BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


MCI TELECOMMUNICATIONS CORPORATION
 and AT&T COMMUNICATIONS OF
 THE PACIFIC NORTHWEST, INC.,

  Complainants,

 v.

U.S. WEST COMMUNICATIONS, INC., 
GTE NORTHWEST, INC. and UNITED 
TELEPHONE COMPANY OF THE NORTHWEST,

  Respondents.
UT-970658

PETITION FOR ADMINISTRATIVE REVIEW OF GTE NORTHWEST INCORPORATED OF FOURTH 
SUPPLEMENTAL ORDER
 I.  INTRODUCTION

 Pursuant to WAC 480-09-780, GTE NORTHWEST INCORPORATED ("GTE") hereby 
petitions the Washington Utilities and Transportation Commission ("Commission") 
for administrative review of the Fourth Supplemental Order and Initial Order 
Granting Petition issued by Administrative Law Judge ("ALJ") Marjorie R. Schaer 
on September 11, 1998 in this docket ("Initial Order").  The Initial Order 
contains significant errors in its findings of fact and conclusions of law.  
GTE asks this Commission to set aside the Initial Order and enter an order in 
accordance with GTE's proposed findings of fact and conclusions of law 
submitted on May 8, 1998.     A copy of which is attached hereto.  
 II.  CHALLENGES TO THE INITIAL ORDER

 A. GTE Challenges the Initial Order's Conclusion of Law No. 4 That It Be 
Directed to Remove the Payphone Subsidy Contained in Its Payphone Operations.

 The Initial Order's fundamental error is the failure to hold the complainants, 
AT&T and MCI, to their burden of proof in this complaint proceeding.  This is a 
serious and material error of law because in a complaint proceeding, the burden 
of proof rests squarely upon the complainant--which in this case is MCI and 
AT&T.  See Spokane Energy, Inc. v. Washington Water Power Co., Cause No. 
U-86-114, 1987, Wash. UTC LEXIS, 108; North Coast Power Co. v. Kuykendall, 117 
Wash. 563, 201 P. 780 (1921).  
 Moreover, in her Initial Order, the ALJ acknowledged that AT&T and MCI failed 
to meet their burden of proof.  In the Initial Order (p. 20), she states, "The 
PSDM model [the AT&T/MCI evidence] is flawed and is not relied upon in this 
decision."  However, the ALJ next astoundingly relieves the complainants of 
their statutory burden under RCW 80.04.110, without explanation or analysis, 
abruptly announcing that,  . . . "The complainants in this case may use the 
Commission staff testimony to carry their burden of proof."  (p. 21.)  She then 
proceeds to base her decision entirely upon the testimony of staff witness Tim 
Zawislak.  The Staff did not bring this complaint.
 1. The unprecedented shifting of the proof of burden here is patently 
erroneous.

 The Commission must not uphold this unprecedented procedural ruling in this 
adjudicative complaint proceeding because it arbitrarily relieves the 
complainants of their responsibility to meet their burden of proof.  
Well-settled principles of administrative law require that the parties bringing 
complaints be required to prove their complaints.  The Commission in fact 
admonished respondent GTE on this very point when it dismissed a complaint 
brought by GTE in GTE N.W. Inc. (GTE) v. Whidbey Tel. Co., (WTC) Docket No. 
UT-950277, 1996 Wash. UTC LEXIS 23 (April 2, 1991) at *13:
 GTE chose to bring a complaint case under RCW 80.04.110.  In making this 
choice, GTE assumed the burdens of the moving party in a complaint proceeding.  
It was the responsibility of GTE to analyze and determine what it believed to 
be the elements of a prima facie case.  It was the responsibility of GTE to 
determine what proof would establish each of those elements, and to proffer the 
requisite evidence in its direct case.  If data were required, it was GTE's 
responsibility to obtain those data. If studies were required, it was GTE's 
responsibility [*15] to perform those studies.  We would expect GTE, and any 
other company filing a complaint against another company in a proceeding before 
the Commission, to evaluate its responsibilities and have a strategy for 
fulfilling them before a complaint is ever filed.

 The option of bringing a complaint case was available to GTE, and GTE availed 
itself of that option.  The Commission made a forum available to it, and GTE 
had the responsibility of satisfying the burdens imposed by the option chosen.  
This matter will be dismissed because GTE did not carry the burden of proof it 
undertook in choosing to bring the complaint.

