BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of:

MFS Communications Company, Inc.'s

Petition for Arbitration Pursuant to 47 U.S.C. Section 252(b) of the 
Interconnection Rates, Terms and Conditions with U S WEST Communications, Inc.
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In the Matter of:

TCG Seattle's

Petition for Arbitration Pursuant to 47 U.S.C. Section 252(b) of the 
Telecommunications Act of 1996
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In the Matter of the Interconnection Agreement Between :

Electric Lightwave, Inc. and U S WEST Communications, Inc. pursuant to 47 
U.S.C. Section 252	)
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		DOCKET NO.  UT-960323
		
		
		
		DOCKET NO.  UT-960326
		
		
		
		DOCKET NO.  UT-960337
		
		
		U S WEST Communications, Inc.'s Petition for Administrative Review of the 
Administrative Law Judge’s Initial Order

 On December 23, 1997, the Administrative Law Judge issued an Initial Order in 
this matter.  The order directed the parties that administrative review was 
available under the provisions of WAC 480-09-780.  U S WEST files this petition 
for review, asking the Commission to modify and clarify the Initial Order as 
set forth herein.
 This matter has already been discussed at length by the parties in briefs 
filed with the Administrative Law Judge.  U S WEST will not repeat the 
arguments it made in its initial brief, but, where appropriate, will reference 
the discussion therein.
 U S WEST will first discuss the procedural issues raised in this case, which 
are primarily issues concerning the nature and scope of the proceeding and the 
result.  U S WEST will then discuss the substantive points of the Initial 
Order, specifically requesting modification and clarification as follows: The 
Commission should reverse the Initial Order’s determination that U S WEST may 
not recover the costs of reclamation from CLECs.  The Commission should clarify 
the reporting requirements imposed by the Initial Order.  The Commission should 
clarify the definition of underutilized space.  The Commission should not 
mandate cageless or shared collocation, although U S WEST will provide cageless 
collocation, and will allow carriers to share collocation space.  Finally, the 
Commission should reverse the Initial Order’s determination that U S WEST must 
make space available on the 8th and 14th floors of Seattle Main.
Procedural Issues – 
 The procedural issues in this case are somewhat unique.  Ordinarily, a case 
brought to the Commission for hearing has the issues defined by virtue of the 
complaint that initiated the proceeding.  However, this matter was not 
initiated by a complaint.  The notice of hearing, dated July 24, 1997, defined 
the issue only as “the matters raised in this docket” and referenced U S WEST’s 
position that space limitations made physical collocation impractical.  The 
subsequent order on prehearing conference, dated August 22, 1997, stated only 
that “USWC will give a presentation on the availability of space in the 
specific central offices at which physical collocation has been denied . . . . 
”  No determination was made in either order as to the nature of the relief to 
be ordered or the action that would be taken by the Commission as a result of 
the presentation.  
 The ALJ’s comments on the record in the prehearing conference guided both the 
format and the substance of U S WEST’s presentation on September 24, 1997.  The 
ALJ had stated as follows:
I believe that if in fact U S WEST can convince this Commission through the  
administrative law judge in its presentation that in fact it has developed 
reasonable standards and criteria for the allocation and utilization of its 
space, and in fact has applied those standards and criteria to its available 
space for physical collocation, that the Commission should make a determination 
based upon that presentation . . . . 
At the same time, I am cognizant that the other parties bring a lot of talent 
and insight to the table, and that is why I am allowing the parties to both 
make a presentation of their own as well as to make responsive comments to the 
presentation by  U S WEST, . . . . I think  the parties should have the 
opportunity to provide their own assessment of the availability of space, and 
on that basis if I am convinced in fact that there is  -- that U S WEST has not 
met its burden then I am put in the position of deciding what next, and I 
clearly  think it would be not appropriate at that point in  time to proceed to 
dictate to    U S WEST how it would  have to use its space, but at that point 
in time I would expect that it would turn into an adversarial  proceeding.  
On the other hand, if U S WEST over the  presentations of the other parties can 
convince the  Commission that in fact it has met its burden then I  believe 
that it should not be required to go forward  into an adversarial proceeding.

