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delayed the recognition of income until the retained conduits
were later sold.
Respondent’s contention assumes that Qwest knew the amount
of future economic benefit it would realize from the retained
conduits at the time it made the cost allocations. Respondent
focuses on Qwest’s 1995 five-year plan, which stated Qwest’s goal
of offering 15,502 miles of conduit for sale to third-party
customers. The 1995 five-year plan estimated that, if the
conduit were sold at an average of $30,000 per conduit mile, this
would generate revenue of $465 million. Respondent also notes
that after the years in issue, Qwest was able to sell most of its
retained conduits.
Respondent fails to consider the extensive testimony and
evidence that, at the time the allocations were made, the value
of the retained conduits was uncertain. The estimated value of
the retained conduits at $30,000 per mile could be realized only
if the conduits were actually sold. At the time of installation,
Qwest did not have customers lined up to purchase the retained
conduits. In its report to Qwest, CLC concluded that the country
did not need another nationwide fiberoptic network, and Qwest’s
installation of additional conduits would be “very risky” and its
revenue projections “may be optimistic”. Further, Mr. Anschutz
and Mr. O’Callaghan credibly testified that installing additional
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