20020927McIntyre Direct.pdf

BEFORE THE IDAHO PUBLIC SERVICE COMMISSION

IDAHO TELEPHONE ASSOCIATION, )
CITIZEN’S TELECOMMUNICATIONS )
COMPANY OF IDAHO, CENTURYTEL ) CASE NO. QWE-T-02-11
OF IDAHO, CENTURYTEL OF THE )
GEM STATE, POTLACH TELEPHONE )
COMPANY and ILLUMINET, INC. )

Complainants,

v.

QWEST CORPORATION,

Respondent.

DIRECT TESTIMONY

OF

SCOTT A. MCINTYRE

ON BEHALF OF QWEST CORPORATION

September 27, 2002

DIRECT TESTIMONY OF SCOTT A. MCINTYRE
INDEX OF TESTIMONY

TOPIC PAGE
I. IDENTIFICATION OF WITNESS.....................................................................................................1
II. INTRODUCTION ...............................................................................................................................2
III. BACKGROUND .................................................................................................................................4
IV. SIGNALING OPTIONS....................................................................................................................10
V. COMPLAINANTS’ ARGUMENTS.................................................................................................14
VI. ACCESS CATALOG........................................................................................................................19
VII. SS7 RATES.......................................................................................................................................21
VIII. INTERCONNECTION AGREEMENTS AND BILLING ARRANGEMENTS..............................24
IX. AGENCY ISSUE...............................................................................................................................26
X. REVENUE NEUTRALITY ..............................................................................................................30
XI. CONCLUSION..................................................................................................................................31

Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

I. IDENTIFICATION OF WITNESS 1
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Q. PLEASE STATE YOUR NAME, PLACE OF EMPLOYMENT, AND
OCCUPATION.
A. My name is Scott A. McIntyre. I work for Qwest Corporation and my title is
Director – Product and Market Issues.

Q. PLEASE REVIEW YOUR EDUCATION, WORK EXPERIENCE, AND
PRESENT RESPONSIBILITIES.
A. I earned a Bachelor of Science degree in Electrical Engineering at the University
of Washington in 1974. I have worked for Qwest (formerly U S WEST
Communications, Inc. and before that, Pacific Northwest Bell) since 1970. In the
past 32 years, I have held many positions that have given me a broad
understanding of the telecommunications business. I have experience in the
installation and repair of local residence and business telephone services. I also
have experience in analyzing and planning new central office equipment and
interoffice network facilities. I have performed cost analyses on many aspects of
the business and analyzed departmental budgets in great detail. From 1987 to
1999, I managed private line voice and data products. This included the
development, pricing and marketing for a wide range of products serving business
customers across Qwest’s fourteen-state region.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Since July 1999, I have been in my current position as a policy and pricing expert,
representing Qwest on issues involving various services. I also represent Qwest
on issues concerning competition and performance measures. This wide range of
experience has provided me with an understanding of how services are provided,
the pricing and marketing that support these services and the impacts of regulation
and competition.

Q. HAVE YOU PREVIOUSLY TESTIFIED IN IDAHO OR OTHER STATES
IN QWEST’S TERRITORY?
A. I have not previously testified in Idaho, however I have testified on several
different occasions in Oregon, Washington, Colorado, Arizona, New Mexico,
Utah, Wyoming, Iowa, Nebraska, and Minnesota.

II. INTRODUCTION 14
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Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY?
A. The purpose of my testimony is to respond to the Complaint filed by The Idaho
Telephone Association (“ITA”), Citizen’s Telecommunications Company of
Idaho, and Illuminet, Inc. (collectively referred to as “Complainants”) and,
specifically, to support the application of Qwest’s June 1, 2001 Idaho Access
Service Catalog (“Catalog”) revision restructuring Signaling System Seven
(“SS7”) signaling functions.
Complainants are not challenging Qwest’s decision to recover its set up costs for

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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the termination of intrastate toll calls through separate access charge rate
elements. Nor are they challenging the rates for those elements or Qwest’s
decision to structure them as a per-call charges. (Paragraph 10 of the Complaint.)
They are, however, challenging, Qwest’s application of the rates.
In my testimony, I will explain how Qwest is, in fact, appropriately applying the
rates and how Complainants have confused facts in this case. As to application of
Qwest’s revised SS7 signaling structure, the facts are pretty straightforward.
Qwest’s has a currently effective Idaho Access Service Catalog specifying
the terms, conditions and rates for its SS7 signaling service.
The SS7 signaling rate structure in the Catalog is consistent with the
federal rate structure previously approved by the FCC.
Of all the Complainants, only Illuminet is currently a customer of Qwest.
The Other Complainants have chosen to purchase their signaling from
third party signaling providers, such as Illuminet and Syringa.
Third party signaling providers, such as Illuminet and Syringa, who
choose to purchase SS7 signaling from Qwest must purchase through
Qwest’s Access Service Catalog because, as non telecommunication
carriers, they do not qualify to purchase through Interconnection or SS7
Infrastructrue Sharing Agreements.
Illuminet cannot purchase from Interconnection or SS7 Infrastructure
Sharing Agreements on its own or by claiming an agency relationship with
its customers who may have such agreements with Qwest because it does
not qualify for either.
Whether or not Illuminet chooses to pass along to its customers the new
signaling message rate elements is its business choice and is irrelevant in
this case.
To the extent the other Complainants in this case have a voice/data
relationship with Qwest, such as an EAS arrangement or Interconnection
Agreement, the nature of that relationship is irrelevant to the application of
signaling message charges assessed to Illuminet in this case.
The voice/data network is completely separate from the SS7 signaling
network. On the voice data network, there may be differentiation between
local and toll traffic. On the SS7 signaling network, there is no
differentiation between local and toll signaling messages. A message is a
message.
Complainants’ allegation that third party providers, such as Illuminet,

