This is a critical case.  In it the Commission will determine the costs and 
prices of unbundled network elements and the avoided cost discounts for resale 
services.  These prices will, in turn, determine whether sustainable 
competition will emerge in Washington State in a form that can benefit the 
public. It should be remembered that the entire purpose of adopting a public 
policy of encouraging the emergence of competition in the provision of local 
telecommunications services is to provide public benefits in the form of lower 
prices, increased innovation, and enhanced service quality.  If prices are set 
so as to prevent the public from receiving these benefits, the entire 
experiment will have been a failure.
 Obviously the Commission has a difficult and delicate balance to strike in 
this case.  On one hand it must set prices at a level that realistically will 
permit competitors to enter the local market and survive.  At the same time it 
must ensure that the incumbent local exchange carriers whose network elements 
and services are being resold are fairly compensated for the use of their 
networks and services.  In striking this balance, the Commission should be 
mindful of the fact that it will be argued that any price charged to a 
dependent competitor must be imputed into the retail price floor of the 
incumbent.  In other words, an inappropriately high price charged to a 
competitor could well force unnecessary price increases to the incumbent's 
retail customers, which result is directly contrary to the purpose of 
encouraging competition in the first place.
 TRACER submits that the Commission can best strike the necessary balance by 
determining costs on a forward-looking, economic basis in a manner generally 
consistent with TELRIC principles as described by the FCC.  In order to do so, 
TRACER strongly recommends that the Commission select one proxy cost model for 
determining the costs of unbundled network elements, assume control over that 
model and require changes to the algorithm and inputs it determines necessary 
to produce as close a measure of true TELRIC cost as reasonably possible.  
TRACER submits that the model that will best serve that purpose is the Hatfield 
model.  Prices, then, should be set at or very close to the cost estimates 
produced by the model, using Commission prescribed inputs.
 TRACER is vitally interested in all of the issues presented for decision.  
Nevertheless, in the interest of not burdening the record, it will in this 
brief address only a few of the key issues regarding the estimation of costs 
and determination of prices for unbundled loops.  In doing so, we intend not to 
unnecessarily duplicate discussion that will be presented by other parties.
I.  LEGAL PARAMETERS AND ISSUES
A.  Federal Law
 This case arises out of the Telecommunications Act of 1996 Pub. L. No. 
104-104, 110 Stat. 56 (codified in several sections of Title 47, United States 
Code). ("the Act"), which was designed to open telecommunications markets to 
competition by obligating incumbent local exchange carriers ("ILECs") to 
facilitate the entry of competing local exchange companies ("CLECs") into local 
telecommunications markets throughout the country.  Specifically, the Act 
requires an ILEC (1) to permit a requesting new entrant in the ILEC's local 
market to interconnect with the ILEC's existing local network for the purpose 
of exchanging traffic and completing calls between the two networks; (2) to 
provide competing carriers with access to individual elements of the ILEC's own 
network on an unbundled basis; and (3) to sell to competing carriers, at 
wholesale rates, any telecommunications service that the ILEC provides to its 
customers at retail rates so that the competing carrier can resell that 
service. 47 U.S.C.A. § 251(c)(2)-(4)(West Supp. 1997).  The stated purpose of 
the Act is "to promote competition and reduce regulation in order to secure 
lower prices and higher quality services for American telecommunications 
consumers and encourage the rapid deployment of new telecommunications 
technologies." (Emphasis added.) Telecommunications Act of 1996, Pub. L. No. 
104-104, purpose statement, 110 Stat. 56, 56 (1996).
 With respect to unbundled network elements, Section 251(c)(3) of the Act 
provides:
UNBUNDLED ACCESS.-- The duty to provide, to any requesting telecommunications 
carrier for the provision of a telecommunications service, nondiscriminatory 
access to network elements on an unbundled basis at any technically feasible 
point on rates, terms, and conditions that are just, reasonable, and 
nondiscriminatory in accordance with the terms and conditions of the agreement 
and the requirements of this section and section 252.  An incumbent local 
exchange carrier shall provide such unbundled network elements in a manner that 
allows requesting carriers to combine such elements in order to provide such 
telecommunications service.
Section 252 of the Act defines the pricing standard for network elements as 
follows:
PRICING STANDARDS.--INTERCONNECTION AND NETWORK ELEMENT CHARGES.-- 
Determinations by a State commission of the just and reasonable rate for the 
interconnection of facilities and equipment for purposes of subsection (c)(2) 
of section 251, and the just and reasonable rate for network elements for 
purposes of subsection (c)(3) of such section--

