BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION ) In the Matter of the Pricing Proceeding for ) DOCKET NO. UT-960369 Interconnection, Unbundled Elements ) Transport and Termination, and Resale ) In the Matter of the Pricing Proceeding for ) DOCKET NO. UT-960370 Interconnection, Unbundled Elements ) Transport and Termination, and Resale ) for US WEST Communications, Inc. ) In the Matter of the Pricing Proceeding for ) DOCKET NO. UT-960371 Interconnection, Unbundled Elements ) Transport and Termination, and Resale ) for GTE Northwest Incorporated ) PHASE II Reply Testimony Of Michael Hydock MCI TELECOMMUNICATIONS CORPORATION August 20, 1998 TABLE OF CONTENTS ISSUE IV. TRANSITION COSTS 3 ISSUE V. ELEMENT COSTS – MARKUPS OVER COST 17 RESPONSE TO U S WEST 17 ISSUE V. ELEMENT COSTS – MARKUPS OVER COST 25 RESPONSE TO GTE 25 STRANDED COST ISSUES 32 ISSUE XI. TRANSPORT AND TERMINATION 37 ISSUE XII. NONRECURRING COST – SPOT FRAME 43 WUTC Docket Nos. UT-960369 Reply Testimony of Michael Hydock August 20, 1998 Page 1 Q. PLEASE STATE YOUR NAME, BUSINESS ADDRESS, AND EMPLOYMENT. A. My name is Michael Hydock. I am presently an Executive Staff Member in MCI’ s Western Region office of Law and Public Policy. My business address is 707 17th Street, Suite 4200, Denver, CO. 80202. Q. PLEASE STATE YOU BACKGROUND AND QUALIFICATIONS. A. Academically, I received a Bachelor of Arts degree, with distinction, in Economics from Rutgers College in 1975. From 1975 to 1978 I was a Georgetown Fellow in the Graduate School at Georgetown University. While there I received a Masters of Arts degree in Economics in 1977 and completed my coursework and comprehensive exams towards the doctorate degree. In 1981, after briefly working as an economic consultant and as an employee of the United States Department of Commerce, Bureau of Economic Analysis, I joined AT&T in their Finance Department. During my eight years at AT&T I performed such duties as managing the development of market forecasting models, developing demand inputs for access and transport cost models, providing financial and accounting analysis support for AT&T’s state regulatory department, and serving as the staff financial manager for AT&T’s regional network organization. In 1990 I accepted a position in MCI’s Federal Regulatory Department where I provided economic and business analysis on regulatory issues being considered at the Federal Communications Commission (FCC). In that position I developed MCI’s regulatory policy on a number of federal issues, including access charges, price cap regulation, and universal service issues. I reviewed Local Exchange Company (LEC) and other parties’ filings at the FCC and wrote direct and rebuttal submissions on MCI’s behalf. During this period I also worked directly for MCImetro, MCI’s local service initiative group. I provided MCImetro with economic, financial, and regulatory guidance during their start-up phase. Since 1995 I have been working with the Western Region Law and Public Policy organization. During this time I have developed public policy for MCI with respect to its interest in entering local exchange marketplaces in the territories of U S WEST and Pacific Bell. I have been involved in local competition rulemakings, MCImetro certification proceedings, Section 252 negotiations and arbitration proceedings, and follow-up generic costing proceedings in a number of states. I have offered testimony in various regulatory proceedings in Oregon, Colorado, Arizona, Utah, Iowa, Minnesota, and Nebraska, and Montana. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. The purpose of my testimony is to address the issues of transition costs, common cost development, transport/termination policy, and certain aspects of U S WEST’s proposed nonrecurring charges. Specifically, I address the testimony of U S WEST witnesses Reynolds and Buhler, and GTE witnesses Lee, Doane, and Norris. ISSUE IV. TRANSITION COSTS Q. WHAT IS YOUR UNDERSTANDING OF THE ITEMS U S WEST IS SEEKING COST RECOVERY FOR IN THIS PORTION OF THIS WUTC DOCKET? A. U S WEST is seeking recovery for the costs it is incurring to give itself the ability to accept orders and provision the resale services and unbundled elements it is under obligation to provide pursuant to the Telecommunications Act of 1996. U S WEST envisions deploying an interface between its internal systems and the back-office functions of the CLECs, as depicted on page 12 of the Direct Testimony of Dean Buhler, and further described on page 12-14 of his testimony. Specifically, U S WEST is requesting cost recovery for its start-up costs associated with both its initial operational support systems (OSS) gateway, characterized by U S WEST as its “human to computer” interface, and its longer-run solution, the “computer-to-computer” interface. U S WEST is also asking for recovery of its ongoing maintenance costs for their OSS gateways. Q. DOES THE TELECOM ACT AND FCC ORDER OFFER ANY GUIDANCE ON THE RECOVERY OF COSTS FOR OSS GATEWAYS? A. Yes, the principles of forward looking technology and TELRIC pricing play a major