20020816Application.pdf

Qwest
C.Douglas Hurst
UT LiilES CDMMiSSIOH Director-State &Local Tax Research
1801 California St.#2539
Denver,Colorado
80202
Phone:[phone]
Fax:[phone]
August 14,2002Ms.Jean Jewell
Commission Secretary NEW CASEIdahoPublicUtilityCommission
472 West Washington Street
Boise,ID 83720
Re:Application for Determination of Qualified BroadbandEquipment (2001)
Dear Ms.Jewell:
Pursuant to Commission Order No.28784,in Case No.GNR-T-01-10,QwestCorporation("Qwest")hereby submits the followinginformation in support of its request
that the Public Utility Commission ("PUC")determine that the machinery and equipmentlistedinTab"C"constitutes "qualified broadband equipment".Qwest represents thefollowingwithregardtosuchequipment:
1.The equipment is capable of transmitting signals at a rate of at least twohundredthousand(200,000)bits per second to a subscriber.
2.The equipment is capable of transmitting signals at a rate of at least one
hundred twenty-fivethousand (125,000)bits per second from a subscriber.
3.The equipment is necessary to the provision of broadband services.
4.The equipment is an integral part of a broadbandnetwork.
The specific information requested by the Order is as follows:
1.Name &address of applicant includingthe contact person in the event there are
questions regarding the application and its content.Indicate whether the applicant
is a telecommunications carrier,a commercial mobile service carrier,a cable oropenvideooperator,a satellite carrier,or other type of wireless carrier.
Name:Qwest Corporation
Address:1801 California Street #2539
Denver,Colorado 80202
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Contact person:Doug Hurst
(303)308 -5618
Character of applicant:Telecommunications Carrier
2.Identify the area or location where the equipment is installed in Idaho.
See Tab "A"
Tab "A"provides a map of Idaho showing the location where:
Eleven DSL switches are located:
Boise Main
Boise Northwest
Boise Southwest
Boise West
Eagle
Idaho Falls
Meridian
Nampa
Pocatello Main
Pocatello North
Twin Falls
Five ATM switches are located:
Boise Main
Ketchium
Twin Falls
Pocatello Main
Idaho Falls
Four Frame Relay switches are located :
Boise Main
Twin Falls
Pocatello Main
Idaho Falls
The location of the individual projects described in Tab "C"is
identified in the column headed "Name"(9th column from the left).For
example,job #023Dl11 (the first job listed in the General Broadband
Services)is located at the Pocatello North central office.
3.Describe the type of broadband service(s)offered to the public in Idaho.
See Tab "B"
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The broadband services offered to subscribers are broken into two groups:
A.General Broadband Products
B.Dedicated Line Services
Qwest is requesting certification of its interoffice facilities (IOF)
that are necessary and an integral part ofits broadband network.The IOF
assets do not constitute specific individual broadband services that are
offered to subscribers.Rather,these assets comprise part of the network
that provides the means by which the above services are offered.
4.State the network transmission rate in bits per second at which subscribers to the
relevant broadband network can receive and send (download and upload).
Transmission Rates
Product Downstream Upstream Transmission
Transmission Rates Rates
General BroadbandServices
Digital Subscriber Lines (DSL)Low:256 Kbps 256 Kpbs
High:7 Mbps 1 Mbps
Asynchronous Transfer Mode (ATM)1.5 Mbps 1.5 Mbps
45 Mbps 45 Mbps
155 Mbps 155 Mbps
Frame Relay 56 Kbps -45 Mbps 56 Kbps -45 Mbps
Dedicated Line Services
DS-1 1.544Mbps 1.544 Mbps
DS-3 44.736 Mbps 44.736 Mbps
SHNS /SHARP 155.52 Mbps -9.95 155.52 Mbps -9.95
Gbps
_
Gbps
SRS 44.736 Mbps 44.736 Mbps
Synchronous Service Transport 155.52 Mbps -9.95 155.52 Mbps -9.95
Gbps Gbps
5.Provide a specific list of the equipment or types of equipmentthat the applicant is
requesting that the Commission determine is "qualified broadband equipment"as
defined in Idaho Code Sec.63-3029I(3)(b).List the brand,manufacture,model
numbers,or other distinguishing features of the installed equipment.
A.Listed Job Investments:
See Tab "C"
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Additional information about the equipment is located in
the Field Reporting Code (FRC)manual,portions of which are
reproduced in Tab "D".The FRC information about eachjob is
located in the column labeled "ACCT"(10'"column from the left).