 If the Commission were to uphold the ALJ's ruling it would be erecting a 
double standard at the best, and at the worst, an arbitrary rule which gives 
the staff unwarranted powers and leaves parties with uncertain guidance in 
complaint matters before this Commission.  If this ruling is upheld, 
complainants will not know who bears the burden of proof.  The burden of proof 
is not a legal moving target which can be shifted arbitrarily to support a 
particular result.
 GTE urges the Commission to return the burden of proof to the complainants 
and, in acknowledging the "flawed" premise in the complainant's presentations, 
substitute GTE's proposed findings of fact and conclusions of law for those in 
the Initial Order.
 B. GTE Challenges Finding of Fact No. 6, Which States That "an Inappropriate 
Subsidy in the Amount of $564,076.00 Is Present in GTE's Washington Payphone 
Operations.

 Washington law requires that findings of fact must be based exclusively on the 
evidence of record.  RCW 34.05.461(4).  A finding or conclusion of an 
administrative agency made without evidence to support it is arbitrary.  State 
ex rel Perry v. Seattle, 69 Wn.2d 816, 420 P.2d 704 (1966); State ex rel 
Tidewater/Shaver Barge Lines v. Kuykendall, 42 Wn.2d 885, 259 P.2d 838 (1953).  
 The Initial Order advances the primary factual issue in the proceeding as 
being whether GTE's payphone operations were being subsidized by the companies' 
regulated operations at the time the provision of payphone service was 
deregulated by the FCC.  (p. 8.) The Initial Order then proceeds to adopt 
wholesale the position of the Commission staff on the issue of subsidy, with 
little or no analysis, of the facts presented by the complainants or GTE on 
this issue.  In doing so, the Initial Order ignores, for instance, the 
admission by the complainants' sole witness that he could not prove the fact of 
a subsidy for GTE.  (TR-227, ll. 17-21.)  The Initial Order ignores the 
testimony which established the factual errors in the complainants' subsidy 
analysis.  (Ex. T-54, pp. 13-20, TR-223, ll. 23-25, 224, ll. 2-8, TR-226, ll. 
3-21, TR-216, ll. 7-21, TR-219, ll. 20-23, TR-227, l. 5.)
 While conceding that the facts put forth by the complainants do not support 
the existence of a subsidy, (p. 20.), the Initial Order nevertheless makes a 
factual finding (No. 6) that a subsidy in the amount of $564,076 was present in 
GTE's pre-deregulation payphone operations.
 Again, the only purported evidentiary basis relied upon by the ALJ for this 
"finding" is the analysis performed by staff witness Zawislak.  (Ex. C-33.)  As 
stated in Section II.A., she committed procedural error in doing so.  She also 
ignored evidence that Mr. Zawislak's testimony was simply wrong.