role. From a policy perspective, MCI believes that only gateways designed with forward looking technologies are eligible for cost recovery consideration. Cost recovery for manual-based systems that do not reflect the efficiencies of modern computer-to-computer electronic interfaces should not be permitted. Additionally, TELRIC pricing suggests that only incremental costs should be recovered in the rates. Rework of existing systems or recovery of costs already included in existing rates must be prevented. Finally, only the relevant costs of constructing a forward looking, efficient gateway should be permitted. A careful audit of U S WEST’s costs would be required to ensure its compliance in this area. Based on these principles, MCI would suggest the Commission not allow U S WEST cost recovery for any resources expended developing or maintaining the Interconnection Mediated Access System (IMA). IMA, their “human-to-computer” gateway is not a forward looking system but rather a manually driven system that requires double entry of orders on the part of CLECs, and is not in compliance with industry standards. Moreover, MCI and other parties never wanted this product, have refused to use the product, and have requested U S WEST to instead spend its resources developing an Electronic Data Interchange (EDI) system. The WUTC should only allow U S WEST to recover the TELRIC a forward looking system. The cost recovery should encompass all rate payers, since that entire class will benefit from the resulting level of competition. This is more fully discussed below. Q. PLEASE DEFINE THE DIFFERENCE BETWEEN A GATEWAY AND INTERNAL LEGACY SYSTEMS. A. Under MCI’s terminology a gateway is the vehicle for communicating between the internal legacy systems of U S WEST and the internal computer systems of MCI. The legacy systems of U S WEST are its existing set of systems that contain pre-ordering, ordering, provisioning, and maintenance/troubleshooting information. The internal computer systems of MCI include billing and other information for the local customers we serve. In this docket, U S WEST should only be allowed to recover its forward looking and efficient costs of constructing a industry compliant gateway. This system allows the CLEC to access the OSS of U S WEST. Cost recovery should not be allowed for U S WEST’s changes to its existing legacy systems. Both U S WEST and CLECs should shoulder their own burden of building or modifying systems to facilitate the opening of local markets to competition. For example, MCI will need to build software systems that will allow it to bill and track and service its local customers. It will incur its own costs for that. U S WEST, likewise, will probably need to clean up its databases, establish new fields in records, and otherwise modify its systems to provide unbundled network elements and resold services. Both parties take on that work as part of the new regime established by the Telecommunications Act. What is permitted under cost recovery is the cost of providing access to that information on U S WEST’s OSS. The method of allowing access is the gateway and specifically a forward-looking gateway the uses efficient technologies and allows for non-discriminatory access to U S WEST’s information. Cost recovery should be limited to those aspects of U S WEST’s OSS development. Q. CAN CLECs ORDER RESALE AND UNBUNDLED ELEMENTS WITHOUT THE USE OF ANY PROPOSED INTERFACE SYSTEM? A. No, there must be some manner in which CLECs can interface with the LEC legacy systems in order to receive from the LEC and provide to the LEC the necessary information to facilitate sales and provision services of these resold services and unbundled elements. U S WEST controls all the information about its monopoly customer base, and the availability of its network deployment. Without access to the OSS of U S WEST, CLEC sales and service representatives will not be able to determine what services and functionality are available for resale at given locations, whether UNEs are available for particular customers, how quickly a service or UNE can be provisioned for a customer, or when a service or UNE is down and how long it will take for maintenance and service to attend to the problem. Without knowing this information, CLECs will be precluded from offering comparable service to what U S WEST can offer its own customers. Q. IS IT YOUR OPINION THAT THE GATEWAY TO THE OSS SYSTEMS OF U S WEST IS A MONOPOLY? A. Yes, because the systems are accessing required information that only US WEST has, and because the interfaces will be designed, owned, and operated by the same incumbent. Consequently, for public policy reasons, these interfaces, in terms of their design, construction, and cost recovery, should be closely reviewed. Q. PLEASE EXPLAIN WHAT YOU MEAN BY THIS. A. Certainly. Because the development and the operation of the system will be totally under the incumbent’s control, the WUTC must carefully evaluate the plans of U S WEST with regards to its gateways. This Commission must pay careful attention to the level of expenditures that