BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
 

In the Matter of Determining Costs  ) DOCKET NO. UT-980311(a)
      )
 for Universal Service    ) AT&T’S RESPONSE TO
        U S WEST’S MOTION TO REMOVE TESTIMONY



 AT&T Communications of the Pacific Northwest, Inc. (“AT&T”), pursuant to the 
established schedule, files its Response to U S WEST Communications’ Motion to 
Remove Testimony to Rulemaking Phase (“U S WEST’S Motion”).  
 U S WEST’s Motion seeks to remove portions of the testimony filed by AT&T’s 
witness Ms. Natalie Baker as well as that of NEXTLINK’s witness, Mr. Rex 
Knowles, to the rulemaking phase of this docket.  U S WEST’s Motion apparently 
was prepared before the Commission’s Fifth Supplemental Order was issued. Ms. 
Baker’s testimony is completely consistent with the Commission’s statements in 
that order and should remain in this phase of the docket.
 U S WEST’s Motion seeks to remove the testimony in Sections I and II of Ms. 
Baker’s testimony.  In Section I, Ms. Baker states that she addresses:
 the basic principles that should govern adoption of a cost model in this 
proceeding.  

The testimony discusses the criteria governing selection of a cost proxy model 
(pp. 4-7), and the rationale for and role of a cost proxy model (pp.7-10).  Ms. 
Baker then discusses (pp. 10-13) the implications of the requirement for a 
“competitively neutral universal service fund” upon the selection of a cost 
methodology:
The Commission is not well advised--as advocated by all of the ILECs--to 
undertake estimating the cost of universal service without regard for either 
coordination with the federal universal service funding mechanism or the other 
cost-based proceedings that comprise the FCC’s three pronged strategy for 
reform.  Responsive Testimony, at  12.    
  
 Ms. Baker, like Dr. Zepp in his Responsive Testimony and Mr. Knowles, contends 
that this Commission should adopt a consistent methodology in estimating the 
cost of universal service and of unbundled network elements.  Indeed, the 
Commission’s Notice of Pre-Hearing Conference in this proceeding states that 
“companies must provide cost estimates that are consistent with past Commission 
decisions on forward-looking cost studies” such as the decisions from the 
Generic Cost Proceeding, Docket Nos. UT-960369 et. al.  Not surprisingly, since 
U S WEST supports one cost model for USF purposes and a myriad of models for 
UNE costing, U S WEST disagrees with AT&T’s position.  While eliminating 
evidence in opposition may be attractive to U S WEST, it does not serve the 
Commission.   Clearly, this testimony concerns the fundamental issue of this 
phase: selection of a cost model and estimation of the size of the fund.
 The testimony (pp. 14-16) then goes on to discuss reconciling the state-wide 
averaged costs for UNEs with the determination of costs in this proceeding.   
This discussion relates to geographic deaveraging, a topic that the Commission 
explicitly stated would be considered in this phase. 
 In section II, Ms. Baker addresses:
  the FCC’s decision to delay the implementation of the new cost-based, 
explicit federal universal service system and its impact on this proceeding.    
  
Ms. Baker summarizes the recent FCC action and points to the FCC’s statement 
that the cost basis for USF support has been re-affirmed: a forward-looking 
cost methodology.  Again, because U S WEST seeks to recover its “actual” cost, 
U S WEST may not wish anyone to emphasize the correct standard, as does Dr. 
Zepp for TRACER.  Finally, Ms. Baker, like Dr. Johnson in his Responsive 
Testimony for Public Counsel, is simply indicating another reason for the 
Commission to proceed cautiously in attempting to estimate costs as well as the 
size of any support fund. 
 Several witnesses have, in their responsive testimony, discussed important 
issues to assist the Commission “to achieve the estimates need[ed] to quantify 
the policy decisions in the rulemaking and to permit the development of a 
complete report to the legislature.”  Fifth Supplemental Order, at 4.  U S WEST 
has singled out the testimony of an AT&T witness.  No reason exists to remove 
Ms. Baker’s testimony while that of other witnesses remains.  For example, the 
ILECs submitted testimony advocating use of so-called “economic” depreciation 
lives and cost of capital.  Ms. Baker’s testimony emphasizes the need for 
consistency with the methodology and decisions made in the Generic Cost 
Docket--where Commission-prescribed cost of capital and depreciation lives were 
adopted as appropriate for use in forward-looking cost studies.  
 The Commission has noted, in the Fifth Supplemental Order, the need to 
consider options and the importance of a complete record in doing so.  AT&T 
submits that Ms. Baker’s testimony will assist the Commission in that 
endeavor.  U S WEST’s Motion should be denied.

Respectfully submitted this 20th day of August, 1998.
 
      AT&T COMMUNICATIONS
      OF THE PACIFIC NORTHWEST, INC.
 
 
 
      _________________________________
      Susan D. Proctor
      Maria Arias-Chapleau
      1875 Lawrence Street, Suite 1575
      Denver, CO  80202
      (303) 298-6164