20030422Lincoln Rebuttal.pdf

Mary S. Hobson, ISB #2142
Stoel Rives LLP
101 S. Capitol Blvd., Suite 1900
Boise, 1D 83702-5958
Te I ephone : ( 2 0 8 ) 3 8 9 - 9 0 0 0Facsimile: [phone]
Adam L. Sherr , WSBA #25291
Qwest
1600 7 th Avenue, Room 3206
Seattle, WA 98191Telephone: [phone]Facsimile: [phone]
RECEIVED mF!LED
ZO03 APR 22 AM 8: II
jU,i;U i'U8l1C
UTiLlTJES CO~1MISSION
Attorneys Representing Qwest Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF QWEST CORPORATION FOR PRICE
DEREGULATION OF BASIC LOCAL
EXCHANGE SERVICES
CASE NO. QWE-02 -
REBUTTAL TESTIMONY OF
Douglas J. Lincoln, Ph.
on behalf of
QWEST CORPORATION
April 16, 2003
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TABLE OF CONTENTS
SUBJECT
INTRODUCTION
II.REBUTTAL TO TESTIMONY OF BEN JOHNSON
AND WAYNE HART
QWEST'S SURVEY
FUNCTIONAL EQUIVALENCE
COMPETITIVE PRICING
REASONABLE AVAILABILITY
STAFF'S RESEARCH
CONSUMER INPUT
III.CONCLUSION AND RECOMMENDATION
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PAGE
INTRODUCT I ON
PLEASE STATE YOUR NAME, BUSINESS ADDRESS AND TELL
US WHERE YOU ARE EMPLOYED.
Douglas Lincoln.officename
located University Drive,Boise,Idaho.1910
Professor andMarketingtheBusinessCollege
Economics at Boise State University.
HAVE YOU PREVIOUSLY PROVIDED TESTIMONY IN THI S
PROCEEDING?
I filed direct testimony ln this proceedingYes,
on December 17 , 2002.
PLEASE PROVIDE AN OVERVIEW OF YOUR REBUTTAL
TESTIMONY .
My rebuttal testimony addresses issues raised in
this proceeding through the testimonies of Ben Johnson and
In my testimony, I demonstrate that the IdahoWayne Hart.
statutory requirements for price deregulation of Qwest' s
basic local exchange service in the seven exchanges have
been met.I respond to both Dr. Johnson ' s and Mr. Hart' s
many contentions that effective competition does not exist
within the seven exchanges because those contentions are
illogical , invalid and unsupported by statistically
meaningful data.
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II.REBUTTAL TO TESTIMONY OF BEN JOHNSON AND WAYNE HART
Qwest's Survey
ON PAGE 18, LINE 6-7, OF HIS DIRECT TESTIMONY, DR.
JOHNSON SAYS YOUR STUDY "IS MUCH TOO LIMITED TO BE RELIABLE"
AND CRITICIZED HOW YOU DEVELOPED YOUR SURVEY QUESTION
REGARDING FUNCTIONAL EQUIVALENCY. DO YOU FIND ANY VALIDITY
IN HIS CRITICISM?
don Dr.JohnsonFirst,reviewing
qualifications contained in Appendix A his direct
testimony,JohnsonI did not find any suggestion that Dr.
has deal t directly with any survey research processes or
methodologies.survey procedures and surveyThe design of
data collection instruments field study that
requires years of formal education, training, and experience
in order to execute a survey-based study that produces data
that are both reliable and valid.Dr.Johnson s apparent
lack of understanding of and inexperience with such studies
evident his sole focus reI iabil i ty his
testimony One with expertise in this(page 18 line 6).
field knows that the most important factor to consider in
evaluating notresearchresul ts their validity,
reliability.measuresA study is valid when it,in fact,
what validanalogy,reports measure.
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speedometer in an automobile would report one is traveling
at 60 mph if this was the true speed.On the other hand, an
automobile would be said to have a reliable (but invalid)
speedometer if it always reported one to be traveling at 65
mph when Reliabili tyin fact the t rue speed was 60 mph.
refers to the same exact findingsabili ty to produce the
each surveytimesomethinglikeaskingrepeatsone
question. Validity, on the other hand , refers to the ability
to produce an accurate reflection of that being measured.
measurement instrument provides a val id measure,
will always be reliable.But,if something is reliable,
may or may not be valid.Thus , Dr. Johnson ' s statement that
my study "is much too limited to be reliable is something
of a non sequitur.What Dr. Johnson seemed to ignore or not
recognize surveythat followed accepted researchwasour
standards so that valid results were produced and used for
the basis of my direct testimony.
PAGES 19-YOUR DIRECT TESTIMONY ,YOU
EXPLAINED HOW YOU AND DR.MACDONALD ARRIVED
OPERATIONAL DEFINITION OF "FUNCTIONALLY EQUIVALENT.DO YOU
AGREE WITH DR. JOHNSON'S CRITICISM OF THAT PROCESS?
First,found his cri ticism internally
inconsistent. As stated in his direct testimony,The survey
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other research efforts had developed a valid setthat
questions and/ or measurescales the cri terion
functional theequivalence.That precisely why
qualitative research step was undertaken with the 36 adults.
Most researchers understand that consumers frequently do not
use dictionary definitions or have dictionaries with them
when responding to sloppysurvey questions.It would be
research surveytaketimeandeffortnotsure
respondents will have a common understanding of the words
and terms contained in the survey.
Thi rd ,surveyshouldrememberedthatour
instrument grouppretestedwithseparatewas
Idahoans living in the seven exchanges.As reported in my
direct 96% of those in the residential pretesttestimony,
market segment said they understood the terms used in the
This was another step that helped ensure that validsurvey.
resul ts 800wouldproducedthefullstudywith
respondents.
Fourth , what Dr. Johnson seems to miss when he offers
his sometimes amusing examples,such as how consumers could
would car forpickuptrucksport suseversus
different purposes,is the fact that our survey explicitly
specified usethe that respondents wereexactcontext
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think surveywhenresponding questions.the That
specified as making and receiving local callscontext was
fdr either household or small business purposes.This is
the context at issue in this application.
HOW DO YOU RESPOND TO DR. JOHNSON'S ACCUSATION ON
PAGE THAT YOUR SURVEY'FINDINGS ARE SKEWED UPWARDS
(RATHERBECAUSE YOU ASKED IF RESPONDENTS COULD SOLELY RELY
THAN "WILLING TO SOLELY RELY"ON WIRELESS SERVICE FOR THE
PURPOSE OF MAKING AND RECEIVING LOCAL CALLS?
Dr. Johnson ' s criticism reveals a misunderstanding
of the statutory standard, in my opinion.Section 62-
622 (3) (b) requires proof that functionally equivalent and
competitively priced alternatives are reasonably available.
