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                         Before the
              Federal Communications Commission
                   Washington, D.C. 20554

In the Matter of                     )
                                    )
WorldCom, Inc.,                      )
                                    )
          Complainant,               )     
                                    )
                                     ) File No. EB-02-MD-017
v.                                   )
                                    )
Verizon New England Inc., Bell       )
Atlantic Communications, Inc.        )
(d/b/a Verizon Long Distance),       )
NYNEX Long Distance Company (d/b/a   )
Verizon Enterprises Solutions), and  )
Verizon Global Networks, Inc.,       )

          Defendants.


                MEMORANDUM OPINION AND ORDER

        Adopted:    July 22, 2002       Released:  July 23, 
2002

By the Commission:  Chairman Powell issuing a statement; 
Commissioner Copps dissenting and issuing a statement.

I.   INTRODUCTION

     1.   In this Order, we deny a formal complaint that 
WorldCom, Inc. (``WorldCom'') filed against Verizon New 
England Inc., Bell Atlantic Communications, Inc. (d/b/a 
Verizon Long Distance), NYNEX Long Distance Company (d/b/a 
Verizon Enterprises Solutions), and Verizon Global Networks, 
Inc. (collectively ``Verizon'') pursuant to sections 208 and 
271(d)(6) of the Communications Act of 1934, as amended 
(``Act'' or ``Communications Act'').1  WorldCom alleges that 
Verizon ceased to meet one of the conditions of the 
Commission's approval of Verizon's application to provide 
interLATA service in Massachusetts.2  In particular, 
WorldCom alleges that, after January 28, 2002, Verizon's 
switching rates in Massachusetts ceased to comply with 
section 271(c)(2)(B)(ii) of the Act, because those rates no 
longer mirrored the switching rates3 in New York, the state 
to which Verizon's switching rates in Massachusetts were 
``benchmarked'' in the Massachusetts 271 Order.4

We deny WorldCom's complaint, because WorldCom failed to 
meet its burden of proving that, during the six month, 
interim period between the issuance of the unbundled network 
element (``UNE'') rate order in New York on January 28, 2002 
and the setting of new UNE rates by the Massachusetts 
Department of Telecommunications and Energy (``DTE'') 
effective August 5, 2002, Verizon ceased to meet a condition 
of its approval to provide interLATA service in 
Massachusetts.5  In particular, the record in this 
proceeding demonstrates that, under the specific 
circumstances present, including steps Verizon took to 
ensure that competitors had access to cost-based rates 
during the interim period and the shortness of the interim 
period in question, Verizon remained in compliance with 
section 271.  Our denial of this complaint, however, is 
without prejudice to whatever rights that WorldCom may have 
to challenge the Massachusetts UNE Rate Order. 

II.  BACKGROUND

     II.A.     The Parties

     2.   WorldCom provides long distance and local 
telephone services in the Commonwealth of Massachusetts.6  
The Verizon defendants include the incumbent local exchange 
carrier providing local service in the Commonwealth of 
Massachusetts, as well as affiliates that provide long-
distance telecommunications service to residential and 
business customers in Massachusetts.7 

     II.B.     Verizon's  Authority   to  Provide  InterLATA 
          Services In Massachusetts

     3.   The Act prohibits a Bell Operating Company 
(``BOC'') from offering in-region interLATA services without 
first obtaining authorization to do so from the Commission.8  
To obtain this authorization, a BOC must demonstrate that it 
satisfies the ``competitive checklist'' set forth in section 
271(c)(2)(B).9  As part of this showing, a BOC must 
demonstrate that the state in question has properly set non-
discriminatory and cost-based rates for UNEs, including 
switches, that the BOC must provide to competitors.10  The 
Commission has established rules governing how states should 
set such rates.11  These rules specify that UNE rates shall 
be set in accordance with a total element long run 
incremental cost (``TELRIC'') methodology.12 

     4.   On January 16, 2001, pursuant to section 271, 
Verizon submitted its application (``Massachusetts 271 
Application'') to provide interLATA services in 
Massachusetts.13  Verizon's Massachusetts 271 Application 
relied upon voluntarily adopted rates that were equivalent 
to those in place at the time in New York that the 
Commission previously had found were TELRIC-compliant and 
satisfied section 252(d)(1) of the Act.14  Verizon argued 
inter alia that ``benchmarking'' its Massachusetts switching 
rates to the existing New York switching rates demonstrated 
that it was TELRIC-compliant in Massachusetts because the 
switching costs in Massachusetts are the same or higher than 
Verizon's switching costs in New York.15

     5.   In evaluating Verizon's Massachusetts 271 
Application, the Commission found that New York's UNE rates, 
including switching rates, could properly ``be used as the 
benchmark for measuring whether Verizon's UNE rates are 
TELRIC-based in Massachusetts.''16  The Commission explained 
that a comparison of Massachusetts and New York rates and 
costs was appropriate because:  (1) the same BOC serves both 
states; (2) the states are adjoining; and (3) the states 
have similar rate structures.17  Further, the Commission 
noted that it had already found that ``the New York rates 
are within a zone that is consistent with TELRIC based on 
current information in the record.''18  The Commission had 
declared that, in these circumstances, a state that fully 
adopted another state's TELRIC-compliant rates ``would be 
entitled to a presumption of compliance with TELRIC if it 
... could demonstrate that its costs were at or above the 
costs in that state whose rates it adopted.''19 

     6.   The Commission found that Verizon's switching 
costs in Massachusetts were the same as or slightly higher 
than its switching costs in New York.20  Thus, the 
Commission concluded that the Massachusetts switching rates, 
like their New York counterparts, ``are at present within 
the range that a reasonable application of TELRIC principles 
would produce,'' and granted Verizon's application to 
provide interLATA services in Massachusetts.21 

     7.   In the Massachusetts 271 Order, the Commission 
acknowledged that the New York Public Service Commission 
(``NYPSC'') was actively investigating UNE rates and might 
ultimately modify the switching rates as a result of that 
investigation.22  Nevertheless, the prospect of future rate 
reductions in New York did not dissuade this Commission from 
using the existing New York rates as a TELRIC benchmark.  
The Commission pointed out that it had found those rates to 
be TELRIC-compliant in December 1999 notwithstanding the 
pendency of the NYPSC's rate investigation,23 and the Court 
of Appeals upheld the Commission's conclusion.24  In 
addition, the Commission noted that there had been no 
intervening ``determination that those rates are not TELRIC-
compliant'' that precluded Verizon from relying on the New 
York rates merely because they were under ``challenge or 
review'' in that State.25  The Commission stated, however, 
that a future decision by the NYPSC to revise New York 
switching rates ``may undermine Verizon's reliance on those 
rates in Massachusetts and its compliance with the 
requirements of section 271, depending on the New York 
Commission's conclusions.''26  Nevertheless, the Commission 
did not adopt a suggestion from some commenters, including 
WorldCom, that the approval of Verizon's application be 
conditioned on Verizon's agreement to immediately and 
completely mirror in Massachusetts any subsequent rate 
reductions in New York.