U S WEST claims is necessary to deploy these systems, as well as the ongoing maintenance that will be claimed for support. It is clear that U S WEST will have every incentive to overestimate the costs and export this overestimate of expense to its new business rivals through charges that will be inordinately excessive. Since U S WEST is proposing to recover its start-up and maintenance costs under a per transaction fee assessed only on CLECs, this will create a cost burden that U S WEST does not face, only the CLECs. Moreover, U S WEST is attempting to recover costs for deploying IMA, a system that has not been accepted by MCI and other parties as a means for providing parity-level access to the U S WEST OSS system information. At best it can be categorized as an emergency patchwork provisioning system that cannot handle the required level of information for full fledged electronic-based ordering of resale, unbundled network elements, and maintenance and servicing of those services. Q. WHAT ARE MCI’S OBJECTIONS TO THE U S WEST PROPOSAL? A. MCI finds several aspects of the U S WEST proposal to be problematic. In the first instance, U S WEST is attempting to recover costs associated with an interim interface that is not complete in coverage and requires too much manual intervention. Based on its shortfalls, MCI petitioned the Colorado Public Utility Commission to extend the deadline established for MCImetro to providing residential resale service in the U S WEST territory in Colorado, and this extension has been granted. U S WEST’s initial OSS gateway is an interface that MCI has not supported and has been found by other commissions, such as Minnesota, to be unsuitable as an access mechanism to U S WEST’s OSS. Despite this, IMA has been forced upon new entrants by U S WEST as a quick fix to its responsibilities to offer and provision resold services and unbundled elements. Secondly, the U S WEST proposal provides no controls over the amount of money expended to build and operate either interim interfaces, or the permanent “computer -to – computer” interface. Under the U S WEST proposal, MCI and other CLECs would be required to underwrite possibly large expenditures that U S WEST claims were used to provide for the interface. U S WEST could expend funds on internal systems improvements, under the guise of developing gateway functionality for CLECs. Under that scenario, U S WEST could charge CLECs the transaction fee for cost recovery associated with improving its own OSS systems. In essence, U S WEST is proposing a cost recovery mechanism that will be virtually impossible to police. In order to improve upon this weakness, U S WEST must provide that independent auditors will verify the expenses claimed under any recovery mechanism allowed by this Commission. WHAT HAVE OTHER STATES SAID ABOUT U S WEST’S PROPOSED INTERFACE TO ITS OSS? Most recently, U S WEST and the Colorado Public Utilities Commission entered into a “Stipulation and Settlement Agreement” on July 14, 1998 (under Colorado Public Utilities Commission Docket No. 97C-432T). In that agreement, U S WEST has agreed to expand the capabilities of its OSS interfaces to include certain key functionalities. It has agreed to provide enhancements to its interfaces by September 30, 1998 and February 28, 1999. Most importantly, U S WEST agrees that it will not file an application for interlata long distance under Section 271(b)(1) of the Telecommunications Act until these enhancements are provided to its OSS systems. WHAT CAN BE INFERRED FROM THIS AGREEMENT? A. It is apparent that U S WEST’s current OSS interfaces do not include the level of functionality that is required for CLECs to have the opportunity to enter the local exchange marketplace using UNEs from U S WEST. Since U S WEST does not have its OSS functioning at a level that would allow it to satisfy Telecom Act requirements, it should be precluded from recovering the costs associated with the program development at this time. Carriers and other beneficiaries should not be required to contribute to U S WEST’s cost recovery until such time as the OSS interface is shown to be complete, and ready for production level volumes. By withholding cost recovery for true TELRIC type expenditures for the development of OSS gateways, the WUTC will provide a carrot to persuade U S WEST to complete these gateways in a timely manner. Q. WHY DOES MCI OPPOSE THE U S WEST TRANSACTION CHARGE? A. Essentially, MCI opposes the charge because it is being assessed to allow recovery of the development and maintenance costs of a system that does not function well enough to provide the support for equal quality in the ordering and provisioning of resold services and UNEs. In other words, CLECs will be paying transaction fees for inferior access to OSS. U S WEST’s long-run solution to provide real-time, non-discriminatory access to its OSS is not yet operational at the level that would support completing the requirements necessary under the Section 271 checklist. Q. IS THIS RELATED TO THE CHARACTERISTICS OF PARITY AND NON-DISCRIMINATION THAT FORM