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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should not be charged for signaling messages related to local traffic is
inaccurate. The message rates apply, as they should, when third party
providers, such as Illuminet, access Qwest’s signaling network. The
charges apply regardless of the underlying nature of the traffic (i.e., EAS,
local, toll) and regardless of the type of customer served by the third party
provider because the message is transmitted and the costs are incurred.

In my testimony, I will also describe how SS7 signaling charges contained in the
Qwest Access Service Catalog clearly apply to third party signaling providers,
such as Illuminet. Qwest understands that Complainants may be upset that Qwest
has closed a pricing loophole with its SS7 restructure, but that does not mean they
should be allowed to avoid its application. The Complainants should be required
to abide by the rates, terms and conditions of the Catalog and should not be
afforded the refund relief requested in the Complaint.

III. BACKGROUND 16
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Q. PLEASE PROVIDE SOME BACKGROUND AS TO HOW QWEST’S
ACCESS RESTRUCTURE OF SIGNALING EVOLVED.
A. Signaling has evolved as telecommunications competition has evolved. There are
two types of costs associated with the use of Qwest SS7 signaling network.
Those are costs for accessing the network and for utilizing the network.
Historically, interexchange carriers (“IXCs”) were the primary users of Qwest’s
SS7 network. Because of that, signaling message costs for utilizing the network
were captured in switched access rates on a per-minute-of-use basis. (Switched
access rates are rates paid to Qwest by IXCs for originating and terminating calls

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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to Qwest’s customers via Qwest’s PSTN network.) Costs for accessing the
network were recovered, and still are recovered, through flat-rated link and port
charges.

As competition developed, more and more providers, including Competitive
Local Exchange Carriers (“CLECs”), wireless providers and third party signaling
providers, began accessing and utilizing Qwest’s SS7 signaling network. While
those providers may have been paying for access to the signaling network through
link and port charges, they were not paying for utilizing the network as the IXCs
were doing through payment of switched access charges to Qwest. As a result,
those IXCs bore a disproportionate and arguably unfair amount of the signaling
costs. In order to correct that problem, Qwest made a substantial investment to
update its systems so that signaling costs could be assessed and recovered based
on a customer’s actual usage of the SS7 signaling network

Qwest first restructured its SS7 signaling rate elements at the federal level by
revising its FCC Access Service Tariff. The restructure was accomplished, on a
revenue neutral basis, by removing the messaging costs from the switched access
rate elements and establishing five new stand-alone message rate elements. In re
U S West Petition to Establish Part 69 Rate Elements For SS7 Signaling, Order,
DA 99-1474, CCB/CPD 99-37 (rel. Dec. 23, 1999). The federal tariff became
effective on May 30, 2000. The FCC approved the usage-sensitive message rates

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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and specifically found it was in the public interest to assign costs to the providers
who use the separate signaling network. Id. at Para. 7. (“We also find that the
U S West proposed restructure is in the public interest because it will permit U S
West to recover its SS7 costs in a way that reflects more accurately the manner in
which those costs are incurred.”)

Qwest then began to implement this same revised rate structure for SS7 at the
state level. Currently eight states, including Idaho, have adopted the revised rate
structure that provides charges for both access to the SS7 system (via links and
ports) and actual usage of the system (via message-sensitive rates). In revising
the Idaho Access Service Catalog, Qwest abided by all Commission rules and
regulations, and the Catalog is currently effective.

Q. WHAT IS THE DIFFERENCE BETWEEN “SIGNALING MESSAGES”
AND VOICE AND DATA “TRAFFIC”?
A. It is critical for the Commission to understand the difference between signaling
“messages” and voice and data “traffic”. Qwest witness Joseph Craig will go into
more detail, but essentially “traffic” consists of transmissions, i.e., voice and data
calls, that are transported over the PSTN. These are conversations or data
exchanges that occur between parties. Signaling “messages” are the short bursts
of data between network switches that electronically inform the switches how to
establish the path over which the conversations and data exchanges take place.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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The signaling network is similar to traffic signals in our cities. Traffic signals
operate on a separate, interconnected network to control the flow of automobile
traffic, which is similar to the voice/data traffic on the PSTN.

Q. WHAT IS SIGNALING SYSTEM 7?
A. Signaling System 7 (“SS7”) is an out-of-band (separate) signaling network that
uses separate switches and network connections to perform the signaling
functions associated with placing telephone calls. The network configuration for
SS7 is described in more detail in the testimony of Mr. Joe Craig on behalf of
Qwest.