     8.   The Commission also acknowledged in the 
Massachusetts 271 Order that the Massachusetts DTE was in 
the process of reviewing Verizon's UNE rates (``DTE Rate 
Proceeding''), having begun a scheduled, five-year review of 
those rates in January of 2001.27  Although commenters 
questioned whether the DTE would adopt TELRIC-compliant 
rates on a going-forward basis, the Commission expressed 
confidence that the DTE would set UNE rates in compliance 
with the Act and the Commission's implementing rules.28  The 
Commission noted that there had been significant guidance on 
what constitutes TELRIC-based rates since the DTE first set 
UNE rates in 1996, including proceedings in other states 
that specifically addressed changes in technologies and cost 
information.29  The Commission presumed that the DTE, like 
other state commissions, would examine the issues relevant 
to costs during the course of its ongoing rate case and set 
rates within the range that a reasonable application of 
TELRIC principles would produce.30  The Commission expressly 
contemplated that the DTE would take into account any rate 
changes implemented in New York and the basis for those 
changes.31  

     II.C.     Developments in New York and Massachusetts 
          After the Massachusetts 271 Order

     9.   On January 28, 2002, the NYPSC issued an order 
concluding its UNE rate investigation and setting new UNE 
rates.32  The NY UNE Order substantially reduced switching 
rates from the temporary rates previously established.33  A 
subsequent order of the NYPSC made the new rates effective 
March 1, 2002.34

     10.  After the new rates became effective in New York, 
WorldCom requested that Verizon immediately reduce its 
Massachusetts switching rates to match the new, lower 
switching rates adopted in the NY UNE Order.35  Verizon 
declined.36  On April 10, 2002, however, Verizon filed a 
tariff (Verizon Interim Tariff) with the Massachusetts DTE 
to reduce its switching rates on an interim basis until the 
DTE issued its final rate order.37  The rates Verizon 
proposed were lower than its current rates (i.e., the rates 
benchmarked to the ``old'' New York rates), but higher than 
the new New York rates set forth in the NY UNE Order.38  
Verizon proposed that these rates become immediately 
effective on April 10, 2002, rather than after the normal 
30-day waiting period under Massachusetts law.39  Verizon 
also proposed that these rates be subject to a true-up 
against the permanent rates eventually established by the 
DTE.40  

On May 9, 2002, the Massachusetts DTE suspended Verizon's 
Interim Tariff. 41  The DTE pointed out that ``the 
Department very rarely'' has allowed ``interim rates to take 
effect on the very verge of issuing a dispositive final 
order on the very same matter.''42  The DTE found that its 
pending ``adjudicatory process for establishing new UNE 
rates should be allowed to run its course, particularly (but 
not only) where [the DTE is] very close to a final decision, 
and should not be preempted by activities driven by federal 
litigation.''43  The DTE further stated that ``[a]llowing a 
rate to take effect is an implicit statement that the rate 
is just and reasonable ... [and] TELRIC-compliant'' and that 
the DTE was not prepared at the time to make that judgment 
about Verizon's Interim Tariff particularly because ``the 
setting of such rates is what its extensive effort now near 
the verge of completion'' in its rate proceeding ``has been 
all about.''44  In the meantime, the DTE stated that the 
current Massachusetts' UNE rates, ``including switching and 
transport rates,'' ``are TELRIC-compliant.''45 

Within days of the DTE Interim Tariff Decision, Verizon 
offered amendments to its interconnection agreements with 
WorldCom and other CLECs in Massachusetts that would have 
trued-up the Massachusetts switching rates then in effect to 
the rates that the DTE ultimately established in its rate 
order, retroactive to March 1, 2002.46  Thus, Verizon 
offered to agree that the switching rates that the DTE 
ultimately set in its UNE rate order would be effective 
retroactively to the effective date of the new New York 
rates.47  Although WorldCom declined this offer, at least 
two other CLECs accepted Verizon's offer before the DTE 
issued its UNE rate order.48

On July 11, 2002, the DTE issued the Massachusetts UNE Rate 
Order.49  The Order was the culmination of a comprehensive 
eighteen month investigation that was pending at the time 
the Commission granted the Massachusetts 271 Application.  
The ``primary objective'' of the proceeding was to assess 
``whether Verizon ha[d] substantiated the reasonableness of 
its many UNE and interconnection cost components.''50  The 
proceeding involved eighteen days of evidentiary hearings 
and extensive briefing by numerous parties, including 
WorldCom and Verizon.51  The DTE examined ``a myriad of cost 
issues bearing on the development of recurring and non-
recurring rates for UNEs and interconnection, including UNE 
loops, switching, inter-office transport, collocation, and 
Operation Support Systems.''52  The DTE's Order thoroughly 
analyzes the competing cost arguments made by Verizon and 
the CLECs, including WorldCom, and the DTE appears to have 
credited and adopted many of WorldCom's arguments concerning 
switching rates.53  Indeed, according to WorldCom, the 
Massachusetts DTE ``rejected Verizon's position on virtually 
every significant switching input'' and ``has issued an 
order that appears to contemplate switching rates roughly 
equivalent to those adopted in New York.''54

     II.D.     WorldCom's Complaint

On April 24, 2002, WorldCom filed the present complaint 
against Verizon.55  WorldCom alleges that as of January 29, 
2002, Verizon's Massachusetts switching rates ceased to 
comply with section 271(c)(2)(B)(ii) of the Act, because 
those rates no longer mirrored the switching rates in New 
York, the state to which Verizon's switching rates in 
Massachusetts were ``benchmarked'' in the Massachusetts 271 
Order.56  WorldCom asks us to determine whether Verizon 
remained in compliance with section 271 from January 29, 
2002 to August 5, 2002, and intends to pursue relief in a 
supplemental complaint after the liability phase of this 
proceeding is completed.57

III.      DISCUSSION

     III.A.    WorldCom Has Failed to Prove That Verizon 
          Ceased to Comply With Section 271 During the 
          Limited, Interim Period Between the New York and 
          Massachusetts UNE Rate Orders.

     11.  This is the first opportunity the Commission has 
had to address how ``benchmarking'' that is used to gain 
section 271 authority affects a section 271(d)(6) complaint 
proceeding after the ``benchmark'' state alters its rates.58  
According to WorldCom, because (1) Verizon and the 
Commission based the lawfulness of Verizon's switching rates 
in Massachusetts solely on a ``benchmark'' to Verizon's 
switching rates in New York, and (2) Verizon's switching 
rates in New York have since substantially diminished with 
no immediate matching reduction in Massachusetts, we now 
have no choice but to rule that Verizon was out of 
compliance with section 271 from the date of the NY UNE 
Order to the date new rates are set in accordance with the 
Massachusetts UNE Rate Order.59  WorldCom contends that 
Verizon should have made available the new New York 
switching rates immediately in Massachusetts, and that 
Verizon's offer to true-up rates set in the Massachusetts 
UNE Rate Order retroactively to the effective date of the 
new New York rates was insufficient to remain in compliance 
with section 271.  For the following reasons, we disagree 
and conclude that Verizon implemented reasonable interim 
measures to remain in compliance with section 271 pending 
the setting of new rates as ordered in the Massachusetts UNE 
Rate Order. 60  

          III.A.1.  The Massachusetts 271 Order Did Not 
               Require Verizon Immediately to Mirror the New 
               Switching Rates in New York.

