BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION

WASHINGTON UTILITIES AND  )
TRANSPORTATION COMMISSION )
      )
 Complainant,   )
      )
v.      ) DOCKET NO. UT-950200
      )
U S WEST COMMUNICATIONS, INC. )
      )
 Respondent.   )




U S WEST'S ANSWER TO METRONET'S AND FRONTIER’S COMMENTS RE COMPLIANCE FILINGS 
IN ADVICE NOS. 2911T AND 2913T

 
 U S WEST Communications, Inc. (U S WEST) files this response to the joint 
comments of Metronet Services Corporation (Metronet) and Frontier 
Telemanagement Inc. (Frontier) (joint commenters) regarding U S WEST’s 
compliance filings in Advice Nos. 2911T and 2913T.  The filings, made on 
February 6, 1998, comply with the Commission’s order in this docket to file 
Centrex Plus Network Access Register (NAR) substitute rates so that they are 
“equivalent” to the rates for similar services.  U S WEST filed these rates in 
compliance with the requirements of the 17th Supplemental Order and in 
compliance with the Commission’s discussion and clarification of those 
requirements set forth in the 23rd Supplemental Order denying reconsideration.

 The joint commenters’ entire dispute with the compliance filings turns on the 
issue of whether or not U S WEST was permitted to file a revenue neutral tariff 
as opposed to a net rate reduction.  The joint commenters, because it is in 
their financial interest to do so, ignore those portions of the Commission’s 
orders which permit a revenue neutral filing and focus only on language taken 
out of context to support their argument that they should see a net decrease as 
a result of these filings.  This is incorrect, as will be shown in the 
discussion below.

A. The 17th Supplemental Order, Which Required Rate Equivalence, Does Not 
Prohibit Revenue Neutrality.

 The joint commenters complain that U S WEST’s filing is a rate redesign which 
results in substantial increases for some customers. (Comments at page 2, line 
14.)  However, such a result was specifically contemplated by the Commission, 
and thus is not a reason to reject the filings.  The Commission discussed 
Centrex Plus tariff revisions in the 23rd Supplemental Order in this matter.  
The Commission specifically addressed the issue of whether the Centrex Plus 
tariff revisions might result in rate increases to some customers, stating “[w]
e find that the changes that we directed to Centrex tariffed elements are for 
all practical purposes revenue neutral within the tariff although individual 
customers may find themselves paying more or less for the service depending 
upon their situation.”  U S WEST believes that this statement is dispositive of 
the issue of whether the compliance filing should be revenue neutral to the 
company, and the issue of whether certain customers might see their overall 
bill go up as a result.  In both cases, the answer is that such a result is 
contemplated and authorized.  

 U S WEST’s filing proposes Centrex Plus “unblocked” usage rates (also referred 
to as NAR substitute rates) that result in a price that combined with the 
Network Access Channel (NAC) rate is equivalent to or less than the business 
basic exchange service rate.   The current statewide business basic exchange 
service rate is $26.60.  U S WEST’s proposed rates in Advice No. 2913T result 
in a comparable Centrex Plus “unblocked” network access arrangement cost of 
$26.60 for 1-20 lines, $25.25 for 21-50 lines and $12.07 for 51+ lines. The 
$12.07 rate assumes a distance of one mile from the serving central office.  If 
the customer was 1.5 miles from the central office the rate would be $12.77.  
All customers are currently within 1.5 miles of the central office.  See 
Exhibit 1.  The combination of a Centrex Plus NAC with a Network Access 
Register (NAR) or NAR equivalent results in a service comparable to business 
basic exchange service.  
The rate design options presented by the joint commenters results in a 51+ line 
network access arrangement cost from a low of $7.46 to a high of $9.90.  Their 
Option 1 proposal would reduce U S WEST annual revenues by as much as 
$2,250,840 Option 1 would reduce revenues by $2,250,840, option 2 would reduce 
revenues by $1.9 million and option 3 would reduce revenues by $1.4 million.  
These options are not acceptable particularly in light of the fact that U S 
WEST just completed a rate case that resulted in a settlement that still places 
U S WEST earnings below the currently authorized rate of return. and would 
result in rates 63%-72% lower than those paid by business basic exchange 
customers. This proposal clearly does not result in rates equivalent to similar 
service.

It is correct that some customers will experience a rate increase should U S 
WEST’s tariff Advice No. 2913T be approved.   However, only 7% (10) of the 
customers will experience an increase.  There are currently 136 Centrex Plus 
customers who subscribe to the “unblocked” usage Centrex Plus network access 
arrangement option. 93% (126) of these current customers will experience a rate 
decrease if the rates filed by U S WEST in Advice No. 2913T are approved. The 
same ten customers who will experience a rate increase should U S WEST’s 
proposal be approved received a significant rate reduction when the Centrex 
Plus NAC rates were modified as required in the 23rd Supplemental Order.   

These same ten customers also can choose to purchase the Centrex Plus NAR 
access arrangement in lieu of the “unblocked” usage option and may in fact 
avoid a rate increase without compromising the quality of the service 
received.  U S WEST will work with these customers to help them determine what 
their NAR requirements would be to receive equivalent service. Centrex Plus 
customers who subscribe to the NAR as opposed to the NAR substitute do not 
purchase a NAR for each Centrex Plus station line.  The number of NARs 
purchased is based on the number of simultaneous calls place from a given 
Centrex Plus system during any given hour.  U S WEST can complete a traffic 
study for these ten customers that will enable them to determine their NAR 
requirements should they choose to convert their network access arrangements 
from the NAR substitute.

