Federal Communications Commission

Pricing Policy Division

Wireline Competition Bureau

SEPTEMBER, 2004

Report

On

Depreciation Reserve Analysis for 2004

Report on Depreciation Reserve Analysis for 2004

The theoretical reserve studies are filed annually by July 1 and analyze
the reserves as of the previous January 1. The most recent studies were
filed by July, 2004.

Comparison of the actual depreciation reserves and the theoretical
reserves provides a good indication of whether the depreciation rates
applied in the past to the assets currently in use have been adequate to
properly allocate the cost of the plant assets to operations over their
useful life. Our analysis of the most recent data shows that the
prescribed rates have been very effective and that the actual
depreciation reserves and the reserves calculated in the theoretical
reserve studies are remarkably close. The actual reserves for the
carriers as a group exceed the theoretical reserves, indicating that the
depreciation recorded to date has been more than adequate. Our analysis
also shows that the differences between the actual depreciation reserves
and the theoretical reserves of the individual carriers are all within
acceptable limits.

Depreciation accounting is the process of allocating the cost of plant
assets to expense over the estimated useful life of the assets. When a
company acquires plant assets that will be used in its operations over
more than one year, it records the acquisitions in appropriate asset
accounts at cost. Each year a portion of the assets' cost is charged to
depreciation expense. The amount charged to depreciation expense is
based on the estimated useful life of the assets and their estimated
value at retirement (salvage value). The cost recorded in an asset
account is not reduced as the assets are depreciated. Instead, the
amount of depreciation recorded as expense is also recorded in an
accumulated depreciation account, often referred to as the depreciation
reserve, which keeps track of how much of the cost of the assets
currently in the plant accounts has been charged to expense to date. The
depreciation reserve subtracted from the cost of the plant shows how
much of the cost remains to be depreciated in the future.

Our analysis shows that the depreciation reserves of the carriers for
which the Commission prescribes depreciation rates equal 61% of the
plant cost, i.e., more than half of the plant cost has been charged to
depreciation expense. By comparison, the theoretical reserve studies
filed by the carriers show that, if the most recent data on plant lives
and salvage value had been used to depreciate existing plant, the
depreciation reserves would equal 53% of the plant cost. This indicates
that the carriers as a group have recorded more depreciation expense
than necessary to recover the cost of the plant over its estimated
useful life.

We also compared the depreciation reserves to the theoretical reserve
studies by company, by state, and by account to identify any individual
depreciation rates that may need adjustment. These comparisons are shown
in the attached tables. Our analysis shows that the pattern for the
companies as a group is also found for the major companies at the
holding company level. The chart below compares the actual reserves and
the theoretical reserves for the large Incumbent Local Exchange Carriers
(ILECs). As the chart shows the companies' theoretical reserves closely
match the actual reserves and in each case the actual reserves are
slightly higher than they need to be.

![](media/image1.wmf){width="5.996527777777778in"
height="4.090277777777778in"}

**[Historical Perspective]{.underline}**

Twenty years ago the carriers' reserve picture looked very different. In
1980, the Commission undertook a major review of its depreciation
prescription process and the industry's depreciation reserve. The
Commission found that the industry's actual depreciation reserve at that
time was 19% of plant and that its theoretical reserve was 33%. This
showed that depreciation charged to expense up to that time had been
insufficient. To correct the shortfall in the depreciation reserve, the
Commission took two major steps to improve its process for prescribing
depreciation rates. First, it adopted improved depreciation methods that
automatically adjusted depreciation rates to compensate for over or
under depreciation in the past. Second, it made a major change in how
plant lives were estimated. The focus was changed from historical-based
studies to forward-looking studies. These changes led to the
prescription of higher and more accurate depreciation rates.

