January 24, 2002 -- The New York State Public Service Commission (PS) voted to approve significant reduction in the wholesale prices that Verizon New York, Inc. can charge to competitors for using certain elements of its network to serve customers. The wholesale price reductions will make it more economical for competitors to purchase local telecommunications network elements on a wholesale basis from Verizon to use in providing their own local phone service to customers.

"The Commission continues to open doors for rapid and broad entry by competitors into local telecommunications market throughout New York State," said Chairman Maureen O. Helmer. "Accurate pricing of wholesale service is absolutely critical to the development of facilities-based as well as unbundled network element-based competition in the local phone market. The wholesale price reductions approved today reflect a reasonable balancing of interests and should promote more choices and better pricing of local telephone service for both residential and business customers."

Depending on which facilities, if any, CLECs build themselves, they purchase either a platform of Verizon's unbundled network elements (UNE Platform or UNE-P), or individual loops (UNE Loop or UNE-L - the line or "loop" that connects the customer to the switch in Verizon's local office) and other network elements to use in providing local phone service.

Based on today's Commission decision, the statewide average wholesale monthly price of the UNE-P, using an average customer usage profile, will be reduced from $27.24 to $19.14. In Manhattan, the monthly wholesale UNE-P price will fall from $24.94 to $15.35. Individual statewide average monthly UNE Loop prices will be reduced to $11.49 from the current $14.13. The monthly price of an individual loop in Manhattan will now be $7.70 as opposed to the current price of $11.83.

Today's decision is the result of a thorough examination of the rates charged by Verizon to CLECs for UNEs that Verizon is required to make available under the provisions of the federal Telecommunications Act of 1996. Comprehensive cost studies prepared by Verizon and substantially adjusted during the course of this proceeding were used to develop the record in this case.

The existing UNE rates were set by the Commission in three phases between 1997 and 1999. In light of new evidence on switching costs submitted in the third phase of the proceeding, and the recognition that costs are continually changing in the evolving telecommunications industry, the Commission initiated another comprehensive review of network element pricing in 1999. Because of the new evidence on switching costs, the Commission also kept a portion of the switching rates set in the first proceeding temporary and subject to refiund.

Among the most difficult issues in both UNE cases has been determining the cost of Verizon's network switches. Because of concern that switching rates in the initial UNE case might need further refinement in light of the new evidence, they were kept temporary and subject to refund. The Commission today decided to reserve decision on the amount and manner of any refunds, pending further discussion among the parties and receipt of additional information.

The Commission will issue a written decision detailing today's actions related to UNE rates. The decision in Commission Case 98-C-1357, when available, can be obtained from the Commission's website.

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