B. U S WEST’s Filing Will Not Stifle Competition.

 The joint commenters claim that the rate increase to the 51+ NAR substitutes 
falls disproportionately on resellers and thus will have an anti-competitive 
effect.  This allegation is simply untrue. 50% of the resellers will experience 
a rate increase and 50% will experience a rate decrease.   As previously 
discussed the majority of the customers (93%) will experience a rate decrease.  
As such, there is no disparate impact on resellers, nor is there any disparate 
positive impact on U S WEST’s retail customers.
Furthermore, even if the rate increase had a disparate impact on one customer 
group, that would not necessarily make the rate design improper.  The advocacy 
of the joint commenters indicates that they somehow believe that they are 
entitled to special protection as the standard bearers of competition.  This is 
not a correct statement of either the law or the policy of Washington.  The 
Commission has consistently held that carriers must pay the appropriate rates 
for the services they receive, and that the state and the Commission have no 
duty to subsidize or underwrite developing competition.  In the Matter of 
Determining the Proper Classification of U.S. Metrolink Corp., Docket No. 
U-88-2370-J, Second Supplemental Order, May 1, 1989.  If the Commission 
determines that the rate design and rate levels proposed in this compliance 
filing are consistent with the earlier orders in this docket, the effect on 
these two individual businesses cannot stand in the way of the approval of the 
tariffs.

C. The Commission has Specifically Held that U S WEST is Entitled to Revenue 
Neutrality.

 The joint commenters focus only on the 15th and 17th Supplemental Orders, and 
argue that to comply with those orders, U S WEST must file rate reductions 
which are not revenue neutral. However, U S WEST raised this concern with the 
Commission in the post-hearing process, wherein U S WEST sought reconsideration 
and clarification from the Commission on the revenue effect of the Centrex Plus 
tariff revisions.  In addition to the language quoted above, the Commission 
engaged in other discussion of the revenue neutrality issue in the 23rd 
Supplemental Order.  The Commission’s discussion clearly indicates that it did 
not intend a net rate reduction with regard to Centrex Plus and that a revenue 
neutral filing would comply with the Commission’s directive:

We stated in the Sixteenth Supplemental Order that we had insufficient 
information to gauge precisely the revenue effects of each of the decisions, 
but anticipated that adjustments might be required. We also stated in a later 
order that we had anticipated that the Company would begin the restructure of 
its Centrex tariffed rated in a manner to retain revenue levels. . . .   We are 
satisfied that the direct effect of the tariff proposal is revenue neutral. . . 
. The Superior Court did stay those elements of the decision that were 
identified as reducing the Company’s revenues.  We are concerned that the 
tariff might have been subject to the stay or should be seen as within the 
intent of the stay.  However, neither the Company nor any party contended that 
this tariff provision should be seen as subject to the stay or should be 
treated consistently with the Superior Court’s decision (and therefore stayed 
or put in abeyance) as a negative revenue element.  On closer examination, we 
do not believe that this rate is subject to the stay.

Twenty-Third Supplemental Order, page 2.
 All the parties of this case are aware of this Order language and no party has 
objected to it.  Thus, the Commission should reject the criticisms of this 
compliance filing and enter an order approving the tariffs in Advise Nos. 2911T 
and 2913T.
CONCLUSION
 U S WEST requests that the Commission approve U S WEST's Centrex Plus tariff 
revisions as filed.
 Submitted this 20th day of February, 1998.



      By _________________________________
       Lisa A. Anderl WSBA # 13236

Exhibit 1 

RATE COMPARISON


BUSINESS BASIC EXCHANGE RATE    $26.60
CENTREX PLUS NETWORK ACCESS REGISTER  $15.60


CURRENT RATES:

CENTREX PLUS            1-20  21-50  51+ (4 qtr miles)
Network Access Channel (NAC)   $11.00 $ 9.65   $ 5.70 
Unblocked Usage Charge      32.00   30.00        3.50
 Total      $43.00  $39.65     $  9.20


U S WEST PROPOSAL:

CENTREX PLUS            1-20  21-50   51+ (4 qtr miles)
Network Access Channel (NAC)   $11.00 $ 9.65       $ 5.70 
Unblocked Usage Charge          15.60   15.60         6.37
 Total      $26.60  $25.25       $12.07

CENTREX PLUS                      1-20   21-50   51+ (6 qtr miles)
Network Access Channel (NAC)   $11.00  $ 9.65       $ 6.40 
Unblocked Usage Charge      15.60   15.60         6.37
 Total          $26.60  $25.25       $12.77


METRONET/FRONTIER PROPOSAL:

CENTREX PLUS - Option 1          1-20  21-50   51+ (4 qtr miles)
Network Access Channel (NAC)    $11.00  $ 9.65     $5.70 
Unblocked Usage Charge          15.60   15.60         1.76
 Total      $26.60  $25.25        $7.46

CENTREX PLUS - Option 2      1-20   21-50   51+ (4 qtr miles)
Network Access Channel (NAC)   $11.00 $ 9.65     $6.40 
Unblocked Usage Charge          15.60   15.60         2.51
 Total      $26.60  $25.25       $ 8.91

CENTREX PLUS - Option 3      1-20   21-50   51+ (4 qtr miles)
Network Access Channel (NAC)   $11.00 $ 9.65     $6.40 
Unblocked Usage Charge          15.60   15.60         3.50
 Total          $26.60  $25.25        $9.90