Q. HOW ARE CHARGES FOR SIGNALING ASSESSED?
A. With the June 1, 2001, Idaho Access Service Catalog revision, Qwest restructured
its rates so that the signaling costs reflect actual usage of the SS7 network. The
new price structure presents a more equitable arrangement for assessing signaling
rates. The current rate structure includes flat-rated link and port charges for
accessing the network and five usage sensitive rate elements (per-message
charges) for utilizing the network.

Q. PRIOR TO THE IDAHO ACCESS SERVICE CATALOG REVISIONS AT
ISSUE IN THIS PROCEEDING, WERE CLECS AND WIRELESS
PROVIDERS CONTRIBUTING THEIR FAIR SHARE OF SS7 COSTS?

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Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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A. If CLECs or wireless providers were paying for access and use of the network
pursuant to the rates, terms and conditions of an Interconnection Agreement, then
they were likely paying their fair share. If, however, they were paying only for
access to the network, through link and port charges, but not for use of the
network through an Interconnection Agreement, the Access Service Catalog or
through a third party provider, they were not paying their fair share of SS7 costs,
for reasons outlined above.

Q. PRIOR TO THE IDAHO ACCESS SERVICE CATALOG REVISIONS,
WERE ILECS CONTRIBUTING THEIR FAIR SHARE OF SS7 COSTS?
A. Not if they were utilizing a third party signaling provider like Illuminet for their
signaling. Third party signaling providers purchased from Qwest’s Access
Service Catalog which, at the time, only assessed costs for access to the Qwest
SS7 network through link and port charges. The message rates for utilizing the
network were not yet established as stand-alone elements.

Q. DID THE PREVIOUS CATALOG STRUCTURE GIVE SOME ILECS OR
CLECS OR WIRELESS PROVIDERS A COMPETITIVE ADVANTAGE
OVER OTHER PROVIDERS?
A. Yes. Third party signaling providers, who are typically not telecommunications
carriers, were able to avoid switched access charges (which included signaling
message costs) and just purchase those links and ports needed for SS7 capability.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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ILECs or others served by such third party providers reaped the benefits of
Illuminet’s position by contracting with Illuminet for the provision of SS7
services. IXCs, on the other hand, paid for signaling message costs as part of
their switched access rates. Those companies were therefore at a competitive
disadvantage to Illuminet’s CLEC, Wireless and Independent Local Exchange
Carrier (“ILEC”) customers.

Q. COMPLAINANTS ALLEGE THAT THE RESTRUCTURE OF QWEST’S
CATALOG SHIFTED ITS COSTS FOR LOCAL AND EXTENDED AREA
SERVICE (“EAS”) FROM ITSELF TO ILECS OR CLECS. IS THIS
CORRECT?
A. No. Qwest is not shifting any costs at all. The costs for the SS7 network exist
and have existed since the network was established. Charging for signaling as the
signaling is used is more fair than charging for it on a per-minute of traffic basis.
The cost associated with these calls is not Qwest’s cost, it is the cost of using the
network and to the degree that ILECs, wireless providers or CLECs (or third party
signaling providers) utilize the network, they should pay for it.

Q. SO THE SS7 NETWORK IS NOT IMPACTED BY THE EAS REGIONS IN
IDAHO?
A. No. The EAS trunks are part of the Public Switched Telephone Network
(“PSTN”), and as such are separate from Qwest’s SS7 network. The EAS trunks

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Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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carry voice/data traffic that, to end-users, appears as local although it was
previously classified as toll. The SS7 messages, however, are carried over
Qwest’s SS7 network. Signaling messaging costs are incurred, regardless of the
nature of the underlying voice/data traffic.

Complainant Citizens has chosen to send its signaling messages to Illuminet and
its EAS traffic to Qwest. Bill and keep applies to Citizens’ EAS traffic with
Qwest. However, signaling messages associated with that EAS voice/data traffic
are handled separately because the signaling messages are on a completely
separate network. Qwest charges Illuminet for the signaling traffic Illuminet
sends over Qwest’s SS7 signaling network. Whether or not Illuminet passes those
message charges along to Citizens is between Illuminet and Citizens. That
business relationship is irrelevant to the issue in this case, the application of
Qwest’s Catalog. Illuminet should pay for its usage.

IV. SIGNALING OPTIONS 16
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Q. DO THE CARRIER COMPLAINANTS HAVE TO PURCHASE SYSTEM
SIGNALING 7 (“SS7”) FROM QWEST?
A. No. The carrier Complainants have several options.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. WHAT OPTIONS DO CARRIERS INTERCONNECTING WITH QWEST
HAVE FOR PURCHASING SS7?
A. CLECs or wireless providers have three options.
1. They may choose to purchase SS7 as an unbundled network element
(“UNE”) through an Interconnection Agreement. For example, the
Exhibit A to the Interconnection Agreement that Qwest has with
intervenor ELI would allow ELI to purchase SS7 on a UNE basis. If ELI
would like to purchase SS7 out of its Interconnection Agreement, it
certainly has that option, and Qwest is more than willing to consider some
sort of mutual billing relationship with it for SS7 services.
2. CLECs or wireless providers may purchase SS7 as a finished service from
Qwest through Qwest’s Idaho Access Service Catalog.
3. CLECs and wireless providers may purchase SS7 from a third party
provider.
In this matter, ELI has chosen to purchase SS7 from the third party provider
Illuminet, not Qwest.