As I and (I believe) Qwest's other witnesses understand this
section , the underlying inquiry is whether , if Qwest were to
raise residential and small business rates significantly,
customers could (if they were so inclined) obtain an
equivalent to basic local exchange service from a non-Qwest
carrier.In contrast, Dr. Johnson would seem to believe
that the section requires Qwest to show that customers have
already made this transition or are inclined to doing so at
this time.Given my understanding that the purpose of this
statute is to withhold price deregulation until it is clear
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that Qwest could not unreasonably ralse prices for a captive
customer base, Dr. Johnson s interpretation is far too
stringent.I stand by the survey questions and believe that
they were actually quite conservative.
DR. JOHNSON REFERS TO YOUR SURVEY DATA AS
PROBLEMATIC" (PAGE 19, LINE 13) AND GOES ON TO SUGGEST THAT
ONLY A MINORITY OF IDAHOANS IN THE SEVEN EXCHANGE AREAS
COULD SUBSTITUTE THEIR WIRELINE SERVICE WITH WIRELESS
SERVICE (PAGE 19, LINE 15-18).DO YOU AGREE?
A. No. for two reasons.First, our surveys were
developed and executed in a scientific manner.The
processes used in developing survey questions followed sound
methodological practices established by the survey research
industry.I have over three decades of experience in
designing such surveys as well as formal education to
support my experience.As pointed out in my direct
testimony, the surveys were designed in a manner to produce
conservative estimates of wireline and wireless
substitution.There are no "problems " with the
methodologies employed in our surveys.What Dr. Johnson
calls for is an extensive, in-depth survey to address a
plethora of what are essentially marketing,(not regulatory)
issues.For example , he purports the need to study what
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consumers could , would, and are willing to do and all the
associated reasons behind their attitudes.Whether or when,
consumers switch from wireline to wireless service is, as
, Johnson notes , a function of consumer preferences.
The purpose of our study was not to uncover consumer
preferences so that one could effectively stimulate
consumers to switch over.That would certainly be the
challenge of a marketing study I might commission if I were
the marketing manager for a wireless service provider.The
purpose of our study was to determine the degree to which
the Idahoans who would be affected by price deregulation
believed that effective competition existed in their area.
This was accomplished by using a scientifically developed
and executed survey with 800 Idahoans.
Functional Equivalence.
DR. JOHNSON DEFINES "FUNCTIONALLY EQUIVALENT" AS
MEANING VIRTUALLY IDENTICAL (PAGE 9, LINE 17).HOW DO YOU
RESPOND TO DR. JOHNSON'S DEFINITION?
I think his definition is without merit and
therefore not a valid working definition.Dr. Johnson I s
personal def ini tion was based, he says, on the separate
dictionary definitions of II functional II and lI equivalence.
His definition of function is "the action for which a person
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or thing is specially fitted or used or for which a thing
exists: PURPOSE. Functionally" was(page 9, line 8) .
said to indicate the active purpose for which an object
(service) exists or is used.The definition given by Dr.
Johnson for equivalence was " equal in force, amount, or
value or corresponding or virtually identical especially in
effect or function.
Using the same methodology and definitions suggested by
Dr. Johnson, I could deduce that services are functionally
equivalent if equal in their purpose.In constructing his
definition of functional equivalence from the same component
definitions, I believe Dr. Johnson misuses his own
definition of "function.That is, rather than focus on the
purpose of the service, he focuses his definition on the
characteristics of the service.I believe this is why much
of his remaining testimony deals with immaterial issues such
as the ergonomic characteristics and ancillary attributes of
the telephone handset.Furthermore, Dr. Johnson is so
focused on the peripheral characteristics of the service
that he fails to even address the purpose of the service.
Fortunately, the statute is very clear on this point.
discussed in Mr. Teitzel's rebuttal testimony, Idaho Code
62-603 (2) clearly defines the purpose of basic local
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exchange service as "the provision of access lines to
residential and small business customers with the associated
transmission of two-way interactive switched voice
communication within a local exchange calling area.
If we rely on the statutory definition of the purpose
of basic local exchange service, wireless service would be
functionally equivalent to wireline service if it provided
access lines to residential and small business customers
with the associated transmission of two-way interactive
switched voice communication within a local exchange calling
area.
There is nothing in the statute that suggests that a
functionally equivalent" service must use the same size and
shape telephone instrument as its wireline counterpart, as
implied by Dr. Johnson (page 25, line 2) .Nor is there
anything that suggests that one should be able to download
identical amounts of data from the Internet at identical
speeds (page 26 , line 14) .The statute simply says, in
laYmen s terms, that the purpose of basic local exchange
service is to allow residential and small business customers
to talk to each other while in separate , fixed locations
wi thin a local exchange call ing area.I do not think it is
possible for any rational person to deny that cell phones
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are designed for the exact purpose identified by the
statute.
As explained in my discussion of value propositions in
my direct testimony (pages 6-9; Exhibit 4), products do not
have to possess attributes or characteristics that are
identical in every way in order to be perceived as
substitutes.The issue is the degree to which one product
or its alternative is perceived to provide the desired
benefits or value that determines substitutability.
other words , consumers buy and use products for what they
expect them to "" for them.
Dr. Johnson s definition of functional equivalence
ignores the findings of our scientifically designed and
implemented empirical research involving a total of 876
Idahoans (36 in the study terminology phase, 40 in
pretesting, and 800 in the final two telephone surveys) who
were able to tell us exactly what functional equivalence
meant to them.They are the ones affected by the
Commission s decision.These Idahoans told us that products
are functionally equivalent when they can "do the same
thing. II They did not say products were functionally
equivalent when they possessed the same physical attributes
or characteristics.Furthermore, when those surveyed were
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asked to think about and respond to the study s "solely rely
" question , it was clear that the use context for that
question was making and receiving local calls (from their
household or small business) .The results of the study that
were presented in Exhibits 8 and 10 of my direct testimony
and the additional results of sample subsets (e.g., views of
those who already have cell phone service in their household
or at their business) both show that a large majority of
Idahoans in these seven exchanges believe wireless phone
service is, in fact, functionally equivalent to wireline
basic local exchange service.
WHAT IS WRONG WITH DR. JOHNSON'S OPINION THAT ONLY
SERVICES THAT ARE IDENTICAL IN EVERY POSSIBLE WAY TO
WIRELINE SERVICE SHOULD BE CONSIDERED FUNCTIONALLY
EQUIVALENT?
basically standard thatsets cannot
reasonably be met.If the Commission follows Dr. Johnson
interpretation functionallyanddecidesdefine
equi valent is absolutely identical toservice as one that
wireline service (not only in its advantages but also in its
disadvantages) ,woul d assuming standard that
virtually impossible to meet.Johnson ' sIn following Dr.
advice, even Qwest' s operations in other states would not be
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considered identical to Qwest' s operations in Idaho because
they may not have employees that provide identical levels of
service.was possibleFurthermore,customer even
there is no rational business motive for a firm to raise
capi tal with the clone of anintent of creating an exact
existing service that is currently being regulated.
