BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION




WASHINGTON UTILITIES AND 
TRANSPORTATION COMMISSION, DOCKET NO. UT-970010
   
  Complainant,           JOINT MOTION TO DISMISS OF
       AT&T, ELI, MCI, METRONET,
 v.  NEXTLINK, TCG, AND SPRINT
         
U S WEST COMMUNICATIONS, INC.,   

   Respondent.   



I.  INTRODUCTION
  Pursuant to the Prehearing Conference Memorandum dated July 8, 1997, AT&T of 
the Pacific Northwest, Inc. ("AT&T"), Electric Lightwave, Inc. ("ELI"), MCI 
Telecommunications, Corp./MCImetro Access Transmission Corp. ("MCI"), Metronet 
Services, Inc., ("Metronet"), Nextlink Washington L.L.C. ("Nextlink"), Sprint 
Communications Company L.P. ("Sprint") and TCG Seattle ("TCG") (collectively 
"Joint Parties") file this motion urging the Commission to dismiss U S WEST 
Communications, Inc.'s ("U S WEST") Interconnection Cost Adjustment Mechanism 
("ICAM") filing as contrary to law.
  The ICAM must be rejected as a matter of law for at least five reasons.  
First, the Telecommunications Act of 1996 (the "Act") defines the categories of 
costs which U S WEST may recover from competitive local exchange carriers 
("CLECs") and designates the negotiation and arbitration process for the 
determination of how that cost recovery will be carried out.  Permitting U S 
WEST to recover, through its ICAM, costs which Congress intended to be 
addressed in negotiations and arbitrations, and which this Commission 
determined would be resolved in the consolidated cost docket, UT-960369, would 
be contrary to the Act.  Second, U S WEST's ICAM does not produce rates which 
are just, reasonable, and based on cost, as required by the Act, because it 
does not define the costs U S WEST seeks to recover or the revenues U S WEST 
will receive.  Third, the ICAM is discriminatory, in violation of the Act, 
because it places cost burdens upon CLECs, but not upon U S WEST or other 
carriers, for services and facilities used by all.  Fourth, the ICAM creates 
unlawful barriers to entry. Finally, implementing the ICAM would require the 
Commission to engage in retroactive ratemaking, in violation of longstanding 
federal and state law.   
II.  U S WEST'S ICAM FILING
  Through the ICAM, U S WEST seeks to recover what it refers to as its costs 
for "unplanned network upgrades, the acceleration of planned upgrades in order 
to comply with state or federal mandates, extensions and/or modifications of 
network facilities or operational support systems, including data bases and 
electronic interfaces and other mandated charges."  Advice No. 2821T, 
Attachment B ("Attachment B") at ¶ 8.  U S WEST refers to these costs as 
"network rearrangements mandated by the Telecommunications Act of 1996", and 
seeks to recover these costs from the CLECs, contending that they are not 
covered by any funding mechanism contemplated by the FCC or this Commission.  
Id. at ¶¶ 8-10.
  To make this recovery, U S WEST proposes three options. The first, which U S 
WEST states is its preferred outcome, requires the Commission to place the 
burden of cost recovery for its "network rearrangements" completely upon 
CLECs.  U S WEST does not, however, set forth specifically how that cost 
recovery will be implemented.  Rather, U S WEST proposes that the Commission 
base the charges to be imposed upon CLECs on one of a number of suggested 
methods, such as dividing those charges amongst the number of CLECs that have 
applied for certification or amongst CLECs which have entered into negotiation 
with U S WEST. Attachment B at ¶ 12.  U S WEST fails to address whether those 
CLECs actually impose the network rearrangement costs U S WEST seeks to recover 
through its ICAM, as opposed to simply requesting certification or 
negotiation.  U S WEST's second cost recovery proposal is a monthly surcharge 
assessed on access lines, together with a monthly surcharge assessed on CLECs 
purchasing unbundled local switching ports or unbundled local loops.  
Attachment B at ¶ 12.  U S WEST's third proposed option is simply "any 
combination" of its first two proposals.  Id.
  Finally, U S WEST proposes an ongoing true-up mechanism through which it will 
update its charges based on the costs it actually incurs throughout the 
three-year ICAM period.  At the end of the three years, U S WEST will conduct a 
final true-up "to recover all costs expended during the three-year period, but 
not fully recovered at the time of the true-up."  Attachment B at ¶ 13.
III.  U S WEST'S ICAM MUST BE DISMISSED AS A MATTER OF LAW
A. The Act Defines the Categories of Costs Which U S WEST May Recover From 
CLECs And the Arbitrations and Consolidated Cost Proceeding Are the Forums in 
Which Those Costs Must Be Addressed.

