September 2, 1998 Robert Wallis Administrative Law Judge 1300 S. Evergreen Drive SW P.O. Box 47250 Olympia, WA 98504-7250 Re: August 26, 1998 Commission Bench Request Dear Administrative Law Judge Wallace: On August 26, 1998 the Commission issued four bench requests seeking information from Sprint. Its responses and requests for clarification are as follows: BENCH REQUEST NO. 3. The cost study presented by Sprint in this case is, or soon will be compliant with this Commission’s guidelines and cost study decisions. Sprint used the Commission authorized depreciation rates and last stipulated cost of money. Pursuant to previous commitments, Sprint will revise its cost studies prior to the hearing to better reflect actual loop lengths by wire center/exchange based on sample loop length studies that have been performed for Sprint’s small, medium, and large exchanges. Because no structure sharing percent was specified in the Guidelines, Sprint used the BCPM default percentages for structure sharing. Because the Commission did not prescribe a specific fill factor for Sprint in the UNE proceeding, Sprint derived its fill factor methodology according to its understanding of the fill factor methodology adopted in the 8th Supplemental Order in UT-960369,960370,960371 for US West and GTE. Sprint’s costs have been reported at the wire center level. (Holmes Direct, pp. 2-3, JAH-2) A reasonable amount of common overhead cost has been included. (Holmes Rebuttal, JAH-7) Deferred taxes and tax rates have been used appropriately. (Dunbar, Rebuttal, p. 15) The supplemental cost studies that will be filed prior to the hearing will be based on consistent lines between runs. Documentation for the model and inputs were filed on June 15 (Holmes Direct, JAH-4). Subsequent explanations were provided in the Holmes Rebuttal Testimony. Respondent/Witness: John Holmes except for subsection 2 and 7, which were addressed by Jim Dunbar BENCH REQUEST NO. 5. The revenue information requested by the Commission has been provided as an attachment to the direct testimony of Nancy Judy filed on behalf of Sprint. It is also contained in Sprint’s responses to the attached data request #4 from TRACER. Respondent/Witness: Nancy Judy BENCH REQUEST NO. 7. In this detailed bench request, the Commission asks for information that Sprint cannot provide in the manner requested by September 3rd . While Sprint is very open to working with the Commission to explain its BCPM model, it is unable to make major changes to the model because of the significant time and expense involved. Sprint estimates that at least one costing expert who already has extensive expertise in developing and modifying BCPM Excel files would be required for three to four months, full-time, to make the sorts of model changes called for by the subparts of BENCH REQUEST NO. 7. Additionally, Stopwatch Maps estimates it would take them three months to make changes for the feeder and sub-feeder portion of the request, at a cost of $150,000. The distribution portion of the request would cost $12,000 plus an additional $2,000 for each subsequent time they process data. Therefore, Sprint’s overall concern and objection to BENCH REQUEST NO. 7 is that it is unreasonable and unduly burdensome to the company. Sprint believes that the record of this proceeding following the evidentiary hearing will satisfy the Commission need for information without requiring Sprint to completely re-write the BCPM. For instance, with respect to each subpart of BENCH REQUEST NO. 7, Sprint has the following major concerns: BENCH REQUEST NO. 7 (a). While this request does not call for model modification, it does require substantial input file modification. The geocode data input called for by this data request is not readily available without significant expense (approximately $100,000 for the State of Washington charged by PNR or another vendor). In trying to respond to this data request, Sprint did consider its engineering and billing records to identify customer locations but billing addresses are inadequate for determining customer’s physical location. Implementation would consist of the following steps: Purchase data from PNR Provide data to Stopwatch Maps, Inc. Stopwatch Maps would re-run preprocessing file Stopwatch Maps would provide resulting ERTS file to Sprint Sprint would re-run studies with new input file Respondent/Witness: Jim Dunbar BENCH REQUEST NO. 7 (b). Sprint filed an ex parte cost study for Montana with the FCC using occupied households. Sprint will provide a copy to the Commission by September 8. Sprint does not support the studies for this proceeding. Respondent/Witness: Jim Dunbar BENCH REQUEST NO. 7 (c). BCPM does not assume square lots except in limited circumstances where lots are assumed to be able to produce a perfect square root. BCPM, therefore, complies with the criteria set forth in the request. Respondent/Witness: Jim Dunbar BENCH REQUEST NO. 7 (d) – (f). All of these data requests would require a substantial rewrite to the BCPM model or to Stopwatch Maps pre-processing of the magnitude described above. Contrary to the assumption in (e), subfeeder is shared in BCPM. The HCPM “solution” suggested by the FCC in its August 8th Notice ignores constraints such as terrain, oceans, rivers, etc. Therefore, Sprint does not support this method as a means of minimizing cost. Respondent/Witness: Jim Dunbar BENCH REQUEST NO. 7 (g). BCPM has been used to group smaller geographic areas within each wire center into two zones or categories as explained in the Direct Testimony of Century Telephone witness, Ted Otis. Sprint estimates it could provide a similar study for all lines based on company-specific data for USF purposes within 1 month. The study would comport with the recommendation of Dr. Ben Johnson on page 16 of his Reply Testimony. It would not comport with the incremental analysis suggested by Dr. Ben Johnson on page 17 of his Reply Testimony. Sprint notes that it has already provided a grouping by CBG run as contained in the exhibits to the Direct Testimony of John Holmes and the Supplemental Testimony of Jim Dunbar. Though Sprint is willing to prepare a two-zone study, Sprint respectfully submits that the request appears to go well beyond the Commission Guidelines established in the May 15, 1998 Notice of Prehearing Conference memo. The Sprint BCPM study has complied with the Commission Guidelines. Even Dr. Johnson does not claim that such a study is essential to meeting the requirements of the legislature to provide USF cost estimates. Respondent/Witness: Nancy Judy Sprint looks forward to discussing this at the prehearing conference on Thursday. Best regards, Nancy L. Judy Enc. c. Simon ffitch, AAG Ron Gayman Rogelio Pena Lisa Anderl Arthur Butler Brooks Harlow/Clyde MacIver Doug Owens Richard Finnigan Robert Snyder Susan Proctor Ben Johnson Susan Rossi Greg Trautman