Re: I/M/O Application of Verizon New Jersey For Approval of Alternative Form of Regulation and to Reclassify Multi-line Business Services as Competitive

Douglas S. Williams, Vice-President of Economics and Technology, Inc., ("ETI") submits testimony on behalf of the New Jersey Division of the Ratepayer Advocate to be read in conjunction with that of Dr. Lee S. Selwyn, President of ETI.

In purported compliance with the Board’s December 22, 2000 Order, Verizon New Jersey devised four scenarios for expanding local calling areas. Verizon developed new rates that would apply to residential and business customers to make the Company whole for lost toll and switched access revenues, as well as to recover the costs of implementing a calling area expansion. However, it concluded that no plan for expanding local calling areas should be adopted. It claims that the optional calling plans presently offered by Verizon are sufficient to meet the needs of its customers.

To the contrary, Mr. Williams, on behalf of the Ratepayer Advocate, recommend adoption of a plan calling for expansion of local calling areas including rate center consolidation. The expansion of local calling areas is a well-recognized consumer benefit, and would do well for New Jersey, a state recognized as having disproportionately small local calling areas and disproportionately large intraLATA toll bills. The Board clearly believed that expanding local calling areas was a topic worth considering as it required Verizon to analyze and develop options for such a plan. In order to derive the most benefit from expanded local calling areas, the Board should concurrently implement rate center consolidation. Rate center consolidation permits for the expansion of local calling areas by grouping together current small rating areas into fewer, larger rating areas.

Consolidation of rating areas also provides the added benefit of conserving numbering resources. Under current guidelines, all carriers, both incumbent and competitive, require a block of 10,000 numbers in each of the 180 rate centers in New Jersey in which they seek to do business, irrespective of customer demand or actual provision of service. By significantly reducing the number of rate centers, the consistent and substantial drain on numbering resources that has resulted in the assignment of six new area codes in New Jersey in the past few years will be abated, and the need for new area codes in the future may well be eliminated.

It is recommended that the 180 current rate centers in New Jersey be consolidated into 21 rating areas that roughly conform to the state’s county boundaries. Calling areas should be expanded to include all current exchanges within the new rate center, as well as all exchanges in the newly contiguous rate centers. This plan is aggressive enough to provide significant increases in the local calling areas for all consumers in New Jersey, as well as providing meaningful conservation of numbering resources so as to avoid unnecessary area code additions.

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