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 SEPARATE  STATEMENT  OF  CHAIRMAN  MICHAEL  K.  POWELL 
 Re:  Review  of  the  Commission  Rules  Regarding  the  Pricing  of  Unbundled  Network  Elements  and  the  Resale  of  Services  by  Incumbent  Local  Exchange  Carriers  (WC 
 Docket  No.  03-  173(  Adopted  September  10,  2003) 
 Seven  years  is  a  long  time  in  the  telecommunications  industry.  At  the  time  the  Commission  initially  adopted  its  pricing  rules  in  1996,  it  promised  to  review  them  after 
 states  had  implemented  the  first  round  of  pricing  decisions.  I  am  pleased  that  today  –  seven  years  after  the  first  pricing  rules  were  adopted  –  the  Commission  has  moved  to 
 keep  the  promise  we  made  in  1996.  Today’s  Notice  represents  the  first-  ever  comprehensive  and  directed  approach  to  reviewing  our  TELRIC  pricing  methodology. 


 Now  that  competition  has  taken  root  in  many  areas  of  the  country,  we  initiate  this  proceeding  to  consider  whether  our  pricing  rules  are  working  as  intended,  in  particular, 
 whether  it  is  conducive  to  facilities  investment.  The  stakes  are  high:  without  the  correct  pricing  signals  in  the  market,  our  rules  can  thwart  a  central  purpose  of  the  Act,  the 
 development  of  facilities-  based  competition. 
 The  hypothetical  nature  of  the  TELRIC  inquiry  has  been  difficult  for  states  to  implement  and  has  resulted  in  a  lack  of  consistency  that  disadvantages  incumbents  and 
 competitors  alike.  It  is  my  hope  that  at  the  end  of  this  proceeding  the  market  will  benefit  from  a  methodology  that  is  less  theoretically  freewheeling.  The  tentative  conclusion 
 stated  in  the  item  supports  this  policy  direction.  While  I  have  heard  some  concern  surrounding  the  tentative  conclusion,  our  commitment  to  retaining  a  forward-  looking 
 approach  is  unwavering  –  what  we  are  debating  is  the  extent  to  which  realistic  assumptions  about  the  incumbent’s  network  should  be  included  in  our  pricing  rules.  I 
 believe  that  an  approach  grounded  in  the  real-  world  attributes  of  the  incumbent’s  network  would  address  claims  that  our  TELRIC  rules  currently  distort  a  competitor’s  decision 
 whether  to  invest  in  new  facilities  or  to  lease  an  incumbent’s  existing  facilities. 
 I  look  forward  to  reviewing  the  submissions  in  the  proceeding  and  working  with  state  regulators  to  capture  the  experience  they  have  gained  implementing  our  pricing 
 methodology.  Finally,  I  appreciate  the  support  of  my  colleagues  in  initiating  a  fair  and  balanced  review  of  our  pricing  rules. 
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