Consumers would have no reason to switch to the new
service provider because it would not be offering anything
different new servicethanthethat,Qwe st.top
provider would be at a disadvantage because its market share
would be lower and,it would have to chargeas a result
significantly higher prices to cover its cost of capital and
to attempt to make a profit.In all my years of marketing
education and practice experience,I have yet to see a case
where consumers would pay significantly more for a product
that identicalexactly existing,we II - known
product.
DO YOU BELIEVE THAT DR. JOHNSON CORRECTLY
ADDRESSED THE ISSUE OF CELL PHONES BEING A COMPLEMENT AND
NOT A SUBSTITUTE FOR WIRELINE SERVICE?
Dr. Johnson provided the following definitionNo.
for the term complement:
products that have a relation such that an increase in
the price of one will decrease the demand for the other
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or a decrease in the price of one will increase the
demand for the other." (page 14, line 21-24.
Dr. Johnson also uses the analogy of peanut butter and
jelly to explain the concept of complements by suggesting
that if the price of one increases , consumption of both
goods will typically decrease.From this discussion , Dr.
Johnson makes the following conclusion about the
relationship between wireline service and cell service:
While a limited degree of substitution occurs in practice
these services are primarily complementary to each other.
(page 16, line 12)Dr. Johnson would therefore like us to
believe that, similar to the relationship between peanut
butter and jelly, when the price of wireline phone service
increases, consumption of cell phone serVlce decreases.
should also expect, according to Dr. Johnson I s definition,
that when the price of wireline phone service decreases, the
consumption of cell phone service should increase.After
careful review of Dr. Johnson I s testimony, I could not find
one allusion to empirical evidence to support his claim that
wireline phone service and cell phone service are
complements rather than substitutes.
In contrast to Dr. Johnson I s testimony, I believe that
our research and the research of others clearly shows that
cell phone service is a substitute product for wireline
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phone service.I am using the term substitute here to refer
to the same definition offered by Dr. Johnson. Substitutes
are:
products that have a relation such that an increase in
the price of one will increase the demand for the other
or a decrease in the price of one will decrease the
demand for the other. 11
Thus if wireless service lS a substitute to wireline
service, when the price of wireline phone serVlce increases
the consumption of cell phone service increases.Similarly,
when the price of cell phone service decreases, the
consumption of wireline service will decrease.Although Dr.
Johnson and Staff provide no scientific evidence to prove
that wireless is a complement to wireline service, we have
found a number of studies that show it is a substitute.
In his testimony, Mr. Tei tzel refers to and quotes from
reports from the Heritage Foundation2 and from INSIGHT
Research Corporation. In addition, Horvath and Maldoom
(2002)conducted a longitudinal study4 analyzing over 7,000
Economics, Robert B. Ekelund, Jr. and Robert D. Tollison , Little,
Brown and Company, 1986, p. 74.
2 Heritage Foundation Reports, Local Telephone Competition: Unbundling
the FCC's Rules, February 10, 2003.Fixed-Mobile Substitution: A Simultaneous Equation Model With
Quali ta ti ve and Limi ted Dependent Variables, Reka Horvath and Dan
Maldoom, August 2002 http: j jwww.dotecon.comjimagesjreportsjdp0202 .pdf4 A "longitudinal study" is one that uses data from a number of
different time periods. In this study, survey data was collected in
1999, 2000 , and 2001
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British Telephone users to investigate if wireless use
should be characterized as a substitute or complement to
wireline service.This was a highly sophisticated study
that used time-series statistical analysis and controls for
selecti vi ty bias 5 caused by preference or taste differences.
The two key findings of the study were:1) increased
wireless use significantly decreases the use of wireline
service, and 2) as the price of wireless telephony decreased
in the last year of their data set, line substitution
increased dramatically.
ON PAGE 22, LINE 11 OF HIS DIRECT TESTIMONY,
DR. JOHNSON MENTIONS THAT CONSUMERS NEED TO PERCEIVE TWO
PRODUCTS TO HAVE VERY SIMILAR ATTRIBUTES TO CONSIDER THEM
SUBSTITUTES.DO YOU AGREE WITH THIS VIEW?
Absol utely not.This view shows a lack of
understanding as to what drives consumer behavior.
Marketing education long ago dispensed with the notion that
consumers behave in a manner that is 100% economically
rational.In making this statement, Dr. Johnson totally
misses the point that consumers buy and consume products
because of their value in use.Consumers buy products
5 Selectivity bias occurs when the sample selected for the test is not
representative of the population from which it was selected.
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according to their perceived benefits.They buy products
for what they want or expect them to "" for them.
A business should view itself as a provider of
solutions rather than a seller of products and
servi ces . II 6
As a practical example,I do not care if my cell phone
is analog or digital.I am not even sure whichIn fact,
type of cell phone I have.But,I do care about what I get
or do not get regarding cell phone use as a result of the
two technologies.
The automobile replaced the horse as America ' s favored
transportation mode, even though they are certainly not the
same in terms of attributes or characteristics as is
required according to Dr. Johnson ' s view.Today, e-mail
communication has substituted for traditional letter (or
note) mailing via the United States Postal Service.These
two products do not have the same attributes/characteristics
and are certainly not based on the same technology.Dr.
Johnson s definition would be a hard sell at the USPS , which
lost just over $800 million in profits between 1990 and
A main reason attributed to this loss was the growth1997.
of e-mail.
Market-Based Management-Strategies for Growing Customer Value andProfitablity,ed., by Roger Best, Prentice-Hall , 2003, p.87.Heather Harreld, "USPS: Fighting for survival,Federal Computer Weekj
Falls Churchj Jun 5, 2000.
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Once consumers have purchased and used a particular
product, they learn how well the product meets their
expectations.They will then adjust their behavior (e.
g.,
continue to buy or not) according to how well their needs
are perceived to have been met.This fact was evident in
our survey results, as wireless service was viewed as a
substitute more often by those with experience using a cell
phone than those respondents who had never used a cell
phone.
DR. JOHNSON SAYS YOUR INTERPRETATION OF YOUR
SURVEY RESULTS "IS CONTRADICTED BY THE FACT THAT SO FEW
CONSUMERS TODAY ACTUALLY DO SOLELY RELY ON A CELL
PHONE." (PAGE 20, LINE 15-16).DO YOU AGREE WITH THIS
STATEMENT?
As mentioned by Mr. Teitzel in his rebuttalNo.
testimony, Dr. Johnson seems to want to employ an
unreasonable standard by which to conclude that any market
has effective competition.He seems to feel that 100% of
all consumers must have already moved to another supplier or
product in order to demonstrate substitutability.I do not
believe that the manufacturers of buggy whips waited until
everyone was driving automobiles to conclude that
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automobiles were effectively competing with horse-based
transportation.
Dr. Johnson ' s reference to estimates that only 3 - 5% of
all consumers using cell phones as their own phone service
understates the current level of penetration , and more
importantly, the speed with which penetration has occurred
and how it has occurred at different rates within market
In this regard , Mr. Shoo shan has testified aboutsegments.
far higher levels of actual line and usage substitution.