By 1986, the ILEC reserve had increased to 28% of plant and the
theoretical reserve had increased to 38%. To bring about a more timely
closure of the gap between the actual and theoretical reserves, the
Commission approved amortization of ILEC reserve deficiencies through
additional charges to depreciation expense over a five-year period
beginning in 1987. As a result of the changes made since 1980, the
industry's depreciation reserve has risen from 19% in 1980 to 61% in
2004, and as shown in the attached tables, the depreciation reserve
deficit has been eliminated.

  ------------------ ----------------- ------- ----------------- ---------- ------- ----------------- ---------- ------- ------------------ -- ----- --
                                                                                                                                                     

                                                                                                                                                     

  **SUMMARY OF                                                                                                                                       
  THEORETICAL                                                                                                                                        
  RESERVE ANALYSIS**                                                                                                                                 

  ***(as of January                                                                                                                                  
  1, 2004)***                                                                                                                                        

                                                                                                                                                     

                     **TOTAL**                 **BOOK RESERVE**                     **THEORETICAL                        **RESERVE**                 
                                                                                    RESERVE**                                                        

                     **INVESTMENT**            **AMOUNT**        **%**              **AMOUNT**        **%**              **IMBALANCE**               

                                                                                                                                                     

  **BELLSOUTH        60,025,209                38,276,534        63.8               31,977,954        53.3               (6,298,579)                 
  CORPORATION**                                                                                                                                      

                                                                                                                                                     

  **SBC              119,283,014               72,274,697        60.6               61,048,209        51.2               (11,226,488)                
  COMMUNICATIONS,                                                                                                                                    
  INC**                                                                                                                                              

                                                                                                                                                     

  **QWEST            41,362,634                24,998,224        60.4               21,564,644        52.1               (3,433,580)                 
  CORPORATION**                                                                                                                                      

                                                                                                                                                     

  **VERIZON          121,934,243               74,766,139        61.3               65,699,024        53.9               (9,067,115)                 
  COMMUNICATIONS**                                                                                                                                   

                                                                                                                                                     

  **TOTAL BOC**      **342,605,100**   ** **   **210,315,593**   **61.4**   ** **   **180,289,831**   **52.6**   ** **   **(30,025,762)**            
  ------------------ ----------------- ------- ----------------- ---------- ------- ----------------- ---------- ------- ------------------ -- ----- --

  ------------------ ----------------- ------- ----------------- ---------- ------- ----------------- ---------- ------- ------------------ ------
                                                                                                                                            

  **SUMMARY OF                                                                                                                              
  THEORETICAL                                                                                                                               
  RESERVE ANALYSIS**                                                                                                                        

  ***(as of January                                                                                                                         
  1, 2004)***                                                                                                                               

                                                                                                                                            

                     **TOTAL**                 **BOOK RESERVE**                     **THEORETICAL                        **RESERVE**        
                                                                                    RESERVE**                                               

                     **INVESTMENT**            **AMOUNT**        **%**              **AMOUNT**        **%**              **IMBALANCE**      

                                                                                                                                            

  **BELLSOUTH        60,025,209                38,276,534        63.8               31,977,954        53.3               (6,298,579)        
  CORPORATION**                                                                                                                             

                                                                                                                                            

  **QWEST            41,362,634                24,998,224        60.4               21,564,644        52.1               (3,433,580)        
  CORPORATION**                                                                                                                             

                                                                                                                                            

  **SBC              119,283,014               72,274,697        60.6               61,154,986        51.3               (11,119,711)       
  COMMUNICATIONS,                                                                                                                           
  INC**                                                                                                                                     

  **Ameritech**      40,113,342                25,136,494        62.7               20,817,555        51.9               (4,318,940)        

  **Southwestern     39,030,439                23,190,406        59.4               19,817,651        50.8               (3,372,755)        
  Bell**                                                                                                                                    

  **Pacific          35,073,829                20,926,799        59.7               17,704,905        50.5               (3,221,894)        
  Telesis**                                                                                                                                 

  **SNET**           5,065,404                 3,020,998         59.6               2,708,099         53.5               (312,899)          

                                                                                                                                            