(A)  shall be--

(i)  based on the cost (determined without reference to a rate-of-return or 
other rate-based proceeding) of providing the interconnection or network 
element (whichever is applicable).
 With respect to resale, Section 251(c)(4) of the Act directs incumbent LECs
(A)  to offer for resale at wholesale rates any telecommunications service that 
the carrier provides at retail to subscribers who are not telecommunications 
carriers; and (B) not to prohibit, and not to impose unreasonable or 
discriminatory conditions or limitations on the resale of such 
telecommunications service, except that a State commission may, consistent with 
regulations prescribed by the Commission under this section, prohibit a 
reseller that obtains at wholesale rates a telecommunications service that is 
available at retail only to a category of subscribers from offering such 
service to a different category of subscribers.
The Act further directs that "a State commission shall determine wholesale 
rates on the basis of retail rates charged to subscribers for the 
telecommunications service requested, excluding the portion thereof 
attributable to any marketing, billing, collection, and other costs that will 
be avoided by the local exchange carrier." 47 U.S.C. § 252(d)(3).
 On August 8, 1996, the FCC issued its First Report and Order First Report and 
Order, Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996, CC Docket No. 96-98 (Aug. 8, 1996). containing 
findings and rules governing, among other things, the prices that the ILECs 
could charge new entrant competitors for interconnection, unbundled network 
elements, and wholesale services.  Those pricing rules were subsequently stayed 
Iowa Util. Bd. v. FCC, 109 F.3d 418 (8th Cir. 1996)., then overturned by the 
8th Circuit Court of Appeals Iowa Util. Bd. v. FCC,     F.3d   (8th Cir. 1997). 
on the grounds that the FCC had exceeded its jurisdiction in promulgating the 
pricing rules regarding local telephone service. Instead, the court determined 
that subsections 252(c)(2) and 252(d) of the Act "undeniably authorize the 
state commissions to determine the prices an incumbent LEC may charge for 
fulfilling its duties under the Act. Iowa Util. Bd. v. FCC, supra at    .
 In their attack on the FCC's pricing rules, a number of ILECs argued that the 
Act's principal purpose is to promote facilities-based competition.  The 8th 
Circuit rejected that argument, stating:  
after study, we do not believe that the Act's exclusive goal is 
facilities-based competition.  While Congress may have envisioned 
facilities-based competition in local telephone markets to occur down the road, 
Congress clearly included measures in the Act, such as the interconnection, 
unbundled access, and resale provisions, in order to expedite the introduction 
of pervasive competition into the local telecommunications industry.  See H.R. 
Rep. No. 104-204, 1995 WL 442504 at *202-03, 494 (1995)(explaining importance 
of resale provision for the early development of competition and indicating 
that the local competition provisions "create the transition to a more 
competitive marketplace"). Congress recognized that the amount of time and 
capital investment involved in the construction of a complete local 
stand-beside telecommunications network are substantial barriers to entry, and 
thus required incumbent LECs to allow competing carriers to use their networks 
in order to hasten the influence of competitive forces in the local telephone 
business. Iowa Util. Bd. v. FCC,    F.3d   , at    (8th Cir. 1997).
 In its pricing rules the FCC purported to mandate that state commissions 
employ the "total element long-run incremental cost" ("TELRIC") method to 
calculate the costs that in ILEC incurs in making its facilities available to 
competitors. See 47 C.F.R. §§ 51.503, 51.505 (1996).  According to he FCC 
rules, after determining the appropriate TELRIC cost, the state commissions 
were to determine the price based on that TELRIC cost.  While the FCC pricing 
rules requiring the use of the TELRIC methodology are not binding on this 
Commission, given the 8th Circuit's decision, those rules still retain 
persuasive value and reflect a thorough and sound application of economic 
principles to the costing and pricing requirements set forth in the Act.
B.  Washington Law
 The Commission is charged in RCW 80.01.040 with the power and duty to 
"[r]egulate in the public interest, as provided by the public service laws, the 
rates, services, facilities, and practices of all persons engaging within this 
state in the business of supplying any utility service or commodity to the 
public for compensation, and related activities; including . . . 
telecommunications companies . . ."  Washington law requires that all rates, 
contracts, rules and regulations of telecommunications companies for messages, 
conversations, service rendered and equipment and facilities supplied shall be 
"fair, just, reasonable and sufficient. . ." RCW 80.36.080.Unreasonable 
preferences and undue rate discrimination are prohibited. RCW 80.36.170; RCW 
80.36.180.  And, no telecommunications company providing noncompetitive 
services shall, as to the pricing of or access to noncompetitive services, make 
or grant any undue or unreasonable preference or advantage to itself or to any 
other person providing telecommunications, nor subject any telecommunications 
company to any undue or unreasonable prejudice or competitive disadvantage. RCW 
80.36.186.
 Finally, in discharging its regulatory responsibilities, the Commission must 
act to achieve the policy goals enacted by the legislature.  In RCW 80.36.300 
the legislature declared it is the policy of the state to:
 (1)  Preserve affordable universal telecommunications service;
 (2)  Maintain and advance the efficiency and availability of 
telecommunications service;
 (3)  Ensure that customers pay only reasonable charges for telecommunications 
service;
 (4)  Ensure that rates for noncompetitive telecommunications services do not 
subsidize the competitive ventures of regulated telecommunications companies;
 (5)  Promote diversity in the supply of telecommunications services and 
products in telecommunications markets throughout the state; and
 (6)  Permit flexible regulation of competitive telecommunications companies 
and services.
