20030815Motion to Re-open & Affidavit.pdf

STOEL
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101 S. Capitol Boulevard, Suite 1900
Boise, Idaho 83702
main 208.389.90002003 HJG 14 PM 4: SO fax [phone]
www.stoel.com
ATTORNEYS AT lAW
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UT!LiflES COi":i,j!SS!ON
August 14, 2003
MARY S. HOBSON
Direct [phone]
mshobson(i!)stoel.corn
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, ill 83702-5983
RE:Docket No. QWE-O2-
Dear Ms. Jewell:
Enclosed for filing with this Commission are the following:
An original and seven (7) copies of QWEST CORPORATION'S MOTION TO RE-
OPEN THE RECORD;
An original and nine (9) copies of the AFFIDAVIT OF JAMES M. SCHMIT. In
addition, Qwest is providing an original and nine (9) copies of Exhibit 1 to the Affidavit
(one of which is designated the "Reporter s Copy
).
Qwest is also providing a disc ofthe
testimony contained in Exhibit 1.
If you have any questions, please contact me. Thank you for your cooperation in this matter.
Very truly yours
?c 1Vt/0 !-h0--
Mary S.~bson
:blg
Enclosurescc: Service List
Oregon
Washington
Caiifo,nia
Boise-160632,10029164-00087
Utah
Idaho
Mary S. Hobson (ISB #2142)
Stoel Rives LLP
101 South Capitol Boulevard - Suite 1900
Boise, ID 83702
Telephone: [phone]
Facsimile: [phone]
mshobson~stoe1.com
t;~ECEIVED ! L':..O
2003 A.UG 14 PM 1.;:
: ,; ,
'r';'_; C
UTILI TIES COhi'iISSION
Adam L. Sherr (WSBA #25291)
Qwest
1600 7th Avenue - Room 3206
Seattle, WA 98191
Telephone: [phone]
Facsimile: [phone]
asherr~qwest.com
Attorneys for 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-O2-
QWEST CORPORATION'S MOTION TO
RE-OPEN THE RECORD
Qwest Corporation ("Qwest"), by and through its undersigned counsel, hereby moves the
Commission to re-open the record to permit Qwest to file the supplemental testimony of James M.
Schmit. A copy ofMr. Schmit's proposed supplemental testimony is attached as Exhibit 1 to the
Affidavit of James M. Schmit submitted herewith. Although Mr. Schmit's testimony is sworn by
virtue of the use of the Affidavit, Qwest recognizes that the Commission and parties have not had the
opportunity to question Mr. Schmit on the matters contained in his proposed testimony. Therefore
Qwest will promptly respond to any questions concerning Mr. Schmit's testimony in writing and will
QWEST CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 1
Boise-160529.10029164-00087
make no objection should the parties wish to file affidavits or written comments, in response to the
supplemental testimony.
On April 21 , 2003 , Idaho President James Schmit filed rebuttal testimony in this case. That
testimony was admitted to the record on June 4, 2003. Tr. 515-531. In addition to discussing
customer input received during the course of the docket, Mr. Schmit's rebuttal testimony outlined
several commitments Qwest was willing to make in order to mitigate certain concerns expressed by
members of the public, Commission Staff and the Intervenors Meierotto. Those commitments
included:
A commitment to maintain Qwest's status as an Eligible Telecommunications Carrier
in the seven exchanges that are the subject of Qwest's application in this case.
A commitment to continue providing Idaho Telephone Service Assistance Program
(ITSAP) support for low-income customers.
A commitment to continue offering stand-alone (i., unpackaged) measured and flat-
rated residence and business service.
A price cap on basic local exchange residential and business recurring rates at current
levels through the end of 2004.
A one-third increase in the block of time included in the monthly price for residence
measured service.
A price cap on the per-minute usage rate associated measured service through the end
of 2004.
A commitment to the deployment of DSL service to at least 10 additional
communities during the three years following approval of Qwest's application.
Having attended the hearings, heard the questions and statements of the Commissioners and
parties and their representatives and having read the legal briefs and analysis, Qwest is aware that the
other parties remain hesitant to support Qwest's request for price deregulation in the seven exchanges
primarily out of a concern that competition will not adequately constrain Qwest's pricing. While
Qwest remains convinced that the record developed in this case strongly supports a finding such
QWEST CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 2
Boise-160529,10029164-00087
concern is unfounded and that price deregulation is appropriate under Idaho Code 9 62-622(3)(b),
Qwest is sensitive to the other parties' continuing concerns. Consequently, Qwest now proposes that
the Commission approve Qwest's application in the form ofa provisional Pilot Project , the terms of
which are more fully set out in Mr. Schmit's proposed testimony. The Pilot Project constitutes a
win-win proposition, in that it grants Qwest the pricing flexibility it seeks, while providing the
Commission sufficient oversight authority to allay any potential concerns that Qwest may use its
new flexibility irresponsibly.