It should also be recalled that our survey was
conservati ve in nature.A very good example of this
pertains to Dr. Johnson s contentions about low use of
wireless phones as the consumers ' only phone.Our survey
sample frame was drawn only from a wireline phone number
pool.Had we included wireless phone numbers (held by
residential and the small business segment) in the sample
frame, we would automatically expect that our survey results
would have demonstrated even greater perceptions of the
effective competition presented by wireless service.
definition , surveying those already known to have wireless
service would "push Up" our numbers of those perceiving
functional equivalency, price competitiveness, and
reasonable availability.
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DR. JOHNSON SAYS HE FINDS "IT PUZZLING THAT" YOU
CAN CONCLUDE THAT WIRELESS AND WIRELINE SERVICES ARE
FUNCTIONALLY EQUIVALENT WHEN OVER 40% OF RESIDENTIAL
CUSTOMERS AND 65% OF SMALL BUSINESS CUSTOMERS SAY THEY COULD
NOT SOLELY RELY ON CELL PHONE SERVICE.(PAGE 20, LINE 22-
23, PAGE 21, LINE 10).DO YOU UNDERSTAND WHY HE IS PUZZLED
BY YOUR CONCLUSION?
It seems he has not carefully reviewed theNo.
exhibits that report my survey findings as he has apparently
chosen to ignore the fact that the actual percentages are
much higher when one accounts for the non-voice reasons that
motivated some respondents to answer negatively to the
solely rely on " question.Let me reiterate that the
percent of residential customers who said they could solely
rely on cell phone service, when one considers (i. e., adds
in) non-voice reasons is 62% (Lincoln Direct, Exhibit
page 4) .And, the corresponding percentage (with non-voice
reasons added back) for the small business segment is 85%
(Lincoln Direct, Exhibit 10, page 4) .
IS THERE MORE EVIDENCE FROM YOUR STUDY TO SUGGEST
THAT THE DEGREE OF SUBSTITUTABILITY IS CONCEIVABLY EVEN
HIGHER THAN YOU REPORTED IN YOUR DIRECT TESTIMONY?
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If we just consider those respondents in ourA. Yes.
survey that reported either having a cell phone in their
household or at their business, we find even more evidence
that the two phone services are substitutes.Some 60% of
those households with a cell phone user8 said they could
solely rely on a cell phone for local calling.This is in
contrast to the 30.2 % of those households not containing a
cell phone user who said they could solely rely on the cell
phone for this reason. The relative percentage for
households with a cell phone user when non-voice reasons
(for not solely relying on) are added back rises to 72.2% as
compared to 41.9% for households without a cell phone user.
Whether or not non-voice reasons are considered, households
with cell phone users are significantly more likely to say
they could solely rely on the cell phone than those
households without a cell phone user.
For small businesses using cell phone service,9 those
responding that they could solely rely on cell phone service
increased from 36.4% to 88.3% when non-voice reasons are
added back into the totals.The corresponding percentages
for those small businesses currently without cell phone
8 The number of such households was 270 out of 402 or 67.2%.9 The number of small businesses was 239 out of 398 or 60.1%.
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service increases from 28.7% to 37.9% when non-voice reasons
are eliminated.
WHY ARE THESE FINDINGS SIGNIFICANT?
They show that as Idaho consumers and small
businesses adopt and use cellular phone service they learn
that cell phone service is very substitutable for wireline
service.The findings from our scientific survey with 800
Idahoans refutes Dr. Johnson ' s contention that they are
complements and not substitutes.Thus, the facts speak
against his unsupported speculation.
Competitive Pricing.
DO YOU AGREE WITH DR. JOHNSON'S STATEMENT "THE
COMPANY HASN'T EVEN TAKEN THE NECESSARY STEPS TO
MEANINGFULLY COMPARE WIRELESS AND WIRELINE PRICES FROM A
CONSUMER PERSPECTIVE?" (PAGE 32, LINE 19-20)
I find this statement to be 180 degreesA. No.
opposite of accurate.It suggests to me that Dr. Johnson
did not take the time to review our study s findings.
that seems to be the case, I will repeat the key pricing
related findings that our respondents generated.I n our
residential segment survey (Lincoln Direct, Exhibit 8 , age
5) some 43.5% said the price of cell phone service for their
household, when compared to traditional phone service was
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lower or about the same (the responses for each were 22.
for same and 20.6% for less) This is a larger percentage
than those who said the price of wireless is higher than
wireline (34.8%) .
The corresponding findings for the small business
(Lincoln Direct, Exhibit 10, page 5) were 42.segment
perceived the wireless prices as the same or less, compared
with only 34.7% saying wireless cost more than wireline.
I should note that around 22% of the respondents in
each study segment were unsure about the price and therefore
did not state a position.If one removes them10 from the
pricing analysis and reports only on those with an opinion
one finds that 55.5% of the residential respondents and
55.0% of the small business respondents saying wireless
costs "less or the same" as wireline.This would leave
around 45%(of those with an opinion)saying that wireless
prices are higher than wireline prices.In summary, more
consumers see the wireless prices as less than or the same
as wireline services than see wireless costing more.
Furthermore, we find that those either living in
households with cell phone service or those working in
businesses with such service, are more likely to perceive
10 This results in 315 usable residential respondents and 307 small
business respondents.
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the prices as similar.While 43.5% of all residential
respondents said wireless prices were the same or less than
wireline service, this percentage jumps up to 53.7% for
those with wireless service.And, the 42.5% response rate
for the small business segment jumps to 49.4%.What these
findings tell us is very clear.Those with cell phone
experience and/or those that live and work in a setting in
which cell phone service is being used , see or perceive even
more competitive pricing than those who are not in such
settings.As more and more consumers and small businesses
adopt wireless phone service, they are also more likely to
form the same perceptions as those (adopting wireless)
before them.
WHAT DO YOU SEE AS THE SIGNIFICANCE OF THE
FINDINGS YOU HAVE JUST DISCUSSED?
Those findings should provide the Commission some
measure of assurance with regard to Staff' s oft-repeated
fear that a price-deregulated Qwest will significantly
increase its prices and hold Idahoans captive.This
conclusion has absolutely no merit if one considers the
consumer perception of prices revealed by our study.I f the
majority of consumers believe wireless prices are already
the same or less than that of Qwest' s wireline service, the
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Company would be making a serious marketing mistake by
making any kind of significant price increase. This move
would provide a clear economic incentive for its customers
to switch to wireless serVlce as their prlmary phone
service.
DR. JOHNSON STATES THAT A MEANINGFUL COMPARISON
BETWEEN WIRELESS PRICES AND WIRELINE PRICES MUST TAKE
SEVERAL FACTORS INTO CONSIDERATION (PAGE 35, LINE 5-15).
YOU AGREE WITH HIS CONTENTION?
Yes and no.I believe he is correct in assuming
that consumers will take their own particular needs and
usage context into account when deciding what to buy or when
to switch suppliers.However, where I disagree with Dr.
