U S WEST Reply Comments 
Docket No. UT-970325
Petition for Investigation into the Cost of Universal Service and to Reform 
Intrastate Carrier Access Charges
 
I. Introduction
 The Telecommunications Act of 1996 requires universal service funding support 
to be an explicit charge.  The current state high cost fund is based on 
revenues collected through an explicit Universal Service Fund charge element of 
switched access service . In addition, implicit subsidy revenues are collected 
from a variety of other incumbent local exchange companies (ILEC’s) services, 
including switched access service. Because ILEC’s must impute switched access 
charges to their toll rates, ILEC toll services also contain  the same implicit 
subsidy contained within switched access service rates. Numerous other services 
contain more significant sources of implicit subsidy than switched access 
service.  For example, ILEC local exchange services offered at statewide 
averaged rates also contain implicit subsidies, where high cost customers are 
subsidized by low cost customers.  Business basic exchange customers subsidize 
the rates of high cost residence customers, therefore they also contain 
implicit subsidies.  However, while the parties continue to address this 
concern in the numerous comments and presentations that have been made in 
Docket UT-970325, the Commission notices and staff comments continue to focus 
on only the removal of implicit support contained within switched access 
service rates as part of redefining the State universal service high cost fund.
 While U S WEST is not opposed to addressing implicit subsidies on a phased 
basis, U S WEST cannot support elimination of only implicit subsidies contained 
within the rates charged to wholesale customers.  Unless comparable subsidies 
are also eliminated from equivalent ILEC toll services and other services 
providing subsidies, such companies