The UTC signed an order on Feb. 9, 2005, setting Verizon's rates for wholesale charges to other phone carriers that rent space on the company's lines. The order addresses recurring rates – rates Verizon charges on a monthly or periodic basis for unbundled network elements (UNEs). The decision also created a five-zone rate structure for loops and switching.
This proceeding was the first national test for Verizon's newly developed "VzCost" model, a web-based program used to help calculate recurring rates. The UTC said the new Verizon model had "merits and demerits." The UTC used Verizon's model, but not exclusively, as it also employed a version of an earlier program known as the Hatfield model (Dockets UT-023003 and UT-033034).
Background
The UTC's "generic cost case" started during the first round of interconnection arbitrations after the Telecommunications Act of 1996 passed. It has proceeded through a series of phases, or "parts," to establish cost and prices for interconnection and unbundled network elements.
In August 2003, the UTC started this investigation of non-recurring costs separate from recurring costs. Qwest's issues were removed from the proceeding in November 2003, leaving only Verizon. The UTC dismissed part of this proceeding dealing with non-recurring costs for Verizon in October 2004. At a prehearing conference, several participants said they no longer wished to go forward with this proceeding because of major changes and uncertainties in telecommunications regulation.
Given the challenges of developing a record if the primary parties did not participate, the UTC dismissed the proceeding without prejudice (Docket UT-033034). The UTC approved a settlement agreement submitted by Qwest, Commission Staff and AT&T on May 11, 2004. Under the agreement, Qwest agreed to implement five different rates for using the company's lines in different parts of the state. The proposed settlement resolves remaining Qwest issues, so only Verizon's costs are still at issue in the case (Docket UT-023003).
In approving the agreement, the UTC said that rates in the settlement will move prices toward costs in all areas of the state: "Accurate pricing provides carriers the best information to rely on in making decisions whether to invest in facilities to serve a given geographic area." Qwest agreed to implement the five-zone loop-rates shown below:
- Zone 1: $11.26
- Zone 2: $13.63
- Zone 3: $16.92
- Zone 4: $28.23
- Zone 5: $67.77
Second Phase, Generic Cost and Pricing
The second generic proceeding (Docket UT-003013) was to set costs and prices for network elements that were not included in the first proceeding, and after to address unresolved issues. This proceeding was also divided into several phases, or "parts."
On Jan. 31, 2001, the UTC issued its 
Part A Order (13th Supplemental), which set prices for line sharing, operations support systems, and collocation; plus a corrected order on Nov. 6, 2001 (27th Supplemental Order). The UTC issued its Part B Order (32nd Supplemental) on June 21, 2002. It addresses issues of line splitting, line sharing over fiber loops, OSS, loop conditioning, reciprocal compensation, and nonrecurring and recurring rates for some unbundled network elements.
Part C, which was to address microwave collocation issues, was canceled on June 14, 2001, after parties reached agreement on rates. The UTC held evidentiary hearings in Part D May 6-10, 2002, and issued its final order on Part D (44th Supplemental) on December 20, 2002.
Initial Generic Cost and Pricing Docket
The UTC's initial generic cost and pricing proceeding (Docket UT-960369) established the cost and prices for unbundled network elements (UNE), including the unbundled loop. The primary orders from this proceeding are listed below:
Phase I: Costs
The UTC completed the cost phase of the proceeding in 1998. The cost determinations are in the below orders:
Phase II: Prices
The second phase of the proceeding established statewide average prices. The UTC completed this phase in 1999. The price determinations are in the below orders:
Phase III: Deaveraging
The third phase of the proceeding established deaveraged prices for interconnection and unbundled network elements. The UTC issued its decision in this phase on May 4, 2000, and an order on reconsideration on Dec. 15, 2000.