To some extent all of these policy goals are impacted by this proceeding, 
particularly policy goals (1), (2), (3), and (5).
II.  COST METHODOLOGY:  PRINCIPLES
A.  What Should Be The Goal(s) Of The Proceeding?
 In its Order Instituting Investigations in this case, dated November 20, 1996, 
the Commission set as its goal of this phase of the proceeding, the 
determination of an appropriate cost methodology which will be used in a 
subsequent phase to establish rates for interconnection, unbundled network 
elements, transport and termination, and a wholesale discount rate for the 
resale of services by U S West Communications, Inc. (USWC) and GTE Northwest 
Incorporated (GTE).
 Although there will be a strong temptation to avoid selecting a single model 
for determining relevant costs and, instead, use the results of all of the 
models sponsored by the various parties to derive some sort of "averaged" cost 
result, TRACER respectfully submits that would be a mistake.  Instead, TRACER 
strongly urges the Commission to select the Hatfield proxy model to be used for 
determining costs and setting prices.  Like all of the models submitted, the 
Hatfield model is flawed and should be modified both with respect to its 
algorithm and its inputs; nevertheless, it is the best of the models submitted, 
the easiest to change, the most open, and comes closest to producing true 
TELRIC cost estimates.  If the Commission punts on selecting a model, the 
various provider parties will simply be encouraged to continue to exhaust the 
Commission's and others' resources examining the latest iteration of a gamed 
model designed to promote and disguise a particular company's strategic 
objectives. The result will be that the important determination of costs, which 
are the cornerstone for determining whether sustainable competition can 
develop, will be immune from public discussion.
B.  How Will The Cost Models Be Used?
 Whether the Commission decides to adopt the Hatfield model or to use the 
results of multiple models run using the same key input assumptions, the 
results of the model(s) should be used as the basis for setting prices for 
unbundled network elements. As noted previously, TRACER confines its comments 
in this brief to the issue of determining the costs and setting the prices for 
unbundled loops. Assuming the decides to adopt TELRIC principles as described 
by the FCC, TRACER submits that unbundled loop prices should be set at or very 
close to the TELRIC cost estimates for that element. As discussed more fully 
below, given the conservative nature of the scorched node limitation prescribed 
by the FCC's approach to estimating TELRIC, the cost results produced by any 
model purporting to follow that prescription already overstate true TELRIC.
 This Commission has determined in the last general rate case for USWC that 
Total Service Long Run Incremental Cost (TSLRIC), excluding any inclusion of 
shared costs, is the appropriate measure of a cost floor for a service.  
TELRIC, on the other hand, while somewhat related to TSLRIC, is different in an 
important respect.  At least as defined by the FCC, TELRIC includes many costs 
considered shared or common under TSLRIC. Zepp Rebuttal, Ex. 163 at 3.  As 
pointed out by Dr. Zepp, the Hatfield model's estimate of TELRIC includes both 
those costs classified as shared and many that are considered common, because 
the model estimates the direct and indirect costs of a network element, in this 
case loops, and because it includes a 10.4% overhead factor.  As stated by 
Zepp:  
Thus, the TELRIC figures produced by the Hatfield Model include everything that 
would be needed to provide unbundled network elements and, as a result, these 
estimates of TELRIC should be considered to be price ceilings, not price 
floors."  Id. at 4.
 TRACER agrees with Dr. Zepp that prices never should be set above stand-alone 
costs.  Id.  Both Zepp and AT&T witness, Klick, confirm that Hatfield model 
estimates are very close to stand-alone costs.  Id. at 4; Tr. 622-23.  Thus, by 
definition, the TELRIC estimates produced by the Hatfield model are very close 
to the economically appropriate price ceiling.  As discussed by Klick on 
cross-examination, the Hatfield model is conservative in a number of respects 
-- it overstates true TELRIC costs by failing to include the effect of deferred 
taxes Tr. 615-18.; it models spare a considerable amount of spare capacity that 
can be used to serve future growth but does not include any measure of the 
additional growth in the line counts used to derive unit loop costs Tr. 
620-21.; and many of the engineering inputs reflected engineer's judgments that 
did not incorporate lower price quotes the modelers received from qualified 
vendors. Tr. 621.  In addition, as discussed below, the model does not 
accurately capture true economies of scale by virtue of the way it models 
special access DS-1 and DS-3 lines as individual loops on a channel equivalent 
basis.  Given these overestimates of cost, or conservative assumptions, there 
appears to be little justification to set prices much above the TELRIC 
estimates produced by the Hatfield model.
C.  What Criteria Should The Commission Follow In Examining Cost Models?
 The Commission to evaluate cost models based on how closely they produce 
accurate measures of TELRIC, how open they are, their ability to be changed by 
users, and their use of publicly available or verifiable inputs.
D.  TELRIC And Its Definition
 As noted previously, in its August 8, 1996, Order in CC Docket No. 96-98, the 
FCC addressed the issue of proper costing for unbundled network elements under 
the Federal Telecommunications Act of 1996.  At that time it adopted the use of 
TELRIC, which it claimed to be a version of TSLRIC.  While not strictly binding 
on the states, the FCC's decision does reflect the application of sound 
economic principles, and, apparently, all parties to this case agree that 
TELRIC is the appropriate costing standard to be used by the Commission in 
determine network element costs.
 The FCC's decision regarding use of TELRIC sets forth some important 
qualifying terms that bound the appropriate application of TELRIC principles.  
They include the following:
(1) "Adopting a [TELRIC] pricing methodology based on forward-looking, economic 
costs best replicates, to the extent possible, the conditions of a competitive 
market."  ¶ 679.

