BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of the Pricing Proceeding for Interconnection, Unbundled Elements, Transport and Termination, and Resale ) ) ) ) ) DOCKET NO. UT-960369 In the Matter of the Pricing Proceeding for Interconnection, Unbundled Elements, Transport and Termination, and Resale for U S WEST COMMUNICATIONS, INC. ) ) ) ) ) DOCKET NO. UT-960370 In the Matter of the Pricing Proceeding for Interconnection, Unbundled Elements, Transport and Termination, and Resale for GTE NORTHWEST INCORPORATED ) ) ) ) ) DOCKET NO. UT-960371 REQUEST OF GTE FOR CLARIFICATION INTRODUCTION GTE Northwest Incorporated (“GTE”) submits requests for clarification of certain aspects of the Commission’s Eighth Supplemental Order (“Order”) in this matter. These questions are in addition to the clarification request concerning GTE’s avoided cost study, which GTE faxed to the Commission on May 4, 1998. As requested in the Commission’s Notice of Opportunity to File Answers, GTE will submit comments on other parties’ clarification requests by May 8, 1998. The Commission’s May 1, 1998 Notice referred to the NEXTLINK/TCG/AT&T and TRACER requests. GTE has subsequently received a copy of U S WEST Communications’ May 1, 1998 Petition for Clarification and Reconsideration. GTE shares many of the concerns raised by these other parties. The requests for clarification that GTE presents in this filing concern some of the Order’s cost adjustments, the Order’s tariffing requirement, and collocation as a Phase II issue. GTE believes that it has identified the major concerns with the Order for which it needs clarification in the near term, but as the Company continues to prepare its Phase II filings it may encounter additional concerns. In such a case, GTE will promptly bring them to the Commission’s attention. GTE also contemplates that Phase II process and substance issues can be raised and discussed at the May 18, 1998 prehearing conference. COST ADJUSTMENT ISSUES On Friday May 1, 1998 GTE obtained the Commission’s documentation of the Order’ s cost study adjustments. See Notice of Availability of Documentation, April 29, 1998. The following concerns remain, on which GTE requests clarification. Four Wire Loop Cost The Order applies a 25% mark-up to the 2-wire loop cost in order to estimate the direct cost of a 4-wire loop, after concurring with Public Counsel’s criticism of GTE’s study; in particular, GTE’s conclusion that the cost of a 4-wire loop is approximately 50% higher than a 2-wire loop (para. 184-195). The Commission apparently agreed with Staff’s assertion that the method by which GTE calculated the 50% factor could not be determined. GTE requests clarification as to whether the Commission examined the Company’s calculations, as displayed on sheets 000159 - 000163 of its cost submission. GTE’s 4-wire cost methodology can be seen on those sheets, and the Company’s cost study personnel are available to the Commission to answer any questions. Briefly, the cost of a loop using a pair gain device is shown on sheet 000163. The 4-wire > 12,000Kft cost is shown at Col. F Row 20 of sheet 000162. The BNF cost is weighted by the percentage of loops occurring in that length class. All copper BNF costs for the 4-wire loop are simply twice the BNF cost of the 2-wire copper loops, which are shown on sheet 000161 (e.g., Col. F Row 8's 2-wire figure times 2 equals the 4-wire figure on sheet 000162 Col. F Row 8). These figures yield an overall factor of 50% for the determination of the cost of a 4-wire loop, based on the cost of a 2-wire loop. Fill Factor GTE requests a clarification of how the Commission determined that use of a 60% fill factor in place of GTE’s 55% factor (para. 183) causes a loop cost reduction of 8.7% (para. 185). GTE’s application of the 60% factor results in a reduction of 5.6%. The impact of the fill factor change should be calculated by applying factors to the BNF costs developed by the LTM portion of GTE’s cost study. Since the LTM was run originally using a 55% factor, if the resulting costs are multiplied by .55 and then divided by .60, the result will be a loop cost at 60% fill. The multiplication by .55 gives the loop cost at 100% fill, and the division by .60 then gives the cost at 60% fill. Aggregating this analysis, which is performed at the BNF Cost level, to the total loop cost level produces a reduction of 5.6%. GTE’s TELRIC template can easily be modified by a formula in the Loop Cost Tab to allow sensitivity runs, which can be linked to the Input tab. GTE can provide the Commission an adjusted template or outline of the required cell formula changes. Competition Impact Adjustment The Order indicates that an adjustment was made for the “impact of competition” (e.g., table following para 270). GTE requests clarification as to the numerical value of that adjustment. Drop Cost Adjustment GTE requests clarification of the drop cost adjustment related to the discussion at paragraphs 111 through 116 of the Order. The Commission appears to believe that GTE’s cost study places only one pair of wires per customer location. If that is, in fact, the basis of the Commission’s adjustment, it should be corrected. GTE’s study actually assumes the placement of 5-pair drops. See sheet 000104 of GTE’s cost submission. The drop investment figure shown there is for a 5-pair drop. Cable Size and Sharing Adjustments GTE requests that the Commission clarify these adjustments, shown in the table following paragraph 270, by providing the numerical values used in the adjustments. Special Access Loop Adjustment The Commission acknowledges a cost understatement in the Hatfield Model due to its method of counting DS-1 and DS-3 loops or circuits (para. 199-204). The Commission adopts the method proposed by U S WEST for correcting this error, but applies it only to U S WEST’s loop costs. As the Order notes, GTE also identified this error in the Hatfield Model, but it did not present a correcting calculation. GTE requests that the Commission clarify whether it will correct this acknowledged error in Hatfield’s estimate of GTE’s loop costs using