  **VERIZON          121,934,243               74,766,139        61.3               65,699,024        53.9               (9,067,115)        
  COMMUNICATIONS**                                                                                                                          

  **Bell Atlantic -  46,493,362                28,799,831        61.9               24,360,392        52.4               (4,439,439)        
  South**                                                                                                                                   

  **Bell Atlantic -  44,683,299                27,735,065        62.1               24,330,402        54.5               (3,404,663)        
  North**                                                                                                                                   

  **GTE Companies**  30,757,582                18,231,243        59.3               17,008,231        55.3               (1,223,013)        

                                                                                                                                            

  **TOTAL BOC**      **342,605,100**   ** **   **210,315,593**   **61.4**   ** **   **180,289,831**   **52.6**   ** **   **(30,025,762)**   

                                                                                                                                            
  ------------------ ----------------- ------- ----------------- ---------- ------- ----------------- ---------- ------- ------------------ ------

  ------------------ ---------------- ------- ---------------- ---------- ------- ---------------- ---------- ------- -----------------
                                                                                                                      

  **SUMMARY OF                                                                                                        
  THEORETICAL                                                                                                         
  RESERVE ANALYSIS                                                                                                    
  BY STATE**                                                                                                          

  ***(as of January                                                                                                   
  1, 2004)***                                                                                                         

                                                                                                                      

                     **TOTAL**                **BOOK RESERVE**                    **THEORETICAL                       **RESERVE**
                                                                                  RESERVE**                           

                     **INVESTMENT**           **AMOUNT**       **%**              **AMOUNT**       **%**              **IMBALANCE**

                                                                                                                      

  **BELLSOUTH**                                                                                                       

  ALABAMA            5,283,503                3,307,966        62.6               2,769,843        52.4               (538,123)

  KENTUCKY           3,087,672                2,002,830        64.9               1,589,015        51.5               (413,815)

  LOUISIANA          5,421,230                3,860,150        71.2               3,122,763        57.6               (737,387)

  MISSISSIPPI        3,662,265                2,475,232        67.6               1,975,787        53.9               (499,446)

  TENNESSEE          6,023,991                3,771,398        62.6               3,153,210        52.3               (618,188)

  FLORIDA            14,178,245               9,304,055        65.6               7,787,777        54.9               (1,516,278)

  GEORGIA            12,241,564               7,003,396        57.2               6,048,072        49.4               (955,324)

  N CAROLINA         6,364,347                4,049,552        63.6               3,400,211        53.4               (649,340)

  S CAROLINA         3,762,393                2,501,955        66.5               2,131,277        56.6               (370,678)

                     **60,025,209**   ** **   **38,276,534**   **63.8**   ** **   **31,977,954**   **53.3**   ** **   **(6,298,579)**

                                                                                                                      

  **QWEST**                                                                                                           

  ARIZONA            6,434,373                3,532,911        54.9               3,129,699        48.6               (403,211)

  COLORADO           7,880,164                4,538,903        57.6               3,868,874        49.1               (670,029)

  NEW MEXICO         2,177,322                1,444,393        66.3               1,288,094        59.2               (156,299)

  UTAH               2,795,551                1,571,086        56.2               1,398,363        50.0               (172,723)

  WYOMING            798,016                  571,818          71.7               476,356          59.7               (95,462)

  IOWA               2,294,136                1,548,558        67.5               1,298,219        56.6               (250,339)

  MINNESOTA          4,930,843                2,972,007        60.3               2,539,201        51.5               (432,806)

  NEBRASKA           1,598,788                1,164,324        72.8               948,858          59.3               (215,465)

  NORTH DAKOTA       527,628                  381,452          72.3               301,924          57.2               (79,528)

  SOUTH DAKOTA       713,879                  466,024          65.3               394,892          55.3               (71,132)

  IDAHO              1,196,414                750,580          62.7               610,034          51.0               (140,546)

  MONTANA            908,624                  631,495          69.5               519,267          57.1               (112,228)

  OREGON             3,197,340                1,792,790        56.1               1,608,436        50.3               (184,354)