(2) "[U]nder a TELRIC methodology, incumbent LECs' prices for interconnection 
and unbundled network elements shall recover the forward-looking costs directly 
attributable to the specified element, as well as a reasonable allocation of 
forward-looking common costs." ¶ 682.

(3) "Any function necessary to produce a network element must have an 
associated cost."  ¶ 691.

(4) "Per-unit costs shall be derived from total costs using reasonably accurate 
'fill factors' (estimates of the proportion of a facility that will be 'filled' 
with network usage); that is, the per-unit costs associated with a particular 
element must be derived by dividing the total cost associated with the element 
by a reasonable projection of the actual total usage of the element."  ¶ 682.

(5) "Directly attributable forward-looking costs include the incremental costs 
of facilities and operations that are dedicated to the element . . ., [and 
also] the incremental costs of shared facilities and operations . . . .[These 
costs for local loops] shall include not only the cost of the installed copper 
wire and telephone poles but also the cost of payroll and other back office 
operations related to the line technicians, in addition to other attributable 
costs."  ¶ 682.

(6) "Costs must be attributed on a cost-causative basis. Costs are 
causally-related to the network elements being provided if the costs are 
incurred as a direct result of providing the network elements, or can be 
avoided, in the long run, when the company ceases to provide them."  ¶ 691.

(7) "The term 'long run' . . . refers to a period long enough so that all of a 
firm's costs become variable or avoidable."  ¶ 677.  "This 'long run' approach 
ensures that rates recover . . . fixed investment costs . . . directly 
attributable to providing the element." ¶ 692.

(8) "[Under TELRIC] assume that wire centers will be placed at the incumbent 
LEC's current wire center locations, but that the reconstructed local network 
will employ the most efficient technology for reasonably foreseeable capacity 
requirements."  ¶ 685.  "Costs must be based on the incumbent LEC's existing 
wire center locations and most efficient technology available."  ¶ 690.

(9) "The increment that forms the basis for a TELRIC study shall be the entire 
quantity of the network element provided."  ¶ 690.

(10) "[T]he forward-looking costs of capital (debt and equity) needed to 
support investments required to produce a given element shall be included in 
the forward-looking direct cost of that element."  ¶ 691.

