20090610Hunnicutt Rebuttal.pdf

Qwest
421 Southwest Oak Street
Suite 810
Portland, Oregon 97204
Telephone: [phone]
Facsimile: 503-242-8589
e-mail: alex.duarte(gqwest.com
"i
Alex M. Duarte
Corprate Counsel
RECEIVED
289 JUN tOAH 8: 1t6
iDAHO PUBLIC r\ we s tUTILITIES COMMlssidN ~
June 9, 2009
VIA UPS NEXT DAY DELIVERY
Jean D. Jewell, Secretar
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983
RE: Docket No. QWE-T-08-07
Dear Ms. Jewell:
Enclosed for filing with ths Commission are nine copies of Qwests Direct Testimony on
Rebuttl of Qwest witnesses Renee Albersheim, Rachel TDrrence and Victoria Hunicutt,
and confidential exhibit thereto.
Qwest s Confidential Exhibit 11, and Qwest s Confdential Page 22 to the Rebuttal
Testimony of Renee Albersheim are being filed separately and under an Attorney's
Certificate.
If you have any questions, please contact me. Than you for your cooperation in this
matter.
Very trly yours,
Alex M. Duare
Enclosures
cc: Paries of Record
CERTIFICATE OF SERVICE
I do hereby certify that a tre and correct copy ofthe foregoing DIRECT REBUTTAL
TESTIMONY OF QWEST WITNESSES RENEE ALBERSHEIM, RACHEL
TORRNCE, and VICTORI HUNICUTT (together with exhibits as noted) was
served on the 9th day of June, 2009 on the following individuals:
Jean D. Jewell
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, ID 83702
Telephone [phone]
Facsimile: [phone]
jjewell~puc.state.id.us
Hand Delivery
U. S. Mail
2L Overnight Delivery (Confidential exhibit
fied separtely)
Facsimile
Email
Weldon Stutzman
Deputy Attorney General
Idaho Public Utilties Commission
472 W. Washington
PO Box 83720
Boise, ID 83720-0074
Email: Weldon.Stutzman~puc.idaho.gov
Hand Delivery
U. S. Mail
-2 Overnight Delivery (all exhibits)
Facsimile
Email
Douglas K. Denney
Integra Telecom, Inc.
6160 Golden Hils Drive
Golden Valley, MN 55416
E-mail: dkdenney~integratelecom.com
Hand Delivery
-2 u. S. Mail (all exhibits)
Overnight Delivery
Facsimile
-. Email
Michael Singer Nelson
Associate General Counsel
Suite 160
867 Coal Creek Circle
Louisvile, CO 80027
E-mail: mnelson~360.net
Hand Delivery
-2 U. S. Mail (all exhibits)
Overnight Delivery
Facsimile
-- Email
M
Alex M. Duare
Attorney for Qwest Corporation
.
RECEIVED
200 JUN lOAM 8= 46
IDAHO PUBLi~EJ~~Ti:: COMMSSl~íi~O&l(~I~sioN
IN THE MATTER OF QWEST )
CORPORATION'S PETITION ) CASE NO. QWE-T-08-07
FOR APPROVAL OF NON-IMPAIRED )
WIRE CENTER LISTS PURSUANT TO )
THE TRIENNIAL REVIEW REMAND )ORDER )
)
DIRECT REBUTTAL TESTIMONY OF VICTORIA HUNNICUTT
QWEST CORPORATION
JU 10,2009
TABLE OF CONTENTS
Page
I. IDENTIFICATION OF WITNESS ......................................................................1
II. PURPOSE OF REBUTTAL TESTIMONY ........................................................2
III. CLARFICATION OF UNE-TO-PRIVATE LINE SERVICE
CONVRSIONS ....................................................................................................3
iv. CONCLUSION ....................................................................................................12
CASE NO. QWE- T -08-07
4/17/09
HUICUTT, V (Di-Reb) i
QWEST CORPORATION
1 I.IDENTIFICATION OF WITNESS
2 Q:PLEASE STATE YOUR NAME, BUSINSS ADDRESS AND
3 POSITION WITH QWEST CORPORATION.
4 A:My name is Victoria Hunicutt. My business address is 1801 Californa
5 Street, Denver, Colorado. I am employed by Qwest Corporation as a Director supporting
6 costs and issues management.