The admission of Mr. Schmit's proposed supplemental testimony into the record will not
cause prejudice to any other party in this proceeding. Qwest will agree with any reasonable
procedure to allow the parties to understand this proposal and to voice their views. While this may
delay ultimate resolution of this case, no party's interests, with the possible exception of those of
Qwest, are adversely impacted by such delay. Meanwhile, the proposed Pilot Project holds the
potential to provide all of the benefits of market-based pricing while minimizing any potential risks
associated with price deregulation. Qwest respectfully submits such a proposal deserves
consideration.
Submitted this 14th day of August, 2003.
Qwest Corporation
::t:;
Stoel Rives LLP
Adam L. Sherr
Qwest
Attorneys for Qwest Corporation
QWEST CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 3
Boise-160529.1 0029164-00087
CERTIFICATE OF SERVICE
I hereby certify that on this 14th day of April, 2003, I served the foregoing QWEST
CORPORATION'S MOTION TO RE-OPEN THE RECORD upon all parties of record in this
matter as follows:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, ID 83720-0074
Phone: [phone]
Fax: [phone]
iiewell~puc.state.id.
Weldon Stutzman, Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ill 83702
Telephone: [phone]
Facsimile: [phone]
wstutzm~puc.state.id.
Executed protective agreement
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
--X...... Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
--X...... Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
--X...... u. S. Mail
Overnight Delivery
Facsimile
Email
--X...... Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
QWEST CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 4
Boise-160529.10029164-00087
Dean 1. Miller
McDevitt & Miller LLP
420 West Bannock Street
O. Box 2565
Boise, ID 83701
Telephone: [phone]
Facsimile: [phone]
i oeCil),mcdevitt -miller. com
Attorneys for WorldCom, Inc.
Attorneys for AT&T
Attorneys for Time Warner Telecom
Executed protective agreement
-..lL
Dean Randall
Verizon Northwest Inc.
17933 NW Evergreen Parkway
Beaverton, OR 97006-7438
dean. ran dal1 ~v erizon. com
Executed protective agreement
-..lL
Mary Jane Rasher
10005 South Gwendelyn Lane
Highlands Ranch, CO 80129-6217
Telephone: [phone]
mirasher~msn.com
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Emai1
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
-..lL u. S. Mail
Overnight Delivery
Facsimile
Emai1
Adam Sherr
Qwest
1600 ih Avenue - Room 3206
Seattle, WA 98191
Telephone: [phone]
Facsimile: [phone]
asherr~qwest.com
-..lL
Clay R. Sturgis
Moss Adams LLP
601 West Riverside - Suite 1800
Spokane, W A 99201-0663
-..lL
Brian Thomas
TimeWarner Telecom
223 Taylor Avenue North
Seattle, W 1\ 98109
Brian. Thomas~twtelecom.com
-..lL
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
QWEST CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 5
Boise-160529.10029164-00087
Susan Travis
WorldCom, Inc.
707 17th Street - Suite 4200
Denver, CO 80202
Telephone: [phone]
Susan.a. Travis~worldcom.com
Conley E. Ward, Jr.
Givens Pursley LLP
277 North 6th Street - Suite 200
O. Box 2720
Boise, ID 83701-2720
Telephone: [phone]
Facsimile: [phone]
cew~givenspurs1ev.com
Attorneys for Idaho Telephone Association
Executed protective agreement
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
-2L
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
~ /
c&u !taJ
Brandi L. Gearhart, PLS
Legal Secretary to Mary S. Hobson
Stoel Rives LLP
QWEST CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 6
Boise-160529.10029164-00087
:ECEIVED
Mary S. Hobson (ISB #2142)
Stoel Rives LLP
101 South Capitol Boulevard - Suite 1900
Boise, ID 83702
Telephone: [phone]
Facsimile: [phone]
mshobson~stoel.com
r;Ll:D f'-"
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2CO3l~UG 14 PH 4: 50
; ,, ,'
' 'I~
UTILITiES CO t11i'(SSION
Adam L. Sherr (WSBA #25291)
Qwest
1600 7th Avenue - Room 3206
Seattle, W A 98191
Telephone: [phone]
Facsimile: [phone]
asherr~qwest.com
Attorneys for 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-O2-
AFFIDAVIT OF JAMES M. SCHMIT IN
SUPPORT OF QWEST CORPORATION'
MOTION TO RE-OPEN THE RECORD
STATE OF IDAHO
) ss.