ONE OF THE UNDERLYING THREADS OF THE TELECOM ACT? A. Yes. The Telecom Act requires that the resold services and access to UNEs be provided on a basis that insures new entrants will receive services and be able to obtain UNEs on the same level of quality as the ILEC’s own retail arm. This would mean that a new competitor would have the same level of access to information as the internal sales agents of U S WEST. In other words, in whatever manner and timeliness U S WEST customer service representatives have access to network provisioning and other U S WEST data, new entrant’s sales representatives should have the same level of accessibility. The same would hold true for the new entrant’s billing and network administration employees. Q. DOES THE U S WEST SYSTEM OFFER PARITY? A. No. My understanding is that U S WEST’s sales and network personnel will not be interfacing to their systems through their gateway, but rather directly to their legacy systems as they do now. New CLECs, however, will be forced to use substandard interfaces until such time as U S WEST readies its electronic "computer - to -computer" interface with full functionality. Q. IS U S WEST COMPLETELY CORRECT WHEN IT INFERS THAT CLECS WILL BE THE ONLY BENEFICIARIES OF THE GATEWAYS? A. The key words for an analysis of this issue are “users” and “beneficiaries”. It is quite true that new CLECs will be the only users of the proposed system interfaces, particularly since U S WEST will continue to utilize its own proprietary access to the existing OSS. However, this ignores the larger aspects to this issue. In the first instance, all consumers in U S WEST’s Washington service area will benefit from the deployment of these interfaces, as competitive alternatives will not develop as quickly if these interfaces are non-functional, or are priced at rates that exceed costs even if they are functional. As these interfaces are deployed and new entrants can order and provision resold services and UNE-based solutions, competition will become more robust, driving down prices and increasing value and choices for all consumers, not just the CLEC customers. A second beneficiary is U S WEST and its shareholders as well. Under the Telecom Act, local markets were required to be opened to competition. At the same time, Congress established the procedures under which U S WEST and the other regional Bell Operating Companies could enter long distance. This can happen once U S WEST meets the fourteen point checklist and receives the necessary approvals under the Act. Once U S WEST makes available its services for resale, makes available its network on an unbundled basis, and provides the ability for new entrants to actually order and provision those elements, then U S WEST is able to receive the benefit of entering in-region long distance. This is a benefit that U S WEST and other RBOCs lobbied vigorously for in the months leading up to the passage of the Telecom Act. Essentially, U S WEST receives direct benefits from its ability to provide access to its OSS to third parties. Q. PLEASE SUMMARIZE MCI’s PUBLIC POLICY ON THE NONRECURRING COSTS PROPOSED BY U S WEST FOR THESE TRANSITION COSTS. A. The non-recurring per transaction charges put forth by U S WEST should recover only the forward looking expenses associated with an interface that actually provides some semblance of parity with U S WEST’s own access to its OSS. In particular, the costs associated with the functions related to the transaction-type activities should be based upon processes and systems that are efficient and forward-looking. Care must be exercised by the WUTC to prevent the double recovery of the costs associated with these activities and to ensure that the Act’s standards of nondiscrimination are met. The investment costs associated with the forward looking OSS systems should be recovered in a competitively neutral recurring charge. Anything other than a competitively neutral cost recovery method will handicap the level of competition, or simply make it unprofitable to enter the local marketplace. Therefore, MCI would suggest that the cost recovery for NRCs be spread over all potential beneficiaries of the U S WEST OSS development, both the CLEC customers as well as the incumbent’s customers. This type of recovery is both logical and economically rational since OSS system availability will benefit U S WEST in the 271 process by allowing CLECs access to resold U S WEST services unbundled network elements. In this docket, U S WEST has suggested that start-up costs for the interfaces it will deploy be recovered on a discriminatory basis. U S WEST seeks to recover all its OSS transition costs from CLECs rather than through a mechanism that seeks recovery from all ratepayers. A preferred method to minimize any detrimental impact on competition and allow for fair and just recovery of TELRIC-based charges would entail the appropriate amortization of the investment costs of new OSS system gateways. The cost associated with the investments for these OSS system gateways should be recovered over the projected lifetime of