 Thus, U S WEST clearly understood only one of two possible outcomes from the 
presentation.  Either U S WEST would prevail in terms of having convinced the 
ALJ that space was not available, or, a second phase of the proceeding would 
take place for more complete factual development in an adversarial proceeding.
 In this context, the issue is raised of whether it was appropriate for the 
Administrative Law Judge to make specific factual determinations with regard to 
the Seattle Main Central Office in light of the scope and nature of this 
proceeding as defined in the prehearing conference.
 The Administrative Law Judge determined that U S WEST must make space 
available in the Seattle Main Central Office, specifically on the eighth and 
fourteenth floors.  Whether it is reasonable for U S WEST to retain 
administrative space as part of the necessary and essential functions of its 
central office is discussed below, as is the issue of whether there is any 
evidence on this record to support a determination that U S WEST’s use of the 
space on these floors is reasonable or not.  However, purely as a procedural 
matter, U S WEST does not believe that such a factual determination, adverse to 
U S WEST, was within the scope of this proceeding.
 U S WEST understood its requirement in the context of the September 24 
presentation to be to convince the Commission through the Administrative Law 
Judge, via its presentation, that U S WEST had developed reasonable standards 
and criteria for the allocation and utilization of its space and in fact had 
applied those standards and criteria to its available space for physical 
collocation.  (Tr. at 12, lines 1-7).  U S WEST understood the Administrative 
Law Judge's ruling in that regard to mean that U S WEST would be required to 
explain to the Commission what its standards were, to establish that those 
standards were reasonable, and to further establish that they had been applied 
to the space at issue.  
 U S WEST specifically did not understand the scope of the proceeding to 
involve factual determinations about whether space was available in any of the 
central offices at issue.  In fact, the Administrative Law Judge did not 
contemplate such a determination either.  As noted on page 3 of the initial 
order, “[t]he Administrative Law Judge concluded preliminarily that it would 
not be appropriate in this proceeding to dictate to USWC how it would have to 
use its space.  It was contemplated that a full adversarial proceeding would 
ensue.”
 While the ALJ has largely adhered to the above determination, the decision 
about the use of space in the Seattle Main central office is contrary to the 
stated purpose, and far outside the scope, of this proceeding.  As noted above, 
the purpose of the proceeding was to evaluate the standards U S WEST uses to 
make space determinations, determine whether those standards are reasonable, 
and whether they had been applied to the central offices at issue.
 U S WEST believes that there can be no real dispute on this record that it 
fulfilled its obligation to present its criteria and standards, and that those 
standards were properly applied to the central office space at issue.  The only 
real issue to be decided is whether those standards are reasonable.  If the ALJ 
determines that they are not, U S WEST must be allowed, at a minimum, further 
evidentiary hearings both on the criteria to be applied, and the applicability 
of the criteria to the specific central office floor space – much as was 
originally contemplated by the ALJ when he noted that a fully contested 
proceeding would occur.
 The other procedural issue raised by the Initial Order is whether it was 
proper for the ALJ to require the parties to meet and jointly propose a 
schedule and procedures for processing future requests for physical and virtual 
collocation.  While U S WEST does not oppose the idea of meeting with parties 
to informally negotiate or resolve issues, U S WEST does not believe that this 
issue was presented to the Administrative Law Judge for decision.  
 As noted above, the scope of this proceeding is to assess whether the 
standards U S WEST uses to evaluate its central offices for physical 
collocation space availability are adequate.  U S WEST processes requests for 
physical and virtual collocation under the specific terms of the 
interconnection agreement with the individual carrier.  If a particular carrier 
does not find the terms in its agreement to be acceptable, that carrier may 
approach U S WEST to negotiate additional or different terms.
 Although the other carriers suggested that U S WEST’s procedures should have 
produced faster results, much of the timing in this proceeding was not a result 
of those procedures.  No carrier alleged in this proceeding that U S WEST’s 
schedules and procedures for processing requests for collocation are in 
violation of the terms of the interconnection agreements.  No carrier has 
