BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of Determining Costs for
 Universal Service	)
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	)	DOCKET NO.  UT-980311(a)
		
		
		U S WEST’S RESPONSE TO MOTION TO COMPEL MULTI-LINE COST STUDIES

 U S WEST Communications, Inc. (“U S WEST”) submits its response to the Motion 
by Public Counsel to compel U S WEST and others to file cost studies that 
depict the cost to construct a network that serves only multiple line 
customers.  The motion should be denied.
 Public Counsel’s motion seeks that which cannot be done reasonably and bases 
the request on an incorrect argument about how costs are to be determined.  
Under ESSB 6622 Section 1(8), telecommunications providers are to give 
information the Commission may reasonably require in connection with this 
proceeding.  The Notice of Prehearing Conference, which contains the guideline 
on which Public Counsel’s motion relies, does not impose an unqualified duty on 
parties to supply information as described in the guidelines.  At page 2, the 
Notice provides: “Any party . . . must submit evidence consistent with the 
guidelines in this notice to the extent it has or can reasonably obtain that 
consistent evidence.”  [emphasis in original.]  The information Public Counsel 
seeks is not information which U S WEST either has or can reasonably obtain.  
The Prehearing Conference Order at page 5 reiterates that the duty to supply 
information prescribed by the guidelines is not absolute: “As the Notice 
states, parties must make a reasonable, good faith effort to provide 
information at the level of detail that is requested in the notice.”  There is 
no basis to conclude that U S WEST or other model proponents have disregarded 
any guideline.  The process of determining in good faith whether and to what 
extent the several types of information described in the guidelines was 
available has consumed time.  U S WEST’s analysis indicates that this 
particular guideline cannot reasonably be complied with.
 According to the attached declaration of Curt Huttsell of Indetec 
International, one of the developers of the BCPM, what Public Counsel seeks 
cannot be created in any meaningful way.  Information does not exist that would 
allow the determination of the length, and hence the cost, of loops to serve 
the multi-line customers exclusively.  The locations of exclusively multi-line 
customers are not kept or identified separately from those of single line 
customers. Arbitrary assumptions on such locations would have to be made, in 
order for the calculation to even be completed.  The arbitrary assumptions 
would simply produce an arbitrary result. U S WEST should not be compelled to 
create information for Public Counsel, based on arbitrary assumptions.  That is 
neither discovery nor evidence.  
 Once Public Counsel has made its own arbitrary assumptions on the locations of 
multi-line customers, the information Public Counsel seeks is as available to 
Public Counsel as it is to U S WEST.  U S WEST has provided Public Counsel a 
copy of the BCPM 3.1 on disk.  The model is also available to be run on the 
World Wide Web (Address: http://www.bcpm2.com).  The inputs for the numbers of 
lines in each grid are user adjustable.  If Public Counsel wants to make the 
runs, Public Counsel has the information and can insert its own assumptions on 
multi-line customer locations into the BCPM.  
 For several reasons, the exercise of running the models to calculate the cost 
of a network that serves only multi-line customers, will not produce a “stand 
alone” cost of a single line only network when subtracted from the cost of a 
network that serves single and multi-line customers.  The reasons include the 
sub-additivity in the costs of providing telecommunications service, the fact 
that neither the BCPM nor the HAI can specify multi-line only customer 
locations, and the fact that U S WEST does not produce only the two products, 
single line and multi-line service.
 Sub-additivity means that computing the cost of single line service by 
subtracting the “stand alone” cost of a multi-line only network from the cost 
of a single and multi-line network will understate the cost of the single line 
network.  This is because economies of scope that are reflected in the single 
and multi-line network are lost in the multi-line only network.  Therefore, the 
calculation described above results in subtracting too many dollars from the 
single line and multi-line network, thus understating the cost of supporting 
single line service. The same sub-additivity means that the original U S WEST 
view in the prefiled testimony, that the cost of a multi-line only network 
could be estimated by subtracting the “stand alone” cost of a single line 
network from the cost of a single line and multi-line network, is equally 
incorrect.  
 The Public Counsel position also fails to recognize that both BCPM and HAI 
models treat common overheads in such a way that the subtraction process Public 
Counsel advocates will yield an incorrect result.  This is because U S WEST and 
other LECs are multi-product firms, and subtracting the cost of one service, 
multi-line exchange service, from the composite of basic services, will not 
produce a reasonable estimate of the cost of single line service.  The common 
overheads of other services will not have been treated correctly, resulting in 
an erroneously low estimate of the cost of single line service.
 Public Counsel’s motion is also wrong in the reason it gives for wanting this 
information.  Public Counsel claims that it is “critical” to the determination 
of the necessary amount of universal service support to have the cost of 
serving customers in high-cost areas “measured on an incremental basis.”  That 
is not what ESSB 6622 says.  The statute says, in Section 1(2)(a), that the 
Commission is to “Estimate the cost of supporting all lines located in 
high-cost locations and the cost of supporting one primary telecommunications 
line for each residential or business customer located in high-cost 
locations.”  The Legislature did not use the adjective “incremental” in 
describing the cost measurement for primary lines.  The Legislature used the 
phrase “the cost of supporting one primary telecommunications line for each 
residential or business customer.”  This is a “stand alone” cost, not an 
incremental cost.  It may benefit Public Counsel to claim that the measure of 
universal service support is the incremental cost of single lines, once a 
“stand alone” multi-line hypothetical network is assumed, because that is 
likely to be a very small number.  However, it is disingenuous to suggest that 
measuring universal service support this way would allow removal of more than a 
slight amount of implicit subsidy from the existing rate structure.  It is 
unreasonable to measure the universal service need by such an artificial 
device, since no one suggests that there ever would be such a “stand alone” 
network to serve only multi-line customers.
 Public Counsel’s request that the sponsors of the models be directed to modify 
them to produce the information Public Counsel seeks cannot be granted.  Not 
all of the model sponsors are even parties to this proceeding.  For example, 
BellSouth is a BCPM sponsor which is not a party to this docket and which does 
not provide service in Washington.  No single BCPM sponsor can unilaterally 
modify the model.  However, as discussed above, Public Counsel or any other 
party can adjust various assumptions and inputs and produce a model run.
Conclusion
 For the reasons stated above, the motion to compel U S WEST to produce a model 
run that portrays the cost of serving only multi-line customers should be 
denied.
 Respectfully submitted this 1st day of July, 1998.
      U S WEST COMMUNICATIONS, INC.

      ________________________________
      Lisa A. Anderl, WSBA No. 13236
      Senior Attorney

      LAW OFFICES OF DOUGLAS N. OWENS



      ________________________________
      Douglas N. Owens, WSBA No. 641
      Of Attorneys for
      U S WEST Communications