Anschutz Company and Subsidiaries - Page 11

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          itself (third-party-only projects).7  In 12 projects, Qwest                 
          installed conduit for third-party customers while simultaneously            
          installing conduit along the same route for its own potential               
          future use or sale (conduit installation projects).  In the                 
          remaining three projects, Qwest pulled fiber using conduit                  
          previously laid and retained by Qwest and granted third-party               
          customers indefeasible rights of use (IRUs) in a certain number             
          of fibers (IRU projects).                                                   
                    1.   Conduit Installation Projects                                
               In the conduit installation projects, Qwest generally                  
          followed the same procedure:  (1) Qwest contracted with a third-            
          party customer for installation of conduit over a certain route;            
          (2) conduit was installed along Southern Pacific’s or other                 
          railroad companies’ rights-of-way; (3) Qwest received cash                  
          compensation or DS-3 capacity for installing the conduit; and (4)           
          Qwest simultaneously installed and retained additional conduits             
          for its own potential future use or sale.  Qwest and the customer           
          negotiated and agreed to a fixed price, with adjustments possible           
          under specific circumstances, for Qwest to install conduit over a           
          particular route.  During the years in issue, Qwest charged its             
          customers approximately $30,000 to $40,000 per conduit mile.                


               7  The third-party-only projects include:  (1) USW Clifton-            
          Rifle; (2) PAC Bell; (3) USW Romero-Santa Fe; and (4) MFS Denver            
          IRU.  These projects are not directly in issue and will not be              
          discussed in detail.                                                        





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Last modified: May 25, 2011