7 Q:DID YOU PREVIOUSLY SUBMIT DIRECT TESTIMONY IN TIDS
8 CASE ON APRIL 17, 2009?
9 A:Yes, I did.
CASE NO. QWE- T -08-07
6/10/09
HUICUTT, V (Di-Reb) 1
QWEST CORPORATION
1 II.PURPOSE OF REBUTTAL TESTIMONY
2 Q:WHAT IS THE PURPOSE OF YOUR REBUTTAL TESTIMONY?
3 A:The purose of my testimony is to respond to the Direct Testimony of
4 Douglas Denney ("Denney Direct"), submitted on May 22,2009. Specifically, I address Mr.
5 Denney's testimony regarding Qwests charge to convert an unbundled network element
6 ("UNE") service to a private line or special access service in those Idaho wire centers that
7 have been designated "non-impaied" pursuant to the Triennial Remand Review Order
8 ("TRRO"). i
i See In the Matter o/Review o/Unbundled Access to Network Elements. Review o/Section 251
Unbundling Obligations 0/ Incumbent Local Exchange Carriers, Order on Remand, ee Docket No. 0 i -338,
we Docket No. 04-313, 20 Fee Rcd 2533, (2004) ("Triennial Review Remand Order" or "TRRO").
CASE NO. QWE-T-08-07
6/10/09
HUICUTT, V (Di-Reb) 2
QWEST CORPORATION
1 III. CLARIFICATION OF UNE-TO-PRIVATE LINE SERVICE CONVERSIONS
2 Q:DO THE JOINT CLECs AGREE WITH QWEST'S ASSERTION THAT
3 THE FORMERLY-AVAILABLE UNE SERVICES MUST BE CONVRTED TO AN
4 ALTERNATIVE, NON-UNE ARGEMENT AS A RESULT OF A NON-
5 IMPAIRMENT AFFIRMATION BY THIS COMMISSION?
6 A:Yes, but only if the CLEC requests to remain on Qwest facilties. The Joint
7 CLECs, though Mr. Denney in his Direct Testimony, agree that a "conversion (is possible)
8 when a circuit that was formerly available as a UN must be converted to a non-UNE
9 alternative arrangement, as the result of a finding of 'non-impairment.",2 For clarfication,
10 two corrections need to be made to Mr. Denney's characterization ofUNE-to-private line
11 conversions. First, in quoting Mr. Denney above, I replaced "happens" with "is possible."
12 Mr. Denney implies that the conversion automatically occurs without affirmative input from
13 the CLEC leasing the facilities. Qwest canot assume the CLEC leasing the facilities wants
14 to remain on Qwest facilities and thus unilaterally convert CLEC-Ieased facilties. Choosing
15 to remain on Qwests facilities and choosing the non-UNE services that the former UNEs are
16 converted to are business decisions that only the CLEC leasing the Qwest facilties can make.
17 Second, a key variable is missing from Mr. Denney's conversion definition: choice.
18 With a finding of non-impairment, there is affrmation that competition exists, thereby
19 recognizing the fact that CLECs have alternatives to remaining on Qwest s facilities. Should
20 the CLEC decide it is in its best interests to remain on Qwest facilties, in lieu of its other
21 options, the CLEC then formally requests to do so.
2 Denney Direct, at page 50, lines 13-15.
CASE NO. QWE- T -08-07
6/10/09
HUICUTT, V (Di-Reb) 3
QWEST CORPORATION
1 To sumarize, clarfy and correct Mr. Denney's statement (at page 50, lines 13-15),
2 I would say as follows: A UNE-to-private line conversion is one of three options available to
3 the CLEC as a result of a finding of non-impairment. That is, a circuit that was formerly
4 available as a UNE must either be (1) obtained though Qwest by formally requesting the
5 conversion of former UNE services to non-UNE alternative arangements on Qwests
6 facilties, (2) obtained through facility providers other than Qwest, or (3) obtaned though
7 self-provisioning the facilities.
