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

In the Matter of                        )
                              )    EB File No. EB-03-IH-0341
Section 272(d) Biennial Audit of        )
Verizon Communications, Inc.            )


                MEMORANDUM OPINION AND ORDER


          Adopted:  August 7, 2003           Released:  
          August 8, 2003

By the Chief, Enforcement Bureau:


                 I.INTRODUCTION AND BACKGROUND

     1.   In this Memorandum Opinion and Order, we deny 
Verizon Communications, Inc.'s (``Verizon's'') request for 
confidential treatment of information contained in its audit 
report filed under section 272(d) of the Communications Act 
of 1934, as amended (the ``Act'').1

     2.   Section 272 of the Act requires Bell Operating 
Companies (``BOCs'') offering in-region, interLATA service 
to do so through a separate affiliate.2  Section 272 
establishes certain structural, transactional, and 
nondiscrimination safeguards that govern the relationship 
between a BOC and its affiliate after the BOC receives 
authorization to provide in-region interLATA 
telecommunications services pursuant to section 271 of the 
Act.  In addition, section 272(d) requires a BOC, after 
receiving section 271 authorization, to obtain a joint 
Federal/State audit conducted by an independent auditor to 
determine the BOC's compliance with section 272 and the 
Commission's rules.3  

     3.   In a series of orders, the Commission implemented 
the separate affiliate safeguards mandated by the Act. 4  
The Commission intended to deter conduct that would furnish 
an unfair competitive advantage to a BOC's in-region 
interLATA operations over other carriers, such as cost 
misallocation or discrimination in favor of the BOC's 
section 272 separate affiliate.5  In the Accounting 
Safeguards Order, the Commission adopted requirements 
governing the section 272(d) biennial audit, the oversight 
of the independent auditor, and filing the audit report.6  

     4.   On June 11, 2001, Verizon submitted its first 
section 272(d) biennial audit report.7  The final audit 
report provided facts concerning the compliance of several 
Verizon affiliates that were providing in-region, interLATA 
service in New York pursuant to Verizon's section 271 
authorization.  Verizon requested confidential treatment of 
certain financial and accounting information, including 
performance measurement data; the request was denied by the 
Commission.8  The Commission observed that section 272(d)(2) 
provides that the independent auditor ``shall submit the 
results of the audit to the Commission and to the State 
commissions of each State in which the company audited 
provides service, which shall make such results available 
for public inspection.''9  The Commission concluded that the 
plain language and the purpose of section 272(d)(2) mandates 
public disclosure of the results of the audit, which are 
contained in the audit report.10  The Commission also found 
public disclosure consistent with the audit provisions of 
section 220 of the Act, the Trade Secrets Act, and Exemption 
4 of the Freedom of Information Act.11

     5.   Similarly, on September 5, 2002, the Commission 
denied SBC Communications, Inc.'s (``SBC's'') request for 
confidential treatment of information contained in its 
272(d) audit report.12  SBC had requested confidential 
treatment for financial and accounting information, 
performance data depicting quality of service, and other 
commercial information.13  The Commission rejected SBC's 
request, observing that the performance data was aggregated 
summary information and that SBC did not provide adequate 
grounds for granting confidential treatment.14

     6.   On June 12, 2003, the independent auditor 
submitted Verizon's second section 272(d) audit report.  By 
letter dated June 12, 2003, attached to the audit report, 
Verizon requests confidential treatment of the performance 
data, specifically for the volumes of special access 
services purchased by Verizon's affiliates and non-
affiliates, as well as the number of presubscribed 
interexchange carrier (``PIC'') changes submitted by 
Verizon's long distance affiliates and other carriers.15  
Specifically, Verizon seeks confidential treatment for the 
volumes contained in the performance measure results in 
Attachment A, pages A-3 through A-79 and the PIC changes 
data in Appendix A, pages 80 and 81.  

                        II.  DISCUSSION

     7.   For the reasons stated in the Verizon 
Confidentiality Order and the SBC Confidentiality Order, we 
reject Verizon's request for confidential treatment.  
Verizon here asserts the same arguments for confidential 
treatment of performance measurements and other data that 
the Commission addressed and rejected in the Verizon 
Confidentiality Order.  As the Commission stated there, the 
plain language of section 272(d)(2) mandates public 
disclosure of the results of the audit, contained in the 
audit report.16  Moreover, as the Commission observed in 
both the Verizon Confidentiality Order and the SBC 
Confidentiality Order, public disclosure of the audit 
results will promote meaningful comment on the audit results 
pursuant to section 272(d)(2) and thereby help the 
Commission determine compliance with section 272 and the 
Commission's rules. 17

     8.   As it did with the last 272 audit report, Verizon 
asserts that disclosure of this aggregated 2001 and 2002 
information would likely substantially harm its competitive 
position.  In the Verizon Confidentiality Order, the 
Commission rejected this argument, noting that Verizon only 
referred generally to redactions in the audit report and did 
not explain how specific information would cause competitive 
harm.18  Under the Commission's confidentiality rules, it is 
the submitter's responsibility to explain the degree to 
which information is commercially sensitive (or contains 
trade secrets) and the manner in which the subject area 
could be used by competitors to inflict substantial 
competitive harm.19  We therefore conclude that Verizon's 
contentions here, without more, do not demonstrate how this 
information would likely substantially harm its competitive 
position.  