  WASHINGTON         5,909,556                3,631,883        61.5               3,182,424        53.9               (449,459)

                     **41,362,634**   ** **   **24,998,224**   **60.4**   ** **   **21,564,644**   **52.1**   ** **   **(3,433,580)**

                                                                                                                      

  **SBC                                                                                                               
  COMMUNICATIONS**                                                                                                    

  ILLINOIS           12,753,069               7,732,477        60.6               6,341,891        49.7               (1,390,586)

  INDIANA            4,291,214                2,602,309        60.6               2,218,933        51.7               (383,376)

  MICHIGAN           10,993,750               7,348,119        66.8               5,932,215        54.0               (1,415,904)

  OHIO               8,141,422                5,195,890        63.8               4,374,980        53.7               (820,910)

  WISCONSIN          3,933,887                2,257,700        57.4               1,949,535        49.6               (308,165)

  ARKANSAS           2,482,800                1,614,226        65.0               1,356,921        54.7               (257,304)

  KANSAS             2,926,159                1,825,663        62.4               1,526,145        52.2               (299,518)

  MISSOURI           6,120,123                3,587,421        58.6               3,109,963        50.8               (477,458)

  OKLAHOMA           3,582,407                2,267,925        63.3               1,876,451        52.4               (391,473)

  TEXAS              23,918,948               13,895,172       58.1               11,948,170       50.0               (1,947,002)
  ------------------ ---------------- ------- ---------------- ---------- ------- ---------------- ---------- ------- -----------------

  ------------- ---------------- -- ------------ ------- -- --------------- ------- -- ---------------
  **SUMMARY OF                                                                         
  THEORETICAL                                                                          
  RESERVE                                                                              
  ANALYSIS BY                                                                          
  STATE**                                                                              

  ***(as of                                                                            
  January 1,                                                                           
  2004)***                                                                             

                                                                                       

                **TOTAL**           **BOOK                  **THEORETICAL              **RESERVE**
                                    RESERVE**               RESERVE**                  

                **INVESTMENT**      **AMOUNT**   **%**      **AMOUNT**      **%**      **IMBALANCE**
  ------------- ---------------- -- ------------ ------- -- --------------- ------- -- ---------------

  ------------------ ----------------- ------- ----------------- ---------- ------- ----------------- ---------- ------- ------------------
  CALIFORNIA         34,285,016                20,506,266        59.8               17,353,504        50.6               (3,152,761)

  NEVADA             788,813                   420,533           53.3               351,401           44.5               (69,133)

  CONNECTICUT        5,065,404                 3,020,998         59.6               2,708,099         53.5               (312,899)

                     **119,283,014**   ** **   **72,274,697**    **60.6**   ** **   **61,048,209**    **51.2**   ** **   **(11,226,488)**

                                                                                                                         

  **VERIZON                                                                                                              
  COMMUNICATIONS**                                                                                                       

  PENNSYLVANIA       12,686,866                8,005,631         63.1               6,763,185         53.3               (1,242,446)

  MARYLAND           7,728,754                 4,873,025         63.1               4,081,164         52.8               (791,861)

  VIRGINIA           7,939,428                 4,630,847         58.3               3,814,723         48.0               (816,124)

  WASHINGTON DC      2,126,744                 1,223,735         57.5               1,094,482         51.5               (129,253)

  WEST VIRGINIA      2,256,109                 1,552,785         68.8               1,304,339         57.8               (248,446)

  DELAWARE           1,161,206                 722,051           62.2               600,110           51.7               (121,940)

  NEW JERSEY         12,594,255                7,791,756         61.9               6,702,387         53.2               (1,089,368)

  MAINE              1,826,503                 1,223,165         67.0               1,016,273         55.6               (206,892)

  MASSACHUSETTS      10,713,093                6,591,290         61.5               5,852,741         54.6               (738,549)

  NEW HAMPSHIRE      2,099,132                 1,342,265         63.9               1,156,832         55.1               (185,433)