8 Q:WILL THE CLECs BEAR THE TOTAL COSTS ASSOCIATED WITH
9 THE CONVRSION, AS MR. DENNEY IMPLIES?3
10 A:No, they will not. The UNE-to-private line conversion rate is a negotiated
11 rate. As a result, both paries bear the costs incured as a result of the conversion process. In
12 the case of the $25 conversion charge, however, Qwest actually assumes a larger portion of
13 the conversion costs incurred.
14 Q:DO THE JOINT CLECs ACKNOWLEDGE THE FACT THAT THE
15 $25 UNE-TO-PRI ATE LINE CONVERSION RATE IS A NEGOTIATED RATE
16 VERSUS A COST-BASED RATE?
17 A:Yes, as confired through Mr. Denney's Direct Testimony, the Joint CLECs
18 concede that the $25 UNE-to-private line conversion charge was agreed to durg a
3 Denney Direct, at page 62, lines 23-24.
CASE NO. QWE-T-08-07
6/10/09
HUICUTT, V (Di-Reb) 4
QWEST CORPORATION
1 negotiations process, and Mr. Denney fuher states that the CLECs agreed to allow Qwest
2 "leeway as to how it implements that charge.,,4
3 Q:HOW DID QWEST CHOOSE TO IMPLEMENT THE UNE-TO-
4 PRIATE LINE CONVRSION RATE?
5 A:The negotiated UNE-to-private line conversion rate be found in Qwests FCC
6 No.1 taff, in Section 5.2.2(C), Design Change Charge. Ths rate has been in effect and has
7 remained unchallenged since April 29, 2006.
8 Q:IS QWEST'S IMPLEMENTATION OF THIS CONVERSION RATE
9 APPROPRIATE?
10 A:Yes. Mr. Denney acknowledges (as shown above) that Qwest was given
11 "leeway" by the CLECs to choose how to implement the negotiated rate, but the Joint CLECs
12 (by way of Mr. Denney's Direct Testimony) then criticize Qwests implementation of that
13 same rate.5 Although Mr. Denney implies otherwise, for Qwest's special access customers,
14 including Qwest s retail customers who purchase out of Qwest s special access taff, the
15 Design Change Charge is applicable when the "customer requests a design change to the
16 service ordered" and when a CLEC requests a "conversion of a UNE circuit to a special
17 private line service.,,6 Ths would have been apparent in Mr. Denney's Direct Testimony7
4 Denney Direct, at page 64, fn. 93 ("The CLECs did agree to a $25 charge and allowed Qwest leeway
as to how it implements that charge, which Qwest has chosen to do so though the Federal tariff and a factor.").
5 Denney Direct, at page 65, lines 6-7.
6 See Qwest Tariff FCC No. i, Section 5.2.2(C), which states:
Design Change Charge
The customer may request a design change to the service ordered. A design change is any change to an
CASE NO. QWE-T-08-07
6/10/09
HUICUTT, V (Di-Reb) 5
QWEST CORPORATION
1 had he not neglected to include the last sentence in his citation of the Design Change Charge
2 definition. The final sentence states: "The Design Change Charge also covers activities
3 associated with the conversion of a UNE circuit to a special private line service." (Emphasis
4 added.)
5 Q:SHOULD QWEST FILE COST SUPPORT TO SUBSTANTIATE ITS
6 PROPOSAL TO CHAGE CLECs FOR UNE- TO-PRIVATE LINE CONVERSIONS,
7 AS MR. DENN IMPLIES?8
8 A:No, it would not be appropriate to file a cost study here for a federally-tarffed
9 rate. Furter, more importantly, and as mentioned above, the UNE-to-private line rate is a
10 negotiated rate to help cover costs incured as a direct result of the CLEC-requested
11 conversion process. It is not a cost-based rate.
Access Order which requires engineering review. An engineerig review is a review by Company
personnel of the service ordered and the requested changes to determine what change in the design, if
any, is necessar to meet the changes requested by the customer. Design changes include such things
as a change of end user premises within the same serving wire center, the addition or deletion of
optional featues, fuctions, BSEs or a change in the tye of Transport Termination (Switched Access
only), tye of chanel interface, tye ofInterface Group or technical specification package. The
Design Change Charge also covers activities associated with the conversion of a UN circuit to a
special private line service."