the asset and from all beneficiaries of the asset, through a recurring charge. Furthermore, U S WEST’s proposed cost recovery mechanism would shield it from meaningful review of the costs being recovered through this charge. It is unclear from the U S WEST cost support filed whether the costs are specific to building a forward-looking OSS interface for CLECs to access, versus making internal improvements to its own systems. In essence, U S WEST is asking for a blank check from this Commission for cost recovery associated with these programs. Q. WHAT DOES MCI RECOMMEND THE WUTC DO IN THIS PHASE OF THE DOCKET? A. MCI recommends that the WUTC disallow cost recovery for the human to computer, or IMA interface. U S WEST could be entitled to cost recovery if it were for the deployment of a electronic data interface that meets the needs of its competitors, and if it were deployed in harmony with the standards being developed in industry fora. However, since the interface at the present time is unusable for the large scale ordering and provisioning of resale and UNEs at some level of parity with U S WEST’s internal systems, cost recovery should be precluded at the present time. By withholding cost recovery at this time, the WUTC will incent U S WEST to design and deploy interfaces that are acceptable to its captive customers for this information. The WUTC should require that U S WEST fulfill its obligation under the FCC rules and the Telecommunications Act of 1996 and develop electronic interfaces for use by CLECs. Once those systems are constructed, and demonstrated to be able to handle large-scale ordering, provisioning, trouble reporting and maintenance, then US WEST can revise and refile its request to recover the costs associated with the interface. At that point, the Commission should allow U S WEST to recover its forward looking costs of providing an OSS interface. Such costs should be recovered from all beneficiaries of the interface, both CLEC customers and U S West’s own customers. ISSUE V. ELEMENT COSTS – MARKUPS OVER COST RESPONSE TO U S WEST WHAT IS MCI’S POSITION REGARDING THE STRUCTURE OF THE COMMON COST FACTOR THAT WILL BE APPLIED TO THE UNE COSTS DETERMINED IN PHASE I OF THIS PROCEEDING? MCI has reviewed the structure of the common cost overlay filed by both U S WEST and GTE. MCI agrees that the common cost overlay structure should be a fixed percentage applied to all UNEs. Although GTE and U S WEST hint to data deficiencies that would preclude the use of a “market-based” approach, MCI bases its policy recommendation on the grounds of economic efficiency. Economic theory suggests that efficiency is maximized through the use of allocating common costs equally across all UNEs. In this manner, the common cost “tax” is non-discriminatory and provides a non-biased price signal to purchasers of UNEs. There would be no distortions introduced into the purchase decisions of CLECs. All UNEs would carry the same burden of common cost, and this addition of a proportionate factor of common costs would leave the relative prices of all UNEs unchanged. Place the above-described situation in comparison with a common cost allocation that places virtually all the common cost burden on one of the UNEs, for example the loop. Since the loop is the most monopolistic portion of the ILEC network, any CLEC that intends to serve a broad base of residential and small business customers using the UNE-loop will be placed in a price squeeze relative to the ILEC and to CLECs that do not service customers using UNE-loops. Essentially a CLEC that constructs switching and transport, but uses loops for the “last mile” will be contributing virtually all the common cost burden, while CLECs that do not use the loop will contribute little. Moreover, U S WEST and GTE could use the monopoly position on the loop to leverage receiving recovery of all their common costs from purchasers of the loop and avoid any type of competitive pressures to reduce their level of common costs. In summary, a proportionate adjustment will minimize economic pricing distortions and remove the ability of the ILECs to leverage their most monopolistic elements. DOES THE LACK OF GEOGRAPHICAL DEAVERAGING IMPACT THE FINANCIAL EFFECTS OF THE COMMON COST RECOVERY? To an extent it does. Without geographical deaveraging, CLECs purchasing loops in more dense areas will be paying in excess of the economic costs of the loop. For example, assume a set of three density zones, where the loop costs, for example purposes only, are $12, $17, and $22, but the loops are only available for a state-wide average rate of $17. Assuming that common costs are 5 percent and have not already been included in the loop cost, the resulting final deaveraged loop costs would be $12.60, $17.85, and $23.10. CLECs that wish to purchase loops in the highest density zone would be paying in excess of TELRIC by $5 ($17 less $12). In addition, because the common cost factor is proportional to the rate, instead of contributing $0.60 towards the ILEC common cost, the CLEC will pay $0.85 per loop, or 41 percent more