  The Act defines the categories of costs which U S WEST may recover from 
CLECs.  See, 47 U.S.C. §§ 251, 252.  Moreover, under the Act, cost recovery 
from CLECs must be resolved through arbitrated and negotiated agreements.  Id.  
Finally, this Commission concluded in the arbitrations that those costs would 
be addressed in the consolidated cost docket.  See, Order Instituting 
Investigation charges, Docket No. UT-960369 (Nov. 21, 1996).
  Each category of costs for which U S WEST seeks recovery in its ICAM is 
addressed in the Act.  The first category of U S WEST's proposed ICAM charges 
relates to the costs of providing wholesale service to resellers.  The Act 
requires U S WEST to offer for resale its retail services at its retail rates 
minus its avoided costs.  47 U.S.C. § 252(d)(3).  In the arbitrations conducted 
between U S WEST and CLECs pursuant to Section 252 of the Act, the Commission 
established the avoided cost discount for resale.  Future arbitrations and the 
consolidated cost proceeding will do the same.  Therefore, the Commission has, 
pursuant to the Act, already addressed U S WEST's recovery of this category of 
costs.
  The second category of the proposed ICAM charge relates to CLECs' access to 
unbundled network elements.  The Act provides that prices for unbundled network 
elements shall be based on cost and may include a reasonable profit.  47 U.S.C. 
§ 252(d)(1).  The Commission applied this principle in establishing interim 
prices for unbundled network elements in the arbitrations, concluding that 
permanent network element prices would be established in the consolidated cost 
docket.  Thus, the costs U S WEST might incur in providing unbundled access are 
already being addressed in another proceeding.
  The final category of U S WEST's proposed ICAM charge relates to the cost of 
interconnection incurred when CLECs exchange traffic between their customers 
and U S WEST's customers.  Again, the Commission addressed this issue in the 
arbitrations and is also doing so in the existing cost docket.  
  The Act definds the categories of charges that U S WEST may impose upon CLECs 
and the process through which that cost recovery may be implemented.  U S WEST 
must not be permitted to impose charges upon CLECs and consumers for the costs 
U S WEST believes it may incur in providing interconnection, services for 
resale or unbundled network elements, while those very charges are being 
established in the arbitrations and the cost docket.  The Act expressly 
contemplates that these charges be set in the negotiations and arbitrations, 
and the Commission determined that resolution of the issue would be made in the 
consolidated cost proceeding.  U S WEST's request to address those charges now, 
is thus contrary to federal and state law and must be rejected. The Act also 
sets forth the process through which U S WEST may appeal the arbitration 
decisions if U S WEST believes they do not enable it to recover the costs to 
which it is entitled. 47 U.S.C. § 252(e).  See, e.g., GTE Northwest, Inc. v. 
Nelson, No. 96-1991, (W. Dist. Wash. Dec. 20, 1996).  
B. U S WEST's ICAM Does Not Produce Rates Which Are Just, Reasonable and Based 
on Cost Because It Fails To Define the Costs U S WEST Seeks to Recover or the 
Revenues U S WEST Will Receive.