  RHODE ISLAND       1,217,424                 802,324           65.9               701,744           57.6               (100,580)

  VERMONT            1,046,727                 721,010           68.9               619,101           59.1               (101,909)

  NEW YORK           27,780,420                17,055,011        61.4               14,983,712        53.9               (2,071,299)

  FLORIDA            5,280,496                 3,209,685         60.8               2,755,563         52.2               (454,122)

  HAWAII             1,907,129                 1,094,888         57.4               1,067,832         56.0               (27,056)

  CALIFORNIA         1,117,497                 706,845           63.3               637,261           57.0               (69,585)

  ILLINOIS           1,809,327                 1,076,387         59.5               1,113,868         61.6               37,481

  INDIANA            2,357,556                 1,357,817         57.6               1,207,233         51.2               (150,584)

  MICHIGAN           1,792,981                 1,089,892         60.8               1,030,692         57.5               (59,199)

  OHIO               2,058,862                 1,303,685         63.3               1,238,188         60.1               (65,497)

  PENNSYLVANIA       1,453,303                 857,063           59.0               766,924           52.8               (90,140)

  WISCONSIN          988,194                   593,599           60.1               586,214           59.3               (7,384)

  IDAHO              422,389                   247,070           58.5               239,363           56.7               (7,707)

  OREGON             1,157,575                 626,948           54.2               611,487           52.8               (15,461)

  WASHINGTON         2,484,337                 1,319,818         53.1               1,305,793         52.6               (14,025)

  NORTH CAROLINA     1,109,824                 663,654           59.8               602,336           54.3               (61,318)

  SOUTH CAROLINA     527,417                   336,816           63.9               295,552           56.0               (41,264)

  VIRGINIA           1,445,997                 830,538           57.4               822,595           56.9               (7,943)

  TEXAS              4,844,697                 2,916,540         60.2               2,727,330         56.3               (189,210)

                     **121,934,243**   ** **   **74,766,139**    **61.3**   ** **   **65,699,024**    **53.9**   ** **   **(9,067,115)**

                                                                                                                         

                                                                                                                         

  **TOTAL BOCs**     **342,605,100**   ** **   **210,315,593**   **61.4**   ** **   **180,289,831**   **52.6**   ** **   **(30,025,762)**

                                                                                                                         
  ------------------ ----------------- ------- ----------------- ---------- ------- ----------------- ---------- ------- ------------------

  ------------ ------------------- ---------------- ---------------- ------------- ---------------- ------------- ----------------- ------------- -- -- --
  **BELL                                                                                                                                                
  OPERATING                                                                                                                                             
  COMPANIES                                                                                                                                             
  (BOCs)**                                                                                                                                              

                                                                                                                                                        

  **PLANT                          **JANUARY 1,     **BOOK RESERVE**               **THEORETICAL                  **RESERVE                             
  ACCOUNT**                        2004**                                          RESERVE**                      IMBALANCE**                           

  **NUMBER**   **DESCRIPTION**     **INVESTMENT**   **AMOUNT**       **PERCENT**   **AMOUNT**       **PERCENT**   **AMOUNT**        **PERCENT**         

  **A**        **b**               **c**            **d**            **e = d / c** **F**            **g = f / c** **h = f - d**     **i = h / c**       

  **2112**     **MOTOR VEHICLES**  **3,376,066**    **2,237,675**    **66.3**      **1,864,977**    **55.2**      **(372,697)**     **-11.0**           

  **2113**     **AIRCRAFT**        **23,822**       **9,513**        **39.9**      **10,053**       **42.2**      **540**           **2.3**             

  **2114**     **TOOLS & OTHER WK  **2,753,742**    **1,434,826**    **52.1**      **1,210,939**    **44.0**      **(223,887)**     **-8.1**            
               EQPT**                                                                                                                                   

  **2121**     **BUILDINGS**       **26,826,213**   **7,193,276**    **26.8**      **7,118,375**    **26.5**      **(74,901)**      **-0.3**            

