegraph Company's (NET's) tariff filing re: Open Network Architecture, including the unbundling of NET's network, expanded interconnection, and intelligent networks in re: Phase II, Module 2 -- Cost Studies, Vermont PSB Docket No. 5713, (Aug. 23, 2000), attached to Verizon Br. App. E as Tab 8.
Vermont PSB Pricing Order II	Order re: Geographic Deaveraging of Unbundled Network Elements, In re: Investigation of Geographically Deaveraged Unbundled Network Prices, Vermont PSB Docket No. 6318 (Oct. 12, 2000), attached to Verizon Br. App. H as Tab 2.
Verizon's Application and Related Filings
PwC Sapienza/Bluvol Decl.	Joint Declaration of Russell J. Sapienza and Catherine (Kate) Bluvol, attached to Verizon Br. App. C as Tab 1.
Verizon Br.	Application by Verizon New England for Authorization to Provide In-Region, InterLATA Services in Vermont, In re: Application by Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions), Verizon Global Networks Inc., and Verizon Select Services Inc., for Authorization to Provide In-Region, InterLATA Services in Vermont, FCC CC Docket No. 02-7 (Jan. 17, 2002).
Verizon Brown Decl.	Declaration of Paula L. Brown, attached to Verizon Br. App. A as Tab F.
Verizon Line Counts Ex Parte	Verizon Communications, Verizon Business and Residential Line Counts as of November 2001, Verizon Ex Parte Submission, FCC CC Docket No. 02-7 (Feb. 7, 2002).
Verizon Line Counts Calculations Ex Parte	Verizon Communications, Verizon Calculations of Business and Residential Line Counts, Verizon Ex Parte Submission, FCC CC Docket No. 02-7 (Feb. 11, 2002).
Verizon McCarren/Garzillo/Anglin Decl.	Joint Declaration of V. Louise McCarren, Patrick A. Garzillo, and Michael J. Anglin, attached to Verizon Br. App. A as Tab D.
Verizon McLean/Wierzbicki Decl.	Joint Declaration of Kathleen McLean and Raymond Wierzbicki, attached to Verizon Br. App. A as Tab B.
Verizon RI Switching Rates Ex Parte	Verizon Communications, Verizon Proposed Reductions in Rhode Island Switching Rates, Verizon Ex Parte Submission, FCC CC Docket No. 01-324 (Feb. 14, 2002).
Third-Party Comments and Affidavits/Declarations
ABS Comments	Comments of Adelphia Business Solutions, Inc. and Adelphia Business Solutions of Vermont, Inc., In re: Application by Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions), Verizon Global Networks Inc., and Verizon Select Services Inc., for Authorization to Provide In-Region, InterLATA Services in Vermont, FCC CC Docket No. 02-7 (Feb. 6, 2002).
AT&T Comments	Comments of AT&T Corp., In re: Application by Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions), Verizon Global Networks Inc., and Verizon Select Services Inc., for Authorization to Provide In-Region, InterLATA Services in Vermont, FCC CC Docket No. 02-7 (Feb. 6, 2002).
CTC Comments	Comments of CTC Communications Corp., In re: Application by Verizon New England Inc., et al., for Authorization to Provide In-region, InterLATA Services in Vermont, FCC CC Docket No. 02-7 (Feb. 6, 2002).
WorldCom Comments	Comments of WorldCom, Inc. on the Application by Verizon for Authorization to Provide In-Region, InterLATA Services in Vermont, In re: Application by Verizon for Authorization Under Section 271 of the Communications Act to Provide In-Region, InterLATA Services in Vermont, FCC CC Docket No. 02-7 (Feb. 6, 2002).
Yipes PA Comments	Comments of Yipes Transmission, Inc., In re: Application by Verizon Pennsylvania, Inc. for Authorization Under Section 271 of the Communications Act to Provide In-Region, InterLATA Services in the State of Pennsylvania, FCC CC Docket No. 01-138 (July 11, 2001).

Before the

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

In the Matter of	)

)

Application by Verizon New England	)

Inc., Bell Atlantic Communications,	)

Inc. (d/b/a Verizon Long Distance),	)

NYNEX Long Distance Company	)	CC Docket No. 02-7

(d/b/a Verizon Enterprise Solutions),	)

Verizon Global Networks Inc., and	)

Verizon Select Services Inc., for	)

Authorization to Provide In-Region,	)

InterLATA Services in Vermont	)

_______________________________________________________

EVALUATION OF THE

UNITED STATES DEPARTMENT OF JUSTICE

_______________________________________________________

Introduction and Summary

The United States Department of Justice ("the Department"), pursuant to Section 271(d)(2)(A) of the Telecommunications Act of 19961 ("the 1996 Act"), submits this evaluation of the application filed by Verizon New England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon Enterprise Solutions),Verizon Global Networks Inc., and Verizon Select Services Inc., on January 17, 2002, to provide in-region, interLATA services in Vermont.