  The Act requires U S WEST to provide access and interconnection at rates 
which are just, reasonable and based on cost.  47 U.S.C. §§ 251(c)(2)(D), 
251(c)(3), 252(d)(1)(A).  U S WEST's ICAM filing provides no real evidence of 
the costs on which its rates are based and fails to define the revenues it will 
produce.  Consequently, it cannot possibly be concluded that the ICAM rates are 
just, reasonable and based on cost.    
 1. The ICAM Rests On Undefined, Unsubstantiated Costs.
  In its ICAM filing, U S WEST provides no evidence that the rates it seeks to 
impose upon CLECs are based on cost.  In fact, U S WEST readily admits that it 
does not know either the nature or amount of the costs it seeks to recover.  
Instead, U S WEST supports its request by stating:
 "U S WEST fully expects to identify and include other interconnection costs as 
the requirements for network rearrangements become more clear.  It reserves the 
right to add additional cost categories to ICAM in the quarterly filings."
Attachment B at ¶ 15.  U S WEST concludes, moreover, that the Commission should 
not consider the categories of costs U S WEST includes in its current 
definition of network rearrangements as exclusive.  Rather, "[t]he Commission 
should allow the cost recovery mechanism to have sufficient flexibility to 
capture [additional cost categories]."  Attachment B at ¶ 11 n.1.
  Indeed, because it has not yet even determined what specific costs it seeks 
to recover through the ICAM, U S WEST is forced to recognize that the ICAM may 
result in double recovery of some costs:
"[I]f other sources provide funding, in whole or in part, for any 
interconnection services or network rearrangements subject to this tariff, U S 
WEST will credit them against the total due hereunder."
Attachment B at ¶ 14.  U S WEST fails, however, to explain how, when, or by 
whom the existence of "other sources," will be determined, what mechanism will 
be used to sort out how much of which services are paid for by "other sources," 
to whose accounts previously recovered amounts will be credited or how those 
questions will be resolved.
  Moreover, U S WEST claims that its request is based on quantifiable 
expectations about costs associated with future requests for interconnection.  
Yet, its filing does not even identify parties who have requested 
interconnection or what services or access such parties might request.  
  Thus, U S WEST completely fails to provide any true evidence of the costs on 
which the ICAM rates are based, or demonstrate that those rates which are just 
and reasonable, as required by the Act.
 2. ICAM Revenues Are Not Defined.