County of Ada
James M. Schmit, being first duly sworn on oath states as follows:
My name is James M. (Jim) Schmit. My office is located at 999 Main Street
Boise, Idaho. I am the President of Qwest in Idaho and I am personally familiar with the facts
stated herein.
AFFIDAVIT OF JAMES M. SCHMIT IN SUPPORT OF QWEST
CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page
Boise-160631.1 0029164-00087
In my capacity as Qwest's Idaho President, I prepared the Supplemental
Testimony that is attached hereto as Exhibit 1. To the best of my knowledge and belief, the facts
and statements contained in that testimony are true and correct.
This concludes my affidavit.
DATED This 14th day of August, 2003.
f'/I.
es M. SChmIt
State of Idaho
) ss.
County of Ada
On this 14th day of August, 2003 , before me, the undersigned, a Notary Public in and for
said State, personally appeared James M. Schmit, known or identified to me to be the person
whose name is subscribed to the within and foregoing instrument, and acknowledged to me that
he executed the same.
IN WIT~6'WlQ~OF, I have hereunto set my hand and affixed my official seal the
day and year jp~;c ~~~rst above written.
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AFFIDAVIT OF JAMES M. SCHMIT IN SUPPORT OF QWEST
CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 2
Boise-160631.1 0029164-00087
CERTIFICATE OF SERVICE
I hereby certify that on this 14th day of April, 2003 , I served the foregoing AFFIDAVIT
OF JAMES SCHMIT upon all parties of record in this matter as follows:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, ID 83720-0074
Phone: [phone]
Fax: [phone]
ii ewell~puc.state.id.
Weldon Stutzman, Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ID 83702
Telephone: [phone]
Facsimile: [phone]
wstutzm~puc.state.id.
Executed protective agreement
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, ID 83702
Telephone: [phone]
Attorney for Meierotto, Padget, Herrick Neal
--L Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
--L Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
AFFIDAVIT OF JAMES M. SCHMIT IN SUPPORT OF QWEST
CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 3
Boise-160631.1 0029164-00087
Dean 1. Miller
McDevitt & Miller LLP
420 West Bannock Street
O. Box 2565
Boise, ID 83701
Telephone: [phone]
Facsimile: [phone]
oe~mcdevitt -miller .com
Attorneys for World Com, Inc.
Attorneys for AT&T
Attorneys for Time Warner Telecom
Executed protective agreement
Hand Delivery
-X....... U. S. Mail
Overnight Delivery
Facsimile
Email
Dean Randall
Verizon Northwest Inc.
17933 NW Evergreen Parkway
Beaverton, OR 97006-7438
dean. rand all (iJ),v erizon. com
Executed protective agreement
Hand Delivery
-X....... U. S. Mail
Overnight Delivery
Facsimile
Email
Mary Jane Rasher
10005 South Gwendelyn Lane
Highlands Ranch, CO 80129-6217
Telephone: [phone]
mi rasher(iJ),msn. com
Hand Delivery
-X....... u. S. Mail
Overnight Delivery
Facsimile
Email
Adam Sherr
Qwest
1600 ih Avenue - Room 3206
Seattle, W A 98191
Telephone: [phone]
Facsimile: [phone]
asherr(iJ),qwestcom
Hand Delivery
-X....... u. S. Mail
Overnight Delivery
Facsimile
Email
Clay R. Sturgis
Moss Adams LLP
601 West Riverside - Suite 1800
Spokane, WA 99201-0663
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Brian Thomas
TimeWarner Telecom
223 Taylor Avenue North
Seattle, W A 98109
Brian. Thomas(iJ),twtelecom.com
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
AFFIDAVIT OF JAMES M. SCHMIT IN SUPPORT OF QWEST
CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 4
Boise-16063L1 0029164-00087
Susan Travis
WorldCom, Inc.
707 17th Street - Suite 4200
Denver, CO 80202
Telephone: [phone]
Susan.a. Travis~worldcom.com
Conley E. Ward, Jr.