Johnson is with his contention that determining the degree
to which prices are competitive can be accomplished solely
by studying what prices are offered in the marketplace.
is a rudimentary marketing principle that, for initial
purchasing decisions, consumer perceptions on pricing
influence their behavior far more than the reality of
pricing distinctions.Consumer price perceptions are formed
in many ways:salesperson presentations, seeing price
tickets, seeing advertisements, talking with others, reading
and paying bills, etc.But , as mentioned before, consumers
Boise-155916.1 0029164-00087
percept ions can and do change as they gain experience wi th a
particular product or service.Thus , they may learn that
their original perceptions were inaccurate and change their
view. As an example, our survey found that as consumers
gained experience with cell phones, they were significantly
more likely to view them as a substitute for wireline
service when it comes to making and receiving local calls.
HOW DID YOUR SURVEY TAKE THE CONSUMER'S USE
CONTEXT INTO ACCOUNT WHEN RESPONDENTS GAVE THEIR PERCEPTIONS
ON WIRELESS AND WIRELINE PRICE COMPETITIVENESS?
Our (residential) survey question was "Do you
think the monthly price of using cell phone service for your
household is about the same, more than, or less than the
price of using traditional phone service?1I The question for
the small business segment was identical except in referring
to the use context.The question format required the
respondent to mentally think of cell phone services prices
in relation to their household.This means that most, if
not all, of Dr. Johnson s contentions that all the consumer
use contexts have to be taken into account in order to make
pricing competi ti veness study meaningful is inappropriate.
Our survey allowed each respondent to take his or her
individual context into consideration.After having done
Boise-155916.1 0029164-00087
, the respondents expressed (through their answers) a
belief that wireless serve is functionally equivalent,
competitively priced and reasonably available in the seven
exchanges.
WHAT DO YOU SEE AS THE SIGNIFICANCE OF THE
FINDINGS YOU JUST DISCUSSED?
I feel the Commission should be assured that its
consti tuents do, in fact, perceive that the prices of
wireless and wireline phone service in the seven exchange
areas are competitive.This finding should also eliminate,
or at least greatly ease, any Commission and/or Staff fears
about Qwest significantly raising its wireline service price
when it is deregulated.Our study suggests that such a move
would likely result in Qwest losing even more customers to
its wireless competitors.The only conceivable way for
Qwest to avoid the negative consumer repercussions of such a
price would be to increase the benefits offered to their
current wireline customers.If they were to pursue that
strategy and retain customers, then the Commission and Staff
should rewarded by knowing that the general public ' s
interest has been served.
Boise-155916.1 0029164-00087
DR. JOHNSON REFERS TO YOUR EXHIBIT 5 FROM YOUR
DIRECT TESTIMONY AS "GREATLY OVERSIMPLIED" (PAGE 36, LINE
19) DO YOU AGREE WITH HIS CONTENTION?
Dr. Johnson apparently did not understand the
purpose of that exhibit, which was to show examples of how
three different wireless pricing plans can be placed into a
competitive map with Qwest wireline service.The exhibit
was used to demonstrate the concept of customer value and
three different value propositions.In developing and
describing this exhibit, I did not purport that this is how
most or even a maj ori ty of consumers might view the
marketplace.
The conclusion that I made in my direct testimony that
Dr. Johnson criticizes was not based on Exhibit 5 , but
instead on an analysis of several pricing plans as shown in
Mr. Teitzel's Exhibit 13.
Nevertheless , I contend that my analysis, or any
pricing analysis by Commission Staff that focuses
exclusively on what is offered in the marketplace, is less
important to a final determination on the level of price
competitiveness in the telecommunications market than are
consumer perceptions of prices.A majority of the 800
Idahoans living in these seven exchanges said they believe
Boise-155916.1 0029164 - 00087
the price of wireless service is competitive with the price
of wireline service given their particular setting, home or
business.
DO YOU HAVE ANY COMMENTS ON MR. HART'S ATTEMPT TO
COMPARE THE PRICES OF QWEST'S BASIC LOCAL EXCHANGE SERVICE
WITH PRICES OF VARIOUS WIRELESS CARRIERS?
Yes.First,his attempt perform such analysis
seems futile himself admits:However must
point out that such compari son very difficult the
products are so different and there are so many different
options for each product. If this is the case(pages 7 - 8)
Mr. Hart has basically said two things:(1) that there is
no reasonable methodology that one can use to determine
price competitiveness in a valid manner and (2) the mere
existence of so many choices and variations, by definition
implies a very, very competi ti ve marketplace.
In addition, as noted by Mr. Teitzel in his rebuttal
the assumptions and calculation approaches used by Mr. Hart
are flawed.Again, this raises questions about the validity
of his findings.
For example , Mr. Hart included non-voice minutes in
his average usage calculations.He then uses these inflated
usage levels to determine what a wireless customer might pay
Boise-155916.1 0029164 -00087
(under the plans he has chosen)for this supposedly average
This methodology tends to inflate the estimateduse.
wireless monthly bills, which he claims are very high
relative to basic local exchange wireline prices.Le t
point out how inflated his final figures might be.A recent
study by UCLA11 reported that Americans spent 11.1 hours per
week online from their homes in 2002.Assuming a four-week
month , this translates to some 2 664 minutes in a month.
This same study also reported that the percentage of
households online in 2002 was 59.12 and that 75% of those
homes used a telephone modem connection.Assuming these
findings are representative of Idaho I estimate that the
average number of monthly local exchange minutes consumed by
such a non-voice use for an average or typical Idaho
household is 1,184 minutes. 14 In reality, my estimate is
still likely to be conservative since the 11.1 hour average
in the UCLA study was calculated by inquiring of only one
respondent in each household.It is reasonable to assume
that multiple household members could also be online using
11 The UCLA Internet Report Surveying the Digital Future Year Three,
UCLA Center for Communication Policy, February 2003, p. 17.http: j jeep. ucla. edujpdfjUCLA-Internet-Report-Year-Three .pdf
12 Id. at 23.
13 Id. at 25.
14 Calculated as 2,664 minutes times 59.3% times 75%.
Boise-155916.1 0029164 -00087
the same telephone modem and phone line, bringing total use
of the phone line well above the estimated 11.1 hours.
Furthermore, I do not believe that studying the
published prices of competitors is very valid approach for
the purpose of assessing pricing competitiveness.A bet ter
approach involves studying actual consumer price
perceptions.Such perceptions will influence consumers
willingness to substitute.Until they learn that their
perceptions are different than reality, perception will
drive their behavior.These perceptions about wireless and
wireline price offerings were assessed in our survey.
Exhibi t 5 to my direct testimony and Mr. Tei tzel' s
Exhibi t 13 were only meant to show what kinds of offerings
existed in the marketplace.It is the results of our survey
with 800 Idahoans that provides the most valuable scientific
evidence relating to the statutory requirement of
competitively priced service, in my opinion.In contrast to
Mr. Hart' s conclusion that "wireless service would be
significantly more expensive than the price of Qwest' s basic
local service (page 8, Line 6-7), a clear majority of
Idahoans living and/or working in the seven exchange areas
do not feel this way at all.