  U S WEST also makes no effort in its filing to prove that the revenues it 
seeks through its ICAM are reasonable.  U S WEST's ICAM proposes three 
alternative cost recovery mechanisms.  Under Option A, the proposed monthly 
charges to be assessed CLECs are divided into three categories:  resale ($8,824 
per month), unbundling ($34,848 per month) and interconnection ($143,939 per 
month).  Attachment C, Option A.  U S WEST does not, however, provide any 
further explanation of how the monthly charges will be assessed, nor what 
revenues U S WEST would collect.  For example, it does not state whether a CLEC 
that is a reseller and a purchaser of unbundled network elements that 
interconnects with U S WEST will pay all three of the monthly charges, or 
whether the monthly charge will vary based on the number of lines a CLEC 
resells, the number of unbundled network elements it purchases or the number of 
its points of interconnection.
  Option B suffers from a similar lack of specificity. That option would 
require Washington consumers to pay a monthly surcharge on access lines, and 
CLECs to pay a monthly surcharge on each unbundled loop or switch port 
purchased from U S WEST. U S WEST does not attempt to estimate the revenues it 
will receive from this proposal.  Indeed, such an estimate would be illogical 
and essentially useless because there is no way to determine now the number of 
access lines customers will order, nor the number of unbundled loops and switch 
ports CLECs might order from U S WEST. Consequently, it is simply impossible to 
determine how much revenue will flow to U S WEST under any of its cost recovery 
options. As mentioned above, U S WEST's third proposed option, Option C, is any 
combination of Option A and B.  Thus, Option C suffers from the same 
indefiniteness as A and B. 
  Thus, neither the revenue or cost portion of U S WEST's filing can be 
considered just, reasonable and based on cost because the filing contains no 
evidence of the costs on which its rates are based and fails to define the 
revenues that will flow from whatever cost recovery might be implemented.  
Consequently, U S WEST's ICAM must be dismissed.
C. U S WEST's ICAM Is Inherently Discriminatory.
  The Act requires that rates for interconnection unbundled network elements 
and resale be nondiscriminatory.  47 U.S.C. §§ 251(c)(2)-(4), 252 (d)(1).  The 
ICAM does not comply with this requirement because it places cost burdens upon 
CLECs, but not upon U S WEST or other carriers, for services and facilities 
used by all.  
  The ICAM places recovery of the cost of network rearrangements upon CLECs 
because those costs "must be incurred by U S WEST to provide industry-wide 
opportunity, but they do not directly benefit U S WEST's end user customers."  
Attachment B at ¶ 12.  However, U S WEST does not identify the extent to which 
its costs of interconnecting with CLECs exceed costs U S WEST would incur in 
the absence of CLECs, nor does U S WEST acknowledge that U S WEST and its 
customers share the benefits of "network rearrangements" because U S WEST 
customers will originate calls to and receive calls from customers of CLECs.
  Moreover, the costs U S WEST seeks to recover in the ICAM are for 
improvements on its side of the network.  Any number of things may create the 
need for those improvements, including traffic growth that would occur without 
the CLECs, required improvements in service quality, or simply the network 
maintenance and upgrades which become essential over time.  In fact, CLECs' 
construction of additional networks relieves, to some extent, U S WEST's burden 
to carry the cost of all traffic growth. However, the ICAM does not take this 
uncertainty of cost causation or potential CLEC related cost-saving factors 
into consideration. Rather, it seeks to shift costs U S WEST incurs to the 
CLECs.  In this manner, the ICAM discriminates against CLECs to the advantage 
of U S WEST.
  The ICAM also discriminates against CLECs by placing the burden of U S WEST's 
"network rearrangements" upon CLECs but not upon other types of carriers, such 
as independent local exchange companies, who also interconnect with and impose 
costs upon U S WEST.  Finally, the ICAM discriminates against CLECs who enter 
the market relatively early in favor of those who enter later.  By the end of 
ICAM's three-year term, earlier entrants will have made more monthly payments, 
and therefore paid a larger percentage of the capital costs and expenses, than 
later entrants.  Although the tariff proposes a "true-up" mechanism to 
compensate U S WEST for any unrecovered costs, it provides no such mechanism 
for spreading costs equitably among all carriers.
  Rates which discriminate against early entrants to the market in favor of 
latter entrants, or in favor of one type of carrier over another, are not 
nondiscriminatory.  In re Implementation of the Local Competition Provisions in 
the Telecommunications Act of 1996, First Report and Order, CC Docket No. 
96-98, FCC 96-325, released August 8, 1996, ¶ 861.   It would thus be contrary 
to the Act to permit U S WEST to supplant the cost-based, nondiscriminatory 
cost allocation procedures, established pursuant to federal and state law, with 
the ICAM.
D. U S WEST's ICAM Creates Unlawful Barriers to Entry.
  Section 253 of the Act provides that "[n]o state or local statute or 
regulation, or other state or local legal requirement, may prohibit or have the 
effect of prohibiting the ability of any entity to provide any interstate or 
intrastate telecommunications service."  Yet, U S WEST's proposal that CLECs 
pay yet-to-be defined charges to cover yet-to-be identified costs does just 
that.
  The ICAM creates uncertainty for CLECs.  As discussed above, U S WEST's 
filing does not actually delineate what specific charges it might impose 
through the ICAM.  Consequently, CLECs contemplating their market entry are 
wholly unable to predict what their costs will be if they choose to 
interconnect with U S WEST, resell U S WEST's service or purchase U S WEST's 
unbundled network elements.  Inability to predict costs with reasonable 
certainty will prevent CLECs from establishing a viable business plan, and 
ultimately bar some CLECs from entering the market at all. Moreover, the ICAM 
filing puts all new entrants on notice that U S WEST will seek to impose 
charges upon them beyond those the Commission has approved or contemplated in 
the consolidated cost docket.  Thus, not only do the costs encompassed by U S 
WEST's ICAM remain undefined and uncertain, the fact of the filing itself 
floods the industry with uncertainty as no one can be sure what type of filing 
and what types of charges U S WEST may seek to impose in the future.
  These barriers to entry, raised by U S WEST's ICAM filing, are contrary to 
law and, if approved, will stifle the development of competition in Washington.
E. U S WEST's Proposal to "True Up" Charges Constitutes Retroactive Ratemaking 
Prohibited by Law.

  The rule against retroactive ratemaking prohibits both the use of past 
profits to decrease future rates and the use of past losses to justify future 
rate increases.  Board of Commissioners v. New York Telephone Co., 271 U.S. 23, 
31, 46 S. Ct. 363, 366, 70 L. Ed. 808 (1926).  See also, GTE v. Wash. Util. & 
Trans. Comm'n, 104 Wn. 2d 460, 470 (1985) (recognizing the prohibition against 
retroactive ratemaking).  Pursuant to this prohibition, a utility may not make 
a claim for costs incurred prior to the date a tariff, such as the ICAM, is 
filed or for costs discovered after a cost recovery mechanism is approved:
The rule against retroactive ratemaking serves two basic functions.  Initially, 
it protects the public by ensuring that present consumers will not be required 
to pay for past deficits of the company in their future payments. . . . The 
rule also prevents the company from employing future rates as a means of 
ensuring the investments of its stockholders.  Citation omitted.  If a 
utility's income were guaranteed, the company would lose all incentive to 
operate in an efficient, cost-effective manner, thereby leading to higher 
operating costs and eventual rate increases.

