 that replacement cost is superior to historical cost as a measure of market value, because, as noted by then-Professor Stephen Breyer, "[a] competitive marketplace values assets, not at their historical price, but at their replacement value the present cost of obtaining the identical service that the old asset provides" (Breyer 1982, p. 38). Historical costs suffer from several well-recognized infirmities. For example, the market value of an input may have increased or decreased since its purchase. In addition, historical costs will typically be based on the book values of plant and equipment (also known as "embedded costs"). The depreciation schedules allowed under the applicable accounting rules and tax laws often fail to constitute proper economic measures of depreciation. Replacement cost, in contrast, more accurately reflects changes in value. It is true that replacement cost is not without its own complications and that short-term changes can temporarily cause it to rise above or fall below equilibrium levels. Nonetheless, replacement cost provides a reasonably reliable measure of the direct costs of providing network services. The costs of supplying network access also include transaction costs, discussed at greater length in Chapter 5. The network operator must devote management and employee resources to handling the provision of network services, including arranging network connections, monitoring usage, and billing for network use. In the face of mandated access, the owner of the network must determine the existing demands for capacity and provide additional capacity to meet regulatory require- ments. For example, in the case of pole attachments, the FCC initially required that a utility take "all reasonable steps" to expand the capacity of its poles, ducts, conduits, and even rights of way upon request by telecommunications carriers and cable operators. Moreover, the FCC still requires that electric utilities verify the amount of space that they would like to reserve for themselves. This provision of 