Givens Pursley LLP
277 North 6th Street - Suite 200
O. Box 2720
Boise, ID 83701-2720
Telephone: [phone]
Facsimile: [phone]
cew~givenspursley.com
Attorneys for Idaho Telephone Association
Executed protective agreement
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
~dtX~
Brandi L. G rhart, PLS
Legal Secretary to Mary S. Hobson
Stoel Rives LLP
AFFIDAVIT OF JAMES M. SCHMIT IN SUPPORT OF QWEST
CORPORATION'S MOTION TO RE-OPEN THE RECORD - Page 5
Boise-16063L1 0029164-00087
Mary S. Hobson, ISB #2142
Stoel Rives LLP
101 S. Capitol Blvd., Suite 1900
Boise, ID 83702-5958
Telephone: [phone]
Facsimile: [phone]
Adam L. Sherr, WSBA #25291
Qwest
1600 ih Avenue, Room 3206
Seattle, W A 98191
Telephone: [phone]
Facsimile: [phone]
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-
SUPPLEMENTAL TESTIMONY OF
James M. Schmit
on behalf of
QWEST CORPORATION
August 14, 2003
EXHffiIT 1
TO AFFIDAVIT OF JAMES M. SCHMIT
Boise-160534,10029164-00004
PLEASE STATE YOUR NAME, ADDRESS AND POSITION WITH
QWEST .
name James (Jim)Schmit.
located 999 Main Street Boise,Idaho.
President Qwest Idaho.
My office
the
DID YOU PREVIOUSLY SUBMIT TESTIMONY IN THIS CASE?
Yes.I previously submitted rebuttal testimony,
which was admitted into the record on June 4 , 2003, during
the hearing in this case.
WHAT THE PURPOSE YOUR SUPPLEMENTAL
TESTIMONY? '
The purpose of my supplemental testimony is
offer addi tional conditions which Qwest woul d
vol untarily concerning how exercisewould theagree
pricing flexibility requested in this case and to provide
the Commission authori ty claw back"the flexibility
granted determines the public interest has been
harmed.
DOES THE FACT QWEST IS OFFERING AN ALTERNATIVE AT
THIS STAGE OF THE PROCEEDINGS MEAN THAT QWEST BELIEVES THE
STATUTORY REQUIREMENTS FOR PRICE DEREGULATION BASIC
LOCAL EXCHANGE SERVICE HAVE NOT BEEN MET?
QWE- T -02-
August 14 2003
Boise-160534.1 0029164-00004
SCHMIT, J. (SUPP) -
Qwest Corporation
not at all.Qwest believes the evidence inNo,
the record substantial and that wirelessunrefuted
services are effectively competing with Qwest's traditional
land-line telephone service.Wireless services are
functionally equivalent to basic local exchange service in
each the exchanges.Wireless servicesseven are
reasonably available from least six providers
unaffiliated with Qwest in each of the seven exchange s .
Wireless services are competitively priced in each of the
seven exchanges.Thus strongly believes that theQwest
requirements of Idaho Code ~ 62-622 (3) (b) have been met and
price deregulation should be granted.
IF YOU BELIEVE THE STATUTORY REQUIREMENTS HAVE
BEEN MET, WHY THEN ARE YOU PROPOSING ADDITIONAL CONDITIONS?
While believes the record overwhelminglyQwest
its application al so recogni that theresupports
element uncertainty the Commission grantingsome
Qwest'application.The depth of the concern about the
unknown and abou t possible behaviorQwest'the
Commission grants Qwest' s application became more evident
to me as I observed the evidentiary hearings and reviewed
the other parties ' post-hearing briefs.
QWE- T -02-
August 14 2003
Boise-160534.10029164-00004
SCHMIT, J. (SUPP) -
Qwest Corporation
Qwest is asking this Commission to find that wireless
services effective thereby pricecompetitionrepresent
deregulating basic local service.otherexchange
(to my knowledge)regulatory commission in the country has
done that. While I strongly believe the evidence in the
level of competitionrecord demonstrates that the present
will effectively pricing and behaviorregulateQwest' s
am proposing here an option that significantlywhat
limits the potential risk of approving Qwest' s application
addi t ional caps and Commissionprovidingforprices
oversight that will virtually guarantee the availability of
affordable basic local exchange service for the foreseeable
future.
PLEASE DESCRIBE CONDITIONS QWESTTHEADDITIONAL
IS PROPOSING.
First let put these new conditions context.
Through rebuttal testimony,Qwest has al ready
volunteered substantial commi t men t s meant addre s s
While recognition of wireless services as effective
competition would be unique , retail price deregulation isnot. In fact , Qwest' s retail prices for basic local
exchange service have been price deregulated in Nebraska
since the mid-1980's. Most recently the South Dakota
commission this week granted retail price deregulation
throughout Qwest' s service area in that state.