OP-6076 at 2-3, citing Narragansett Elec. Co. v. Burke, 415 A2d 177, 178-79 (RI 
1980).

  As the Public Utility Commission of Oregon recently concluded, the ICAM 
violates the rule against retroactive ratemaking because it denies customers 
their right to know the rates they are paying for service and their right to be 
free from surprise surcharges after the service has been provided.  See Order 
No. 97-180, Docket No. UT-135 (Pub. Util. Comm'n of Or., May 22, 1997).  The 
ICAM's true-up process requires the Commission to determine whether refunds or 
additional surcharges are necessary based on past performance.  Retroactive 
ratemaking is involved because the actual imposition of the rate occurs at the 
time of the true-up.  Collections from the customers prior to the true up are 
held in a balancing account, escrowing revenues in anticipation of a future 
claim.  Since the rate is charged after the costs are incurred, the rule 
against retroactive ratemaking is implicated. Id. 
  While U S WEST argues that the Commission's authority to approve the ICAM 
rests with Washington statutes, U S WEST fails to provide grounds for 
overcoming the rule against retroactive ratemaking.  U S WEST cites RCW 
80.36.140 and RCW 80.36.160 as authority for the Commission's approval of the 
ICAM.  However, these provisions refer only to the Commission's power to 
determine what facilities a public utility may require to perform mandated 
services and to set appropriate charges for use of those facilities.  
Administrative agencies are creatures of the legislature and may exercise only 
those powers conferred on them. See Human Rights Comm'n v. Cheney Sch. Dist. 
30, 97 Wn.2d 118, 125 (1982).  The statutory provisions U S WEST cites clearly 
do not grant authority to the Commission to engage in retroactive ratemaking.  
IV.  CONCLUSION
  U S WEST's ICAM filing, contained in Advice No. 2821T, seeks to employ a 
procedure that is not authorized by, and is antithetical to, federal and state 
law.  Therefore, the Joint Parties urge the Commission to reject that filing.  
 Dated this 31st day of July, 1997.
Respectfully submitted,

Davis Wright Tremaine LLP
By  Patricia A. Raskin



AT&T COMMUNICATIONS OF THE   
PACIFIC NORTHWEST, INC.
Susan D. Proctor
1875 Lawrence Street, Suite 1575
Denver, Colorado 80202
Telephone:  (303) 298-6164
Fax:  (303) 298-6301

ELECTRIC LIGHTWAVE, INC.
Penny Bewick
8100 NE Parkway Drive, Suite 150
Vancouver, Washington 98662
Telephone:  (360) 816-3381
Fax:  (360) 816-3821


MCI TELECOMMUNICATIONS CORP./MCIMETRO 
ACCESS TRANSMISSION CORP.
David Hackett
Brooks Harlow
Miller, Nash, Wiener, Hager,
  & Carlson, L.L.P.
4400 Two Union Square
601 Union Street
Seattle, Washington 98101
Telephone:  (206) 622-8484
Fax:  (206) 622-7485

METRONET SERVICES, INC.
David Hackett
Brooks Harlow
Miller, Nash, Wiener, Hager,
  & Carlson, L.L.P.
4400 Two Union Square
601 Union Street
Seattle, Washington 98101
Telephone:  (206) 622-8484
Fax:  (206) 622-7485

NEXTLINK WASHINGTON L.L.C.
Deborah Jaques
Director - Regulatory 
1003 Montello Avenue
Hood River, Oregon 97031
Telephone:  (541) 386-6398
Fax:  (541) 386-6397


TELEPORT COMMUNICATIONS GROUP, INC.
Deborah S. Waldbaum
201 North Civic Drive, Suite 210
Walnut Creek, California 94596
Telephone:  (510) 949-0646
Fax:  (510) 949-0658

SPRINT COMMUNICATIONS COMPANY, L.P.
Carol L. Matchett
1850 Gateway Drive, 7th Floor
San Mateo, California 94404-2467
Telephone:  (415) 513-2712
Fax:  (415) 513-2737