     9.   Finally, we reject Verizon's request to limit 
access to the audit information with a protective agreement.  
In the Verizon Reconsideration Order and the SBC 
Confidentiality Order the Commission rejected the same 
request, observing that a protective order would run counter 
to the statutory requirement to make the audit results 
contained in the final section 272 audit available for 
public inspection and to allow any party to comment on the 
audit report.20  

     10.  Therefore, for the foregoing reasons, we deny 
Verizon's request for confidential treatment of information 
contained in its section 272(d) audit report.  As discussed 
below, an unredacted version of the section 272(d) audit 
report, in its entirety, will be available for public 
comment. 

                   III.  ORDERING CLAUSES

     11.  ACCORDINGLY, IT IS ORDERED , pursuant to sections 
4(i), 220, and 272(d) of the Act, 47 U.S.C. §§ 154(i), 220, 
and 272(d), that Verizon Communications, Inc.'s request for 
confidential treatment of the section 272(d) audit report, 
as noted and described herein, IS DENIED for the reasons 
indicated in this Order.

     12.  IT IS FURTHER ORDERED THAT, pursuant to sections 
4(i), 220, and 272(d) of the Act, 47 U.S.C. §§ 154(i), 220, 
and 272(d), that the unredacted version of the final section 
272(d) audit report be filed in this docket within ten days 
of the release of this Memorandum Opinion and Order, subject 
to paragraph 13 below.  Interested parties will have 60 days 
from that date to file comments.

     13.  IT IS FURTHER ORDERED, pursuant to section 
0.459(g) of the Commission's rules, 47 C.F.R. § 0.459(g), 
that Verizon has five working days from telephone notice of 
decision to file an Application for Review of this 
Memorandum Opinion and Order with the Commission.  If 
Verizon files such an Application for Review, the materials 
will be accorded confidential treatment until the Commission 
acts on the Application for Review.



                         FEDERAL COMMUNICATIONS COMMISSION


                         David H. Solomon
                         Chief, Enforcement Bureau


_________________________

1  47 U.S.C. § 272(d).

2  47 U.S.C. § 272.

3  47 U.S.C. § 272(d).

4  See Accounting Safeguards under the Telecommunications 
Act of 1996, Report and Order, 11 FCC Rcd 17539 (1996) 
(``Accounting Safeguards Order''), Second Order on 
Reconsideration, 15 FCC Rcd 1161 (2000); Implementation of 
the Non-Accounting Safeguards of Sections 271 and 272 of the 
Communications Act of 1934, as Amended, First Report and 
Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 
21905 (1996) (``Non-Accounting Safeguards Order''), First 
Order on Reconsideration, 12 FCC Rcd 2297 (1997), Second 
Order on Reconsideration, 12 FCC Rcd 8653 (1997), aff'd sub 
nom. Bell Atlantic Telephone Companies v. FCC, 131 F.3d 1044 
(D.C. Cir. 1997), Third Order on Reconsideration, 14 FCC Rcd 
16299 (1999); see also 47 C.F.R. §§ 32.27, 53.1-53.213, 
64.901-64.904.

5  See Accounting Safeguards Order, 11 FCC Rcd at 17546, ¶ 
13.

6  See id. at 17628-632, ¶¶ 197-205; 47 C.F.R. §§ 53.209-
53.213.

7  See Accounting Safeguards under the Telecommunications 
Act of 1996:  Section 272(d) Biennial Audit Procedures, 
Memorandum Opinion and Order, 17 FCC Rcd 1374 (``Verizon 
Confidentiality Order''), recon. denied, Order on 
Reconsideration, 17 FCC Rcd 6955 (``Verizon Reconsideration 
Order'') (2002).

8  See Verizon Confidentiality Order, 17 FCC Rcd at 1375, ¶ 
4.

9  Id. at 1375-76, ¶ 5.

10 Id.

11 Id. at 1380-83, ¶¶ 13-20.

12 See Accounting Safeguards under the Telecommunications 
Act of 1996:  Section 272(d) Biennial Audit Procedures, 
Memorandum Opinion and Order, 17 FCC Rcd 17012 (2002) (``SBC 
Confidentiality Order'').  

13 SBC Confidentiality Order, 17 FCC Rcd at 17017-18, ¶ 17.  

14   Id. at 17018-19, ¶ 19.
15 See Letter from Joseph DiBella, Regulatory Counsel, 
Verizon to Marlene H. Dortch, Secretary, Federal 
Communications Commission (June 12, 2003) (``Verizon 
Confidentiality Request'').

16 Section 272(d)(2) states that the auditor ``shall submit 
the results of the audit to the Commission and to the State 
commission of each State in which the company audited 
provides service, which shall make such results available 
for public inspection.  Any party may submit comments on the 
final audit report.''  47 U.S.C. § 272(d)(2).  See Verizon 
Confidentiality Order, 17 FCC Rcd at 1375-76, ¶ 5.

17 Verizon Confidentiality Order, 17 FCC Rcd at 1377-78, ¶ 
8; SBC Confidentiality Order, 17 FCC Rcd at 17023, ¶ 33.

18 Verizon Confidentiality Order, 17 FCC Rcd at 1381, ¶ 15.  

19 47 C.F.R. §§ 0.459(b)(3), 0.459(b)(5).

20 Verizon Reconsideration Order, 17 FCC Rcd at 6956, ¶ 3; 
SBC Confidentiality Order, 17 FCC Rcd at 17024, ¶ 35.