Boise-155916.1 0029164-00087
Q. DO YOU AGREE WITH MR. HART'S CONCLUSION THAT "WIRELESS
SERVICE IS NOT COMPETITIVELY PRICED FOR THE VAST MAJORITY OF
CUSTOMERS AND WOULD NOT BE AN EFFECTIVE REGULATOR OF QWEST'
RATES?
For all practical purposes, our studyNo.
findings clearly show that wireless prices would act to
constrain the price Qwest is able to charge and receive from
its customers.If most consumers already believe that
wireless service prices are the same as, or lower than,
wireline service, then any significant price increase by
Qwest will create a powerful incentive for its current
customers to switch to wireless as their primary local
calling phone solution. Even Dr. Johnson admits that he
could and would shift to wireless if Qwest significantly
increased its basic local exchange wireline rates. And
higher prices would logically prevent the Company from
acquiring new customers including those younger individuals
beginning to form households and searching for a local
calling solution. This means that current price perceptions
15 As already mentioned, the only way that such a price increase could
prevent consumer from switching would if Qwest could somehow offer more
for what they charge. Using customer value theory, some consumers would
be willing to pay the higher price if they felt the price was justified.16 Dr. Johnson testifies at pages 19-20 of his testimony, "Likewise, Icouldget rid of my wireline service but I'm not willing to-unless
someone forces me to (e. g. by drastically raising the price).
Boise-155916.1 0029164-00087
of wireless service provide Qwest with the reality of losing
current customers and never acquiring new customers should
it choose to significantly raise its wireline local exchange
service prices.
DR. JOHNSON AT PAGE 42 OF HIS TESTIMONY STATES
THAT "MOST CUSTOMERS WOULD BE PLACED AT THE MERCY OF QWEST'
MONOPOLY POWER, FORCED TO PAY WHATEVER RATES IT ELECTS TO
IMPOSE." ASSUMING THE COMMISSION GRANTS QWEST'S APPLICATION,
DO YOU AGREE WITH THIS DIRE PREDICTION?
Absolutely not. In fact, I believe the opposite is
As I have already pointed out, Qwest would be intrue.
grave danger of losing a substantial number of customers if
it were to significantly raise its wireline prices without
somehow significantly increasing its value proposition.
The facts of our survey support my contentions.The
residential and small business respondents clearly view the
wireless and wireline phone service as being substitutable
competitively priced, and reasonably available for the
purpose of making and receiving local calls. This means that
the captive customers alluded to by Dr. Johnson do not exist
in large numbers.Consumers believe they can use an
al ternati ve product (i. e., a cell phone) to solve their
Boise-155916.1 0029164-00087
local call making and call receiving needs, they see that
same alternative as already costing the same or less than
wireline, and they believe that cell phone service is easy
to find and obtain in their own exchange area.Put in its
simplest form, Idahoans living and/or working in these seven
local exchanges already perceive the existence of effective
competition in the marketplace.
APART FROM WHAT YOU HAVE STATED ABOVE, WHY DO
BELIEVE THAT FOR QWEST TO RAISE ITS WIRELINE PRICES WOULD
REPRESENT MARKETING SUICIDE IN THE CURRENT MARKET PLACE?
In addition to the reasons discussed above , there
is another condition in today s telecommunications
marketplace that exemplifies how difficult and why such a
price move might backfire on Qwest.Wireless providers are
overtly promoting their services as a substitute for
wireline services. One is the AT & T wireless advertisement
run on January 26 , 2003, during the Superbowl , which
portrayed an Antiques Roadshow setting in which a wireline
customer is told by an appraiser that his phone is worth
nothing.(Appendix 1) A second example is a Cricket
advertisement aired on local television station KTVB (NBC
affiliate) on November 30 , 2002.This advertisement' s
obj ecti ve is clearly noted in its message:
Boise-155916.1 0029164 - 00087
Everywhere you look home phones are being replaced byCricket. Cricket service works just like your home
phone with all the local calls you want for one low
predictable price plus plenty of free long distance.
So why pay for both? Cricket , it could be your only
phone. II (Appendix 2)
Reasonable Availability
DO YOU AGREE WITH MR. HART'S ASSESSMENT THAT
WIRELESS SERVICE IS REASONABLY AVAILABLE TO CUSTOMERS IN THE
SEVEN EXCHANGES? (PAGE 27, LINE
has accurately described exactlyYes.
what we found in our survey.An overwhelming percentage of
residential customersand small business feel that
easy to get wireless service in their area and that there
are a good number of choices of wireless service options.
DR. JOHNSON STATES "MORE THAN ONE-HALF OF ALL
HOUSEHOLDS STILL DO NOT HAVE A MOBILE PHONE.(PAGE 41, LINE
7) DO YOU AGREE WITH HIM?
It is unclear what, if any, data he relied onNo.
to make this assertion.Our simple random sample based
survey of households found that one or more persons in 67.
of the households surveyed in the seven exchanges used a
cell phone.This is over two-thirds of all respondents.
Given our sample size of 402 respondents, we are 95%
confident that the true penetration of cell phones within
Boise-155916.1 0029164 -00087
households of the seven exchange areas falls between 62.
and 72. 1 % .
Staff's Research
MR. HART REFERS TO CONVERSATIONS WITH STUDENTS AND
YOUNG ADULTS IN HIS ASSESSMENT OF WIRELESS SERVICE QUALITY
(PAGE 18, LINE 10-18).DO YOU FEEL HIS USE OF THIS INPUT IS
VALID AND CAN THEREFORE AID THE COMMISSION IN ITS DECISION-
MAKING PROCESS?
I do not. To place credence on this type of non-
scientific input would be grossly inappropriate.Such
anecdotal information does not lead to meaningful, valid or
reliable generalizations. I can state that in my one year of
using Spring PC wireless that I have never experienced a
dropped call or voice quality problems.But , this is
unacceptable as evidence of the experience of an entire
population.Similarly, what Mr. Hart purports to have found
is totally invalid because he did not use scientific methods
from which he could possibly generate valid information.
MR. HART ATTESTS THAT TO VERIFY THE ACCURACY OF
THE CLAIMS MADE ABOVE, STAFF CONDUCTED A STUDY ON MARCH 17,
2003 BY PLACING 50 CELL CALLS.DO YOU BELIEVE THAT THE
ACCURACY OF SUCH CLAIMS HAS BEEN VERIFIED?
Boise-155916.1 0029164-00087
, not at all. Mr. Hart relied on what is
commonly referred to as convenience sampling.This refers
to a situation where the selection of the place and time of
data collection results in respondents being chosen in a
subj ecti ve rather than obj ecti ve process.Convenience
sampling is recognized as having significant potential to
produce misleading (i. e
. ,
results.This meansinvalid)
that Mr. Hart' s results should not be used to draw valid
conclusions.His choice of what wireless service to "test"
(i. e., Cricket) automatically influenced his findings.
valid test would have used a variety of services or , at a
minimum , services that were randomly selected from those
available in the marketplace.Additionally, the choice of
day and the choice of time of day was one of convenience and
wi thout rationale. Again , a valid test would include a
variety of days and times during which testing would occur.