This application to the Federal Communications Commission ("FCC" or "Commission") is Verizon's first for the state of Vermont, and follows its successful application for long distance entry in Massachusetts, another state in its New England region, as well as successful applications for Pennsylvania, Connecticut, and New York.2 The Department has also recommended that the FCC approve Verizon's recently filed applications for Section 271 authority in Rhode Island and New Jersey, subject to the Commission's satisfaction with respect to certain pricing issues.3 The Department concludes that Verizon has generally succeeded in opening its local markets in Vermont to competition and recommends approval of Verizon's application for Section 271 authority in Vermont, subject to the Commission satisfying itself as to the pricing issues mentioned below.

I.	Vermont Public Service Board Review

For the most part, conditions in the Vermont local telecommunications market appear favorable to fostering competition. The Vermont Public Service Board ("Vermont PSB"), with the input of the Vermont Department of Public Service, has facilitated the development of these conditions by establishing carrier-to-carrier wholesale performance measurements, which incorporate improvements from New York4; conducting pricing proceedings that established rates for unbundled network elements ("UNEs")5; and adopting a Performance Assurance Plan intended to ensure that an appropriate level of wholesale performance is maintained once Verizon's Section 271 application is approved.6 The Vermont PSB's review of Verizon's state Section 271 filing included an independent third-party test by PricewaterhouseCoopers ("PwC") designed to determine whether the operations support systems ("OSS") that Verizon uses in Vermont are the same as those it uses in Massachusetts.7 PwC concluded that Verizon's assertions regarding the "sameness" of its "New England region Operational Support Systems (specifically the pre-order, order, provisioning, maintenance & repair, relationship management infrastructure, and billing domains) and Performance Metrics Reporting" are fairly stated.8 On January 16, the Vermont PSB voted to recommend that the FCC approve Verizon's Section 271 application.9

II.	The Department's Evaluation

In assessing whether the local markets in a state are fully and irreversibly open to competition, the Department looks first to the actual entry in a market.10 But the Department does not broadly presume that all three entry tracks -- facilities-based, unbundled network elements ("UNEs"), and resale -- are open or closed on the basis of an aggregate level of entry alone.11

Together, Verizon and CLECs serve a total of approximately 373,900 lines in Verizon's Vermont service area.12 Of the total lines in Verizon's service area in Vermont, 34.3 percent, or approximately 128,400, serve businesses, and 65.7 percent, or approximately 245,500, serve residential customers.13 For business and residential customers combined, Verizon reports that CLECs using all modes of entry serve approximately 21,500 lines, or 5.7 percent of all lines in Verizon's service area in the state.14

Competitors have made progress in penetrating the business market in Vermont. CLECs serve approximately 16.2 percent of all business lines in Verizon's Vermont service area.15 CLECs serve approximately 3.5 percent of all business lines using primarily their own fiber optic networks that are either connected directly to the customer premises or connected through loops leased from Verizon.16 CLECs resell Verizon's services to serve approximately 12.1 percent of all business lines.17 CLECs use the UNE-platform (a combination of loop, switch, and transport elements) to serve less than 1 percent of such lines.18

Using all modes of entry combined, CLECs serve less than one-half of 1 percent of all residential lines in Verizon's Vermont service area.19

The amount of entry by competitive facilities-based carriers and resellers serving business customers in Vermont and the absence of complaints regarding Verizon's fulfillment of its obligations to open its markets to these modes of entry, lead the Department to conclude that opportunities to serve business customers via the facilities-based and resale modes of entry are available in Vermont.20 Although there is significantly less competition to serve residential customers, the Department does not believe there are any material non-price obstacles to competition in Vermont created by Verizon.21 Verizon has submitted evidence to show that its Vermont OSS are the same as those that the Commission found satisfactory in Massachusetts.22 Moreover, the record indicates few complaints regarding Verizon's Vermont OSS.

