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BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION



Request for Competitive Classification of 1-800-4USWEST Calling Service	)
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		UT-980630
		
		U S WEST'S RESPONSE TO AT&T COMMUNICATIONS OF THE PACIFIC NORTHWEST, INC.'s 
COMMENTS

 U S WEST Communications, Inc., ("U S WEST"), respectfully submits the 
following response to the Comments filed August 5, 1998, by AT&T Communications 
of the Pacific Northwest, Inc., ("AT&T"):
I.  INTRODUCTION
 On April 30, 1998, U S WEST filed with the Commission its Petition to request 
competitive classification for its 1-800-4USWEST calling card service.  The 
petition was brought pursuant to RCW 80.36.330 and stressed that U S WEST's 
1-800-4USWEST calling card fulfilled each of the statutory requirements for 
competitive classification.  In particular, U S WEST noted that, on a 
nation-wide level, 66.3% of the calling card market had an AT&T calling card, 
while local exchange companies, such as U S WEST, had issued approximately 26% 
of the calling cards.  In fact, U S WEST currently has less than 10% of the 
relevant calling card market in the state of Washington.
 Subsequently, AT&T intervened in this docket and opposed the competitive 
classification of U S WEST's 1-800-4USWEST calling card service.  Unlike U S 
WEST's Petition, AT&T did not focus on the statutory requirements set forth in 
RCW 80.36.330. Rather, AT&T presented two reasons why U S WEST's petition 
should be denied.  First, AT&T claimed that U S WEST provides its calling card 
service to a "significant captive customer base" of calling card customers.  
Second, AT&T alleged that U S WEST's calling card services violated federal law 
in several respects.
 As is demonstrated below, neither of the reasons proffered by AT&T have any 
merit. U S WEST does not have a significant captive customer base in the 
calling card market. Moreover, U S WEST's 1-800-4USWEST service does not 
violate federal law.  In sum, AT&T's objections should be overruled and the 
Commission should classify 1-800-4USWEST as a competitive service.
II.  ARGUMENT
U S WEST DOES NOT HAVE A CAPTIVE CUSTOMER BASE IN THE CALLING CARD MARKET.
 As U S WEST noted in its petition, AT&T currently possesses over 65% of the 
nationwide calling card services market and AT&T has presented no evidence that 
its share of the Washington market is lower.  U S WEST currently possesses less 
than 10% of the same market.  See, letter dated May 18, 1998 from U S WEST to 
the Commission.  Despite this gross disparity, AT&T claims that U S WEST has a 
"significant captive customer base" in the calling card market and, therefore, 
U S WEST has "a significant advantage over other providers of interLata and 
intraLata calling card services."  Thus, AT&T, (the proverbial elephant), has 
magnified the threat and its fear of U S WEST, (the proverbial mouse).  AT&T's 
fears rely upon the entirely false premise that, because U S WEST may have a 
significant captive customer base for local exchange service, (a matter of some 
doubt), U S WEST ipso facto enjoys a captive customer base in calling card 
services.
 AT&T's premise, however, ignores the plain distinction drawn by RCW 80.36.330 
in that a company may enjoy a captive customer base for some services but not 
for other services in the relevant market:
(1) The Commission may classify a telecommunications service provided by a 
telecommunications company as a competitive telecommunications service if it 
finds, after notice and hearing, that the service is subject to effective 
competition.  Effective competition means that customers of the service have 
reasonably available alternatives and that the service is not provided to a 
significant captive customer base.  (emphasis added).

Also, among the factors that RCW 80.36.330 lists are the availability of 
competitive providers in the relevant market:
(b) The extent to which services are available from alternative providers in 
the relevant market.

Thus, the relevant inquiry under RCW 80.36.330 is whether the company in 
question has a significant captive customer base for the service for which it 
seeks competitive classification.  AT&T's argument effectively eliminates the 
focus of RCW 80.36.330 upon the "relevant market."  In this case, the relevant 
market is users of calling card services in Washington.  U S WEST has a 
minority position of customers in this market; AT&T has a dominant position.  
Plainly, any claim that U S WEST has a significant captive customer base in 
this market is disingenuous and demonstrably wrong.
 Further, AT&T's argument must be rejected because it makes RCW 80.36.330 
effectively meaningless.  RCW 80.36.330 was adopted in 1989, when most LECs in 
Washington had a significant captive customer base.  The statute was plainly 
enacted to allow LECs to competitively classify those services for which LECs 
did not have a captive customer base.  AT&T's argument implies that no LEC with 
a captive customer base can competitively classify any service.  This renders 
the statute effectively void.  Moreover, this interpretation is contrary to 
prior Commission practice, in which the Commission has previously competitively 
classified certain U S WEST services.  See, e.g., In the Matter of the Petition 
of Pacific Northwest Bell Telephone Company for Classification of Services as 
Competitive, 113 P.U.R. 418 (WUTC, May 8, 1990).
B.  U S WEST'S CALLING CARD SERVICE IS NOT ILLEGAL.
 AT&T's second argument is that U S WEST's 1-800-4USWEST calling card service 
violates federal law.  AT&T offers no support for this allegation other than 
submitting a copy of a complaint it filed before the FCC.  Signally, AT&T 
failed to provide a complete record of that docket, including U S WEST's answer 
and briefs. AT&T's unsupported argument, however, is flawed and should be 
rejected for several reasons.
 First, AT&T's Complaint to the FCC is not evidence that U S WEST's calling 
card service is illegal.  Rather, it is simply evidence that AT&T has filed a 
complaint before the FCC.  The FCC has not rendered a decision on the 
complaint.  Therefore, the complaint remains nothing more than a mass of 
unsubstantiated allegations.
 Second, AT&T's attempts to interject its FCC complaint into these proceedings 
is procedurally improper.  AT&T chose to bring its complaint before the FCC, 
not here.  By incorporating its FCC complaint into these proceedings, AT&T is 
requesting the Commission to conduct a contemporaneous collateral review.  U S 
WEST submits that the Commission should decline AT&T's invitation to interfere 
with the complaint proceedings which AT&T chose to initiate before the FCC.
 Third, AT&T's complaint is not germane to these proceedings.  The only 
question before the Commission is whether U S WEST's calling card service is 
subject to effective competition and, therefore, should be competitively 
classified.  The issue before the FCC is entirely different:  does 
1-800-4USWEST pass muster under federal law?  The two issues can, and should, 
be decided independently.  We note, parenthetically, that the Commission has 
already deemed U S WEST's calling card service to be legal by approving the 
tariffs under which it is currently offered.  Should the FCC or other competent 
authority differ from the Commission's decision, the service will be 
discontinued.  Until that time, (if it ever comes), the Commission can, (and 
should), classify U S WEST's calling card service as competitive.  
 Finally, AT&T's argument should be rejected because it is just plain wrong.  U 
S WEST has submitted an answer and a lengthy brief to the FCC demonstrating 
that AT&T's complaint is groundless.  For the sake of completeness, a copy of 
these documents are attached.  By attaching these documents to this response, U 
S WEST does not request the Commission to decide the issues currently pending 
before the FCC.  Rather, U S WEST has included the documents merely in response 
to the complaint attached to AT&T's Comments, in order to avoid any inference 
that U S WEST has acquiesced in AT&T's allegations by failing to respond to 
them.


III.  CONCLUSION
 For the foregoing reasons, and the reasons set forth in U S WEST's Petition, U 
S WEST respectfully request that it Petition for Competitive Classification of 
its 1-800-4USWEST Calling Card Service be granted.
 Dated:  September 11, 1998.

     U S WEST Communications, Inc.


     ________________________________________
     Peter J. Butler