These numbers correspond to detail descriptions of the types and
functions of the equipment contained in eachjob.For example,
the most of the jobs in the ATM section cross references FRC
257C in the ACCT column and are described as "Circuit
Equipment -Subscriber pair Gain Digital".Knowingthat "Circuit
Equipment"is "Central Office Equipment",the reader finds in The
Index of Field Accounting Practice that a detailed description can
be found in Section 41 of the manual.Turningto section 41
(found in the upper right hand corner),the Index states that FRC
257C is further defined in Division 2 "Central Office Equipment
Defined",paragraph "I""Circuit Equipment-Digital Local Loop -
257C".Turningto page 10 of section 41,the followingdetail is
found:
I.Circuit Equipment -Digital Local Loop -257C
Digital Local Loop Circuit Equipment is defined as digital
circuit equipmentoriginating in the central office and
terminating at a remote location.The remote location
includes,multipleas well as single customer premises and
field termination units.This includes all circuit equipment
(e.g.,carrier repeaters or regenerators,
transmitters/receivers electrical or optical multiplexers,
etc.)directly associated with such facilities in the span line
or end terminating units.Digital local loop circuit
equipment is located in central offices,manholes,on poles,
in cabinets or huts and on the customer premises.(Digital
circuit equipment associated with Hi Cap facilities,Point-
to-Point or Rings,that are intended to be used as private
network facilities for an end customer,are classified as
257C Digital Local Loop.If the equipment is to be shared
for both Local Loop and Interoffice,see item M below for
classification.)
Behind Tab "D"can be found the master Sectional Index to
the Field Accounting Practice,and the three sections in which most
of the assets being requested for certification are described,
(Section 41 "Central Office Equipment",Section 53 "Cable"and
Section 54 "Underground Conduit").If other sections are needed,
please contact the undersigned.
At a meeting with the PUC and DOR on June 25,2002,Qwest was
asked to provide an example of the back-up material for the amounts
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reported in the "Cumulative Amount Invested"for one job.This
information is located in Tab "E".The last job on the summary report for
General Broadband Services (Job ID #123B447)was selected as an
example for jobs that are tracked through the "Billing Verification
Accounts Payable Processing"system (BVAPP).The BVAPP processes
approximately 90%of the material purchased for capital construction.A
detailed analysis of the selected job is contained in section one of Tab "E".
JOB ID #123B019 indicates that $33,956 was spent for adding
3600 Switch Tie Pairs for DSL at the Boise Main central office.
The total is comprise of the following:
Number
of Invoices Vendor Amount
1 ADC Telecommunications $20,610
4 Graybar Electric Co.$10,800
1 Lucent Technologies $1,002
6 Total Invoices $32,412
Capitalized Internal Labor $1,544
Total Job $33,956
More detail and copies of the individual invoices are contained in Tab
"E".
Approximately91.2%($18,761,351 /$20,798,303 [sum of total
dollars])of the expendituresbeing requested are jobs that are handled
within the automated BVAPP tracking system.The remaining 9.8%of the
capitalized costs are for items that are acquired from company inventory.
When these items are needed for a specific job,a NECTAS order form is
submitted to the Construction Management Center (CMC)by the project
engineer.The form contains a description and the quantity of the items
needed.This form is then used to provide the information to determine
the dollar amount charged to the job.An Average Disbursement (ADP)
rate for each item in inventoryis calculated monthlybased upon the
average ending price of the items in the inventoryaccount for that state.
When the items are shipped,the inventoryaccount is charged the average
value.When unused items are returned,the account is credited at the
same rate.As a result,individual invoices for this type of material cannot
be matched with the materials used on a specific job.An example of the
reports for this process are contained in section 2 of Tab "E".This
procedure is followed for all financial corporate records,(SEC reporting,
Tax records,Regulatory reporting,etc.)
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Qwest Communications represents that all equipment identified in
this 2001 application for certification constitute new investments in Idaho,
and such equipment has not previouslybeen submitted for certification.
B.Capitalization Policy:
A statement of Qwest Communication's Fixed Asset Capitalization
Policy is contained in Tab "F".The Company follows Part 32 of the FCC
Rules and Regulations for telecommunications plan accounts,(copy
attached).
C.Retirement Calculation:
Because Qwest is providing the PUC with investment data at a
summary level as opposed to an individual asset basis,an allocation
method will be used to determine assets retired for recapture purposes.
Due to the volume of individual assets represented in this application,it
would be a sizable task to identify specific asset retirements.Since the
company uses "mass asset"accounting for its fiscal books,the
identification of individual retirements would require a manual process.