     12.  We disagree with WorldCom that the Commission 
required in the Massachusetts 271 Order an immediate rate 
reduction in Massachusetts once New York altered its 
rates.61  The Commission stated that it would watch New York 
closely to observe whether it reduced UNE rates and the 
basis for any such reductions.62  The Commission also stated 
that a decision by the NYPSC to revise New York switching 
rates ``may undermine Verizon's reliance on those rates in 
Massachusetts and its compliance with the requirements of 
section 271, depending on the New York Commission's 
conclusions.''63  The Commission noted that it would work 
``in concert with the Massachusetts [DTE], . . . to monitor 
closely Verizon's post-approval compliance for Massachusetts 
to ensure that Verizon does not `cease[] to meet any of the 
conditions required for [section 271] approval'''64 
(emphasis added).  The Commission did not mandate that 
Verizon immediately reduce its Massachusetts rates to the 
level of any new rates set in the New York cost 
proceeding.65  In fact, the Commission did not adopt that 
proposed condition, and refused to prejudge any decision by 
the NYPSC to modify its UNE rates or interfere with the 
pending DTE proceeding.66  

     13.  Nevertheless, the Commission contemplated that if 
the NYPSC reduced its rates before the DTE had concluded its 
rate proceeding, some action would likely be required on an 
interim basis in Massachusetts to protect local competitors 
until the DTE concluded its rate proceeding.67  As Verizon 
points out, the Commission spoke favorably in the 
Massachusetts 271 Order of a true-up mechanism that would 
protect CLECs until the DTE concluded its rate proceeding:  
``implementation of a true-up mechanism pending the outcome 
of the DTE's current UNE cost-proceeding could help to 
ensure that competitive LECs pay cost-based rates.''68  
Notably, the Commission did not require Verizon to implement 
such a true-up mechanism in order to obtain section 271 
authority.69  

     14.  Verizon argues that its offer to true-up the rates 
set by the DTE in the Massachusetts UNE Rate Order 
retroactively to March 1, 2002 was precisely the kind of 
reasonable interim measure that the Commission contemplated 
in the Massachusetts 271 Order.70  WorldCom argues, on the 
other hand, that Verizon's true-up offer was flawed, because 
the true-up was without regard to whether the rates set in 
the Massachusetts UNE Rate Order were later found to be 
unlawful.71  Thus, WorldCom complains that Verizon did not 
contractually commit to re-true-up rates back to March 1, 
2002, if the DTE-set rates were challenged, found to be 
unlawfully high, and then reduced.  Verizon points out, 
however, that its true-up offer did not prevent CLECs who 
accepted the offer from challenging the DTE-set rates and 
arguing that they are entitled to refunds retroactive to 
March 1, 2002 or earlier, if the rates are subsequently 
declared unlawful.72  In particular, Verizon makes clear 
that nothing in its true-up proposal prevented any CLEC from 
asserting ``any claim that Verizon is obligated to true-up 
to March 1, 2002, or earlier the existing Massachusetts 
switching rates to whatever rates a court, the FCC, or the 
DTE (on remand from a court of the FCC) ultimately sets in 
Massachusetts.''73  Accordingly, because Verizon's true-up 
proposal allowed CLECs to make claims seeking a true-up to 
March 1, 2002, or earlier to rates ultimately deemed lawful 
by a court or commission, we do not find unreasonable 
Verizon's decision not to contractually bind itself to such 
a re-true-up.  

     15.  Further, Verizon also assumed risks with its true-
up proposal.  Specifically, under Verizon's true-up 
proposal, it relinquished any ability to seek an upward 
true-up for switching usage rates.74  Moreover, Verizon's 
true-up proposal reasonably limited the administrative 
problems associated with potential future multiple true-
ups.75  Accordingly, we disagree with WorldCom's criticisms 
of  Verizon's true-up offer and conclude that we should 
consider that offer in determining whether Verizon violated 
section 271 pending the setting of new rates in accordance 
with the Massachusetts UNE Rate Order.76
          III.A.2.  Verizon's Interim Measures After the NY 
               UNE Order and Before the Massachusetts UNE 
               Rate Order Satisfied its Obligations Under 
               Section 271. 

     16.  As set forth below, Verizon's interim measures and 
the particular circumstances of this case lead us to 
conclude that Verizon did not violate section 271 of the Act 
for the limited period of time in question.  The critical 
facts supporting this conclusion are:  (1) Verizon proposed 
to agree that the DTE-set rates would be retroactive to the 
effective date of rates set by the NY UNE Order; 77 (2) the 
rates set by the DTE are entitled to a TELRIC presumption in 
the first instance; and (3) the interim period in question 
was of short duration.78  Thus, we conclude that Verizon's 
actions helped ensure that the local market remained open to 
competition during the short, interim period between the 
effective date of the new rates in New York and 
Massachusetts.

     17.  Our conclusion that Verizon did not violate 
section 271 during this interim period is supported by 
Commission orders that have found interim rates to be 
satisfactory, based on the particular facts presented in a 
271 application.  In these cases, for example, the 
Commission has cited with approval instances where the state 
commissions were showing progress in issuing final rates, 
the interim period in question was expected to be short in 
duration, and where refunds or true-ups would be available 
once the final rates are issued.79  In the instant case, the 
record in the Massachusetts DTE rate proceeding had closed 
and the DTE had repeatedly declared its intention to issue 
its final rate order imminently, which it did on July 11, 
2002.80  Further, Verizon offered CLECs a means to obtain 
true-ups to the switching rates ultimately set by the DTE, 
retroactive to March 1, 2002.  Thus, the short-term, interim 
measures implemented here resemble measures the Commission 
has approved in section 271 application proceedings. 

     18.  Further, our finding that WorldCom failed to prove 
that Verizon ceased to comply with section 271 during this 
limited period reflects an acknowledgement of the 
flexibility built into the rate-setting process under our 
TELRIC rules.  The Commission has approved rates under 
section 271, even while recognizing that ``the costs of 
inputs [may] have changed'' since the date those rates were 
initially approved by the state acting pursuant to section 
252.81  The Commission also has previously concluded that 
neither the Act nor its implementing rules impose an 
obligation on a BOC to update cost data in one state each 
time it files a newer cost study in another state.82  The 
United States Court of Appeals for the District of Columbia 
Circuit similarly has recognized that, while rates may often 
need adjustment to reflect newly discovered information, 
such new information is not necessarily a basis to reject an 
existing UNE rate as non-TELRIC.83  Moreover, the Supreme 
Court has found that ``TELRIC rates in practice'' routinely 
experience ``lags in price adjustments'' because the UNE 
rates adopted by state commissions typically remain 
effective for several years.84  

     19.  WorldCom appears to acknowledge the inherent 
flexibility in the rate-setting process, because WorldCom 
made its own true-up proposal to Verizon to account for the 
lag between the NY UNE Order and the Massachusetts UNE Rate 
Order.  In particular, WorldCom proposed to withdraw this 
complaint if Verizon charged the new New York rates 
effective January 29, 2002, with a true-up to whatever rates 
the DTE set in its UNE rate order, if those rates were not 
challenged or were deemed lawful after a challenge.85  Thus, 
Worldcom concedes that it was appropriate, within the TELRIC 
rate-setting framework, for Verizon to offer to charge 
``placeholder'' switching rates for the interim period in 
question, until the DTE issued its rate order.  WorldCom 
contends, however, that Verizon could select only the new 
New York switching rates as the placeholder rates for the 
interim period in question to remain in compliance with 
section 271.  For the reasons explained above, we disagree 
that Verizon was so constrained.

     20.  Finally, we are not persuaded that Verizon ceased 
to comply with section 271 because its offer to true-up was 
effective only to March 1, 2002, and not to January 28, 
2002, the release date of the NY UNE Order.  March 1, 2002 
is the effective date of the new rates in New York and 
Verizon was therefore reasonable in selecting that date for 
its true-up offer.  Accordingly, we conclude that WorldCom 
has failed to prove that Verizon ceased to comply with 
section 271 for the interim period in question.