Imagine if an Albertsons grocery store wanted to know how
satisfied its customers were with that store s products and
services and attempted to do so by only interviewing those
who shopped on Saturday morning between 9 AM and Noon and
that they only interviewed customers who happened to pass
17 G .A. Wyner
, "
Representation, randomization, and realism,MarketingResearch, Fall , 2001, pp. 4-
Boise-155916.1 0029164-00087
through the produce department.This would not give
Albertsons a valid picture of overall customer satisfaction.
Another issue is the fact that what Mr. Hart chose to
measure in this "test" was not developed in a scientific
The choice of what to measure and how to measuremanner.
such occurred wi thin a research vacuum.For example, his
choice of measuring the time between pressing the send
button on the wireless handset and the ringing of the
wireline phone is unjustified.Why was this chosen to
Who says it is important enough to customers tomeasure?
prevent them from switching from wireline to wireless
service?Where is the evidence in the literature that says
this is how you measure wireless customer satisfaction?
I have many years of teaching, researching, and
consulting in the field of customer satisfaction measurement
and management.Mr. Hart' s approach in this study is
totally without merit and goes against an abundance of
published customer satisfaction literature.
MR. HART BELIEVES THAT THE ABOVE DISCUSSED STUDY
IS "SUFFICIENT TO BE GENERALLY CONSIDERED STATISTICALLY
SIGNIFICANT.(PAGE 19, LINE 15-16) DO YOU AGREE?
This statement demonstrates a lack ofNo.
understanding about the term "statistically significant.
Boise-155916.1 0029164-00087
The term "statistically significant" is used in research to
refer to situations where some measure is statistically
compared to another measure.I see no evidence that Mr.
Hart statistically compared anything to anything.Perhaps
he is using this term to imply that his sample findings are
representative of larger population. If so, this is
certainly an inaccurate Vlew.For the reasons already
pointed out in my prior statements , this study was neither
valid , nor did it produce anything which could be considered
representative of the population of interest to this
application (i .e., those living and/or working within the
seven local exchanges).
As the editor of what is recognized as the most
influential journal in the field of marketing education , I
can assure you that if I received a manuscript based on this
type of research, it would be desk rej ected immediately and
not even sent out for review by my peers.It would simply
be a waste of both our reviewers ' time and that of the
author (s) .If, on the other hand, Mr. Hart had carefully
designed an experiment within which he attempted to measure
consumer satisfaction with wireless versus wireline service
performance, things might be different.wi th the correct
experimental design, including well supported reasons for
Boise-155916.1 0029164 -00087
his choice of independent variables (e. g., what brand of
service , time of day, day of week, etc.) and his choice of
dependent variables (e. g., call quality, time to place/make
call, ease of making call , etc.), we might have something
for which statistical differences could be measured and
reported.None of this occurred in the purported attempt to
verify the accuracy of the anecdotal claims found in his
conversation with students and young adults.Of course, one
must remember that such claims were not valid (i. e., true of
the entire population) in the first place because of his use
of convenience sampling.Therefore, any attempt to prove
them as scientifically valid was basically bad research
chasing bad research.
MR. HART CONCLUDES THAT CUSTOMERS OF FLAT-RATED
WIRELESS SERVICE MUST MAKE A TRADEOFF BETWEEN THE
CONVENIENCE AND FEATURES OFFERED BY WIRELESS CARRIERS AND
THE (BETTER) QUALITY OF SERVICE PROVIDED BY WIRELINE
(PAGE 20, LINE 4-) DO YOU AGREE WITH THISCARRIERS.
STATEMENT?
This conclusion is at least partiallyNo.
predicated on the Staff test "study " involving 50 calls it
made on a Cricket phone.As I have pointed out, that study
cannot be construed to be valid using any scientific
Boise-155916.1 0029164-00087
criteria.As a result, Mr. Hart again offers a conclusion
unsupported by any statistically meaningful data.It is
also undermined by the fact that, as Mr. Shooshan and Mr.
Tei tzel point out, consumers continue to flock to cell
phones.Were serVlce quality as poor as Mr. Hart implies,
this would not be the case, in my opinion.
DO YOU AGREE WITH MR. HART'S VIEW THAT IT IS
IDAHO'S CURRENTLY SLUGGISH ECONOMY THAT IS CAUSING QWEST'
WIRELINE BUSINESS TO SLOW OR ERODE? (PAGE 29, LINE 2-
I do not find any empirical support for such a
statement in his testimony.This appears to be an
unsupported hypothesis.One could just as easily argue that
such economic factors should be reducing or inhibiting the
sales of wireless services.But , I believe statistics
provided by Mr. Tei tzel and Mr. Souba in their testimony
show how fast and extensive the penetration of wireless
service has been in recent years in Idaho.If Mr. Hart
contends that wireless is so much more expensive than
wireline service and that the economy is "tough" right now
then why would the sales of wireless services be
skyrocket ing?The logic is simply not here.
Consumer Input
Boise-155916.1 0029164-00087
WHAT IS YOUR OPINION REGARDING THE STATISTICAL
VALIDITY OF THE CONSUMER INPUT THAT THE COMMISSION HAS
RECEIVED REGARDING THIS APPLICATION?TO WHAT DEGREE SHOULD
THIS INPUT BE USED IN DETERMINING IF EFFECTIVE COMPETITION
AS DEFINDED BY IDAHO CODE ~ 62-622 (3) EXISTS IN THE SEVEN
LOCAL EXCHANGE AREAS?
I think it is very important that any constituent
potentially affected by a Commission decision of this
potential magnitude has an equal and fair opportunity to
express his or her views and desires.I commend the
Commission for having such a process and for its decision to
actively reach out to constituents living in or around the
areas where the three workshops were held.These methods
for informal input are important for at least two reasons:
(1) they provide an opportunity for citizens to voice their
input and (2) they sometimes allow Staff to get a feel for
the reasons behind why some consumers either favor or do not
favor a particular decision.If the Staff considered this
input to be valuable, Staff should have followed up by
conducting formal scientific research to determine if the
concerns or opinions expressed were statistically
22.representative of the populations of interest in the subj ect
exchange areas.
Boise-155916.1 0029164 -00087
However I must strongly advise against relying
heavily on informal input as evidence because it:( 1) has
not been collected using valid scientific methods and (2)
does not offer the number of observations (responses) needed
to make statistical inferences about the larger population
to be affected by the eventual decision.
Let me clarify the dangers of using this non-
scientific input in a scientific manner.Those individual s
who chose to provide input through these mechanisms or
avenues do so on what researchers commonly refer to as a
self -selection basis.In other words, they decided to come
forward and say or write something.However, because the
respondents were not selected using a probability-based
methodology in which every respondent has an equal and known
chance of involvement, we cannot assume these sel f - selected
respondents are similar to the larger population of interest
to this application (i., those living and/or working in
the seven local exchange areas) .