  **2122**     **FURNITURE**       **72,956**       **54,014**       **74.0**      **46,637**       **63.9**      **(7,377)**       **-10.1**           

  **2123.1**   **OFFICE SUPPORT**  **326,434**      **292,455**      **89.6**      **193,531**      **59.3**      **(98,924)**      **-30.3**           

  **2123.2**   **COMPANY           **494,880**      **398,925**      **80.6**      **283,183**      **57.2**      **(115,742)**     **-23.4**           
               COMMUNICATION EQ**                                                                                                                       

  **2124**     **GENERAL PURPOSE   **6,547,644**    **5,405,329**    **82.6**      **4,470,227**    **68.3**      **(935,102)**     **-14.3**           
               COMPUTERS**                                                                                                                              

  **2211**     **ANALOG            **1,033,546**    **1,174,487**    **113.6**     **804,170**      **77.8**      **(370,318)**     **-35.8**           
               SWITCHING**                                                                                                                              

  **2212**     **DIGITAL           **60,533,171**   **32,952,478**   **54.4**      **29,532,987**   **48.8**      **(3,419,491)**   **-5.6**            
               SWITCHING**                                                                                                                              

  **2220**     **OPERATOR          **590,391**      **320,274**      **54.2**      **348,507**      **59.0**      **28,233**        **4.8**             
               SYSTEMS**                                                                                                                                

  **2231**     **RADIO SYSTEMS**   **596,333**      **480,754**      **80.6**      **402,983**      **67.6**      **(77,771)**      **-13.0**           

  **2232**     **CIRCUIT -         **20,877,353**   **14,584,037**   **69.9**      **11,784,767**   **56.4**      **(2,799,270)**   **-13.4**           
               COMBINED**                                                                                                                               

  **2232.1**   **CIRCUIT -- DDS**  **422,217**      **407,807**      **96.6**      **329,146**      **78.0**      **(78,661)**      **-18.6**           

  **2232.2**   **CIRCUIT -         **2,339,052**    **2,394,310**    **102.4**     **2,015,773**    **86.2**      **(378,536)**     **-16.2**           
               ANALOG**                                                                                                                                 

  **2232.3**   **CIRCUIT -         **64,241,469**   **41,079,934**   **63.9**      **33,026,660**   **51.4**      **(8,053,274)**   **-12.5**           
               DIGITAL**                                                                                                                                

  **2311**     **STATION           **426**          **(217)**        **-50.9**     **364**          **85.4**      **581**           **136.3**           
               APPARATUS**                                                                                                                              

  **2341**     **LARGE PBX**       **190,344**      **140,697**      **73.9**      **104,639**      **55.0**      **(36,059)**      **-18.9**           

  **2351**     **PUBLIC            **248,698**      **213,402**      **85.8**      **179,016**      **72.0**      **(34,386)**      **-13.8**           
               TELEPHONE**                                                                                                                              

  **2362**     **OTHER TERMINAL    **3,427,371**    **3,008,683**    **87.8**      **2,199,439**    **64.2**      **(809,244)**     **-23.6**           
               EQUIPMENT**                                                                                                                              

  **2411**     **POLES**           **6,009,284**    **5,294,785**    **88.1**      **5,069,218**    **84.4**      **(225,566)**     **-3.8**            

  **2421**     **AERIAL CABLE      **3,094,126**    **2,358,356**    **76.2**      **2,030,521**    **65.6**      **(327,835)**     **-10.6**           
               COMBINED**                                                                                                                               

  **2421.1**   **AERIAL CABLE      **28,141,863**   **21,970,698**   **78.1**      **18,697,800**   **66.4**      **(3,272,898)**   **-11.6**           
               METALLIC**                                                                                                                               

  **2421.2**   **AERIAL CABLE      **2,771,385**    **1,203,637**    **43.4**      **1,046,926**    **37.8**      **(156,711)**     **-5.7**            
               NON-METALLIC**                                                                                                                           
  ------------ ------------------- ---------------- ---------------- ------------- ---------------- ------------- ----------------- ------------- -- -- --

