Opinion ID: 793196
Heading Depth: 2
Heading Rank: 4

Heading: Determining General Support Assets

Text: 30 Finally, Qwest objects to MPUC's adoption of the HAI model to calculate general support asset (GSA) expenses. GSA expenses are the costs for the necessary items that keep a network running and make telephone service possible, without actually being part of the network. These include the costs of computers, desks, buildings, vehicles, tools, and other non-network assets. Under FCC rules, these costs are treated as common and are recovered through a percentage markup on UNEs. See Local Competition Order ¶¶ 676, 682; see also 47 C.F.R. § 51.505(a). GSA expenses include the support costs a telephone company assumes when delivering service to both retail and wholesale customers. However, state public utilities commissions may not set UNE rates that include retail-only GSA costs because CLECs do not utilize an ILEC's retail support services to provide telephone service to their own customers. See 47 C.F.R. § 51.505(c)(2)(ii), (d)(2). Therefore, MPUC was required under the FCC's pricing rules to calculate the GSA expenses that an efficient forward-looking carrier would incur in the wholesale provision of UNEs. See id. 31 MPUC based GSA costs on the HAI Model proposed by AT & T/MCI. Under the HAI Model, GSA expenses are adjusted through two allocation factors that remove retail-only costs. Qwest argues that the HAI Model's calculation of GSA expenses already allocates to Qwest's retail operations an appropriate share of costs, and therefore the further adjustment under the allocators was unnecessary. Qwest also claims there is a lack of evidence explaining the methodology used to remove retail costs under the allocation factors. 8 32 While Qwest objects to the evidentiary support given to the HAI Model and the allocation factors, at its heart, Qwest's argument focuses on its disagreement with the methodology chosen to remove retail costs. Qwest argues that the preadjusted GSA costs allocated an appropriate share of such costs to Qwest's retail operations, and that further reduction under the allocators would result in Qwest's retail operations bearing a disproportionate share of GSA costs. Given that Qwest's retail operations should not merely be bearing a share of the retail GSA costs, but rather all of Qwest's retail costs, see 47 C.F.R. § 51.505(c)(2)(ii), (d)(2), we cannot see how MPUC erred in relying upon expert testimony that the allocators were necessary to remove retail GSA costs. 33 Qwest argues that there was insufficient explanation of the allocator methodology. However, Qwest's expert challenged the allocators in a sophisticated manner, suggesting that Qwest understood the HAI Model's methodology, and merely disagreed with it. While the ALJ and MPUC could have provided more detail in explaining their decision to adopt the HAI Model, they were not arbitrary and capricious merely because they chose the explanation and methodology of one expert over another. 34 Qwest argues that the Wireline Competition Bureau rejected a similar secondary adjustment in the Virginia arbitration. See Virginia Arbitration Order ¶ 151. However, the Virginia arbitration adopted a different cost model than the HAI Model adopted by MPUC. The Bureau rejected the inclusion of a secondary adjustment that removed costs associated with special access and toll in the universal service support context because there was nothing to indicate that this adjustment correlated to a reduction in retail expenses in the GSA context. Id. Relevant to the HAI Model, however, the ALJ noted that the model was previously adopted by MPUC in another proceeding and that Qwest presented its same objections to two other state public utilities commissions, both of which accepted the HAI Model as properly excluding retail GSA expenses. 35 Therefore, we conclude that MPUC was not arbitrary and capricious in its adoption of the cost models relevant to the present case.