EXECUTIVE SUMMARY OF REPLY BRIEF ON BEHALF OF THE RATEPAYER ADVOCATE IN VERIZON-NJ=S APPROVAL FOR ALTERNATIVE FORM OF REGULATION AND RECLASSIFICATION OF BUSINESS SERVICES AS COMPETITIVE SERVICES (APAR II@)

Filed January 23, 2002, BPU Docket No. TO01002009

The promises of the Telecommunications Act of 1996 which included the transition to a competitive telecommunications marketplace has not been realized in New Jersey. In light of the fact that competition and choice have not been available to New Jersey consumers, it is the Board=s duty in the PAR II proceeding to ensure that the ongoing deregulation of Verizon-NJ does not lead to no regulation and a situation in which New Jersey ratepayers are subject to the greater monopoly power of Verizon-New Jersey.

In its reply brief, the Ratepayer Advocate refutes Verizon-NJ=s claim that it alone has the right to propose a plan for alternative regulation. According to the Ratepayer Advocate, the statute contemplates the input of all interested parties, and prohibits Verizon from undermining such inputs. Moreover, the Ratepayer Advocate=s proposed plan which includes a rate cap, earnings and merger sharing requirement, expansion of local calling areas, enhanced service quality, and a state universal service fund seeks to protect the interests of New Jersey ratepayers. Both Verizon-NJ and AT&T=s attacks of the Ratepayer Advocate=s plan are without merit and neither party has proposed an alternative mechanism by which promised excess earnings and merger benefits might accrue to ratepayers.

Regarding Verizon-NJ=s Petition for Reclassification of multi-line business services, the Ratepayer Advocate demonstrates once again in its reply brief that Verizon-NJ fails to demonstrate the presence of actual competitors with reference only to potential entry, fails to recognize that entry barriers in the local exchange market still exist, and fails to separately show the availability of substitute services, as required by the statute. The Ratepayer Advocate maintains that a more thorough analysis under a complete list of criteria are necessary for Verizon-NJ to demonstrate beyond a shadow of a doubt that the services which it wants to reclassify are in fact competitive. The Ratepayer Advocate urges the Board to initiate a proceeding to focus its reclassification inquiry on the criteria for existence of effective competition and an examination of relative market shares.

Finally, the Ratepayer Advocate contends that Verizon-NJ=s objections to structural separation proposal are untimely and without merit. The reply brief explains that existing regulatory measures are not sufficient to promote local competition because competition under the current regulatory framework has not produced significant results for New Jersey ratepayers. Furthermore, Verizon-NJ fails to make any substantial response to the Ratepayer Advocate=s alternative proposal of functional/structural separation through a strong code of conduct.


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