  2. The Staff's subsidy analysis contained numerous mistakes of fact

 The Staff's rebuttal "subsidy analysis" (Ex. C-33) is actually an adjusted GTE 
subsidy analysis.  Without Staff's "adjustments," GTE's analysis reflects no 
subsidy.
 The Staff's adjustments in Ex. C-33 are factually incorrect. First, Staff 
improperly deducted an amount from GTE's payphone revenues because Mr. Zawislak 
mistakenly assumed that the federally mandated subscriber line charge ("SLC") 
was included in GTE's reported payphone revenues (i.e., the local coin rate) 
and that this deducted amount would remain regulated  (TR 320-321).  The 
revenue source in Mr. Zawislak's analysis in Exhibit C-33 is derived from Mr. 
McCormick's revenue calculation. (Ex. 55)  All such revenues reflected on that 
exhibit come from payphone specific accounts.  All of these revenues have been 
reclassified as non-regulated.  None of the revenues reported on that exhibit 
include any SLC revenues whatsoever because SLC revenues are booked to a 
separate FCC account (See End User Revenues For Interstate Access Revenues, 47 
C.F.R. § 32.5081), which is not included in Exhibit 55.  Therefore, Mr. 
Zawislak reduced the revenues GTE recorded for payphone due to his mistaken 
belief that SLC revenues were included in those accounts.
 The second problem with Mr. Zawislak's adjustment is the fact that he used an 
erroneous number of payphone access lines in his calculations.  His workpapers 
(Ex. C-37) calculated 5,060 payphone lines.  However, Mr. Zawislak later 
conceded that this number should really have been 4,570 payphone lines (TR-371, 
l.15).  If this correct number is substituted in Mr. Zawislak's workpapers, the 
alleged subsidy calculation which appears on Exhibit C-33 drops approximately 
in half.
 The third major flaw with the Staff's adjustment to GTE's subsidy analysis is 
the use of tariffed rates to determine access line costs and unbundled 
features.  The Staff used tariffed rates - rather than costs-to determine the 
pre-deregulation costs associated with GTE's access line costs.  Use of 
post-deregulation tariffed rates does not establish accurate, actual 
pre-deregulation, fully distributed costs. 
 Mr. Zawislak admitted he did not perform a fully distributed cost analysis for 
GTE payphone access lines to determine the actual pre-deregulation access line 
costs (TR-342).The ALJ seems to endorse use of a "fully distributed cost 
methodology" (p. 13 Initial Order).  She erroneously "finds" that the 
Commission staff in "the fully-embedded analysis it makes, correctly analyze 
the determination required by the FCC."  (p. 17.)  The facts in the record show 
that Mr. Zawislak did not perform such an analysis. (TR-342, 346-348.)  The 
facts also refute her "finding" that GTE witness McCormick's payphone access 
line cost analysis continues subsidizing GTE's deregulated payphone service.  
Mr. McCormick fully covered all costs in his analysis (T-54, p. 17) as even 
MCI's witness agreed.  TR-226.  He did not do any cost studies in connection 
with the tariffed public access line rates which he selected (TR-346).  
Finally, he did not select a tariff rate that would necessarily represent the 
rates in most of the exchanges in which GTE will be offering payphone service.  
(TR-347-348) Accordingly, use of Staff's calculated tariff-based access line 
costs in lieu of the real access line costs calculated by Mr. McCormick was 
incorrect.  In sum, the adjustments made by Staff are improper and inaccurate.  
Without these adjustments, GTE's analysis shows no subsidy.
 Indeed, the overwhelming and unrebutted factual evidence in the record 
established that GTE's pre-deregulation payphone revenues exceeded its pre
-deregulation payphone costs.  (Ex. T-54 and 55). Therefore no subsidy exists.
 The ALJ perpetuates the staff's confusion of pre- and post-deregulation 
expenses and revenues in the Initial Order.At page 7 of the Initial Order the 
ALJ correctly describes the subsidy analysis "as of the date of deregulation."  
She later confuses the analysis by finding that the post-deregulation price of 
a PAL and features should have been included in GTE's pre-deregulation 
analysis. (p. 13.)  This confusion--and not the facts--are what permeate the 
ALJ's finding of a subsidy, which should now be corrected by this Commission.
 C. GTE Challenges Finding of Fact No. 8 Requiring It to Remove an 
Inappropriate Subsidy of $564,076 From Its Regulated Operations.

 GTE incorporates its argument above in support of its contention that the 
initial order errs by concluding that a subsidy existed in GTE's 
pre-deregulation pay phone rates.The Initial Order also errs by requiring GTE 
to remove a "subsidy" of $874,315 (page 20) from the carrier common line 
charge. This amount is the US West "subsidy" - not GTE's.   
 The Initial Order also errs at page 14 in adopting the staff's conclusory 
analysis that "[a]ll other things being constant, if a reduction is not made a 
windfall may be realized using this `historical' method of assigning costs as a 
benchmark."  The evidence in the case proves an entirely contrary conclusion.  
GTE has actually proved the converse, that it will not even be able to meet its 
access charge revenue requirement.  Accordingly, it is impossible for GTE to 
achieve any form of windfall from access charges.  (Ex. T-56, pp. 5-7; Ex. 57.)
III. CONCLUSION AND REQUEST FOR RELIEF
 The Initial Order, if upheld by this Commission, would establish a troubling 
and wholly inconsistent precedent regarding the disposition of complaints, 
which will necessarily engender further appeal to avoid the arbitrary 
administration of justice before the Commission in complaint matters.  The 
undisputed facts show that neither the complainants nor the Staff could prove 
the existence of any subsidy in GTE's pre-deregulation pay phone rates.  
Nevertheless, the Initial Order completely disregards these dispositive facts 
and adopts wholesale the staff's rebuttal testimony to sustain a complaint 
which the Initial Order indicates cannot be proved by the complainants.  
 GTE therefore urges the Commission to reverse this troubling and erroneous 
Initial Order with its material misconstruction of complainant proof burdens 
and erroneous fundamental fact assumptions, and enter the proposed findings and 
conclusions attached hereto proposed by GTE.
 DATED this _____ day of September, 1998.

  WILLIAMS, KASTNER & GIBBS PLLC



  By  
   Judith A. Endejan
   WSBA #11016

  Attorneys for GTE Northwest Incorporated