  ------------ ------------------- ----------------- ----------------- ------------- ----------------- ------------- ------------------ ------------- -- -- --
  **BELL                                                                                                                                                    
  OPERATING                                                                                                                                                 
  COMPANIES                                                                                                                                                 
  (BOCs)**                                                                                                                                                  

                                                                                                                                                            

  **PLANT                          **JANUARY 1,      **BOOK RESERVE**                **THEORETICAL                   **RESERVE                              
  ACCOUNT**                        2004**                                            RESERVE**                       IMBALANCE**                            

  **NUMBER**   **DESCRIPTION**     **INVESTMENT**    **AMOUNT**        **PERCENT**   **AMOUNT**        **PERCENT**   **AMOUNT**         **PERCENT**         

  **A**        **b**               **c**             **d**             **e = d / c** **f**             **g = f / c** **h = f - d**      **i = h / c**       

  **2422.1**   **UNDERGROUND CABLE **22,274,183**    **16,305,516**    **73.2**      **13,986,865**    **62.8**      **(2,318,650)**    **-10.4**           
               METALLIC**                                                                                                                                   

  **2422.2**   **UNDERGROUND       **7,300,705**     **3,284,842**     **45.0**      **2,935,777**     **40.2**      **(349,064)**      **-4.8**            
               NON-METAL**                                                                                                                                  

  **2423**     **BURIED CABLE      **8,232**         **3,322**         **40.3**      **3,622**         **44.0**      **301**            **3.7**             
               COMBINED**                                                                                                                                   

  **2423.1**   **BURIED CABLE      **51,786,291**    **35,440,913**    **68.4**      **30,549,271**    **59.0**      **(4,891,642)**    **-9.4**            
               METALLIC**                                                                                                                                   

  **2423.2**   **BURIED CABLE      **4,528,903**     **1,927,183**     **42.6**      **1,713,773**     **37.8**      **(213,410)**      **-4.7**            
               NON-METALLIC**                                                                                                                               

  **2424**     **SUBMARINE CABLE   **85,071**        **58,245**        **68.5**      **51,085**        **60.0**      **(7,160)**        **-8.4**            
               COMBINED**                                                                                                                                   

  **2424.1**   **SUBMARINE CABLE   **9,211**         **8,980**         **97.5**      **8,063**         **87.5**      **(917)**          **-10.0**           
               METALLIC**                                                                                                                                   

  **2424.2**   **SUBMARINE CABLE   **4,596**         **1,406**         **30.6**      **1,343**         **29.2**      **(63)**           **-1.4**            
               NON-METAL**                                                                                                                                  

  **2426**     **INTRABLDG CABLE   **587,044**       **515,029**       **87.7**      **398,621**       **67.9**      **(116,408)**      **-19.8**           
               COMBINED**                                                                                                                                   

  **2426.0**   **INTRABLDG CABLE   **1,441,250**     **1,296,761**     **90.0**      **1,072,507**     **74.4**      **(224,254)**      **-15.6**           
               METALLIC**                                                                                                                                   

  **2426.0**   **INTRABLDG CABLE   **135,683**       **110,543**       **81.5**      **54,855**        **40.4**      **(55,689)**       **-41.0**           
               NON-METAL**                                                                                                                                  

  **2431**     **AERIAL WIRE**     **94,742**        **133,930**       **141.4**     **103,331**       **109.1**     **(30,599)**       **-32.3**           

  **2441**     **CONDUIT SYSTEM**  **19,410,403**    **6,618,789**     **34.1**      **6,639,879**     **34.2**      **21,090**         **0.1**             

                                                                       ** **         ** **             ** **         ** **              ** **               

               **TOTAL ACCOUNTS**  **342,605,100**   **210,315,593**   **61.4**      **180,289,831**   **52.6**      **(30,025,762)**   **-8.8**            
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