Q. FOR A CLEC OR WIRELESS PROVIDER, WHAT IS THE DIFFERENCE
BETWEEN PURCHASING SS7 AS A UNE FROM THEIR
INTERCONNECTION AGREEMENT WITH QWEST AND
PURCHASING SS7 OUT OF THE CATALOG?

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Idaho Public Service Commission
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Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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A. Interconnection Agreements allow carriers to purchase products and services on
an unbundled network element basis, meaning that the carrier may select which
network elements it wants to purchase. UNEs are intended to promote local
competition and, as such, are offered at a discounted rate. A service that is
purchased out of the Catalog, on the other hand, is a finished product. That means
that the purchasing carrier may not pick and choose particular elements of the
product. The purchasing carrier has purchased a complete product, not parts of a
product.

Q. WHAT OPTIONS DO ILECS HAVE FOR PURCHASING SS7?
A. Independent Local Exchange Carriers (“ILECs”) also have three options.
1. ILECs may choose to purchase SS7 from Qwest via a negotiated SS7
Infrastructure Sharing Agreement.
2. Just like CLECs or wireless providers, ILECs may purchase SS7 as a
finished service from Qwest through Qwest’s Idaho Access Service
Catalog.
3. ILECs may purchase SS7 from a third party provider, such as
Illuminet.
In this matter, Citizens has chosen to purchase SS7 from the third party provider
Illuminet, not Qwest.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. YOU MENTIONED THAT ILECS MAY PURCHASE SS7 FROM QWEST
VIA A SS7 INFRASTRUCTURE SHARING AGREEMENT. WHAT IS A
SS7 INFRASTRUCTURE SHARING AGREEMENT?
A. Section 259 of the federal Telecommunications Act of 1996 (“Act”) requires
Qwest to share its infrastructure, telecommunications facilities and functions with
qualifying independent LECs for the purpose of enabling that qualifying carrier
the ability to provide telecommunications services. Qwest must provide signaling
to qualifying carriers on terms that allow qualifying carriers to “fully benefit from
the economies of scale and scope” from Qwest. Qwest has determined that the
SS7 infrastructure sharing requirement encompasses signaling.

Q. WHO QUALIFIES FOR AN INFRASTRUCTURE SHARING
AGREEMENT WITH QWEST?
A. The federal Telecommunications Act defines a qualifying carrier as a
telecommunications carrier that lacks economies of scale or scope and offers
telephone exchange service, exchange access, and any other service that is
included in universal service to all consumers without preference throughout the
service area wherein the carrier has been designated an eligible
telecommunications carrier pursuant to 47 USC 214(e). In addition, the Act
provides that CLECs do not qualify for infrastructure sharing treatment.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. WHAT OPTIONS DOES COMPLAINANT ILLUMINET AND OTHER
THIRD PARTY PROVIDERS HAVE FOR PURCHASING SS7?
A. Third party signaling providers, such as Illuminet, may purchase SS7 from
Qwest’s Access Service Catalog. Illuminet is not a telecommunications carrier as
defined under the federal Telecommunications Act of 1996 and, thus, cannot enter
into an Interconnection Agreement with Qwest. Similarly, it does not qualify for
infrastructure sharing under Section 259 of the federal Act.

V. COMPLAINANTS’ ARGUMENTS 9
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Q. DO THE COMPLAINANTS IN THIS CASE CONFUSE THE ISSUE OF
“SIGNALING” WITH THE ISSUE OF “TRAFFIC”?
A. Yes, they do so repeatedly. In the filed complaint there are five issues raised by
the Complainants. Two of these five issues attempt to portray traffic issues as
signaling issues. These five issues are outlined on page three of the complaint.
Item a., for example, asserts that Qwest has contravened the Commission’s
practice of “bill and keep” treatment for local and EAS calls. Bill and Keep is
clearly a “traffic” issue, not a signaling issue. Bill and Keep simply means a
company “bills” customers for local service or calls placed and “keeps” the
associated revenue. Signaling has nothing to do with this process for local and
EAS traffic, and Qwest has not changed the process at all.

Item c. charges that Qwest has violated “meet-point-billing” practices. This is

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Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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also a “traffic” issue. Meet-point-billing has to do with how network “traffic” is
exchanged between companies at negotiated locations known as “meet-points”.
The SS7 network is an entirely separate network with different signaling
interfaces. Qwest’s restructure of signaling does not affect meet-point-billing
arrangements. These traffic interfaces remain the same. The ILECs in this case
are the only ones with meet-point arrangements with Qwest. The ILECs have no
such meet-points for signaling because they are not purchasing signaling from
Qwest. Illuminet purchases signaling but has no meet-point issues at all. These
are two entirely different concepts.