(11) "Retailing costs, such as marketing or consumer billing costs associated 
with retail services, are not attributable to the production of network 
elements that are offered to interconnecting carriers and must not be included 
in the forward-looking direct cost of an element."  ¶ 691.
 These statements provide practical instruction regarding application of the 
theoretical constructs.  While several important issues are not addressed, the 
bounds of the costing environment are clearly delineated.
 There is one aspect of this "scorched node" costing approach that should be 
mentioned.  That is what TCG witness Montgomery refers to as "a very fragile 
assumption in the sense that it doesn't represent what anybody would actually 
do."  In other words, to the extent the scorched node assumption reflects an 
attempt to measure the market value of the incumbents' facilities as limited by 
what it would cost to build a replacement network sufficient to serve the same 
demand, that assumption is conservative and overstates what any provider, a new 
entrant or the incumbent, would actually do.  In fact, it is highly unlikely 
any entrant would actually duplicate the existing wire center locations of the 
incumbent.  To that extent, the scorched node assumption will produce TELRIC 
estimates that exceed true TELRIC costs.  The conservative nature of any cost 
estimate produced by a proxy model that uses the scorched node assumption 
should be taken into account in setting prices for unbundled network elements.
F.  Actual Or Embedded Costs And Their Utility
 The costing framework defined by the FCC is based on the assumption that under 
a competitive environment, and for a long run planning horizon, production 
cannot be influenced by what has gone before; i.e., past investment or 
strategic decisions and their results as shown on the incumbents' books of 
accounts. Admittedly, some aspects of past decisions may continue since these 
frame the best course of future action.  However, the influence of these past 
decisions merely indicate the status of the current environment by 
happenstance.  While the policies of incumbents may be followed by their 
managerial heirs, and entrants alike, they need not be.  In any event, the fate 
of "stranded investment" is of no import for TELRIC determinations.
 In short, the following have no direct relevance to the costing process under 
the FCC's order:  (1) "actual costs" in the sense of historical costs as the 
incumbents use that term, and (2) the comparison of forecast figures against 
costs of service under current conditions to test a model's "validity."  For 
(1), the figures are irrelevant since they do not result from a competitive 
environment or from forecasting/projecting activities.  For (2), if the 
forecasting algorithm is sensical economically, and satisfies model 
constraints, e.g., providing service to all customers thought to be served, 
current figures are simply not of comparative value.
III.  COST MODELS
C. Network Architecture Issues
2.  Loop Lengths And Line Counts
 There is significant disagreement among the parties regarding the appropriate 
measure of line counts to be used in developing loop costs.  The issue of the 
proper treatment of special access DS-1 and DS-3 lines is discussed below in 
section IV(C)(7).  Apart from that, the parties disagree on the proper 
treatment of investment placed to accommodate future growth.
 The Hatfield model designs a network intended to serve only the existing level 
of demand, utilizing objective fill assumptions of 85%.  However, because of 
the modularity of cable sizes, considerable spare capacity is actually 
modelled, which can be used to serve future growth.  While the investment for 
growth happens to be included in the model, there is no inclusion or accounting 
for increased line counts resulting from future growth when unit costs are 
calculated.  In effect, then, the costs of excess capacity is charged to 
current users.  Current users pay too much for their offerings, while future 
users pay too little.  In this sense, the Hatfield model overestimates the 
appropriate measure of TELRIC and should be modified.  This issue is discussed 
by AT&T witness, Klick, at Tr. 620-21.
 The problem is compounded in the USWC, GTE, and BCPM models. They specifically 
include investment designed to accommodate growth, as well as reflect the 
effects of modularity spare based on that additional investment.  This is 
particularly acute in the case of distribution plant, which these modelers 
assume is deployed to serve ultimate demand.  The rationale is that the most 
significant element of distribution costs in a TELRIC environment is placement 
cost; therefore, there are economies to be achieved by placing sufficient cable 
to serve future demand at the outset, thereby avoiding digging up streets, 
sidewalks, driveways, etc. to reinforce plant when the demand materializes. 
However, these modelers do not include any of the future demand in the line 
counts used as the divisor in calculating unit costs. In effect, they charge 
the costs of serving future demand to current customers.  As noted by Klick, 
this is inappropriate.
 If there are significant economies associated with building plant today to 
serve future demand, TRACER agrees that additional investment should be 
included in a properly designed TELRIC study.  However, the costs of this 
excess capacity to serve future demand should not be recovered exclusively from 
current customers; it should be spread proportionately over current and 
reasonably expected future demand.  Failure to do so significantly overstates 
the appropriate measure of TELRIC. Either that investment placed to serve 
future demand should be removed from the ILEC cost model inputs or the line 
counts used in the divisor should be increased.
IV.  OTHER MODEL AND INPUT ISSUES