the adopted U S WEST methodology. Such a correction is easily performed using readily available information. See Attachment A to this Request. TARIFF ISSUES GTE has several procedural and substantive concerns with the Order’s summary direction to GTE and U S WEST to file tariffs with regard to commencing the pricing phase (“Phase II”) of this case. Background This case is a follow-on to both the Commission’s “Interconnection cases” See page 6 and footnote 7 of the Order. and specific arbitrations under the Telecommunications Act of 1996 (“the Act”) involving GTE and U S WEST. As stated at the beginning of this case: The Commission intends to adopt a cost methodology and to establish for each of the two ILECs [i.e., GTE and U S WEST], prices or price ranges based upon that methodology and the record in its case. It is expected that those prices or price ranges will be applied in future arbitrations, and that parties will reform their contracts to adopt the Commission-approved prices. It is also anticipated that the determinations made in these proceedings will apply to any relevant tariffs required to be filed pursuant to Commission Orders in the consolidated interconnection proceedings, Docket No. UT-941564, et al., and the USWC rate case proceeding, Docket No. UT-950200. Order Instituting Investigations, etc., Docket Nos. UT-960369, UT-960370, UT-960371 (Nov. 21, 1996), p. 3. As to the arbitrations, that statement of the purpose and scope of this case was consistent with the Commission’s Order on Sprint’s Petition to Intervene and to Establish Generic Pricing Proceedings (Docket Nos. UT-960307, et al.; Oct. 23, 1996), in which it declared its intention that only interim rates be set in the arbitrations and “permanent” rates be set thereafter in this more deliberate “generic” case. As to the Interconnection cases, which preceded the Act and arbitrations under it, the Commission there ordered the tariffing by GTE and U S WEST only of a simple 2-wire unbundled loop, interim number portability and local interconnection on a bill and keep basis. The companies’ compliance tariff filings received varied treatment by the Commission. GTE’s local interconnection tariff was allowed to go into effect. Its tariff containing the unbundled loop and interim number portability was suspended, although the interim number portability offering was allowed to go into effect subject to refund. See, e.g., the Fifteenth and Seventeenth Supplemental Orders in the Interconnection Cases. In the Order, the Commission does not discuss a Phase II tariffing requirement in any detail, but orders simply that “U S WEST and GTE must file tariffs to implement the Phase II pricing for the network elements for which we establish costs in this Order” (para. 539). In the Order, the Commission establishes costs for the following network elements: 2-wire loop, 4-wire loop, switch port and usage (para. 498). The Commission also establishes costs for the non-network element offering of interim number portability, sets some “nonrecurring” costs or charges, and directs the refiling of GTE’s avoided cost (i.e., resale discount) and wholesale nonrecurring cost studies. Para. 498, 531, 532, 533. Modifying Interconnection Case Tariffs GTE requests the Commission to clarify whether GTE must -- by the May 18, 1998 deadline An extension to the Order’s deadline was made in the Commission’s Notice of Rescheduled Prehearing Conference (April 24, 1998). -- formally file (i.e., by advice letter) new sheets specifically for the Company’s existing tariffs which were established in compliance with the Commission’s previous orders in the Interconnection Cases, or whether the Company is merely to use a tariff format to present its Phase II pricing proposals for such offerings (i.e., 2-wire loop, interim number portability). New Tariff Offerings Insofar as the Order appears to require the filing of tariffs for network elements that were not required in the Interconnection Case but which were the subject of arbitrations under the Act (i.e., 4-wire loop, switch port and usage), GTE requests the following clarifications: (1) Whether the ordered tariff(s) are to be formally filed in the usual sense, e.g., pursuant to an advice letter, or whether the companies are simply to use a tariff format for presenting their Phase II pricing proposals for the subject network elements; (2) Whether only proposed prices, as opposed to terms and conditions, must be included in the tariff(s); (3) If terms and conditions are to be included, whether there are any limitations or requirements as to the terms and conditions that the companies may include The terms and conditions contained in the Interconnection Cases’ compliance tariffs are not necessarily appropriate to these other network elements.; (4) If terms and conditions are to be included, whether they will be subject to suspension and investigation in this case (Phase II or otherwise) or in any other proceeding; (5) The basis for requiring tariffing at this time of offerings not referenced in the Order Instituting Investigations in this case. COLLOCATION GTE’s arbitrations under the Act resolved collocation pricing issues by using GTE’s federal collocation tariff. E.g., In the Matter of the Petition for Arbitration of an Interconnection Agreement Between AT&T Communications of the Pacific Northwest, Inc. and GTE Northwest Incorporated, Docket No. UT-960307, Arbitrator’s Report and Decision (Dec. 11, 1996), p. 32. GTE does not have a collocation tariff in Washington. The Order states that GTE is to submit testimony in Phase II on the extent to which the collocation cost studies submitted by GTE in Phase I comply with FCC decisions on GTE’s federal collocation tariffs (para. 417, 515), and it orders GTE to modify and refile its collocation studies (para. 534). The Order also states that TCG/Nextlink’s concern about some collocation preparation work should be addressed as a Phase II pricing issue (para. 419). GTE requests the Commission to clarify the extent to which, if any, it intends to reset GTE’s arbitrated collocation rates in Phase II. May 6, 1998