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heavily against petitioners because this inexactitude is of their
own making, we estimate that the accumulation of earnings
justified to meet NITCO's reasonable business need for installing
fiber optic cable to connect its exchanges was $300,000 for 1987
and was $100,000 for each of the years 1988 and 1989.
With respect to broadband switches and the fiber optic cable
to support broadband switches, petitioners maintain that NITCO
planned to eventually acquire the broadband switches at about the
time it commenced to rewire the homes of its residential
customers with fiber optic cable.14 Yet, in the white paper Kyle
14In a letter dated Sept. 28, 1992, to respondent's counsel
that elaborated on certain of NITCO's alleged business needs,
petitioners' counsel stated:
During the years in issue * * * [NITCO] also
determined that ultimately it would be required to
retrowire individual housing for fiber optic cable and
to move on to the next generation of digital switching.
Fiber optic cable coupled with the next generation of
digital switching will allow NITCO to provide service
option features to its customers comparable to
adjoining telephone companies such as Call blocking,
caller I.D., and call-me-back services. This next
generation of digital switches is generally described
as broad-band switches which have the capacity for
greater programming flexibility in order to provide
multiple services to each line. While no copper wire
in existing residential and commercial installation has
been retrofitted with fiber optic cable to date to
allow use of the new generation switches, such program
is anticipated in the near future to enable NITCO to
remain competitive.
These broadband switches apparently could also be used to
provide television or video services to customers. On reply
(continued...)
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