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 STATEMENT  OF 
 COMMISSIONER  KEVIN  J  .  MARTIN 


 Re:  Review  of  the  Commission’s  Rules  Regarding  the  Pricing  of  Unbundled  Network  Elements  and  the  Resale  of  Service  by  Incumbent  Local  Exchange  Carriers.  WC  Docket  No.  03-  173 


 I  am  pleased  that  we  are  taking  action  to  alter  our  existing  TELRIC  pricing  regime.  Today,  we  tentatively  conclude  that  our  unbundled  network  element  pricing 
 methodology,  while  forward-  looking,  should  be  based  upon  the  incumbent  local  exchange  carrier’s  actual  network  rather  than  the  totally  hypothetical  assumptions 
 contained  in  a  cost  proxy  model.  I  believe  that  the  prices  for  unbundled  network  elements  should  be  based  on  the  forward-  looking  replacement  cost  of  the  ILEC’s 
 network. 
 As  I  have  long  stated,  I  believe  that  that  the  TELRIC  rules  should  be  reviewed  and  revised.  I  have  also  stated  before  that  the  existing  TELRIC  formula  may  provide 
 incumbent  service  providers  with  an  insufficient  return  on  investment  capital  for  new  infrastructure.  Today’s  item,  in  conjunction  with  our  decision  in  the  recent  Triennial 
 Review  Order,  begins  the  process  to  provide  the  necessary  adjustments  to  the  TELRIC  formula  that  will  more  accurately  reflect  incumbent  costs  and  help  spur  deployment  in 
 new  facilities  and  services. 
 While  I  am  pleased  that  we  are  initiating  this  proceeding,  I  am  cognizant  that  the  Wireline  Competition  Bureau’s  interpretation  of  the  TELRIC  pricing  rules  in  the  recent 
 Virginia  Arbitration  Order  may  not  reflect  the  direction  and  spirit  of  today’s  decision. 
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