-1- BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of ) Determining Costs for ) Docket No. UT-9803311(a) Universal Service ) I. INTRODUCTION Pursuant to this Commission's December 3, 1998 Notice, Sprint Corporation, on behalf of United Telephone Company of the Northwest ("Sprint") hereby responds to the Petitions for Reconsideration of US WEST Communications, Inc. ("US WEST") and GTE Northwest, Incorporated ("GTE"). II. THE COMMISSION SHOULD REVISE FOOTNOTE NO. 12, AS REQUESTED BY U.S. WEST In the Overview section of the Tenth Supplemental Order, the Commission made several statements in Footnote No. 12 at page 10 with respect to the HAI 5.0a model. Sprint supports the objection presented by U.S. West, to the Commission's statement that it agrees "with the FCC that the HAI 5.0a engineering algorithms permit all customers to have access to high speed data transmission." U.S. West is correct in stating that no record evidence supports this finding and that the Commission erred by taking judicial notice of the cited FCC order (FCC 98-279, October 28, 1998). Sprint urges the Commission to delete this sentence and revise the footnote to only state, at the most, the actual action of the FCC rendered in FCC 98-279, which should not in any sense be deemed controlling on the Commission's analysis and decision in the Tenth Supplemental Order. Furthermore, discussions of the HAI 5.0a's ability to design a network for providing high speed modem access along loops is an issue extraneous to the sentence which the footnote modifies. Therefore, Sprint suggests deleting everything except the first sentence in Footnote No. 12 from the Tenth Supplemental Order. II. SPRINT ENDORSES GTE'S REQUEST THAT THE COMMISSION DETERMINE THE COST OF UNIVERSAL SERVICE WITH REFERENCE TO HOUSING UNITS, NOT HOUSEHOLDS. GTE succinctly makes a persuasive case for revising the Tenth Supplemental Order (Par. 91) to use housing units, not households, to determine universal service costs. The Commission's analysis in support of its decision to use households is based upon an isolated example of one wire center (Easton). An isolated sample should not be used as a basis for concluding that using housing units rather than households would result in a much greater support requirement. In addition, Sprint is puzzled about the Commission's choice to adopt an approach which undermines the ability of incumbents in a rural area to provide universal service. If anything, the Commission should err on the side of providing support for a network that will be designed to serve more, not less, customers to achieve its policy goal of promoting universal service. III. SPRINT AGREES WITH GTE THAT PARAGRAPH 175 SHOULD BE RECONSIDERED WITH RESPECT TO POLE MATERIAL AND INSTALLATION COSTS. Like GTE, the Commission rejected Sprint's credible evidence regarding pole and material installation costs in Par. 175 of the Tenth Supplemental Order. The Commission rejected the actual evidence of GTE and Sprint (see Holmes Direct Ex. 104C) with respect to an itemization of pole costs. Rather, the Commission appears to have relied upon Exhibit 241 which is based upon certain assumptions leading to Commission's inference that the ILELs' reported costs failed to take into account "the economies of scale that would be available in major construction." The Commission's inference in Par. 175 is unfounded. The Commission assumes in Par. 175 that the cost reported by ILECs must reflect the cost of an "occasional pole" as opposed to major construction. However, Exhibit 241 itself explains that there is little cost difference between new additions and new construction (page 30). Further, no record exists to suggest that there are economies of scale with respect to pole installation. The cost discrepancy between Exhibit 241 and the ILEC's reported costs is more likely due to the fact that the rural study was limited to only 19 observations with a low R2. Exhibit 241 should be rejected as a basis for any Commission inference that the cost reported by ILECs for pole material and installation are erroneous, and the ILECs costs should be accepted. IV. THE COMMISSION SHOULD EXTEND THE RECONSIDERATION REQUESTED BY GTE TO ALL EFFECTED ILECs. GTE asked the Commission to identify all changes made to the default inputs in the HAI model run for GTE (Petition for Reconsideration, page 13). Sprint agrees that such an identification would be helpful for all three companies (GTE, Sprint and U.S. West). Sprint has also had difficulty replicating the Commission's adjustments to the HAI model for Sprint inputs. GTE also asked the Commission to clarify that the parties are not precluded from introducing new evidence of placement costs in higher density zones in future proceedings (Petition for Reconsideration, page 14). Sprint requests the Commission to clarify that this would cover Sprint and U.S. West as well. Finally, Sprint also requests the Commission to render consistent treatment to Sprint and U.S. West on the issue of different drop lengths between the BCPM and HAI. GTE contended that using different drop lengths in the BCPM and HAI models is inconsistent. If the Commission lengthens drop lengths for GTE, then it should do so for Sprint as well. V. CONCLUSION. Sprint appreciates the opportunity to respond to the Petitions for Reconsideration of GTE and U.S. West and urges the Commission to make the requested modifications to the Tenth Supplemental Order. DATED this _____ day of December, 1998. SPRINT CORPORATION By________________________________ Judith A. Endejan Attorney at Law Williams, Kastner & Gibbs, PLLC 601 Union Street, Suite 4100 P.O. Box 21926 Seattle, WA 998111-3926 Nancy L. Judy AVP External Affairs Sprint/United Telephone 902 Wasco Street Hood River, OR 97031