Although the non-price aspects of Verizon's UNE offering in Vermont do not appear to raise concerns, the Department notes several complaints from commenters regarding the pricing of UNEs in Vermont.23 The Department urges the Commission to look carefully at these comments in determining whether Verizon's prices are cost-based.24 As the Department has stated previously, "[b]ecause of the Commission's experience and expertise in rate-making issues . . . the Department will not attempt to make its own independent determination whether prices are appropriately cost-based."25

III.	Conclusion

The record in this matter suggests that Verizon has succeeded in opening its local markets in Vermont to competition in most respects. Subject to the Commission satisfying itself as to the pricing issues mentioned above, the Department recommends approval of Verizon's application for Section 271 authority in Vermont.

Respectfully submitted,

/s/

Charles A. James	Nancy M. Goodman

Assistant Attorney General	Chief

Antitrust Division

Benjamin D. Brown

R. Hewitt Pate	Katherine E. Brown

Deputy Assistant Attorney General	J. Parker Erkmann

Antitrust Division	Lauren J. Fishbein

Michael L. Katz	Attorneys

Deputy Assistant Attorney General	Telecommunications and Media

Antitrust Division	Enforcement Section

Margaret A. Ward

Counsel to the Assistant Attorney General

Antitrust Division

W. Robert Majure

Assistant Chief

Antitrust Division

John Henly	U.S. Department of Justice

Jeffrey Prisbrey	1401 H Street, NW, Suite 8000

Economists	Washington, DC 20530

Economic Regulatory Section	(202) 514-5621

February 21, 2002

Certificate of Service

I hereby certify that I have caused a true and accurate copy of the foregoing Evaluation of the United States Department of Justice to be served on the persons indicated on the attached service list by first class mail, overnight mail, hand delivery, or electronic mail on February 21, 2002.

Lauren J. Fishbein

Attorney

Telecommunications and Media

Enforcement Section

Antitrust Division

U.S. Department of Justice

Service List

Chairman Michael K. Powell

Commissioner Kathleen Q. Abernathy

Commissioner Michael J. Copps

Commissioner Kevin J. Martin

Federal Communications Commission

445 12th Street, SW

Washington, DC 20554

William Caton

Acting Secretary

Office of the Secretary

Federal Communications Commission

445 12th Street, SW

TW-B204

Washington, DC 20554

Janice Myles

Common Carrier Bureau

Federal Communications Commission

445 12th Street, SW

Room 5-C327

Washington, DC 20554

Qualex International

Portals II

445 12th Street, SW

Room CY-B402

Washington, DC 20554

Julie Veach

Common Carrier Bureau

Federal Communications Commission

445 12th Street, SW

Washington, DC 20554

Michael H. Dworkin, Chairman

David C. Coen, Board Member

John D. Burke, Board Member

Vermont Public Service Board

112 State Street (Chittenden Bank Building)

Drawer 20

Montpelier, VT 05620-2701

Susan Hudson

Clerk

Vermont Public Service Board

112 State Street (Chittenden Bank Building)

Drawer 20

Montpelier, VT 05620-2701

Peter Bluhm

Director of Regulatory Policy

Vermont Public Service Board

112 State Street (Chittenden Bank Building)

Drawer 20

Montpelier, VT 05620-2701

Michael E. Glover

Senior Vice President and

Deputy General Counsel

Verizon

1515 North Court House Road

Suite 500

Arlington, VA 22201

Lori Wright

Associate Counsel

Federal Advocacy

WorldCom, Inc.

1133 19th Street, NW

Washington, DC 20036

Pamela Hintz

Vice President

Regulatory and Legal Affairs

CTC Communications Corp.

360 Second Avenue

Waltham, MA 02451

Eric J. Branfman

Edward W. Kirsch

Swidler Berlin Shereff Friedman, LLP

3000 K Street, NW

Suite 300

Washington, DC 20007

Marybeth M. Banks

H. Richard Juhnke

Sprint Corporation

401 9th Street, NW

Suite 400

Washington, DC 20004

Mark C. Rosenblum

Lawrence J. Lafaro

James J.R. Talbot

AT&T Corporation

295 North Maple Avenue

Basking Ridge, NJ 07920

John Glicksman

Terry Romine

Adelphia Business Solutions, Inc.

1 N. Main Street

Coudersport, PA 16915

Cynthia Heslen

National Mobile Communications, Corp.

d/b/a SoVerNet Communications

P.O. Box 495

Bellows Falls, VT 05101

Andrew D. Lipman

Patrick J. Donovan

Swidler Berlin Shereff Friedman, LLP

3000 K Street, NW

Suite 300

Washington, DC 20007