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News | News Release Contact: Ken Schrad, 371-9141
For Immediate Release: December 14, 2007

RICHMOND — The State Corporation Commission (SCC) has granted in part and denied in part an application from Verizon Virginia and Verizon South (“Verizon”) to deregulate and detariff essentially all of Verizon’s local residential and business telephone services throughout Verizon’s Virginia service territory.

The SCC followed state laws that promote competition and authorize the SCC to deregulate if and where it finds competition to Verizon is sufficient to regulate prices. Verizon is Virginia’s largest provider of local telephone service.

The SCC focused on actual competitive options available to consumers. It found that competition or the potential for competition exists in any local telephone exchange in which at least 75 percent of consumer households have a choice of two or more competitors to Verizon for residential telephone service. Also, at least one competitor that owns its own wireline network must be available to 50 percent or more of the households in the exchange.

The SCC noted that the competitiveness test it adopted in this case is similar to competitiveness tests used in several other states to decide whether to deregulate local telephone services.

Applying its test to the evidence, the SCC determined that telephone exchanges that together include, at a minimum, approximately 62 percent of Verizon’s residential telephone lines are presently competitive. Those exchanges are located in Virginia’s largest urban and suburban areas, including most of Northern Virginia, Richmond, Hampton Roads, and Roanoke County.

The SCC applied a similar test for business telephone services, and determined that, at a minimum, approximately 57 percent of individual-line business customers in Virginia were in exchanges determined to be competitive.

In exchanges found to be competitive, basic local telephone and related services are deregulated as to price. To protect consumers from large price increases for basic telephone service, the SCC imposed a $1 per year limit on any price increase per line for basic local telephone service for residential consumers, and a $3 per year cap for basic local business service. The yearly price caps will be in place for five years, from 2008 to 2012.

The SCC’s determination of competitiveness in various telephone exchanges in this order does not preclude additional exchanges from being declared competitive if Verizon files tariffs showing that the additional exchanges meet the competitiveness test. The Commission has established a streamlined administrative procedure for the filing of such tariffs.

The SCC found “bundled” telephone services to be competitive statewide and deregulated them as to price. These are services that consumers can choose to purchase in various packages and configurations that may include both local and long distance calling, wireless telephone, Internet or video services.

The SCC also found competitive, and deregulated as to price, the “big business” market in Virginia, consisting of those businesses that have the purchasing power to negotiate individual contracts for telecommunications services from Verizon or its competitors.

The SCC found that Verizon had not proven its claim that Virginia’s entire statewide telephone market was competitive under Virginia law. The SCC further found that Verizon had not met the legal standard to justify deregulating and detariffing essentially all its residential and business telephone services statewide.

Referring to the record in the case, the SCC noted that it appeared that only two states, South Dakota and Rhode Island, have deregulated local telephone services on a scale comparable to what Verizon proposed for Virginia, and that neither South Dakota nor Rhode Island is comparable to Virginia in population or economic diversity. The SCC also said that it appeared that no other state has detariffed essentially all local telephone services, as Verizon requested.

In the order, the SCC wrote that “Considering together the various statutes that govern this case, we find that the General Assembly has set forth a general policy that directs this Commission to favor, within the parameters of those statutes, the promotion of competition for local exchange telephone services … In promoting competition and deregulating as competition develops, however, we find that the General Assembly has also directed this Commission to proceed carefully and cautiously.”


Case Number PUC-2007-00008