established that U S WEST has taken an unreasonable amount of time in 
processing these requests, or in fulfilling the ones that can be met.  As the 
ALJ noted, many of the issues around physical collocation are issues of first 
impression for the Commission.  They are issues of first impression for U S 
WEST too.  In this context, U S WEST believes that it has acted on a reasonable 
schedule to establish procedures and meet requests for collocation.  As the 
Initial Order correctly states, U S WEST has fulfilled 33 of 39 requests for 
physical collocation in Washington and 175 of 199 region-wide.  U S WEST’s 
processes and procedures obviously work to accomplish physical collocation.  
The fact that MFS or TCG would have liked to have their requests acted upon 
more quickly simply does not and should not dictate any sort of global 
revamping of U S WEST’s processes and procedures which are otherwise effective 
and efficient.
Cost Recovery for Collocation Space Evaluation and Reclamation Costs – 
 Cost recovery for physical collocation is perhaps the most important issue in 
this case.  U S WEST respectfully submits that the Initial Order, while 
attempting to ensure cost recovery for physical collocation, erred in adopting 
Staff’s suggestion and analysis that U S WEST’s historic depreciation practices 
concerning its embedded costs (i.e., rate base) somehow allow for cost 
recovery.  As will be discussed below, this is incorrect as a matter of 
Commission costing and pricing policy, and is in violation of Section 251(c)(6) 
of the Telecommunications Act, which requires just and reasonable rates for 
collocation.  
 The ALJ determined that U S WEST should bear the cost to inventory all central 
office space.  The ALJ further determined that U S WEST must bear the cost to 
remove inactive or underutilized equipment in order to reclaim central office 
space.  The Initial Order held that U S WEST’s historic depreciation practices 
fully compensate it for the costs of removal of inactive equipment and that no 
separate charge may be assessed to the new entrant who requires the removal.  
 U S WEST disagrees with the Order’s assessment that just because the costs of 
inactive equipment removal may be included in rate base depreciation, that U S 
WEST is not entitled to an explicit space reclamation recovery mechanism.  U S 
WEST also takes issue with the way this argument was presented by Staff – on 
brief, with no opportunity for U S WEST to present evidence on this issue or to 
offer rebuttal.  This alone should require rejection of this argument.  
Nevertheless, U S WEST will explain here why the argument should be rejected.
 The Initial Order states that, “USWC is obligated under the Telecommunications 
Act to demonstrate that physical collocation is not practical due to space 
limitations when it requests an exception from its statutory duty to provide 
physical collocation.”  The Order goes on the state that U S WEST must bear the 
cost of conducting an inventory of working, inactive, and underutilized 
equipment and assessing vacant space.  Furthermore, U S WEST is not entitled to 
recover space reclamation costs because, according to the Order, costs of 
equipment removal are already included in depreciation of the equipment to be 
removed, and explicit charging for reclamation through the collocation process 
would constitute double recovery.
 U S WEST agrees that it has an obligation under section 251(c)(6) to 
demonstrate to the state commission that physical collocation is not practical 
due to space limitations.  However, U S WEST strongly disagrees that it must 
bear the costs of space evaluation and reclamation.  
 The Act allows U S WEST to recover all of the costs it incurs in the process 
of interconnecting with CLECs, including the costs of providing physical 
collocation.  Section 251(c)(6) specifically states that the rates, terms, and 
conditions for physical collocation must be just and reasonable.  Failure to 
set rates that allow an incumbent LEC to recover its costs would violate that 
very basic provision of the Act, and requiring U S WEST to provide physical 
collocation without proper rates to allow cost recovery of any sort would not 
be just and reasonable.
 The Eighth Circuit Court of Appeals, in its July 18, 1997 order, stated the 
obvious when it observed that incumbent LECs must receive just compensation for 
providing access to their networks.  The Court also noted that the incumbents 
are required to provide access only to the existing network, not some as yet 
unbuilt superior network.  The Court acknowledges, as did the petitioners in 
that case, that some modifications to the incumbents’ networks might be 
required in order to provide access and interconnection, but the Court held 
that under the Act:
an incumbent LEC will recoup the costs involved in providing interconnection 
and unbundled access from the competing carriers making these requests.  1997 
U.S. App. LEXIS 18183, *70.