C.  Investment
1.  Structure Sharing
 The assumption made about the extent to which structure costs will be shared 
among utilities will have a significant impact on the final estimate of loop 
costs, and the parties disagree violently about what level of sharing is 
appropriate in a scorched node environment.
 The GTE model makes minimal or no allowance for the sharing of loop 
structure.  Klick Rebuttal, Ex. 31 at 33.
 The USWC RLCAP model assumes USWC shares the placement costs of buried cable 
on 17% of the time and shares the cost of poles used to provide aerial cable 
are shared 50% of the time.  The model assumes underground conduit is never 
shared with any other party.  Zepp Direct, Ex. 162., Ex. URI-2 at 26.
 The default assumptions in the BCPM model are only slightly different.  They 
reflect 50% sharing for aerial cable and varying degrees of sharing for 
underground and buried cable, depending on density zone, ranging from no 
sharing in the lowest density zone to a maximum where the ILEC bears 85% of the 
costs of feeder structure and 80% of the costs of distribution structure in the 
highest density zone.  Klick Rebuttal, Ex. 31 at 39.
 The Hatfield model varies the percent of sharing by density zone ranging from 
no sharing for underground conduit in the lowest density zone to allocating 75% 
of the structure cost responsibility to others for poles in the highest density 
zone. Spinks Direct, Ex. 104 at 8.  On average, Hatfield assumes 33% sharing 
for underground and buried cable.  The model provides the user with the ability 
to set structure sharing percentages by both type of plant and by density 
zone.  Klick Direct, adopted by Mercer, Ex. 36 at 7.
 In its cross-examination of AT&T witness, Dean Fassett, USWC challenged the 
reasonableness of the Hatfield sharing assumption as applied to the direct plow 
method of installing buried plant. Tr. 324.  Fassett responded that, while it 
is more difficult to share direct plowing, that installation method is "a very 
cheap way of placing facilities."  Id.  He then expanded on that response by stating:  "We've had plowing estimates 
of 50 cents or less per foot, so if you break that down with the sharing where 
we have right now $1.77, I believe, for the lowest density so that it actually 
comes out the same costs of the telephone company [if you assume 33% 
sharing]."  Tr. 325.
 USWC also challenged the Hatfield sharing assumption as it applies to feeder 
cables, citing a recommendation in the AT&T Outside Plant Handbook advising 
against joint trenching of feeder cables with power facilities.  Tr. 325.  
Fassett responded that the referenced recommendation was not being followed by 
USWC and several other RBOCs:
 There's a recommendation in there that states that they would recommend that 
feeder not be placed in joint trenches. However, that practice is not being 
followed by U S WEST, as Mr. Larry Schlupp, who was their 14-state construction 
manager, states in his [deposition], that they've jointly placed buried with 
the power company.  It's very economical to do it that way, and recently 
telephone companies, including U S WEST, have started placing inner duct with 
their cable facilities that they are placing at the time, so the reason that 
the handbook had recommended not placing feeder in a joint structure was the 
fact that you would be limited as far as getting back there.  Now, with the 
placement of inner ducts at the time of the initial placement the reinforcement 
of that feeder cable is not really an issue.
Tr. 326.  While the recommendation in the AT&T handbook cited by USWC warrants 
caution in applying an aggressive sharing assumption for feeder trenching, 
Fassett's response provides ample justification for employing a reasonable 
sharing assumption in that circumstance.  
 TRACER submits that the sharing assumptions presented in the USWC RLCAP, the 
GTE LTM, and the BCPM models are unreasonable in the context of a 
forward-looking, scorched node environment.  The fact that those sharing 
assumptions generally reflect historical sharing experience is irrelevant.  As 
pointed out by AT&T/MCI witness, Nina Cornell, a carrier operating in a 
regulated environment has limited or no incentive to share structure costs 
because it receives a return on all investments in its ratebase. This is in 
direct contrast to a carrier operating in a competitive environment which would 
have a strong incentive to share in order to cut costs.  Tr. 651.  This would 
be particularly true for a carrier facing a large, planned network buildout as 
would be the case in a scorched node environment.
 TRACER agrees with Staff witness, Thomas Spinks, that "forward looking 
economic costs should reflect an amount of sharing that could reasonably 
expected