This section of Qwest s FCC tarff can be accessed at:
(http://tariffs.qwest.com:8000/idc/groups/pu blic/docu ments/tarifffccl s005p021.pdf#Page= 1 &PageMode
=bookmarks)
7 Denney Direct, at page 65, lines 10-19.
8 Denney Direct, at page 63, lines i 6- i 7.
CASE NO. QWE-T-08-07
6/10/09
HUNICUTT, V (Di-Reb) 6
QWEST CORPORATION
1 Q:MR. DENNEY REFERS TO SECTION 7 OF THE FCC NO.1 TARFF
2 IN HIS DISCUSSION OF QWEST'S "INTERSTATE ACCESS DESIGN CHANGE
3 CHARGE.,,9 IS THIS SECTION OF THE TARFF APPLICABLE TO THE UNE-
4 TO-PRIVATE LINE CONVERSION CHAGE?
5 A:No, the section that Mr. Denney references has no reference to, nor does it
6 include, the UNE-to-private line conversion charge. The correct section of Qwests FCC No.
7 1 tarff is section "5.2.2(C) Design Change Charge." Apparently from Mr. Denney's
8 excerpt, the section is referrng to "administrative changes," not activities associated with the
9 conversion of a UNE circuit to a special private line service as specifically indicated in the
10 definition of "Design Change Charge" in section 5.5.2.
11 Q:MR. DENNEY ASSERTS THAT "QWEST REQUIRES CLECs TO
12 PLACE AN ORDER."io DO YOU AGREE WITH HIS ASSERTION?
13 A:No, I do not agree at alL. For the same reasons, I do not agree with Mr.
14 Denney's assertion that the conversion, and thus, its requisite processes, is "not a change
15 requested by a CLEC."l1 Although Qwest would prefer to retan a CLEC as a customer, it
16 canot "require" a CLEC to remain on its facilities. With a finding of non-impairment, there
17 is affirmation that competition exists, thereby recognzing the fact that CLECs have
18 alternatives to remaining on Qwest's facilties. Should a CLEC decide it is in its best
9 Denney Direct, at page 64, lines 4-7 and fn. 93.
10 Denney Direct, at page 66, line 5.
11 Denney Direct, at page 68, lines 6-7.
CASE NO. QWE-T-08-07
6/10/09
HUICUTT, V (Di-Reb) 7
QWEST CORPORATION
1 interests to remain on Qwest facilities, in lieu of its other options, the CLEC then formally
2 requests to do so.
3 Furher, the FCC, in both the TRO (Triennial Review Order) and the TRRO, referred
4 to the CLEC as the "requesting carer," a label referred to numerous times arising from the
5 fact that the CLEC makes a conscious business decision in light of competition to request to
6 remain on Qwest s facilties, thereby forgoing its other options of availing itself of other
7 facilties in a marketplace that is deemed competitive, or of self-provisioning with its own
8 facilities.12 This CLEC decision to either remain on Qwest's facilities, both expected by the
9 FCC and initiated by the CLEC, clearly demonstrates that the CLEC determines whether or
10 not the conversion wil take place.
11 Q:MR DENNEY POINTS OUT13 THAT THE RATE DOES NOT
12 REFLECT THE TASKS INVOLVED IN THE CONVRSION. DO YOU AGREE
13 WITH HIS OBSERVATION?
14 A:Yes, I do, but for completely different reasons. Qwest maintains, and the
15 Joint CLECs have confirmed, that the $25 UNE-to-private line conversion charge is a
16 negotiated rate, not a cost-based rate. In recogntion of the fact that this is not a cost docket,
17 nor is it the proper venue for a fact-intensive inquiry as to the reasonableness of a federally-
18 tarffed rate, along with the fact that the $25 conversion rate is a negotiated rate, Qwest did
19 not submit a cost study in support of the $25 rate amount. Having said that, however, and as
12 The following phrase is but one example of the many instances in the TRO and TRRO where the
FCC has referred to the CLEC as the "requesting carer": "... the list ofUNs that incumbent LECs must
provide to requesting carriers. .." TRRO,1 10, at p. 8. (Emphasis added.)