QWE- T -02-
August 14, 2003
Boise-160534.1 0029164-00004
SCHMIT, J. (SUPP) -
Qwest Corporation
specific raised this and the priorconcernscase
Burley case.These include committing to continue to act
as an Eligible Telecommunications Carrier to offer basic
measured and flat-rated residence and business service on a
stand-alone basis , and to keep rates at their current level
through end believe those commi tments2004.year
provide substantial protections and benefits.consumer
because the precedent-setting and untestedHowever,
nature of this case Qwest is willing to operate under a
pilot proj ect" with the following additional conditions:
First deregulation basicfor localprlce
exchange service would granted
conditional Pilot proj ect"basis in the seven
exchanges of Boise,Nampa,Caldwell Meridian
Twin Falls, Idaho Falls, Pocatello.
These seven exchanges represent a reasonable group
for the Pilot proj ect for several reasons. First, they are
the largest exchanges in Qwest' s southern Idaho territory
and therefore offer the most attractive markets for all
competitors. In fact, all of the Zone 1 (i. e., lowestpriced) wire centers are included within these seven
exchanges for purposes of the deaveraged UNE rates.
addition, the seven exchanges contain a sufficient number
of lines to allow Qwest to operate efficiently in making
the marketing, billing and product changes that may be
introduced in response to competition. Further the size of
this group of customers means that the Pilot proj ect will
QWE-02-
August 14 2003
Boise-160534,!0029164-00004
SCHMIT, J. (SUPP) -
Qwest Corporation
Second,the Pilot proj ect would cover
approximate 54 -month timeframe divided into two
periods.During firstthe period (through the
end of 2004) as I previously committed,prlces
for basic local exchange services will be capped
During the second periodcurrentrates.
three full from 2005 throughJanuaryyears
December 2007) ,the competitive market will
regulate prices.that theHowever any concern
market would offer adequa t e constraintnot
basic local exchange service prices would
mitigated by a "universal service assurance cap
that will guarantee prices in the seven exchanges
remain below level al ready determined
affordable for Idaho basic local exchange
the Commissionl i. e. customers the rates
established the Commission for Idaho
regulated independent companies.
offer a meaningful "test" of the impacts of competition andpricing flexibility.
3 In orders dating back as far as 1998 the Commission
found that rates of $24.10 for residence and $42.00 for
business basic local exchange customers were fair
reasonable and in the public interest. See I e.g. I In the
QWE- T -02-
August 14 2003
Boise-160534.1 0029164-00004
SCHMIT, J. (SUPP) -
Qwest Corporation
Third,the Commission may determine at any time
during the timeframe that price54-month
deregulation the Pilot proj ect exchanges
should be made permanent.Similarly,Qwest may
terminate the plan at any time during the term of
the Pilot proj ect at which point basic local
exchange service will revert to price regulation
under the then current Idaho statutes.the
Pilot proj ect terminated Qwest,Qwest
that rates will revert to the pre-Pilotagrees
Matter of Direct Communications Rockland, Inc.
Application for Authori ty to Increase Rates and
Disbursements From the Idaho USF, Case No. ROR-97-
Order No. 27450 (April, 1998). The conditions that Qwest
is agreeing to here would guarantee that from now until
January 2008, the maximum rate Qwest customers would be
paying would remain affordable and be no more than that
other Idahoans have been paying since 1998. While Qwest
has said this case is not about raising rates and that ithas no plans to increase rates at this time, Qwest cannot
guarantee that rates will never increase. Likewise,
neither Qwest nor the Commission can make such a guarantee
under rate of return regulation. In addition , Qwest asks
that the Commission keep in mind that the seven exchanges
primarily represent Zone 1 (lowest cost) for purposes of
unbundled loop rates. The current unbundled loop rate of
$15.65 thus serves as an additional constraint on Qwest' spricing. This belt (competitive market) and suspenders
(unbundled loop rate) approach already provides tremendous
constraints on Qwest' s pricing in the seven exchanges.
the unlikely event that both of these mechanisms fail , the
universal service assurance cap will protect consumers.
QWE-02-
August 14 2003
Boise-160534,10029164-00004
SCHMIT, J. (SUPP) -
Qwest Corporation
proj ect rates unless other rates are found by the
Commission to be just and reasonable.