Q. WHILE YOUARE ON THE SUBJECT OF THE ISSUES RAISED IN THE
COMPLAINT, PLEASE RESPOND TO THE OTHER THREE
ALLEGATIONS RAISED BY THE COMPLAINANTS.
A. The following items are also on page three of the Complaint. Complainants
allege in Item b. that Qwest has substituted an Access Service Catalog change for
the requirement to negotiate Interconnection Agreements between Qwest and
CLECs. This is hardly the case. The Interconnection Agreement process is still
in place with no changes at all. This process continues to be the preferred process
for negotiating network connections with CLECs. In this case, the CLECs chose
to purchase signaling from Illuminet and not pursuant to other options that may
have been available to them.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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The claim in Item d. is that Qwest “unilaterally” shifted “costs” from IXCs to
Qwest’s local competitors thereby frustrating further development of nascent
competition. The fact is that Qwest has merely done what the FCC said “will
permit U S WEST (“Qwest”) to recover its SS7 cost in a way that reflects more
accurately the manner in which those costs are incurred.” This is the essence of
fair competition. Accurate cost-based rates are required for fair competition, not
biased rates that provide some competitors with an unfair advantage over other
providers.

Complainant’s final issue, Item e., alleges that Qwest has effectively re-priced
residential and small business “basic local exchange service”. This is clearly not
the case. Qwest did not change any basic exchange rates at all. Qwest received
no additional revenues as a result of the Access Catalog change. It was revenue
neutral to Qwest. Qwest merely changed the structure to reflect the usage of a
specific service. In this case, Illuminet is Qwest’s customer, not the ILECs or
CLECs and Illuminet serves no end user customers at all. Qwest made no changes
to any basic exchange rate. Furthermore, any time access rates change, there is
the possibility that some trickle down effect may occur. In this case, that trickle
down effect may be the reduction of intrastate toll charges by IXCs who have
benefited from reduced signaling costs. This trickle down effect is clearly at the
discretion of the final provider of service, not any of the intermediary providers
who may or may not pass along cost increases (or decreases) to their customers.

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Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. IS ILLUMINET THE ONLY THIRD PARTY SIGNALING PROVIDER IN
THIS CASE?
A. It appears not. Based on the answer to one of Qwest’s data requests, there is
another third party signaling provider, known as Syringa or Syringa Networks.
Q. HOW DOES SYRINGA OPERATE AS A THIRD PARTY SIGNALING
PROVIDER?
A. It appears that Syringa purchases signaling through Project Mutual, an
unregulated ILEC. Syringa appeared to Qwest to be a facility provider
transporting Project Mutual’s signaling. Based on Complainant Idaho Telephone
Association’s (“ITA’s”) response to Qwest’s Interrogatory No. 3, it appears that
Syringa provides signaling services to other ILECs, just like Illuminet. Project
Mutual was Qwest’s SS7 customer. Qwest has no contractual or catalog SS7
relationship with Syringa.

Q. WHY WOULD SYRINGA NOT MAKE ITS SIGNALING OPERATION
KNOWN TO QWEST?
A. Presumably to hide the fact that they were a third party SS7 provider selling the
signaling to ITA members and try to protect the pricing loophole as long as
possible.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. DOES THE CATALOG REVISION RESTRUCTURING QWEST’S SS7
SIGNALING RATES MAKE THE VARIOUS OPTIONS AVAILABLE TO
CLECS MORE EQUITABLE?
A. Yes. It makes the rate structure in the catalog equivalent to that in the
Interconnection Agreements by introducing signaling message rate elements.

Q. HAVE OTHER STATES IN THE QWEST REGION ADOPTED THE
IMPROVED SS7 RATE STRUCTURE?
A. Yes, the improved rate structure is currently available in eight states within
Qwest’s 14-state service territory, including Idaho.

Q. DO THE COMPLAINANTS IN THIS CASE MAKE ANY STATEMENTS
ABOUT THE REASONABLENESS OF THIS NEW STRUCTURE?
A. Yes. On page 8, paragraph 10, they state that “Complainants do not take issue
with Qwest’s decision to recover its set up costs for the termination of intrastate
toll calls through separate access charge rate elements. Nor do Complainants
challenge the Access Catalog price for these elements or the decision to structure
them as a per-call charge.”

Q. IF THE COMPLAINANTS AGREE WITH THE STRUCTURE AND
THEY AGREE WITH THE PRICE, THEN WHAT IS THEIR CONCERN?

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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A. They say in paragraph 10 of the Complaint that their concern is with Qwest’s
application of the SS7 signaling rates.

Q. IS THAT A VALID CONCERN?
A. No. Qwest is appropriately applying the revised SS7 signaling rate structure as
described above in a non-discriminatory manner. Illuminet purchases out of
Qwest’s Idaho Access Service Catalog and should not be allowed to pick and
choose the elements it would like to pay for particular services. The Catalog is
valid and its rates are effective. The other Complainants have chosen to purchase
signaling through Illuminet, so application of the revised SS7 signaling rate
structure to those carriers is a matter not for Qwest, but between them and
Illuminet.

VI. ACCESS CATALOG 14
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Q. IS ANY LOCAL TRAFFIC INCLUDED IN THE SS7 SIGNALING
CHARGES TO THE COMPLAINANTS?
A. No, there are no charges for local “traffic”. Local “traffic” is carried over trunks
designed specifically for traffic. Signaling messaging is charged on a per-
message basis without regard to the nature of the underlying voice/data traffic.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. IS THE SIGNALING ASSOCIATED WITH THE LOCAL TRAFFIC
INCLUDED IN THE CHARGES TO ILLUMINET?
A. Yes. A message is a message. Illuminet is using Qwest’s SS7 network to
complete signaling for all traffic regardless of the jurisdiction. It is completely
appropriate to charge for this signaling in proportion to the demands placed on the
network. This is in line with the concept of paying for what you use.

