BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION

In the Matter of the Universal Service Issues Proceeding,
Docket No. UT-980311(a)

TRACER'S RESPONSE TO STAFF'S MOTION TO REMOVE TESTIMONY TO THE RULEMAKING 
PROCEEDING
 TRACER submits this Response to Commission Staff's Motion to Remove Portions 
of Testimony to the Rulemaking Phase of This Docket (UT=980311(r)).
 Staff, in its motion, seeks to remove certain portions of the pre-filed direct 
testimony of TRACER witness Dr. Thomas M. Zepp to the rulemaking phase of this 
proceeding.  TRACER opposes that motion.
 Specifically, Staff seeks to remove testimony from Dr. Zepp relating to the 
following:
(1)  TRACER's recommendation that the level of USF subsidies be based on costs 
calculated at the wire center level;
(2)  the revenue benchmarks recommended by Dr. Zepp and used by him to 
determine which areas are high-cost and to estimate the size of the funds 
necessary (a) to support only primary lines and (b) to support all lines in 
high cost areas;
(3)  TRACER's recommendation as to which lines should be supported, how 
"primary" lines should be defined, and other lines priced;
(4)  TRACER's preliminary estimate of the size of the funds; (5)  
identification of the wire centers that would receive support;
(6)  an explanation of why national revenue benchmarks were used as default 
benchmarks in the analyses; and
(7)  a clarification regarding Guideline #8.

 The stated rationale for seeking to remove this testimony pre-filed by Dr. 
Zepp and Ms. Judy is that (1) it falls outside the stated purpose of the 
adjudicative phase of the proceeding, and (2) "will result in needless 
duplication of effort and resources. . ."  TRACER believes that the Staff is 
mistaken about the scope of the adjudicative phase of this proceeding.  TRACER 
also respectfully submits that the presentation of the subject testimony in the 
adjudicative phase is essential if important issues are to be properly explored 
and the Commission is to be able to make an informed decision about the 
appropriate structure of a state USF mechanism to recommend to the legislature 
and to properly answer the legislature's questions about USF fund size.
 The Prehearing Order at page 1 states specifically that the Commission "is 
using this adjudicative phase to determine cost-related matters . . ."  At page 
8 of the Order the Commission also states that the purpose of this phase is 
both to "produce an estimate of the size of the fund required" and "to produce 
specific universal service support to which qualifying companies will be 
eligible, at least initially."  The Order also states in pertinent part at page 
8:  "[T]he purposes of the proceeding is the adjudication . . . and the actual 
determination of, the reasonable and accurate costs of providing the 
telecommunications services identified in ESSB 6622 (L. 1998 c. 337) to 
customers in "high cost" locations, alternatively for all switched residence 
and business lines in such locations and for a single primary line for such 
users."  (Emphasis added.)
 Thus, cost-related issues such as the identification of high-cost areas, the 
sizing of the fund and the estimates of the support levels, and the other 
issues discussed by Dr. Zepp are well within the proper scope of this phase of 
the proceeding. 
 The Staff is mistaken when it argues that issues such as "the geographic level 
the Commission should choose from among the available cost estimates, whether a 
benchmark should be cost or revenue based, or the number of residential or 
business lines that should be supported" should not be considered in this 
phase. The identification of which areas are "high cost" and what the cost of 
providing services to customers in those areas, whether for one line or for all 
lines, requires use of a benchmark and a determination of the size of the 
geographic level on which the cost estimates are to be made.  Similarly, the 
issue of what lines should be supported discussed in Dr. Zepp's testimony 
relates directly to the issue of how "primary" lines should be defined for 
purposes of estimating the cost of supporting those lines.
 Contrary to the Staff's contention, there will be no needless duplication of 
resources and effort if the subject portions of Dr. Zepp's testimony is 
considered in the adjudicative phase of this proceeding.  This is true even if 
there may be some repetition of the same points made by TRACER in the 
rulemaking phase.  Indeed, this type of testimony from all parties is essential 
if the Commission is to answer the questions the legislature has directed it to 
answer.  If anything, the Staff and other parties should be required to 
supplement their testimony to address the same issues in this phase, if they 
have not done so already (i.e., the recommended geographic level for cost 
determinations, the identification of which areas are "high-cost", the size of 
the required funds if primary lines are supported or if all lines are 
supported, etc.).
 TRACER also opposes the Staff's motion to the extent that it seeks to remove a 
portion of the pre-filed testimony of Sprint witness, Nancy Judy (page 3, line 
16 beginning with "Additionally . . ." through page 4, line 10).  This 
testimony contains Sprint's explanation of why it believes the Commission's 
guidelines 2(b) and (c) requiring cost studies be determined separately for a 
network that serves only single-line subscribers and a network that serves only 
multiline subscribers is contrary to other Commission guidelines, to the Joint 
Board's recommendation, to the FCC's universal service order.  It also explains 
why the cost studies submitted by Sprint in response to the guidelines should 
not be relied upon for any purpose.  This testimony goes to the very heart of 
the cost issues and the evidence being examined in the adjudicative phase.
 In sum, the Staff's motion should be denied.
 Respectfully submitted this 22nd day of July, 1998.
       ATER WYNNE LLP

                              
       Arthur A. Butler, WSBA #04678
       Attorneys for TRACER