Public Utility Commission's Decision Sends Telecom a Message: Don't Invest in California

THOUSAND OAKS, Calif. - Today, the California Public Utilities Commission (CPUC) ordered interim unbundled network element (UNE) rates in California based on New Jersey rates. The interim UNE rates will be adjusted retroactively, either up or down, once permanent rates are ordered. The permanent UNE proceeding begins this May. The commission initiated the interim UNE proceeding in mid-2002 to expedite the replacement of Verizon's current rates, which were set in early 1997. Rather than accept new cost studies, the commission ruled interim rates could be based on trending information or rates in other states. The following response should be attributed to Tim McCallion, Verizon Pacific Region president.

"The CPUC's decision completely ignores the unprecedented array of choices consumers have for communications - cell phones, e-mail, broadband, the Internet - as well as the traditional telephone.

"These didn't exist 10 years ago. Innovation and investment have made these choices possible and continued innovation is needed to keep the momentum into the future. Below-cost prices hammer any company's rationale for investment and put a big brake on innovation.

"The CPUC wrongly used rates from New Jersey rather than review Verizon's costs in California to set the temporary UNE rates announced today. This decision forces Verizon to provide access at rates that are well below the cost of providing the service.

"Under this decision Verizon pays AT&T and WorldCom to compete in California. It is hard to imagine a justification for this decision."