     21.  We wish to reiterate, however, that our conclusion 
here hinges largely on the short duration of the interim 
period.  We would be less inclined to approve of interim 
measures, such as Verizon's true-up proposal, if the interim 
period in question were of longer or indefinite duration.  
In addition, although the facts in this case do not reflect 
evidence of gamesmanship by Verizon to avoid offering cost-
based UNE rates to its competitors during the interim 
period, we note that in future similar proceedings, we will 
not credit a BOC's behavior where we are presented with 
persuasive evidence of gamesmanship by the BOC, including 
delays in taking steps to ensure that competitors have 
access to interim cost-based UNE rates pending the imminent 
adoption of permanent cost-based rates by a state 
commission.  We will continue to assess the adequacy of 
interim measures in the context of 271(d)(6) complaints on a 
case-by-case basis in the future.  Finally, although we are 
denying the instant complaint, this is without prejudice to 
whatever rights WorldCom may have to challenge the 
Massachusetts UNE Rate Order itself. 

IV.  ORDERING CLAUSE

Accordingly, IT IS ORDERED that, pursuant to sections 1, 
4(i), 4(j), 201(b), 208, and 271(d)(6) of the Communications 
Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 
201(b), 208, and 271(d)(6), that the formal complaint filed 
by WorldCom against Verizon is hereby DENIED. 

                         FEDERAL COMMUNICATIONS COMMISSION



                         Marlene H. Dortch
                         Secretary

      SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL

Re:  WorldCom, Inc., v. 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., 
     File No. EB-02-MD-017 

     The Order we issue today, in my view, sensibly denies 
WorldCom's request that we find Verizon out of compliance 
with section 271 in Massachusetts solely because the 
Massachusetts DTE did not immediately reduce its UNE rates 
to match the rates established by another state commission.  
At bottom, our denial of WorldCom's request reflects our 
firm belief that we should allow states to develop and 
update UNE rates without unwarranted intervention or pre-
emptive actions by this Commission where none are necessary 
to prevent harm to competition or consumers.  This decision 
also reflects the appropriate flexibility of the TELRIC 
rate-setting process that the Supreme Court recently 
acknowledged in affirming our TELRIC rules.86  

     Were I at all concerned that either Verizon or the 
Massachusetts DTE had failed to act promptly and in the 
interest of competition, I would not hesitate to find 
Verizon in violation and impose an appropriate remedy, 
including suspension or revocation of its section 271 
authority.  This is simply not that case.  The Massachusetts 
DTE, after a thorough 18 month proceeding, has adopted a 
500+ page pricing order that directs Verizon to file rates 
that WorldCom believes will be roughly equivalent to the 
current New York rates,87 and in any event, are presumed to 
comply with TELRIC absent challenge.88  The DTE did not 
conclude its rate proceeding until late March, and yet it 
was able to generate a thorough, voluminous final order less 
than four months later.  All of this has occurred within a 
few months of New York's action that raised the question of 
whether the rates that we approved in the Massachusetts 271 
Order continued to fall within a range of what a reasonable 
application of TELRIC principles would produce.89   

     I would add that WorldCom's request here amounts to a 
collateral attack on the sound conclusion that Congress 
granted to the states the authority to set UNE rates.  The 
Commission granted Verizon's 271 application to provide long 
distance services in Massachusetts by relying, in part, on 
UNE rates that were benchmarked to rates then in effect in 
New York.90  Nevertheless, I did not support a requirement 
that Verizon match immediately any New York rate reductions 
in Massachusetts as a condition of its 271 authorization, 
because such a ``mirroring'' requirement would unduly 
federalize rate-setting and impermissibly subject the 
Massachusetts DTE to the regulatory actions of another 
state.91  The Commission properly declined to impose such a 
requirement.

     In the Massachusetts 271 proceeding, I stated that, if 
the New York rates went down before the Massachusetts DTE 
had concluded its rate proceeding, Verizon would likely need 
to take some action that would have the practical effect of 
charging cost-based switching rates for a short period until 
the DTE established new rates. As the Massachusetts DTE 
worked to conclude its process of updating its rates to 
reflect changes in technology and economic assumptions 
pursuant to the Commission's TELRIC pricing methodology, 
Verizon took several affirmative steps to ensure continued 
compliance with the Act, including its proposed tariff and 
its offer to true-up the old rates to those ultimately 
established by the Massachusetts DTE.  Indeed, it appears 
that if WorldCom had accepted Verizon's true-up offer, as 
other CLECs did, WorldCom would have obtained essentially 
all of the relief it sought in its complaint:  the benefit 
of paying rates that WorldCom believes will now be 
equivalent to the new New York rates, retroactive to March 
1, 2002.  In light of Verizon's actions and the laudable 
efforts of the Massachusetts DTE, I believe the company did 
not act unreasonably and I find no cause for criticizing my 
state colleagues here.  I want to express my deep 
appreciation for the enormous dedication and acumen 
demonstrated by the Massachusetts DTE in this matter and for 
issuing its decision before the statutory deadline in this 
proceeding.

     Finally, I want to emphasize that our Order expressly 
relies on the specific circumstances presented here, 
including the shortness of the interim period in question, 
Verizon's efforts to remain in compliance with section 271 
during the interim period, and the DTE's swift action to 
conclude its rate proceeding and establish new rates.  Just 
as the Commission took swift, substantial action when 
problems with Verizon's OSS in New York were identified,92 
we will take similarly swift and substantial action if, in 
the future, BOCs or states do not act quickly to ensure 
continued compliance with the market-opening requirements of 
section 271. We will remain vigilant in exercising our 
271(d)(6) enforcement authority in future cases to ensure 
that competitors are not denied access to cost-based rates.                        STATEMENT OF
               COMMISSIONER MICHAEL J. COPPS,
                         DISSENTING

Re:  WorldCom, Inc., v. 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. 

     In the Telecommunications Act of 1996, Congress sought 
to promote competition in all telecommunications markets.  
One of the central tools that Congress created to achieve 
this objective is section 271 of the Act.  Pursuant to this 
section, a Bell company may enter the long-distance market, 
but only after it opens its local markets to competition.  
Congress recognized, however, that the grant of a section 
271 application is not the end of the road.  It therefore 
required Bell companies to maintain the openness of their 
local markets and established a 90-day period to adjudicate 
complaints that a Bell company has ceased to meet any of the 
requirements in section 271.

     Congress directed the Commission to establish a process 
to adjudicate such complaints under section 271(d)(6).  The 
Commission, in its 271 orders, has continually stated that 
it would not hesitate to use its authority under section 
271(d)(6) to ensure continued compliance with the Act.  
Today's decision is the first time that the Commission is 
setting in place such a process.  Notwithstanding the 
significant efforts by the Massachusetts Department of 
Telecommunications and Energy (DTE) to open its local 
markets to competition, I dissent from today's decision 
because it puts in place a framework that I fear will 
preclude the Commission from effectively adjudicating 
pricing complaints in the future.