To report retired assets,Qwest will calculate the ratio of assets
upon which the broadband credit is claimed (by FRC/tax class and year
placed in service)when compared to the total Idaho annual additions (by
FRC/tax class and year place in service).This percentage will be used to
determine an allocation of future retirements (by FRC/tax class and year
place in service).Qwest will assume that the total amount of assets retired
in a given year is proportional between those earning broadband
investment credits and the remaining assets within the state.For example,
if in a given year,75%of the assets in class 257C are certified as
"Qualified Broadband Equipment",and 10%of the total vintage class
257C assets are retired in a subsequent year,Qwest will report 7.5%of the
total class as retired and subject to recapture,(75%qualifyingX 10%total
assets retired within the vintage class).
6.Provide the date(s)or time period(s)when the broadband equipment was installed
in Idaho.
All equipment listed in Tab "C"was placed in service between
January 1,2001 and December 31,2001
The specific date that the equipment for each project listed in Tab
"C"was "placed in service"is identified in the column headed "Inservice
date"(the 15'"column from the left).For example,03012001 means March
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1,2001.The date the assets are "placed in service"is determined in a
manner consistent with Qwest's accounting procedure as mandated by
General Accepted AccountingPractices (GAAP),and the Internal
Revenue Code.
7.Provide a written description (includingbasic schematics or general drawings)of
the relevant broadband network includinga description of how the installedequipmentis"an integral part"of a broadbandnetwork.
See Tab "G"
The followingbroadband network is described in Tab "G":
The Basic DSL Architecture
Remote ATM Architecture
Qwest DSL
Qwest DSL Loop Qualifications
DSL Remote Terminals
DS3 and SST Networks
SHNS Network
8.Quantifythe percentage and number of potential Idaho subscribers that could be
serviced with the broadband equipment and the percentage and number of non-
Idaho subscribers that will be/could be serviced by the broadband network.
In Idaho Not in Idaho
Percentage of Number of Percentage of Number ofProductPotentialPotentialPotentialPotential
Subscribers Subscribers Subscribers Subscribers
General 100 %151,063 *0 %0
Broadband
Products
IOF 100 %1,293,953 **0 %0
Dedicated Line 100 %1,293,953 **0 %0
Services
*The followingchart reports the number of lines within 3,000 meters of thewirecentersthatprovideDSLservice.This distance is the limitation for
providing DSL to prospective customers.
Wire Center Lines Within DSL Total Access Lines Percent Potentially
Distance Limitation for the Wire Center ServedBoiseMain31,670 74,006 43%
Boise Northwest 5,604 6,445 87%
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This request is answered in three separate parts:
i.General Broadband Services:$9,855,469
Pro-Forma Submission $9,856,741
Change ($1,272)
This list includes equipment that is necessary and is an
integral part of the provision of the followingservices:
Asynchronous Transfer Mode Cel1Relay
Service (ATM)
Digital Subscriber Lines (DSL)
Frame Relay
ii.Dedicated Line Services:$4,064,950
Pro-Forma Submission $4,064,950
Change -0-
This list includes equipment that is necessary and is an
integral part of the provisionof the followingservices:
DS-1
DS-3
Sonet Ring Service (SRS)
Synchronous Service Transport (SST)
Self-Healing Network Service (SHNS)
Self-Healing Alternate Route Protection
(SHARP)
iii.Inter Office Facilities (IOF):$6,877,884
Pro-Forma Submission $8,196,521
Change ($1,318,637)
This list includes equipment that connects the central
offices and is necessary and an integral part of providing
the services within the General Broadband Service and
Private Line categories.
Each line in Tab "C"represents a specific job that is a
summation of multipleindividual assets,capitalized labor,and
interest expense.The dollar amount in column "Cumulative
Amount Invested"(last column on right)represent the total
investment for that specific job.The distinguishing features for
each job is identified in the column "Acct.Desc."(1lth COÏUmn
from the left -i.e.Circuit Equipment -Other Digital Equipment)
and the Field Reporting Code identified in the column "ACCT"(10th COlumn from the left).
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Boise Southwest '3,905 9,006 43%
Boise West 26,941 50,865 53%
Eagle 6,460 13,785 47%
Idaho Falls 18,122 44,478 41%
Meridian
i 11,115 23,753 47%
Nampa '14,346 34,939 41%
PocatelloMain 12,857 22,404 57%
PocatelloNorth 5,279 13,890 38%
Twin fall 14,764 26,066 57%
Totals 151,063 319,637 47%
**This is the population of Idaho in year 2000
Source :NPG Idaho State Facts http://www.npe.ore/states/id.htm
9.Enclose a statement certifying that the applicant has read the applicable statutes
for broadbandinvestment income tax credit and the applicant believes that the
subject broadbandequipment qualifies for the tax credit under Idaho Code sec.
63-30291.
See Tab "H"
Any additional requests or notifications of action on this application should be directed to
the undersigned,and a copy provided to Mr.John Souba,Qwest Corporation,999 Main
Street,11'"Floor,Boise ID 83702.
ely
C.Dou Hurst