Fourth basic services thelocalexchange
seven exchanges would be subj ect claw back"
prlce regulation followingunde r the
conditions:
QWE- T -02-
August 14 2003
Boise-160534.1 0029164-00004
During the pilot proj ect ,term of the upon
complaint to the Commission and after notice
Qwest and hearing,Commissionthe
finds that the quality,general availability
terms and basic localconditionsfor
exchange service in the seven exchanges are
adverse public interest,thethe
Commission shall have authority to negotiate
require servicesuchchangeshow
provided.addition the Commission
finds actionthatsuchcorrecti ve
inadequate,the authori ty shall have
require proj ectthatthePilot
terminated.Exercising pricing flexibili ty
wi thin the established by pricerange caps
SCHMIT, J. (SUPP) -
Qwest Corporation
grounds correcti venot,itself,for
action or terminating the pilot proj ect.
the conclusion of the pilot Project,Fifth,
claw-back occurred,pricehasassumingnot
deregulation in the seven exchanges would become
permanent.
Sixth, Qwest will not seek expansion of the pilot
exchanges during thebeyondtheproj ect seven
months of the Pilot proj ect .ini tial twelve
ADDRESSESPLEASEEXPLAIN HOW THE PILOT PROJECT
CONCERNS THAT WERE EXPRESSED DURING THE PRIOR PROCEEDINGS.
Al though tended expressedtheconcerns
for example,focusing on applicationsindirectly by,
may not be readily adaptable as voicewirelinesthat
wireless al ternati ve,believe thatcommunications
ultimately the concern is that Qwest will abuse the pricing
increasing rates-seeking herefreedoms
who changeparticularlyformaynotwantcustomers
elderly customers)using access(e.
g. ,
some or customers
lines for purposes other than basic local exchange service.
offered the compet i t i vetestimonythatWhileQwe s t has
market will protect those customers and in fact that those
QWE- T -02-
August 14 2003
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SCHMIT, J. (SUPP) -
Qwest Corporation
will benefi t from the compet i t i ve market thecustomers
Pilot Proj ect approach providessuggesting the
Commission and all customers with the comfort of limiting
the potential risk of price deregulation over the next
months, while preserving all of the potential benefits of a
competitive market.Given the change thepace
industry,and the current trend in access line loss,that
deal more certainty than customers includinggreat
the elderly and those with fewer perceived choices)have
today under price regulation.
DOES THIS MEAN THAT CUSTOMERS WILL PAY MORE FOR
BASIC LOCAL EXCHANGE SERVICE UNDER THE PILOT PROJECT THAN
THEY DO TODAY?
Not necessarily.stated,the market will
control prices subj ect to the upper limits described above.
Customers will choose their provider on the basis of price,
service, quality and features-just as they do today.Qwest
will need compet it i ve all fronts order
retain existing customers and attract new customers.
have already testified that oplnion that
wireless competition constrains Qwe s t from making arge
price increases and have testified that Qwest has
QWE- T -02-
August 14 2003
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SCHMIT, J. (SUPP) -
Qwest Corporation
plans to increase prices.By offering the pilot proj ect,
those facts do not change.But,just like the Commission,
know exactly what the future will hold.not
benefi t Pilotthe proj ect thatapproach
The
the
Commission and customers will know the upper limit of any
potential price increase, but customers may still enj oy any
stabili zing downward competition bringspressure
prices for basic local exchange service.
PLEASE SUMMARIZE YOUR TESTIMONY.
These conditions,together with all
condi tions previously offered,provide significant
substantial benefits and protectionsconsumer
otherwise continued rate-of -guaranteedcannot
return regulatory structure.At the same time,the terms
the
and
that
of the Pilot Project give Qwest the ability to more fully
the marketplace today.comparedcompete
Qwest believes the Pilot proj ect proposalstatus quo,
better for consumers,better for the State of Idaho,
bet ter for the company,while at the same time minimizing
potential risk adverse result
the
and
unintendedany
consequence of granting Qwest' s application.
DO YOU HAVE ANY FINAL THOUGHTS?
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August 14, 2003
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SCHMIT, J. (SUPP) -10-
Qwest Corporation
Yes.Qwest appreciates the long history of the
Commission and the Company working together creatively and
proactively addre s s emerging issues the
telecommunications industry.I believe Idaho has benefited
and is better positioned for future economic growth because
of it.What I have attempted to do here is continue that
tradition.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.Thank you.
QWE-02-
August 14 2003
Boise-160534,10029164-00004
SCHMIT, J. (SUPP) -11-
Qwest Corporation