     In the Massachusetts Order, the Commission approved 
rates based on a comparison to rates in neighboring New 
York.  The Commission was aware that rates in New York were 
under review, but approved the application recognizing that 
``a decision by the New York Commission to modify these UNE 
rates may undermine Verizon's reliance on those rates in 
Massachusetts and its compliance with the requirements of 
section 271, depending on the conclusions of the New York 
Commission.''93  Since that time, the New York Commission 
not only modified its rates, but this Commission has also 
concluded that it is ``inappropriate'' to evaluate 
compliance with the section 271 pricing requirements ``based 
on a benchmark comparison to superseded New York rates.''94  
The majority makes much of the fact that the Commission did 
not require Verizon to reduce immediately its rates in 
Massachusetts and that a Bell company need not update its 
cost studies in one state merely because it updates its cost 
studies in another state.  But these statements miss the 
point entirely.  The issue is not whether Verizon would need 
to update rates in Massachusetts just because its rates in 
other states were updated.  The issue is whether the rates 
in Massachusetts comply with TELRIC, as Congress required in 
section 271.  

     It is clear that the only basis under which the 
Commission approved rates in Massachusetts was the 
comparison to superseded New York rates, and that the 
Commission has since stated that Bell companies may no 
longer rely on those rates.95  The majority does not dispute 
that the rates in effect in Massachusetts did not comply 
with TELRIC on the date the complaint was filed.  The 
majority further does not dispute that the rates in effect 
today also do not comply with TELRIC.  Although the 
Massachusetts DTE issued an order in its cost proceeding on 
July 11, the rates will not be set - or even known - until 
Verizon submits a compliance filing on August 5.  Indeed, we 
do not even know if the rates that will be adopted following 
the compliance filing will comply with TELRIC

     Because the majority is unable to conclude that the 
current rates comply with section 271, the majority must 
rely on Verizon's offer of a true-up to find that there was 
no violation.  Although the Commission has approved section 
271 applications in which rates are interim subject to a 
true-up, the true -up here does not meet the conditions that 
the Commission has relied on in the past.  As the majority 
points out, in previous section 271 applications, the 
relevant state commissions had pending cost proceedings to 
set permanent rates and had ordered that the interim rates 
would be subject to a true-up for all carriers.  In those 
instances, the state commission set interim rates and 
retained control of the true-up process.  In contrast, the 
rates in effect on day 1 and on day 90 of this complaint are 
permanent rates that the Massachusetts DTE has not subjected 
to a true-up.  It is only the carrier that has offered a 
true-up, but with substantial limitations.  The true-up was 
only offered to the rates adopted by the Massachusetts DTE 
even if those rates were later deemed not to comply with 
TELRIC.  The true-up was only available to those carriers 
that agreed to forego the ability to challenge the current 
rates.  And the true-up was not available to any carrier 
that had not accepted it prior to the decision of the 
Massachusetts DTE.  The Commission has never accepted a 
true-up offered by a carrier with the conditions that 
Verizon placed on it here.  

     Given that Verizon does not have TELRIC-compliant rates 
in effect, I find that Verizon failed to comply with a 
critical provision of section 271.  I do not conclude that 
the true-up saves Verizon, because it is of limited scope, 
is no longer available, and was offered only to those 
carriers that agreed not to challenge the rates.  I cannot 
support the decision of the majority that there is no 
violation.  Additionally, I fear that such a decision 
provides the ability for game-playing in the future.  Under 
the majority's test, a Bell company may avoid a finding of 
violating section 271 by offering a limited true-up only to 
those carriers that agree not to challenge the rates under 
section 271(d)(6).  By this reasoning, would the Commission 
grant a section 271 application if a Bell company offered a 
true-up only to those carriers that agreed not to contest 
the rates in the application?

     Although I would have found that Verizon ceased to 
comply with a provision of section 271, the Act provides 
several remedies including suspension of long-distance 
authority, revocation of such authority, or an order to 
correct the deficiency.  In this instance, I would neither 
have revoked nor suspended Verizon's authority.  I would 
instead have ordered Verizon to correct the deficiency - 
something the Massachusetts DTE is now attempting to do.  
Verizon had sought to reduce its rates - albeit not to the 
New York rates - but was denied by the Massachusetts DTE 
because it was close to completing its cost proceeding.  The 
Massachusetts DTE has now completed its extensive review, 
and, as even WorldCom admits, appears to set rates roughly 
comparable to those now in effect in New York.  I commend 
the Massachusetts DTE for its on-going efforts to open the 
local market to competition.  

     By finding a violation, and ordering Verizon to correct 
the deficiency, the Commission could have resolved this 
complaint and maintained the integrity of its enforcement 
process.  I fear that the majority's resolution here may 
substantially undermine our enforcement ability in future 
complaints.





_________________________

1    47 U.S.C. §§ 208, 271(d)(6).

2    Formal  Complaint, File  No. EB-02-MD-017  (filed Apr. 
24,  2002)  (``Complaint'')  at 1-2.   See  Application  of 
Verizon  New England  Inc.,  Bell Atlantic  Communications, 
Inc.  (d/b/a Verizon  Long Distance),  NYNEX Long  Distance 
Company (d/b/a Verizon  Enterprises Solutions), and Verizon 
Global  Networks, Inc.,  For Authorization  to Provide  In-
Region  InterLATA  Services  in  Massachusetts,  Memorandum 
Opinion  and  Order,  16  FCC Rcd  8988,  8996-9006  (2001) 
(Massachusetts 271 Order) at ¶¶ 16-36.

3    The  parties generally  agree that  switching includes 
the following elements:   switching usage, port, transport, 
and  signaling.    See  Supplemental  Joint   Statement  of 
WorldCom and Verizon, File  No. EB-02-MD-017 (filed May 13, 
2002) (``Supp. Joint Statement'') at 14 and 17.  This order 
refers  to   the  individual   rates  for   these  elements 
collectively and generally as ``switching rates.''

4    Complaint  at ¶¶  26, 144.   WorldCom intends  to seek 
damages  and  other  relief  in  a  supplemental  complaint 
proceeding.  Complaint,  ¶ 34.   See 47 C.F.R.  §§ 1.722(d) 
and (e).

5    Investigation by the  Department of Telecommunications 
and Energy on its own  Motion into the Appropriate Pricing, 
based upon  Total Element  Long-Run Incremental  Costs, for 
Unbundled  Network Elements  and Combinations  of Unbundled 
Network Elements, and the Appropriate Avoided-Cost Discount 
for Verizon New England,  Inc. d/b/a Verizon Massachusetts' 
Resale  Services  in  the  Commonwealth  of  Massachusetts, 
Order, D.T.E. 01-20 (rel. July 11, 2002) (Massachusetts UNE 
Rate Order).  Although the DTE issued its order on July 11, 
2002, the  new rates  will not  be established  until after 
Verizon makes  a compliance  filing in accordance  with the 
DTE's rulings on August 5, 2002.

6    Supp. Joint Statement at 2, ¶ 2.  

7    Id. at 2, ¶ 3.

8    47 U.S.C. § 271.  See  Massachusetts 271 Order, 16 FCC 
Rcd  at 8993-94,  ¶¶ 10-11;  Joint Application  by SBC  for 
Provision  of In-Region  InterLATA Services  in Kansas  and 
Oklahoma, Memorandum  Opinion and  Order, 16 FCC  Rcd 6237, 
6241-42, at ¶¶ 7-10 (2001) (``Kansas/Oklahoma 271 Order''), 
aff'd in  part and remanded in  part, Sprint Communications 
Co. v. FCC,  274 F.3d 549 (D.C. Cir.  2001); Application by 
Bell Atlantic New York  For Authorization Under Section 271 
of the  Communications Act To Provide  In-Region, InterLATA 
Service in  the State of  New York, Memorandum  Opinion and 
Order,  15 FCC  Rcd 3953,  3958,  3961-63, at  ¶¶ 8,  17-20 
(1999) (New York 271 Order),  aff'd, AT&T Corp. v. FCC, 220 
F.3d  607, 616-18.   For our  purposes here,  Verizon is  a 
``BOC'' within  the meaning of  section 153(4) of  the Act.  
47 U.S.C. § 153(4).

