(a) An electing local exchange company shall have its rates for basic local exchange services determined pursuant to this Code section.

(b) Rates for basic local exchange services for residential and single line business customers in effect on the date the local exchange company becomes subject to alternative regulation described in this article shall be the maximum rates that the local exchange company may charge for basic local exchange services for a period of five years, provided that such maximum rates are subject to review by the commission pursuant to subsection (f) of this Code section under rules promulgated by the commission. During such period, the local exchange company may charge less than the authorized maximum rates for basic local exchange services. Thereafter, rate adjustments for basic local exchange services may be made pursuant to subsection (c) of this Code section.

(c) Rates for basic local exchange services may be adjusted by the electing company subject to an inflation based cap. Inflation shall be measured by the change in the GDP-PI. The electing company is authorized to adjust the cap on an annual basis. The cap requires that the annual percentage rate increase for basic local exchange services shall not exceed the greater of one-half of the percentage change in the GDP-PI for the preceding year when the percentage change in the GDP-PI exceeds 3 percent or the GDP-PI minus 2 percentage points.

(d) In the event the GDP-PI is no longer available, the commission shall elect a comparable broad national measure of inflation calculated by the United States Department of Commerce for its use.

(e) The local exchange company shall set rates for all other local exchange services on a basis that does not unreasonably discriminate between similarly situated customers; provided, however, that all such rates are subject to a complaint process for abuse of market position in accordance with rules to be promulgated by the commission. Competing local exchange companies may resell local exchange services purchased from other local exchange companies.

(f)(1) Except as otherwise provided in this subsection, the rates for switched access by each Tier 1 local exchange company shall be no higher than the rates charged for interstate access by the same local exchange company. The rates for switched access shall be negotiated in good faith between the parties. In the event that the rates for switched access cannot be negotiated between the parties, any party may petition the commission to set reasonable rates, terms, or conditions for switched access. The commission shall render a final decision in any proceeding initiated pursuant to the provisions of this paragraph no later than 60 days after the close of the record except that the commission, by order, may extend such period in any case in which it shall find that the complexity of the issues and the length of the record require an extension of such period, in which event the commission shall render a decision at the earliest date practicable. In no event shall the commission delay the rendering of a final decision in such proceeding beyond the earlier of 120 days after the close of the record or 180 days from the filing of the notice of petition for determination of rates for switched access that initiated the proceeding.

(2) Each Tier 2 local exchange company shall, prior to July 1, 2000, adjust in equal annual increments its intrastate switched access charges to parity with its similar interstate access rates. The commission shall have authority to govern the transition of Tier 2 local exchange company switched access rates to their corresponding interstate levels and shall allow adjustment of other rates, including those of basic local exchange services or universal service funds, as may be necessary to recover those revenues lost through the concurrent reduction of the intrastate switched access rates. In no event shall such adjustments exceed the revenues associated with intrastate to interstate access parity as of July 1, 1995. In addition, if access revenues have dropped below July 1, 1995, levels in subsequent years, the adjustment in those years will be based on the reduced balance. Any intrastate to interstate switched access adjustments resulting in increased local rates that have been capped under subsection (b) of this Code section will be allowed and a new cap will be established pursuant to this Code section. In the event that the rates for switched access cannot be negotiated in good faith between the parties, the commission shall determine the reasonable rates for switched access in accordance with the procedures provided in paragraph (1) of this subsection.

(g) In accordance with rules to be promulgated by the commission, any electing company shall file tariffs with the commission for basic local exchange services and other local exchange services that state the terms and conditions of such services and the rates as established pursuant to this Code section.