 This language encompasses two critical points:  1) that the LEC will recover 
its costs; and 2) that those costs are to be recovered from the interconnecting 
carriers.  This second point is essential, and will be discussed further below 
in connection with the issue of whether or not U S WEST’s historic depreciation 
practices provide just compensation for the costs of space reclamation and 
equipment removal.
 The Court specifically declined to address takings issues raised by the LECs, 
on the basis that state pricing proceedings were not complete and the question 
of whether just compensation was in fact being paid could not yet be answered.  
It is proceedings such as these where just compensation must be ordered to 
avoid an unconstitutional taking, and just compensation in this instance means 
that U S WEST must be allowed to charge the new entrants for the costs they 
cause.  
 Space evaluation and other collocation preparation costs are real costs 
connected with and 
caused by a request for physical collocation.  There is no disallowance for 
collocation preparation costs cited anywhere in the Act, in the in the FCC’s 
interpretation of the Act, or in the Eighth Circuit’s decision.  Plain and 
simple, USWC is entitled to recover these costs and the most economic method of 
recovery is from the cost causer, i.e., the CLECs.
 In accordance with the Act, the FCC’s Order, and this Commission’s own rules 
regarding costs and pricing, U S WEST is, first and foremost, allowed to 
recover all of its interconnection costs, including reclamation.  Those costs 
should be based on a forward-looking, long run incremental cost methodology, 
such as the TELRIC methods advocated during the generic costing and pricing 
proceeding, Docket Nos. UT-960369, et al.  The parties to this proceeding have 
invested literally thousands of hours in that docket, advocating TELRIC costing 
methodologies for pricing interconnection and unbundled elements.  Collocation 
should similarly be costed and priced on a forward-looking basis.  This 
Commission long ago abandoned embedded cost pricing for telecommunications 
companies, and should not adopt that methodology here.
 Booked depreciation costs of the removal of various types of central office 
switching and circuit equipment are totally irrelevant to the consideration of 
explicit cost recovery through interconnection prices.  All of the 
interconnection elements discussed in Docket Nos. UT-960369, et al., have 
corresponding book depreciation costs, but no party filed rates based on such 
costs.  If U S WEST incurs costs reclaiming space by removal of inactive or 
underutilized equipment, it is entitled to cost recovery based on cost 
methodology standards that are consistent with other interconnection rate 
elements.  Rate base and book cost debates are best left for rate cases and 
should have no bearing on pricing decisions for interconnection, or any other 
service elements, for that matter.
 Consistent with the above, U S WEST believes it is entitled to cost recovery 
for consolidating or moving underutilized equipment.  The Act allows for the 
recovery of all interconnection costs.  The costs of consolidating circuits or 
converting them onto new equipment are not currently being recovered anywhere 
else.  The most economic method of cost recovery, and the one that is 
consistent with the Eighth Circuit’s interpretation of the Act, is from the 
cost causer, i.e., the CLECs.  
 Furthermore, even if the depreciation analysis were correct, and it could be 
concluded that U S WEST had already recovered its costs for the removal of 
inactive equipment, that analysis and conclusion could not be extended to the 
costs for consolidation and removal of underutilized equipment.  MFS’s own 
witnesses acknowledged that there would be significant technician time involved 
in that consolidation.  (Tr. at 218-19).  There is no suggestion that the 
depreciation expense associated with that equipment includes any of these extra 
costs caused by the request for consolidation and reclamation.
 Finally, it should be pointed out that if U S WEST is required to remove 
inactive equipment from its central offices, U S WEST will incur additional 
costs to warehouse that equipment off-site.  Moving the circuit equipment, 
which may be re-used in another office, can damage it and create additional 
costs.  As noted above, if Staff had raised the argument of cost recovery 
during the hearing, U S WEST could and would have presented extensive evidence 
of additional costs associated with mandated reclamation.  However, because 
this issue was not raised in testimony, U S WEST had no opportunity to rebut 
it.  Thus, U S WEST specifically requests that the Initial Order be modified 