per loop than under geographical deaveraging. SHOULD US WEST BE ALLOWED TO INCREMENT THE $17.00 LOOP RATE BY A COMMON COST FACTOR? It would appear, based on the methodology followed by the WUTC in the Eight Supplemental Order, that no additional common cost mark up is required. The WUTC has established a rate of $17.00 for the U S WEST loop, based on the use of three data points from the models filed in this proceeding. The data input points were $13.53 for Hatfield, $17.23 for BCPM, and $13.76 for U S WEST’s RLCAP. The WUTC also advised the parties that it applied regulatory judgement to the numbers to arrive at the $17.00 loop cost. It appears that the $17.00 loop rate for U S WEST would compensate it for any common costs that were not explicitly included in the TELRIC. Essentially, the WUTC has chosen a proposed TELRIC cost that is almost 15 percent greater than the averaged TELRIC rates. This suggests that U S WEST need not increase its prices above the cost established by the Commission. PLEASE COMMENT ON U S WEST’S PROPOSED MARK-UP OVER THE LOOP COST OF $17.00. U S WEST has proposed pricing that contains several adjustments above the WUTC’ s proposed loop cost of $17. It includes a 4.05% adjustment to reflect the common costs that were included in its RLCAP submission in Phase I. Applying that factor to the loop cost of $17 yields a final loop price of $ 17.765. This would be the final loop price that should be permitted for U S WEST if the WUTC disagrees with MCI regarding the issue raised immediately above. In the Eighth Supplemental Order, the WUTC established two distinct items. In the first instance, it decided upon loop costs that would apply to U S WEST and GTE. It based its decision on its review of the material filed in Phase I of this proceeding. MCI does not consider that the process employed by the WUTC generated a loop cost that could be considered TELRIC. MCI does not waive its legal rights to seek reconsideration or judicial review of the process, but will assume that the $17 rate is the WUTC’s estimate of the total TELRIC cost of the loop, excluding the level of common costs. It then directed parties to take this calculation as the TELRIC of the loop, and file testimony and calculations to account only for any common costs that were not accounted for in the $17 cost. This direction comports with the spirit and the letter of the 1996 Telecom Act which states the carriers should price UNEs at the forward looking economic cost of the element along with a reasonable allocation of the common costs. Beyond that one particular adjustment, U S WEST proceeds on a journey of devising additional increases to the loop price that are at best not relevant to this docket, or at worst anti-competitive and designed to remove the threat of competition to the majority of its telecommunications market in Washington. U S WEST erroneously seeks adjustments to the final cost of the loop to account for double counting attributable costs, and attempting to establish a revenue stream from CLECs based on some sort of partial “make whole” analysis. U S WEST’s pricing directly violates the Telecom Act. The Act allows for recovery of the costs of the unbundled elements, including an allocation of common costs. It does not allow for the recovery of universal service costs through the UNE prices. Rather, the Act explicitly sets up a process to define any additional universal service costs due to competition and develop subsidy mechanisms to minimize the impact of competitive entry on universal service. The Act requires that the subsidies be explicit and nondiscriminatory. Likewise, the Act explicitly states that the price of UNEs should be set without regard to the elements that would underlie a traditional rate case. U S WEST’s existing revenue stream, the current structure of its rates, or its avoided cost discounts, do not impact what the level of TELRIC-based rates should be. In its testimony, U S WEST blatantly expects this Commission to grant it a revenue stream that is contrary to the Act and in direct conflict with the development of meaningful competition. The WUTC should reject these proposals and limit U S WEST to the common cost adjustment described above. PLEASE DETAIL THE TWO INCORRECT ADJUSTMENTS PROPOSED BY U S WEST. U S WEST has requested to increase the price for unbundled loops and other elements to account for two erroneous issues. In the first instance, U S WEST has double counted costs that were already considered in the Eight Supplemental Order. U S WEST describes how it decided that the $17 cost established by the WUTC was “missing” some attributed costs in addition to the common cost overlay. Instead of increasing the cost only to include the common costs filed in the first stage of this docket, U S WEST indicated that based on its evaluation of the WUTC cost it discovered that the cost did not reflect all the attributed costs it deems necessary. Therefore, it has included an augmentation for these attributed costs. This is incorrect, as the WUTC based its $17 cost figure on a mix of models and regulatory j