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(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. With respect to the IRU projects, Qwest: (1)
Contracted with WorldCom to pull a certain number of fibers; and
(2) instead of pulling a fiberoptic cable with just enough fibers
to satisfy the IRU agreement, Qwest pulled a fiberoptic cable
with additional fibers for its own potential future use or sale.
b. Qwest’s Primary Focus
Petitioners argue that Qwest would not have installed the
additional conduits or pulled additional fiber without first
having the third-party customer contracts in place. Respondent
argues that Qwest’s primary focus was not the installation of
conduit or pulling of fiber for third-party customers, pointing
to the two projects with no third-party customer contracts in
place.25
During the years in issue, Qwest engaged in nine conduit
installation projects for third-party customers26 and three IRU
projects for WorldCom. In each instance, Qwest made the decision
25 It is important to note that the cost allocations with
respect to these two projects are not at issue; respondent only
uses them to question Qwest’s incremental cost allocation method
utilized in the projects in issue.
26 As noted supra, Qwest actually engaged in 12 such
conduit installation projects, but only 9 of these projects are
still in issue.
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