Q. WHY IS IT APPROPRIATE FOR SS7 CHARGES TO APPEAR IN
QWEST’S ACCESS SERVICES CATALOG?
A. The FCC defined SS7 as an access service (in Part 69 rules) and it was therefore
implemented in Idaho in that manner. Qwest's Idaho Access Service Catalog
contains services that are offered on a wholesale rather than a retail basis;
however, non-Access services such as DS1 and DS3 are also available through
the Access Service Catalog. Feature Group D services are billed via access MOU
rates for all traffic that goes over the trunks regardless of whether it is local, EAS,
intraLATA/intrastate or interLATA/intrastate. The Access Catalog provides rates
for accessing Qwest’s network to customers who sell telecommunications
services to others, i.e., wholesale services. It is not limited to toll providers and it
is not limited to toll providers’ provision of toll services.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. HOW DID QWEST SET THE RATES FOR THE SIGNALING
ELEMENTS ESTABLISHED IN THE ACCESS SERVICES CATALOG?
A. SS7 message rates were set equal to those existing in Qwest's interstate access
tariff to have consistency in rates for both the intrastate and interstate
jurisdictions, after assuring that those prices equaled or exceeded each element's
total service long run incremental costs (“TSLRIC”), as established in the study
performed for the FCC filing.

Q. WHY HAS QWEST ESTABLISHED THE SAME RATES FOR
SIGNALING MESSAGES IN IDAHO AS IS FOUND IN THE FCC
TARIFF? ARE ALL INTRASTATE RATES SET EQUAL TO
INTERSTATE RATES?
A. Since interstate and intrastate access service elements are essentially identical,
Qwest attempts, where possible, to set the rates charged for like elements at the
same rate. This is not only a reasonable policy, but also one that is appreciated by
access customers managing both intrastate and interstate access-supported
services.

Q. WHEN DID THESE RATE ELEMENTS BECOME EFFECTIVE IN THE
FCC TARIFF?

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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A. The FCC approved Qwest’s (then U S WEST’s) petition to establish these rate
elements on December 22, 1999. (CCB/CPD 99-37). The tariffed rates became
effective on May 30, 2000.

Q. WAS QWEST’S PETITION TO ESTABLISH THESE RATE ELEMENTS
OPPOSED BY ANY OTHER PARTY?
A. No. Qwest’s petition was unopposed.

Q. DID THE FCC RECOGNIZE THE IMPACT QWEST’S FILING WOULD
HAVE?
A. Yes. In paragraph 7, the FCC’s Order states: “We also find that the U S WEST
proposed restructure is in the public interest because it will permit U S WEST to
recover its SS7 costs in a way that reflects more accurately the manner in which
those costs are incurred.” In paragraph 9, the Order goes on to say: “We further
conclude that it would be in the public interest to grant U S WEST’s petition
because the proposed services add to the range of options available to U S WEST
customers.”

Q. WON’T FCC RATES CHANGE EVERY YEAR WITH THE REQUIRED
ANNUAL FILING AND WON’T THAT RESULT IN RATE DISPARITY
AGAIN?
A. That is possible, but not all FCC rates are adjusted every year and we do not

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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expect changes in FCC signaling rates in the near future. In any case, it makes
sense to start out with the same rates as the current federal rates even though
future regulatory policies may cause some disparity in the rates in the future.

Q. DOES QWEST BILL CLECS OR ILECS FOR SIGNALING MESSAGES,
IF THEY PURCHASE SIGNALING FROM A THIRD PARTY
PROVIDER?
A. No. In such cases, the CLECs or ILECs are not Qwest’s customers for SS7
signaling services – they are the third party signaling provider’s customer.
Therefore, Qwest does not charge these parties for signaling services and any
charges they do incur is a matter of the contract negotiated between them and
their provider.

Q. THE COMPLAINANTS MAINTAIN THAT SIGNALING CHARGES
SHOULD ONLY APPLY TO ORIGINATING INTRASTATE TOLL
TRAFFIC. IS THAT CORRECT?
A. No. It is based on the misconception that signaling messages and voice calls are
one and the same. This is simply not correct, as demonstrated in the testimony of
Mr. Craig. It is true that the SS7 signaling network has costs that are directly
associated with messages being transmitted; however, it is confusing and
misleading to portray that signaling costs should only be recovered for certain
classes of those messages. In the signaling world, a message is a message – every

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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call requires signaling in order for the call to be completed. It makes no
difference whether the call is local, EAS, wireless or toll in nature. Likewise,
there is a cost for signaling regardless of the underlying nature of the voice/data
call.