13 Denney Direct at page 66, line 9 though page 67, line 16.
CASE NO. QWE-T-08-07
6/10/09
HUICUTT, V (Di-Reb) 8
QWEST CORPORATION
1 a show of good faith that Qwest incurs substatial costs in the conversion process, I have
2 previously sumarzed in my direct testimony the myriad tasks that Qwest employs in a
3 proven conversion process. Furhermore, this $25 rate amount reflects only a fraction of the
4 costs that Qwest incurs.
5 Q:MR. DENNEY ADVOCATES14 THAT THE CONVERSION RATE
6 SHOULD BE "SET TO ZERO." HOW DO YOU RESPOND TO THIS ARGUMENT?
7 A:I respond in thee pars: (1) the $25 UNE-to-private line conversion rate is a
8 negotiated rate that is included in multiple interconnection agreements, (2) a "zero rate"
9 would be uneasonably discriminatory to other, similarly-situated carers, which is
10 disallowed under the FCC Rules, is and (3) the resulting effect of a "zero rate" on economic
11 incentives and its impact on facilities-based competition does not support the preferable goal
12 ofthe Act.
13 To begin, the $25 UNE-to-private line conversion rate was agreed to in negotiations,
14 and is included in 146 interconnection agreements across Qwest s 14-state region. Of the
15 146 agreements providing the element at that $25 rate, eight of the approved agreements are
16 with CLECs operating in Idaho.
14 Denney Direct, at page 52, line 3.
is The FCC is specific in its discussion of
transitional pricing issues:
Congress established a pricing standard under section 252 for network elements unbundled pursuant to
section 251 where impairment is found to exist. Here, however, we are discussing the appropriate
pricing standard for these network elements where there is no impairent. Under the no impairent
scenario, section 271 requires these elements to be unbundled, but not using the statutorily mandated
rate under section 252. As set fort below, we find that the appropriate inquir for network elements
required only under section 271 is to assess whether they are priced on a just, reasonable and not
uneasonably discriminatory basis - the standards set forth in sections 201 and 202. TRO,' 656, at
p. 409. (Emphasis in original.)
CASE NO. QWE-T-08-07
6/10/09
HUICUTT, V (Di-Reb) 9
QWEST CORPORATION
1 Next, as stated by the FCC,16 where non-impairment is afrmed, the appropriate
2 inquiry for network elements is to assess whether they are priced on a just, reasonable and
3 not unreasonably discriminatory basis. Therefore, requiring Qwest to perform services
4 requested by the CLEC at no charge in a non-impaired marketplace, as Mr. Denney
5 advocates, would have the effect of forcing Qwest to uneasonably discriminate against other
6 similarly-situated cariers (e.g., interexchange carers) who are charged the Design Change
7 Charge for changes to their existing facilities.
8 Finally, if Qwest were not allowed to charge a CLEC for the costs incured to
9 perform the conversion per the CLEC's request, the CLEC's economic assessment of the
10 alternatives would be distorted. This could possibly lead the CLEC to choose Qwest s
11 facilties in situations where another alternative, such as the CLEC self-provisioning its own
12 facilities, is more economically sustainable and would fuher the preferable goal of the Act
13 (specifically, "genuine, facilities-based competition,,).17
16 TRO, ,r 656, at p. 409.
17 The D. C. Circuit sumarzed the purose of the Act when it stated:
After all, the purose of the Act is not to provide the widest possible unbundling, or to guarantee
competitors access to ILEC network elements at the lowest price that governent may lawfully
mandate. Rather, its purpose is to stimulate competition-preferably genuine, facilties based
competition." (Emphasis added.) United States Telecommunications Association v. FCC, 359 F.3d
554 (D.C. Cir. 2004) ("USTA ir).
