Anschutz Company and Subsidiaries - Page 22

                                       - 22 -                                         
          Using the MCI Denver-El Paso project as an example, Qwest used              
          the incremental cost allocation method as follows:14                        
               Indirect costs allocated to Qwest’s retained assets                    
               Qwest conduit miles                2,295                               
               Times: incremental cost/mile       *    $6,500                         
                                                  $14,917,629                         
               Plus: Qwest capitalized interest   + 1,072,296                         
               Project costs allocated to Qwest   $15,989,925                         
               Indirect costs allocated to customer contracts                         
               Total project costs                $39,151,405                         
               Less: project costs                (15,989,925)                        
               allocated to Qwest                                                     
               Project costs                                                          
               allocated to customer              $23,161,480                         
               Divide: customer conduit miles     /       761                         
               Incremental cost/mile allocated                                        
               to customer                        $30,422                             

               B.   Incremental Cost Allocation Method in the IRU Projects            
               Qwest also used an incremental cost allocation method to               
          allocate costs for the IRU projects involving WorldCom.  For                
          these projects, Qwest allocated existing conduit costs, the labor           
          costs of pulling fiber, and right-of-way costs entirely to the              
          IRU agreement because these costs did not increase by installing            
          a cable with more than 24 fibers.15  The cost of new conduit, or            


               14  We note that these calculations were provided by                   
          petitioners, and there appear to be mathematical errors.                    
          However, because petitioners relied on these calculations, we               
          have left the errors uncorrected.                                           
               15  For the WorldCom Dallas-Houston project, since the fiber           
          was previously installed for Qwest’s account, Qwest allocated the           
          existing conduit costs, the costs of pulling fiber through that             
                                                             (continued...)           




Page:  Previous  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  Next

Last modified: May 25, 2011