government-created money flow from one company to through the historic another” development of access rates, the existence of which Verizon has in the past consistently admitted, further proves the existence of a subsidy, which while not a problem then is now that carriers compete and must be eliminated under Chapter 30. at 2, 5-8. AT&T Id. contends that the logic of those Parties that oppose revenue-neutral access to local rebalancing is puzzling. In view, because such rebalancing is revenue-neutral, AT&T’s Verizon should not object. Further, AT&T asserts that the impact on local rates would not impact either affordability or universal service, especially given “genuinely Verizon’s remarkably low local exchange at 3. According to AT&T, simply Id. rate.” “Verizon wants it both ways: to maintain monopoly subsidies while it enjoys the benefits of expanded competitive classification. That is contrary to Pennsylvania at 4. Id. law.” In response to criticism of other Parties regarding the lack of cost support, AT&T contends that neither Verizon nor the OCA identifies any state that has required a cost study or required a stand-alone cost test to prove a subsidy. AT&T further contends that this Commission take notice that reciprocal compensation and switched access “can involve materially the same network functionality, yet the FCC (prior to adopting found that a reasonable reciprocal compensation rate was $0.0007 cents per AT&T R.B. at 8. AT&T asserts that a simple comparison of rates minute.” “indicates that the access rate is being used to subsidize local In response to the Id. service[.]” argument that access rates must exceed the stand-alone cost of access service OCA’s before they can provide a subsidy, AT&T contends that from an economic perspective, a subsidy exists when the price of a product X is insufficient to cover its incremental cost, but the firm prices its other products sufficiently to cover their incremental costs and the other firm costs. AT&T concludes that there is no doubt that originating Verizon’s access rates are priced above incremental costs and a subsidy is provided. AT&T R.B. at 9-10.
government-created money flow from one company to another” through the historic development of access rates, the existence of which Verizon has in the past consistently admitted, further proves the existence of a subsidy, which while not a problem then is now that carriers compete and must be eliminated under Chapter 30. Id. at 2, 5-8. AT&T contends that the logic of those Parties that oppose revenue-neutral access to local rebalancing is puzzling. In AT&T’s view, because such rebalancing is revenue-neutral, Verizon should not object. Further, AT&T asserts that the impact on local rates would not “genuinely impact either affordability or universal service, especially given Verizon’s remarkably low local exchange rate.” Id. at 3. According to AT&T, “Verizon simply wants it both ways: to maintain monopoly subsidies while it enjoys the benefits of expanded competitive classification. That is contrary to Pennsylvania law.” Id. at 4. In response to criticism of other Parties regarding the lack of cost support, AT&T contends that neither Verizon nor the OCA identifies any state that has required a cost study or required a stand-alone cost test to prove a subsidy. AT&T further contends that this Commission “can take notice that reciprocal compensation and switched access involve materially the same network functionality, yet the FCC (prior to adopting found that a reasonable reciprocal compensation rate was $0.0007 cents per minute.” AT&T R.B. at 8. AT&T asserts that a simple comparison of rates “indicates that the access rate is being used to subsidize local service[.]” Id. In response to the OCA’s argument that access rates must exceed the stand-alone cost of access service before they can provide a subsidy, AT&T contends that from an economic perspective, a subsidy exists when the price of a product X is insufficient to cover its incremental cost, but the firm prices its other products sufficiently to cover their incremental costs and the other firm costs. AT&T concludes that there is no doubt that Verizon’s originating access rates are priced above incremental costs and a subsidy is provided. AT&T R.B. at 9-10.
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