CASE NO. QWE-T-08-07
6/10/09
HUNICUTT, V (Di-Reb) 10
QWEST CORPORATION
1 Q:HAVE STATES, OTHER THA CALIFORNIA AND COLORAO,18
2 ALLOWED ILECs TO CHARGE FOR CONVERTING UNE SERVICES TO
3 ALTERNATIVE FACILITIES OFFERED BY THE ILEC?
4 A:Yes. As mentioned above, the UNE-to-private line rate is a negotiated rate
5 and exists in 146 interconnection agreements throughout Qwest s 14-state region, including
6 eight interconnection agreements in Idaho. Furer, other ILECs charge for the UNE-to-
7 private line conversion. For example, Verizon's template interconnection agreement19
8 includes charges for conversions from UNE services to special access services,20 which
9 include a conversion service order charge, a per circuit charge for the conversion, and, if
10 applicable, a circuit re-tag charge per circuit.21
18 Denney Direct, at page 70, line 3 though page 71, line 18.
19 An example ofVerizon's template interconnection agreement can be obtained at:
(http://ww.puc.state.nh.us/telecomIilngslInterconnection%20AgreementsIDT%2007-
091 %20Neutral%20Tandem%20NH.pdO
20 Id at pages 16 and 17.
21 Id at page 135.
CASE NO. QWE-T-08-07
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HUNICUTT, V (Di-Reb) 11
QWEST CORPORATION
1 iv.CONCLUSION
2
3
Q:PLEASE SUMMARIZE YOUR TESTIMONY.
A:In summary, I have addressed Mr. Denney's assertions regarding Qwests
4 charge to convert an unbundled network element ("UNE") service to a private line or special
5 access service in those Idaho wire centers that have been designated "non-impaired" pursuant
6 to the TRRO. In doing so, I have demonstrated that choosing to remain on Qwest s facilities,
7 and requesting a UNE-to-private line conversion is only one of thee options available to the
8 CLECs as a result of a finding of non-impairment. Should the CLEC decide it is in its best
9 interests to remain on Qwest facilities once the UNE services are no longer available after a
10 finding of non-impairment, the CLEC then submits a request formally acknowledging its
11 choice to remain on Qwest s facilities, and the conversion process begins.
12 Moreover, as a direct result of converting CLEC circuits from UNE services to non-
13 UNE services, Qwest incurs costs. In recognition of these costs, Qwest and numerous
14 CLECs in those states that initially had TRRO non-impairment proceedings pending before
15 their state utility commissions negotiated a $25 rate to offset the costs that Qwest incurs (i.e.,
16 the costs are shared between the CLEC and Qwest). Furher, in that same negotiation
17 process, it was agreed to allow Qwest "leeway" in how it implements the conversion rate.
18 Thus, the conversion rate is a negotiated rate, and not a cost-based rate, nor is the negotiated
19 rate required to be substantiated by its associated costs.
20 Finally, in a non-impaied marketplace, the non-UNE elements are not bound by
21 UNE pricing stadards. Instead, the appropriate pricing stadard is to assess whether the
22 element is priced on a just, reasonable and not unreasonably discriminatory basis, which
CASE NO. QWE- T -08-07
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HUICUTT, V (Di-Reb) 12
QWEST CORPORATION
..
1 would not be the case if the conversion was a "zero rate." Furher, since this rate is a
2 federally-taffed rate, the assessment falls under the FCC's jurisdiction, not this
3 Commission's jurisdiction.
4 For these reasons, Qwest is merely asking that the Commission simply acknowledge
5 that Qwest is entitled to be compensated, at least in par, for the costs incured in the
6 demonstrated, seamless conversion from UNE services to alternative services (such as
7 finshed private line services). Qwest makes ths request with the hope that such
8 acknowledgement will serve the FCC's goal of encouraging ILECs and CLECs to negotiate
9 in good faith regarding any rates, terms, and conditions necessar to implement the FCC rule
10 changes,22and to ensure that paries do not engage in unecessary delay in implementing the
11 FCC's rue changes,23 through litigation or by other means.
12
13
Q:DOES THIS CONCLUDE YOUR TESTIMONY?
A:Yes, it does.
22 See TRRO, ~ 233, at page 133.
23 See TRRO, ~ 233, at page 133.
CASE NO. QWE- T -08-07
6/10/09
HUNICUTT, V (Di-Reb) 13
QWEST CORPORATION