9    47 U.S.C. § 271(c)(2)(B).

10   47  U.S.C.  §   271(c)(2)(B)(ii).   Massachusetts  271 
Order, 16 FCC Rcd at  8996-7, ¶¶ 16-17; Kansas/Oklahoma 271 
Order, 16 FCC Rcd at 6259-61, ¶¶ 47-48; New York 271 Order, 
15  FCC Rcd  at 3977-79,  ¶¶  63-66.  Checklist  item 2  of 
section  271(c)(2)(B)  states  that the  BOC  must  provide 
access  to  network  elements in  accordance  with  section 
252(d)(1)  of  the  Act.   47  U.S.C.  §  271(c)(2)(B)(ii).  
Section 252(d)(1)  provides that the state  shall set rates 
that are non-discriminatory and based on costs and that may 
include a reasonable profit.  47 U.S.C. § 252(d)(1).

11   Implementation of the Local Competition Provisions in 
the Telecommunications Act of 1996, First Report and Order, 
11 FCC Rcd 15499, 15812-929 at ¶¶ 618-862 (1996) (Local 
Competition First Report and Order), aff'd in part and 
vacated in part sub nom., Competitive Telecommunications 
Ass'n v. FCC, 117 F.3d 1068 (8th Cir. 1997) and Iowa Utils. 
Bd. v. FCC, 120 F.3d 753 (8th Cir. 1997), aff'd in part and 
remanded, AT&T v. Iowa Utils. Bd., 525 U.S. 366 (1999), on 
remand, Iowa Utils Bd. v. FCC, 219 F.3d 744 (8th Cir. 2000), 
rev'd in part, Verizon Communications, Inc. v. FCC, 122 S. 
Ct. 1646 (2002).

12   See Local  Competition First Report and  Order, 11 FCC 
Rcd at 15844-869, ¶¶ 672-732; see also 47 C.F.R. §§ 51.501-
51.515.   The Supreme  Court recently  upheld these  rules.  
Verizon  Communications,  Inc.  v.  FCC, 122  S.  Ct.  1646 
(2002).

13   Supp. Joint  Statement at  3, ¶ 8.   See Massachusetts 
271 Order, 16 FCC Rcd at 8989, ¶ 1.

14   Massachusetts 271  Order, 16  FCC Rcd at  8999-9000, ¶ 
21.  See also  Supp. Joint Statement at 3,  ¶ 10; Complaint 
at ¶ 17.  The Massachusetts  DTE originally had set interim 
switching rates in December 1996 that it made ``permanent'' 
in  March 1999.   Massachusetts 271  Order, 16  FCC Rcd  at 
8997-98, ¶  18.  On  July 24,  2000, the  Massachusetts DTE 
subsequently lowered these ``permanent'' switching rates by 
approving lower ``promotional'' switching  rates as part of 
an interconnection agreement that Verizon made available to 
similarly  situated  carriers.    Id.    These  promotional 
switching rates were in effect when Verizon filed its first 
section  271  application  for Massachusetts.   While  this 
first application was  pending, Verizon further voluntarily 
lowered its  Massachusetts switching rates in  October 2000 
to the same level as the  switching rates that were then in 
effect  in New  York.  Id.   Although Verizon  subsequently 
withdrew   this   first  application,   its   Massachusetts 
switching  rates  remained  equivalent   to  the  New  York 
switching  rates when  it  filed  its second  Massachusetts 
application in January 2001.  Id. at 8991-92, 8997-9000, ¶¶ 
7, 18, 21.

15   Id. at 9001-02, ¶ 26.

16   Massachusetts 271 Order, 16 FCC Rcd at 9002, ¶ 28.

17   See id. at 8999-9002, ¶¶ 21, 28 & n. 56.

18   Id. at 9002, ¶ 28.

19   Kansas/Oklahoma 271 Order, 16 FCC Rcd at 6276-77, ¶ 82 
& n.244.

20   Massachusetts 271 Order, 16 FCC Rcd at 9001-02, ¶¶ 26-
27.

21   Id.  at 9002,  ¶  27.  The  Commission determined,  of 
course, that Verizon had complied in Massachusetts with all 
of the other  requirements of section 271 as  well.  Id. at 
8989-90, 8996-9117 ¶¶ 1, 15-231.

22   Id.  at 9002,  ¶ 29.   The NYPSC  cost proceeding  was 
initiated  to  address,  inter  alia,  issues  relating  to 
changes in  technologies and  switching costs in  New York, 
including a switch  discount issue that was  raised late in 
the NYPSC's prior rate proceeding.  Proceeding on Motion of 
the  Commission to  Examine  New  York Telephone  Company's 
Rates for Unbundled Network  Elements, Case Nos. 98-C-1357, 
95-0657,  94-C-0095,  91-C-1174,  Order Denying  Motion  to 
Reopen  Phase 1  and  Instituting New  Proceeding at  10-12 
(N.Y.P.S.C. Sept.  30, 1998).   Because of  the uncertainty 
regarding  newly   adduced  evidence  in  its   prior  rate 
proceeding,  the NYPSC  deemed  the switching  rates to  be 
temporary,  subject  to   possible  refund  or  reparation.  
Proceeding on Motion of the  Commission to Examine New York 
Telephone Company's  Rates for Unbundled  Network Elements, 
Case 98-C-1357, Order on Unbundled Network Element Rates at 
42 (N.Y.P.S.C. Jan. 28, 2002) (NY UNE Order).  

23   New York 271 Order, 15 FCC Rcd at 4083-86, ¶¶ 242-247.

24   AT&T v. FCC, 220 F.3d  607, 616-18 (D.C. Cir. 2000).

25   Massachusetts 271 Order, 16 FCC Rcd at 9003, ¶ 31.

26   Massachusetts 271 Order, 16 FCC Rcd  at 9003-04, ¶ 30.

27   Id. at 9004-06, ¶¶ 33-36.

28   Id. at 9005, ¶ 35.

29   Id. at 9005, ¶ 35.

30   Id. at 9005, ¶ 34.

31   Id. at 9005-06, ¶¶ 35-36.

32   NY UNE Order; Joint Statement at 3, ¶ 7.

33   See  Complaint at  ¶ 25.   The rates  were reduced  by 
approximately 40-45%.  See Supp.  Joint Statement at 19 and 
Exhibit C.  In  its order, the NYPSC did  not state whether 
it had erred  in setting the previous  switching rates, but 
encouraged the  parties to  negotiate the issue  of whether 
refunds were warranted.  NY UNE Order at 42-47.

34   Proceeding  on Motion  of the  Commission to  Consider 
Cost  Recovery by  Verizon  and to  Investigate the  Future 
Regulatory Framework,  Order Instituting  Verizon Incentive 
Plan, Case  Nos. 00-C-1945, 98-C-1357 (N.Y.P.S.C.  Feb. 27, 
2002).

