BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of Determining Costs )
) Docket No. UT-980311(a)
for Universal Service )
) NEXTLINK RESPONSE TO USWC
) MOTION TO REMOVE TESTIMONY
) 


 NEXTLINK Washington, Inc. ("NEXTLINK") provides the following response to the 
Motion of U S WEST Communications, Inc. ("U S WEST"), to remove portions of 
NEXTLINK's prefiled testimony from the adjudicative phase of this docket to the 
rulemaking phase ("U S WEST Motion").  NEXTLINK opposes the U S WEST Motion and 
recommends that it be denied and that the Commission clarify in both the 
adjudicative and rulemaking phases of this docket that the issues to be 
addressed include the effect of geographically averaged unbundled network 
element rates on universal service funding.
DISCUSSION
 The ostensible purpose of the adjudicative phase of this docket is to estimate 
the costs to fund universal service support.  The entire prefiled Response 
Testimony of Rex Knowles on behalf of NEXTLINK ("NEXTLINK Testimony") addresses 
that issue, contrary to U S WEST's characterization.  More specifically, the 
challenged portions of that testimony explain that by deciding not to deaverage 
unbundled network element rates, the Commission perpetuates implicit subsidies 
that, among other effects, will result in an overstated universal service fund 
estimate.  The Commission has already recognized that the effect of geographic 
deaveraging on cost estimates is an appropriate issue for consideration in the 
adjudicative phase of this docket.  Fifth Supp. Supp. Order at 4.  This 
decision effectively refutes U S WEST's claim that "[n]one of this testimony 
would properly be considered on the issues in this phase of the docket." 
 Nor can U S WEST legitimately assert that NEXTLINK is seeking to challenge in 
this docket the Commission's Eighth Supplemental Order in Docket Nos. 
UT-960369, et al. ("Costing Order").  Indeed, had U S WEST bothered to read 
paragraph 274 of the Costing Order more carefully, U S WEST would have 
discovered that the Commission stated that while declining to geographically 
deaverage unbundled loop prices "at this time" in that proceeding, the 
Commission agreed with "parties who argue that it is more appropriate to 
consider this issue in the context of universal service reform, deaveraged 
retail prices, and the extent of competitive activity in Washington State."  
The Commission, therefore, expressly provided that the issue of geographic 
deaveraging should be considered in the context of "universal service reform," 
which the Commission currently is considering only in this docket. U S WEST's 
suggestion that the NEXTLINK Testimony is an improper collateral challenge to 
the Commission's Costing Order, therefore, is unwarranted.
 NEXTLINK agrees that geographic averaging of unbundled network element costs 
and prices raises policy issues that should be considered in the rulemaking 
phase of this docket, but the portions of the NEXTLINK Testimony addressing 
that issue also raise cost quantification issues.  As the Commission explained 
in the context of other geographic deaveraging issues, "we may need to define 
and develop numeric values for alternative choices on these issues in order to 
get results from which the policy decisions can be quantified in the report to 
the legislature and, as needed, in the rule."  Fifth Supp. Order at 4. That 
statement applies with equal force to the NEXTLINK Testimony's discussion of 
geographic deaveraging of unbundled network element costs and prices.
CONCLUSION
 The Commission should deny the U S WEST Motion and should address the extent 
to which geographic averaging of unbundled element costs affects the cost 
estimates developed in the adjudicative phase of this docket.  Whether or not 
the Commission grants that motion, moreover, the Commission should clarify the 
scope of the issues in the rulemaking phase to include consideration of the 
effect of geographically averaged loop and other unbundled network element 
costs and rates on universal service funding.
 RESPECTFULLY SUBMITTED this _____ day of August, 1998.

      DAVIS WRIGHT TREMAINE LLP
      Attorneys for NEXTLINK Washington, Inc.



      By  
       Gregory J. Kopta
       WSBA No. 20519