upon review to allow U S WEST to impose just and reasonable charges upon new 
entrants who request space reclamation.
Reservation of Space – 
 The Administrative Law Judge concluded that U S WEST’s determination of 
whether space is available for physical collocation cannot take into account 
space held or reserved for virtual collocation.  
 It was U S WEST’s original position in this docket that it should be permitted 
to reserve small amounts of space for virtual collocation, which space would 
not necessarily be sufficient to meet all of the existing or expected requests 
for physical collocation.  However, U S WEST is willing to accept the holding 
of the Administrative Law Judge on this issue and will modify its policies and 
procedures accordingly.
Definition of Vacant Space – 
 The Administrative Law Judge defined “vacant space” to include space occupied 
by inactive or underutilized equipment.  The Initial Order states, “[s]pace 
occupied by inactive equipment or underutilized equipment shall be treated as 
vacant space.”  The Initial Order goes on to define underutilized equipment as 
equipment that is susceptible to deactivation by combining its functionality 
with other equipment.
 U S WEST has already committed in its reclamation policy to make space 
currently occupied by inactive or underutilized equipment available for 
physical collocation, subject to recovering the costs of reclamation and 
conditioning.  U S WEST would propose that the Commission’s Final Order utilize 
U S WEST’s reclamation policy for transforming reclaimable space to vacant 
space.  Such an outcome would be consistent with the discussion of the issue of 
cost recovery for reclamation, as already discussed above.
 U S WEST would further seek clarification of the ALJ’s definition of 
underutilized equipment.  As noted above, underutilized equipment is 
susceptible to deactivation by combining its functionality with other 
equipment.  U S WEST believes that such consolidation can only be accomplished 
on equipment that is experiencing declining utilization, not equipment that has 
spare capacity for expected growth.  U S WEST believes that this is what is 
meant by the ALJ’s definition of underutilized, but seeks clarification to 
avoid future misunderstanding in applying this ruling.
Cageless and Shared Collocation Space – 
 The Initial Order decided the issue of cageless collocation, concluding that U 
S WEST should not be required to offer cageless collocation.  The Initial Order 
also decided the issue of shared collocation space, concluding that U S WEST 
cannot prohibit shared collocation arrangements. 
 This determination on cageless collocation was based primarily on the FCC’s 
discussion of that issue, and the FCC’s conclusion that security issues 
precluded the mandatory offering of cageless collocation.  U S WEST agrees that 
such arrangements should not be imposed on an incumbent without its consent.  
However, U S WEST is in fact in the process of developing a cageless physical 
collocation offering, and will make such arrangements available under 
appropriate terms and conditions.
 The Administrative Law Judge also determined that U S WEST must provide shared 
physical collocation space (Ordering paragraphs 4, 5, and 6, at pages 26 and 
27).  U S WEST submits that this issue was not properly raised in this 
proceeding for a decision, was not properly before the ALJ, and therefore 
should not have been decided in this matter.  
 The issue of shared collocation space was not really even a disputed issue in 
this case.  U S WEST has always offered shared collocation to interconnectors 
who have that term in their interconnection agreements.  There was no 
allegation that U S WEST has improperly denied shared collocation, or that U S 
WEST has even denied shared collocation to any carrier who has requested it.  
There was no evidence presented in this hearing that shared collocation would 
make physical collocation practical in offices where space limitations exist.  
Even shared space is only available in 100 square foot increments.  Thus, while 
U S WEST does not object to offering shared collocation arrangements, they 
should not be ordered in this proceeding.
Comprehensive Reports – 
 The Initial Order requires U S WEST to prepare and file comprehensive reports 
on the three central offices at issue, and to provide such reports in any case 
where U S WEST denies physical collocation because of space availability.  The 
reports must contain the nine items listed on page 16 of the Initial Order, 
and, in addition, must contain an inventory of inactive and underutilized 
equipment.  See, Order at ¶ 17, page 28.
 U S WEST does not object to providing floor plans and a report to the 