35   Complaint  at  ¶  27; Answer,  File  No.  EB-02-MD-017 
(filed May 1, 2002) (``Answer'') at ¶ 27.

36   Complaint at ¶ 28; Answer at ¶ 28.

37   Letter  to  Mary  Cottrell, Secretary,  Department  of 
Telecommunications  and  Energy,   from  Region  President-
Massachusetts/Rhode  Island  for  Verizon (Apr.  10,  2002) 
(Verizon Interim Tariff Letter).  

38   Complaint at ¶ 80.

39   Verizon Interim Tariff Letter at 2.  The Massachusetts 
DTE had granted a similar  request from Verizon in adopting 
the  lower  UNE  rates  in  October  2000  upon  which  the 
Commission's grant  of Verizon's section  271 authorization 
in Massachusetts  was based.  See Massachusetts  271 Order, 
16 FCC Rcd at 8998, ¶ 18. 

40   Id.  at 2.   The true-up  that Verizon  proposed would 
have  made  the  rates set  by  the  DTE  in the  DTE  Rate 
Proceeding effective  retroactively to April 10.   Thus, if 
the DTE's new  rates were lower than the  rates proposed in 
Verizon's Interim Tariff, then  Verizon would have refunded 
the difference between the  amounts CLECs paid for affected 
UNEs during the period between April 10 and the DTE's final 
rate order, and the amount they  would have paid if the new 
rates had been charged during that period.  Verizon Interim 
Tariff Letter at 2; DTE Interim Tariff Decision at 2.

41   DTE Interim Tariff Decision at 4.  

42   Id. at 6.

43   Id.  Although we respect the DTE's decision to suspend 
Verizon's Interim Tariff, we  would ordinarily expect state 
commissions to accept interim  lower rates that are subject 
to a true-up once the state's permanent rates are set.

44   Id. 

45   Id. at 4.

46   Opening Brief of Verizon, File No. EB-02-MD-017 (filed 
May 29, 2002) at 10; Supp. Joint Statement at 26-30.

47   See  Letter  from  Catherine  K.  Ronis,  Counsel  for 
Verizon, to  Ms. Marlene  Dortch, Secretary, FCC,  File No. 
EB-02-MD-017  (filed June  3,  2002) (Verizon  Supplemental 
Submission).  

48   Motion to Supplement the Record, File No. EB-02-MD-017 
(filed  July 10,  2002).  The  offer expired  once the  DTE 
issued  the  Massachusetts  UNE Rate  Order.   See  Verizon 
Supplemental Submission at 2.

49   See Massachusetts UNE Rate Order.

50   See Massachusetts UNE Rate Order at 4.

51   See Massachusetts UNE Rate Order at 4-10.

52   See Massachusetts UNE Rate Order at Executive Summary.

53   See Massachusetts UNE Rate Order at 276-316.

54   Letter from Lisa B. Smith, Counsel for WorldCom, Inc., 
to Alexander  P. Starr,  Chief, Market  Disputes Resolution 
Division, FCC, File No.  EB-02-MD-017 (filed July 19, 2002) 
at 2.

55   See Complaint.

56   Id. at ¶¶ 26, 144.  

57   Complaint at ¶¶  34, 144.  See 47  C.F.R. §§  1.722(d) 
and (e).  See also Reply  Brief of WorldCom, Inc., File No. 
EB-02-MD-017  (filed   June  6,  2002)   (``WorldCom  Reply 
Brief'') at 17.    

58   WorldCom Reply Brief at 14.

59   Complaint  at  ¶¶  21-22,   25-26;  Opening  Brief  of 
WorldCom, Inc., File No.  EB-02-MD-017 (filed May 29, 2002) 
(``WorldCom Opening Brief'') at 25-30.

60   WorldCom  filed a  Motion to  Strike one  of Verizon's 
affirmative  defenses  and  related portions  of  Verizon's 
briefs,  arguing  that   Verizon  improperly  modified  its 
affirmative  defenses  subsequent  to  filing  its  answer. 
Motion  to Strike,  File  No. EB-02-MD-017  (filed June  6, 
2002).  Verizon  filed an opposition to  WorldCom's motion.  
Opposition  to  Motion  to Strike,  File  No.  EB-02-MD-017 
(filed June 7, 2002).  We deny this motion as moot, because 
our decision  does not depend  or rely upon  the challenged 
affirmative defenses.

61   Complaint at ¶ 22.

62   Massachusetts 271 Order, 16 FCC Rcd at 9002-03, ¶¶ 30-
31.

63   Id. at 9003-04, ¶ 30 (emphasis added).

64   Id. at 9125, ¶ 250; 47 U.S.C. § 271(d)(6)(A).

65   See Answer at ¶¶ 21-23.

66   See Massachusetts 271 Order, 16  FCC Rcd at 9002-03, ¶ 
30-31; Answer at 15-16.  

67   See Massachusetts 271 Order, 16 FCC Rcd at ¶ 34.

68   Answer at 17;  Massachusetts 271 Order, 16  FCC Rcd at 
9005, ¶ 34.  

69   Massachusetts 271 Order, 16 FCC Rcd at 9005, ¶ 34.  

70   Verizon also argues that its true-up proposal comports 
with  what  Chairman  Powell  envisioned  in  his  separate 
statement.  Reply  Brief of Verizon, File  No. EB-02-MD-017 
(filed June 6, 2002) (``Verizon Reply Brief'') at 25-26.

71   WorldCom Reply Brief at 13-17.

72   See  Verizon  Supplemental  Submission at  3;  Verizon 
Reply Brief at 24.

73   See  Verizon   Supplemental  Submission  at   2-3  and 
attached  draft Agreement  and Release  at ¶  2(a); Verizon 
Reply  Brief at  24-25.  Although  WorldCom complains  that 
Verizon conditioned  the true-up offer on  agreement by the 
CLEC  not  to challenge  the  rates  in effect  during  the 
interim  period   as  unlawful  under  section   271,  that 
restriction  seems reasonable.   Verizon was  simply asking 
the CLECs who accepted the  proposal to refrain from filing 
a  complaint challenging  the  existing  rates during  this 
interim period before the DTE  issued its rate order.  See, 
e.g. Verizon Reply Brief at 25 (explaining that a CLEC ``is 
eligible for Verizon's true-up offer,  as long as it agrees 
not to  accept that  offer while at  the same  time arguing 
that Verizon's existing  Massachusetts rates cause Verizon, 
at  this time, to  be in  violation of  section 271  of the 
Act.'')  (emphasis  added).   Verizon's  proposal  did  not 
prevent  CLECs, once  the Massachusetts  DTE order  issued, 
from filing challenges  to that order and  arguing that any 
rates  set  as  a  result  of  a  successful  challenge  be 
retroactive  to March  1st or  earlier.  See,  e.g. Verizon 
Reply   Brief   at   24    (``nothing   in   the   proposed 
interconnection agreement amendment would prohibit WorldCom 
or any other CLEC from  raising arguments before a court or 
the  DTE that  any new  rate  set subsequent  to the  DTE's 
decision should be applied retroactively to March.'') 

74   Verizon's proposal  stated that ``if the  average rate 
per minute of use by the CLEC during the true-up period for 
an  individual usage  element, using  the rates  applicable 
absent  any true-up,  is lower  than the  average rate  per 
minute of use by the CLEC during the true-up period for the 
same usage element using the  [DTE set] Rate, then the [DTE 
set]   Rate  for   that  usage   element  will   not  apply 
retroactively.''  Verizon Supplemental Submission at 2.  In 
addition, Verizon  assumed the  risk that  if the  DTE sets 
rates that  were, in Verizon's  view, too low,  the true-up 
offer obligated Verizon to charge  those low rates until it 
successfully challenged those rates on appeal.  Id. at 1.