VIII. INTERCONNECTION AGREEMENTS AND BILLING
ARRANGEMENTS
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Q. DOES QWEST HAVE AN INTERCONNECTION AGREEMENT WITH
ILLUMINET OR OTHER THIRD PARTY SIGNALING PROVIDER?
A. No, because third party providers such as Illuminet are not local service providers.
They do not meet the definition of a telecommunications provider pursuant to the
federal Telecommunications Act of 1996. Illuminet therefore does not qualify for
Section 251 interconnection treatment. Accordingly, pursuant to the Federal
Communication Commission's rules, Illuminet is not entitled to purchase SS7 at
Unbundled Network Element (“UNE”) rates. Illuminet must purchase SS7 out of
Qwest's catalog.

Q. SHOULD INTERCONNECTION AGREEMENTS BE A
CONSIDERATION IN THIS CASE?
A. No. In this case, Illuminet is Qwest’s customer for SS7 services – not the other
Complainants. Illuminet is not a CLEC; therefore, it cannot purchase services
through an Interconnection Agreement. Illuminet, Syringa or other third party

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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signaling providers, who are not also telecommunications providers, are
precluded from purchasing service at UNE rates by the FCC. Illuminet and
Syringa therefore must purchase services out of Qwest’s Access Service Catalog.
Whether the ILECs or CLECs in this case continue to purchase signaling from
Illuminet or Syringa under their current agreements, choose to alter those
agreements or purchase signaling from Interconnections Agreements or SS7
Infrastructure Sharing Agreements is all a matter of business analysis and free
choice.

Specifically, the billing arrangements contained in ELI’s Interconnection
Agreement have absolutely no bearing on this proceeding. Complainant ELI has
chosen not to purchase SS7 services out of its Interconnection Agreement, but
rather from Illuminet. Thus, ELI is not Qwest’s SS7 customer because the SS7
provisions of its Interconnection Agreement do not apply. Similarly, the EAS
billing arrangement between Citizens and Qwest does not apply. Citizens has
also chosen to purchase its signaling service from Illuminet. As previously
explained, signaling is assessed and billed by Qwest to Illuminet regardless of the
underlying nature of the call or the relationship between Illuminet and its carrier
customers.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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IX. AGENCY ISSUE 2
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Q. DO COMPLAINANT CITIZENS AND INTERVENOR ELECTRIC
LIGHTWWAVE, INC. (“ELI”) CONTEND IN THEIR DISCOVERY
RESPONSES THAT COMPLAINANT ILLUMINET IS THEIR AGENT?
A. Yes, but they admit the scope of the alleged agency is limited to authorizing
Illuminet to utilize their point codes when sending SS7 messages to Qwest.

Q. WHAT IS THE BASIS OF THEIR CONTENTION?
A. Complainants base their contention upon letters of agency (“LOA”). Qwest
requires its third party SS7 providers such as Illuminet to produce written proof
that Illuminet’s carrier customers have authorized its use of their point codes.
Qwest requires this written proof in the form of a Letter of Authorization or Letter
of Agency. Illuminet usually provides a letter from its carrier customers, Citizens
and ELI in this case, wherein the carrier customer authorizes the release of its
point codes to Qwest.

Q. WHY DOES QWEST REQUIRE THIS AUTHORIZATION?
A. As explained more fully by Qwest witness Joseph Craig, Qwest utilizes point
codes to identify which SS7 messages will be given access into its SS7 network.
Without point codes, no SS7 message will enter the SS7 network. Illuminet does
not have its own point codes; and yet, as Qwest’s SS7 customer, it sends SS7

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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messages to Qwest. Illuminet, instead, utilizes the point codes of its carrier
customers. Thus, Qwest requires that Illuminet provide documentation verifying
that the use of its carrier customers’ point codes is authorized. The authorization
also indicates to Qwest that Illuminet has approved access of the SS7 messages
for those point codes into Qwest’s SS7 network and is requesting that Qwest bill
it for the message access.

Q. DO THE LETTERS OF AGENCY GIVEN BY CITIZENS AND ELI TO
ILLUMINET IN THIS MATTER AUTHORIZE ILLUMINET IN ANY
WAY BEYOND THE USE OF THEIR POINT CODES?
A. No. Both Citizens and ELI admitted that the scope of agency was limited to the
use of their point codes. Citizens-Idaho stated in its discovery responses to
Qwest’s Interrogatory No. 40 that Qwest requires Illuminet to provide proof of
authorization “from CTC-Idaho and to file such LOAs with Qwest prior to Qwest
loading within its network the necessary point code information that specifically
identifies CTC-Idaho’s switches.” ELI makes the same statement in its response
to Qwest’s Interrogatory No. 40.

Q. YET COMPLAINANTS ASSERT IN PARAGRAPH 11 OF THE
COMPLAINT THAT AS AN “AGENT”, ILLUMINET HAS THE RIGHT
TO PASS ITS SIGNALING COSTS TO ITS CARRRIER CUSTOMERS.
WOULD YOU COMMENT ON THIS ALLEGATION?