Commission upon a denial of physical collocation space.  The report and 
inventory is largely encompassed in what U S WEST currently provides with its 
floor plans.  However, there are some additional requirements that U S WEST 
would seek clarification on, or would suggest to the Commission that the 
requirement would not provide useful information.  Thus, the reporting 
requirements should be modified as follows:
 1) The requirement that U S WEST provide an inventory of equipment should be 
clarified to require U S WEST to inventory only its own equipment.  U S WEST 
should not be required to make a determination as to whether another carrier’s 
equipment is inactive or underutilized.  In fact, if such equipment is in 
locked cabinets or cages, U S WEST would be unable to do so.
 2) The reporting requirement in “3.” should not single out administrative 
space for separate reporting on a per square foot basis.  The floor plans 
already identify switching, transmission, and administrative space.  U S WEST 
is concerned that a separation of administrative space may lead to an indexing, 
whereby the Commission seeks to impose a uniform requirement for administrative 
space.  In other words, if one office can manage with 15% of its square footage 
in administrative space, why can’t all of them(?).  U S WEST opposes this 
requirement because the information would be relatively time-consuming to 
produce, it is not currently compiled, and would not produce information that 
would be usable.  Each central office has different needs and serves different 
markets.  Some central offices provide a great deal of private line service, 
which require less administrative support space than switched services.  Thus, 
the amount of administrative space necessary to the efficient functioning of a 
particular central office will depend upon the market served by that office.
 3) The requirements set forth in 8. and 9. should be clarified.  As currently 
stated, U S WEST is not certain what is required.  U S WEST is willing and able 
to provide a general policy statement with regard to when or whether it will 
convert administrative, maintenance, storage or equipment space from one use to 
another.  In general, such a policy statement has already been provided in 
connection with this docket.  If U S WEST would convert or reclaim space for 
its own use, the space would be made available to others for physical 
collocation, subject to appropriate charges for reclamation and conditioning.  
However, as set forth in U S WEST’s initial brief in this matter, 
administrative space is necessary to the efficient operation of the central 
office, and it is generally not subject to conversion or reclamation.
Seattle Main – 
 The Initial Order specifically finds that U S WEST’s use of space on the 8th 
and 14th floors in Seattle Main is unreasonable and discriminatory.  The Order 
requires U S WEST to make one-half of the storage and staging area (area D) on 
the 8th floor available for physical collocation and to make all of the 
administrative, storage, and staging space on the 14th floor available for 
physical collocation.
 U S WEST submits that such a determination was not properly within the scope 
of this proceeding as discussed in the initial section.  Furthermore, the 
decision, even if properly within the scope of the proceeding, is not based on 
the evidence of record.  The only evidence regarding the use of space on these 
floors is that U S WEST needs administrative and storage space in the current 
locations for the effective and efficient operation of the central office (Tr. 
at 249).  The testimony of MFS’s witness does not establish either that the use 
is discriminatory or unreasonable, only that this witness, who is not a central 
office engineer, would consolidate the space and use it differently.  The 
workability of this “solution” is speculative at best, and U S WEST’s evidence 
in this matter establishes that its use of this space is reasonable.
CONCLUSION
 In consideration of the foregoing, U S WEST requests the Commission:
   reverse the Initial Order’s determination that U S WEST may not recover the 
costs of reclamation from CLECs;
   clarify the reporting requirements imposed by the Initial Order;
   clarify the definition of underutilized space;
   not mandate cageless or shared collocation, although U S WEST will provide 
cageless collocation, and will allow carriers to share collocation space; and
   reverse the Initial Order’s determination that U S WEST must make space 
available on the 8th and 14th floors of Seattle Main.
 Respectfully submitted this ____ day of January, 1998.

      U S WEST Communications, Inc.



      By:_______________________________
       Lisa A. Anderl, WSBA No. 13236