75   Verizon Supplemental Submission at  2.  By agreeing to 
true-up   without  regard   to  whether   the  rates   were 
challenged,  Verizon reduced  the likelihood  of having  to 
calculate true-ups multiple times.

76   See  Verizon  Reply  Brief  at 23-26;  Answer  at  15; 
Opening Brief of Verizon,  File No. EB-02-MD-017 (filed May 
29, 2002) (``Verizon Opening Brief'') at 11-15.  .  

77   See Verizon Supplemental Submission at 1-2.

78   Massachusetts 271 Order, 16 FCC  Rcd at 8999, 9006, ¶¶ 
20, 37.   The Commission has  previously held that  it will 
not  conduct  a  de  novo   review  of  a  state's  pricing 
determinations and  will reject  a 271 application  only if 
``basic  TELRIC  applications  are violated  or  the  state 
commission  makes  clear  errors  in  factual  findings  on 
matters so  substantial that  the end result  falls outside 
the  range  that  the   reasonable  application  of  TELRIC 
principles would  produce.''  Massachusetts 271 Order  at ¶ 
20.  The  initial deference due  the states in  setting UNE 
rates  derives from  the statutory  framework, pursuant  to 
which states  establish rates in the  first instance.  See, 
e.g., 47 U.S.C. §  252(d)(1).  WorldCom implicitly concedes 
that the  rates set by the  DTE are presumed lawful  in the 
first instance.   This concession is reflected  in the fact 
that WorldCom  proposed to Verizon  that it charge  the new 
New York  switching rates  effective January 29,  2002, but 
with a  true-up to  the rates  set by the  DTE if  no party 
challenged those rates.  WorldCom Reply Brief at 16 and Tab 
A.  Thus,  WorldCom acknowledges  that the DTE's  rates are 
lawful  unless and  until a  party successfully  challenges 
those rates.

79        See Kansas/Oklahoma Order, 16 FCC Rcd at 6359-61, 
¶¶  238,  240  (the  Kansas and  Oklahoma  Commissions  had 
pending cost  proceedings to  set permanent rates,  and the 
commissions  had ordered  the interim  rates be  subject to 
true-up);  Joint Application  by SBC  Communications, Inc., 
Southwestern Bell Telephone  Company, and Southwestern Bell 
Communications Services, Inc.  d/b/a Southwestern Bell Long 
Distance Pursuant to Section  271 of the Telecommunications 
Act  of 1996  to Provide  In-Region, InterLATA  Services in 
Arkansas and Missouri, Memorandum Opinion and Order, 16 FCC 
Rcd  20719, 20750,  ¶  64 (2001)  (Missouri Commission  had 
scheduled  hearings   for  the  month  following   the  271 
authorization grant  to conclude  the setting  of permanent 
rates,  and  made  provision  for refund  or  true-up  once 
permanent   rates    were   set);   Application    by   SBC 
Communications, Inc.,  Southwestern Bell  Telephone Company 
and Southwestern  Bell Communications Services,  Inc. d/b/a 
Southwestern Bell Long Distance  Pursuant to Section 271 of 
the Telecommunications  Act of 1996, To  Provide In-Region, 
InterLATA Services In Texas,  Memorandum Opinion and Order, 
15 FCC Rcd  18354, 18395-96, ¶ 90  (2000) (Texas Commission 
had  set up  a  schedule  to set  permanent  rates, with  a 
hearing scheduled  for the same month  as 271 authorization 
grant, and had indicated to  parties that the interim rates 
were subject to refund or  true-up); New York 271 Order, 15 
FCC  Rcd at  4090, ¶  256  (NYPSC had  an accelerated  rate 
proceeding underway to set permanent XDSL rates, subject to 
refund).

80   See  DTE Letter  Submission at  2; DTE  Interim Tariff 
Decision at 5-6 & n 7.

81   Georgia/Louisiana 271 Order, 2002 WL 992213 at ¶ 96.

82   Vermont 271 Order, 2002 WL 598046, ¶ 22.

83   AT&T v. FCC, 220 F.3d  at 617-18.  Indeed, as the D.C. 
Circuit noted in affirming the New York  271 Order, ``[n]ot 
only  are  state-agency-approved  rates always  subject  to 
refinement,  but  we  suspect  that rates  may  often  need 
adjustment  to reflect  newly discovered  information, like 
that about  Bell Atlantic's  future discounts'';  the court 
specifically noted  that such ``new information''  does not 
make the existing rates non-TELRIC and subject to rejection 
under section 271.  Id. at 617.  

84   Verizon Communications, Inc. v.  FCC, 122 S. Ct. 1646, 
1669 (2001).

85   WorldCom Reply at 16 & Tab A.

86   See Verizon  Communications, Inc.  v. FCC, 122  S. Ct. 
1646, 1660-61, 1669-70 (2002).

87   Letter from Lisa B. Smith, counsel for WorldCom, Inc., 
to  Alexander P.  Starr, Chief,  Market Dispute  Resolution 
Division, FCC, File No.  EB-02-MD-017 (filed July 19, 2002) 
at 2.  

88   The initial  deference due  the states in  setting UNE 
rates  derives from  the statutory  framework, pursuant  to 
which states  establish rates in the  first instance.  See, 
e.g.,  47 U.S.C.  §  252(d)(1).  In  the Massachusetts  271 
Order,  we   stated  ``as  always,  we   presume  that  the 
Massachusetts  Department,  like other  state  Commissions, 
will . . . set rates  within the range of what a reasonable 
application   of   TELRIC   principles   would   produce.''  
Massachusetts 271 Order, 16 FCC Rcd at 9005-9006, ¶ 35.

89   See Proceeding on Motion  of the Commission to Examine 
New York  Telephone Company's  Rates for  Unbundled Network 
Elements,  Case  98-C-1357,   Order  on  Unbundled  Network 
Element Rates at 42 (N.Y.P.S.C. Jan. 28, 2002).

90   In doing so, the Commission acknowledged the existence 
of  pending   rate  proceedings   in  both  New   York  and 
Massachusetts  that would  result  in new  UNE rates.   See 
Application  of Verizon  New  England  Inc., Bell  Atlantic 
Communications, Inc.  (d/b/a Verizon Long  Distance), NYNEX 
Long   Distance   Company    (d/b/a   Verizon   Enterprises 
Solutions),   and  Verizon   Global  Networks,   Inc.,  For 
Authorization  to Provide  In-Region InterLATA  Services in 
Massachusetts,  Memorandum Opinion  and Order,  16 FCC  Rcd 
8988, 8996-9006 (2001) (Massachusetts  271 Order) at ¶¶ 16-
36.  The Commission also acknowledged that there might be a 
time lag between  the setting of new rates in  New York and 
in Massachusetts.  Id.

91   Massachusetts   271  Order,   Separate  Statement   of 
Chairman Powell.

92   See  Bell   Atlantic-New  York,   Authorization  Under 
Section 271 of the Communications Act to provide In-Region, 
InterLATA Service in the State of New York, File No. EB-00-
IH-0085, Order, 15 FCC Rcd 5413 (2000).   

93 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, 
Memorandum  Opinion and  Order,  16 FCC  Rcd 8988,  9002-03 
(2001) (Massachusetts 271 Order).

94 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,  Memorandum Opinion and Order, 17 
FCC Rcd 3300, 3324 (2002).

95 Id. at 3321-24.