Docket UT-961514                                         Page 1 
BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of the Application of    )  
U S WEST COMMUNICATIONS, INC., for an  )   DOCKET UT-961514
Order Granting Authority to Enter      )   
into Services Agreements and Asset     )   ORDER GRANTING
Transfers with                         )   APPLICATION
U S WEST LONG DISTANCE, INC.,          )        
an Affiliated Interest.                )
. . . . . . . . . . . . . . . . . . . .)


  On November 27, 1996, U S WEST Communications, Inc. (USWC), filed an 
application with the Commission under the provisions of Chapter 80.16 RCW for 
an order authorizing it to enter into a Services Agreement and a Master 
Services Agreement with U S WEST Long Distance, Inc. (USWLD).  The application 
was supplemented on August 1,1997, to request approval of an Agree-ment For The 
Provision of Billing and Collection Services For Interexchange Carriers Between 
USWLD and USWC.  On December 12, 1997, the application was supplemented to 
request approval of an asset transfer from USWC to USWLD.  Additional 
amendments were filed on December 22, 1997.  

          U S WEST, Inc., owns 100% of U S WEST Communications Group, Inc., 
which in turn owns 100% of USWC and USWLD.  There-fore USWC and USWLD are 
affiliated interests pursuant to 
RCW 80.16.010.

          USWC requests approval for USWLD to provide management and 
procurement of interLATA toll services for USWC's Official Company Business 
(OCS) under the Services Agreement in the form filed as Exhibit A, as 
subsequently amended, of the application. Such services include Private Line 
Data (DSO, DS1, DS3), 800 Basic and Complex, CallNet 1+, CallNet Corporate 
Calling Card and Client Counseling.  USWLD also acts as an agent of USWC and 
other U S WEST companies for the payment of interLATA toll charges to outside 
third parties.  The OCS activities of USWC have been combined with those of 
other U S WEST companies in an effort to centrally manage those activities and 
gain greater volume dis-counts through aggregated call volumes.  USWLD charges 
USWC the fully distributed costs for the management and procurement services.  
The toll charges from interexchange carriers are being charged to USWC at the 
costs at which the services are procured.

          USWLD plans to offer long distance services to customers inside and 
outside of USWC's 14 state territory.  These services, which are under 
development and are kept separate from the OCS operations described above, will 
not be offered until all required governmental requirements have been 
satisfied. The cost for development of these customer services are not billed 
to USWC.

          The Master Services Agreement, in the form filed as Exhibit B, as 
subsequently amended, of the application, allows USWC to provide basic business 
services to USWLD.  USWLD is billed fully distributed costs or prevailing 
company prices.  
The revenues booked at USWC in 1996 for the services provided to USWLD were 
$1,259,611 or $113,778 on a Washington intrastate basis.

  The Agreement For the Provision of Billing and Collection Services for 
Interchange Carriers Between USWLD and USWC (Attachment B) covers the standard 
arrangements between USWC and all interexchange carriers and the billing and 
collections transactions associated with the calling card.  This agreement is 
only applicable to interstate services, all intrastate billing and collection 
services are provided in accordance with the USWC Intrastate Access Tariffs.  
The standard billing and collections features covering interexchange services 
will not be exercised until USWLD achieves 271 and 272 status.  USWC has 
established prevailing company prices for many of the billing and collection 
services.  These established prices are consistent between the access tariff, 
the proposed contract, and other interexchange carriers’ contracts and the 
proposed USWLD contract.  The prices are the prevailing company prices that all 
carriers would be charged for each of the service components, if the rating 
options requested by the carriers were the same.    

          The asset transfer from USWC to USWLD involves computer assets that 
were used by employees located in Colorado who were transferred to USWLD.  USWC 
journal entries record the transfer at the net book value of $62,222, which was 
higher than the market value of $35,618.   
          
          The Commission neither approves nor disapproves the reasonableness of 
the fees, charges, or accounting allocations involved with the proposed 
arrangements and reserves the right of the Commission to determine the 
reasonableness of those fees, charges, and allocations in any future proceeding 
dealing with USWC’s results of operations for ratemaking purposes.



FINDINGS

  THE COMMISSION FINDS:

  1. U S WEST Communications, Inc., a Colorado corp-oration, is a public 
service company subject to the jurisdiction of this Commission under the 
provisions of chapters 80.12 and 80.16 RCW.

  2. U S WEST Long Distance, Inc., is an affiliated interest of U S WEST 
Communications, Inc., as defined in 
RCW 80.16.010.

  3. As to form, the applications filed herein meet the requirements of 
chapters 80.12 and 80.16 RCW and the rules and regulations adopted pursuant 
thereto.

  4.  It appears, upon investigation, that the proposed arrangements and 
transfers between U S WEST Communications, Inc., and U S WEST Long Distance, 
Inc., are reasonable and consistent with the public interest and should, 
therefore, be approved.


O R D E R 

  THE COMMISSION ORDERS:

  1. Subject to the conditions of this order, U S WEST Communications, Inc., is 
hereby authorized to enter into a 
Services Agreement, a Master Services Agreement and an Agreement 
For the Provision of Billing and Collection Services For Inter-exchange 
Carriers with U S WEST Long Distance, Inc., in the form filed in Exhibits A and 
B, as amended, and Attachment B, respectively, of the application.

  2.   Subject to the conditions of this order, U S WEST Communications, Inc., 
is hereby authorized to transfer computer assets, described in the application 
herein to U S WEST Long Distance, Inc.  

          3. U S WEST Communications, Inc., shall file with the Commission 
details of the arrangements approved herein, as required by WAC 480-146-091, 
Reporting of Affiliated Interest Transactions.


  4. The reasonableness of the fees, charges or accounting allocations involved 
in carrying out the provisions 
of ordering paragraphs no. 1 and 2 of this order are neither approved nor 
disapproved in this proceeding.

  5. Jurisdiction of these proceedings is hereby retained by the Commission for 
the purpose of entering such further orders or of taking any other action it 
may deem necessary and proper in respect to the subjects under con-sideration 
in these proceedings.

  6. This order shall in no way affect the authority of this Commission over 
rates, service, accounts, valuations, estimates or determination of costs, or 
any matters whatsoever that may come before it, nor shall anything herein be 
construed as an acquiescence in any estimate or determination of costs, or any 
valuation of property claimed or asserted.

  DATED at Olympia, Washington, and effective this 13th day of May, 1998.

  WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION



                              PAUL CURL, Acting Secretary