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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A. Illuminet has no “agency” status that means anything in this context. They may
call Illuminet an “agent” based on the LOA, but the authorization to use point
codes is not an authorization to pass through signaling costs to its carrier
customers. Rather, Illuminet’s to right to pass through its signaling costs to its
carrier customers, such as Citizens and ELI, is based solely upon the contractual
signaling relationship negotiation between the complainants. This business
relationship is only between Illuminet and its carrier customers. Qwest is no more
a party to this contractual relationship and the pass through of signaling costs than
any other supplier of Illuminet. If an equipment provider increases its costs of
equipment that is purchased by Illuminet, Illuminet may or may not pass along
these costs as well. This does not mean that the equipment provider is
“effectively” charging the Illuminet’s customers more for Illuminet’s service. If
Illuminet negotiates a reduction in equipment prices, are Illuminet’s customers
assured of a pass through of these savings? Qwest cannot be responsible for
Illuminet’s business practices or the contract negotiations with its customers.
Perhaps Illuminet knew all along that its pricing loophole would eventually be
closed and built protection into its contracts.

Q. DOES THIS AGENCY RELATIONSHIP BETWEEN ILLUMINET AND
ITS CARRIER CUSTOMERS (CITIZENS AND ELI) AUTHORIZE
ILLUMINET TO NEGOTIATE AND/OR PURCHASE SS7 ON BEHALF
OF ITS CARRIER CUSTOMERS?

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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A. No. Again, the agency relationship, if it exists, between Illuminet and its carrier
customers merely authorizes Illuminet to use the point codes of its carrier
customers.

Q. FINALLY, DOES THIS ALLEGED AGENCY RELATIONSHIP
BETWEEN ILLUMINET AND ITS CARRIER CUSTOMERS (CITIZENS
AND ELI) AUTHORIZE ILLUMINET TO STAND IN THE SHOES OF
ITS CARRIER CUSTOMERS?
A. No. Contrary to the Complainants’ belief Illuminet may not stand in the place of
ELI in terms of the Interconnection Agreement between ELI and Qwest. First, as
stated above, the scope of agency granted only covered the use of point codes.
Second, Illuminet is not eligible for interconnection treatment under the federal
Telecommunications Act. The FCC still refuses to allow Illuminet to purchase
UNE services through Interconnection Agreements. Third, the Interconnection
Agreement is irrelevant in any event because ELI has chosen not to purchase SS7
out of its Interconnection Agreement. As for Citizens, Illuminet’s scope of
agency only pertained to the use of Citizens’ point codes. Illuminet has not
represented Citizens in any contractual relationship between Citizens and Qwest,
nor would it benefit from the terms of any contract between Qwest and Citizens.
Similar to ELI, any contract between Qwest and Citizens, however, is also
irrelevant because Citizens purchases SS7 from Illuminet, not Qwest.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. WHY WAS REVENUE NEUTRALITY AN IMPORTANT ISSUE IN THIS
FILING?
A. The telecommunications industry has gone through significant technological
change as well as policy change. When these changes occur costs can change and
the policy of how those costs are recovered can change. There have been many
such changes in the past and making these adjustments on a revenue neutral basis
has been a way of minimizing the impact on customers and the companies that
serve them. Revenue neutral restructures are a way of isolating complex issues. In
this case, Qwest did not benefit from the restructure. Qwest’s revenue stream was
held neutral so the improvements in the structure could be more easily seen. Some
customers always benefit from rate restructures and some do not. Typically
however, the customers whose rates increase have been receiving a benefit for
some period of time. This prior benefit should be weighed when analyzing the
rate increase they experience. In this situation, Illuminet (and Syringa) and its
customers have been utilizing Qwest’s signaling at a discount. This has given
them a head start on their competition, but eliminating this windfall should be
looked at as a balancing act, not a penalty. The IXCs, who have been paying for
Illuminet’s signaling experienced a rate reduction when signaling was removed
from switching rates and presumably, they will pass these reductions on to
customers by way of toll rate reductions. Revenue neutral rebalancing allows

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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everyone to see the logic of the restructure and most agree with the methods even
if they do not directly benefit.

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Q. WOULD YOU PLEASE SUMMARIZE YOUR TESTIMONY?
A. Yes. Illuminet is Qwest’s customer for the purchase of SS7 which it, in turn,
provides to the other Complainants in this case. In the past, Illuminet purchased
services out of Qwest’s Access Service Catalog which allowed it to provision SS7
to its customers without purchasing the services whose rate elements cover the
cost of the SS7 network. Qwest lawfully revised its catalog to establish discrete
SS7 rate elements to ensure that the customers using SS7 services were paying for
them. Illuminet should not be allowed to circumvent these charges as it has done
in the past. Billing arrangements and Interconnection Agreements Qwest may
have with ILECs or CLECs have absolutely no impact on this proceeding, as they
have chosen not to purchase SS7 services through these agreements and,
therefore, are not Qwest’s SS7 customers. Instead, these parties chose to purchase
SS7 from Illuminet and Illuminet is not a party to the billing arrangements and
Interconnection Agreements. Illuminet has purchased SS7 services out of Qwest’s
Access Service Catalog, the charges within that Catalog are valid, and Illuminet is
certainly not entitled to any refund. The SS7 rates introduced by Qwest provide a
fair and equitable mechanism for cost recovery and therefore, should be allowed
to remain in effect.

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Idaho Public Service Commission
Case No. QWE-T-02-11
Qwest Corporation
Direct Testimony of Scott A. McIntyre
September 27, 2002

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Q. DOES THIS CONCLUDE YOUR TESTIMONY?
A. Yes, it does.