On the other hand, the 800 participants in our
telephone surveys were selected using a probability sampling
Every single household18 and s~all business 19 withmethod.
18 Our sample frame or calling list was randomly generated from the list
of 215,797 primary billing residential phone numbers.19 Our sample frame or calling list was randomly generated from the list
of 26,183 primary billing small business phone numbers.
Boise-155916.1 0029164-00087
Qwest wireline service in the seven exchange areas had an
equal and known chance of participating in our surveys.
Probability sampling methods are one requirement of
producing statistical inferences. Non-probability methods,
such as voluntary input and/or convenience sampling, cannot
guarantee such ability.
Even if one made the rather far-fetched assumption
that the 38 people who filed written comments with the
Commission were truly representative of all those living
and/or working in the seven exchange areas , the sample Slze
is so small that the statistical precision would be so wide
that there is a significant chance that one could draw
false conclusion.For this application setting, there are
two possible false conclusions that the Commission might
make. One, the Commission might conclude that the statutory
requirements for price deregulation have been met when, in
fact, they have not.Or two , the Commission might conclude
the requirements have not been met when , in fact, they have
been.
In summary, uslng the self-selected group of 38 people
to extrapolate results for the whole population cannot be
justified.Apart from the non-characteristic nature of the
respondents, the small sample size dramatically increases
Boise-155916.1 0029164-00087
the odds that any conclusions based on that data are not
representative of the views of Idahoans living in the seven
exchange areas.Decisions of this potential magnitude
(affecting thousands of Idahoans) should not rely on data
suffering from this level of imprecision.
This means that the Commission is much more likely not
to make one of the two false conclusions discussed above if
it places more weight on our survey findings that those of
Mr. Hart' s "study" or the solicited consumer input.
III. CONCLUSION AND RECOMMENDATION
PLEASE SUMMARIZE YOUR TESTIMONY.
In my testimony I have provided evidence to
demonstrate that Dr. Johnson s and Mr. Hart's measures of
effective competition and their assessment of its presence
in the seven exchanges is scientifically flawed and invalid.
I have pointed out how both witnesses have either ignored or
dismissed the voices of 800 Idahoans who, on several proven
scientific bases, represent thousands of wireline customers
either living and/or working in these exchanges.
WHAT IS YOUR RECOMMENDATION TO THIS COMMISSION?
I recommend that the Commission approve Qwest' s
request for deregulation in the seven exchanges of Boise,
Caldwell , Idaho Falls, Meridian , Nampa, Pocatello and Twin
Boise-155916.1 0029164 -00087
Falls. I fully respect and appreciate the challenge the
Commission faces in making this decision.In doing so , I
would hope the Commission takes comfort in knowing that
Qwest, by commissioning the survey research I oversaw , has
allowed the affected constituents a fair and valid forum to
voice the public ' s interest in this matter.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.
Boise-155916.1 0029164 - 00087
January 26,
Ad"
2003 - AT&T Wireless "Superbowl
ANT I QUE BAND WAGON
(Sitting at table with appraiser holding desktop push button
telephone with hard wire attached)
Appraiser: "This is what was once called a telephone,
back here, this is
something once referred to as a wire
Man:A wire...
Appraiser:
wall. People would actually be tethered to the
Man:That's weird.
Appraiser:Do you know how much this worth?1I
Man:(shaking head)
Appraiser:Diddley squat ( $0 displayed)
Announcer:Dag gum it.
Announcer: "When your wireless phone can be your only
phone, that' s M-Life
from AT&T Wireless.
Boise-155916.1 0029164-00087
CRICKET COMMERCIAL PROMOTING USE OF
WIRELESS PHONE FOR SOLE-SOURCE SERVICE
AIRED SAT , NOV. 30 , 2002 - BOISE , ID
KTVB , CHANNEL 7 NBC
(Visual - telephones leaving homes, golng down
streets and going off cliff)
Everywhere you look home phones are being replaced
by Cricket.Cricket service works just like your
home phone with all the local calls you want for
one low predictable price pI us plenty of free long
distance.So why pay f or both?Cricket, it could
be your only phone.
Visual at end of commercial
Cricket
Unlimited local calling
500 long distance minutes
$39.99 a month plus tax
Running Time:approx. 30 seconds
Boise-155916.1 0029164-00087
CERTIFICATE OF SERVICE
I hereby certify that on this 21 5t day of April, 2003 , I served the foregoing REBUTTAL
TESTIMONY OF DOUGLAS J. LINCOLN, PH.D. ON BEHALF OF QWEST
CORPORATION upon all parties of record in this matter as follows:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, ill 83720-0074
Phone: [phone]
Fax: [phone]
ii ewell~puc.state.id. us
Weldon Stutzman, Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street
o. Box 83720
Boise, ill 83702
Telephone: [phone]
Facsimile: [phone]
W stutzm~puc.state.id.
Marlin D. Ard
Willard L. Forsyth
Hershner, Hunter, Andrews, Neill & Smith LLP
180 East 11 th Avenue
O. Box 1475
Eugene, OR 97440-1475
Attorneys for Verizon
Executed protective agreement
John Gannon, Esq.
1101 West River - Suite 110
Boise, ill 83702
Telephone: [phone]
Attorney for Meierotto, Padget, Herrick Neal
Hand Delivery
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Dean J. Miller
McDevitt & Miller LLP
420 West Bannock Street
O. Box 2565
Boise, ill 83701
Telephone: [phone]
Facsimile: [phone]
i oe~mcdevi tt - miller. com
Attorneys for WorldCom, Inc.
Attorneys for AT&T
Attorneys for Time Warner Telecom
Executed protective agreement
Dean Randall
Verizon Northwest Inc.
17933 NW Evergreen Parkway
Beaverton, OR 97006-7438
dean. ran daB (CfJ,v erizon. co m
Executed protective agreement
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Mary Jane Rasher
10005 South Gwendelyn Lane
Highlands Ranch, CO 80129-6217
Telephone: [phone]
mirasher(CfJ,msn.com
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Adam Sherr
Qwest
1600 ih Avenue - Room 3206
Seattle, W A 98191
Telephone: [phone]
Facsimile: [phone]
asherr(CfJ,q west. com
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Clay R. Sturgis
Moss Adams LLP
601 West Riverside - Suite 1800
Spokane, W A 99201-0663
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Brian Thomas
TimeWamer Telecom
223 Taylor Avenue North
Seattle, W A 98109
Brian. Thomas~twtelecom.com
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Susan Travis
WorldCom, Inc.
707 1 ih Street - Suite 4200
Denver, CO 80202
Telephone: [phone]
Susan.a. Travis~worldcom.com
Conley E. Ward, Jf.
Givens Pursley LLP
277 North 6th Street - Suite 200
O. Box 2720
Boise, ill 83701-2720
Telephone: [phone]
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cew(i3), gi venspursl ey. com
Attorneys for Idaho Telephone Association
Executed protective agreement
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~dAi
Brandi L. Gearhart, PLS
Legal Secretary to Mary S. Hobson
Stoel Rives LLP