20070817Nagrosst direct.pdf

Molly O'Leary (ISB No. 4996)
RICHARDSON & O'LEARY PLLC
515 North 27th Street
O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
Mail: molly~richardsonando1eary.com
Theodore A. Livingston
Dennis G. Friedman
MAYER, BROWN, ROWE & MAW LLP
71 South Wacker Drive
Chicago, IL 60606-4637
Telephone: [phone]
Fax: [phone]
Mail: dfriedman~mayerbrown.com
Dan Foley
General Attorney & Assistant General Counsel
AT&T WEST
P. O. Box 11010; 645 E. Plumb Lane, B132
Reno, Nevada 89520
Telephone: [phone]
Fax: [phone]
Mail: df6929~att.com
RECEIVED
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UTILiTIES iON
Attorneys for Complainant AT&T Communications of the Mountain States, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
AT&T COMMUNICATIONS OF THE MOUNTAIN )
STATES , INC.
Complainant
vs.
QWEST CORPORATION
Respondent.
August 16, 2007
CASE NO. QWE-06-
DIRECT TESTIMONY OF
GREGORY W. NAGROSST ON
BEHALF OF AT&T
COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.
INTRODUCTION
Please state your name for the record.
My name is Gregory Nagrosst.
By whom are you employed and in what capacity?
I am employed by AT&T Services, Inc. as Executive Director - Accounting.
that capacity I have familiarity with the payment records of AT&T
Communications of the Mountain States, Inc., a subsidiary of AT&T Inc.
Please briefly describe your job responsibilities.
Currently and for the last few years, I have been the Executive Director
Accounting in AT&T Services, Inc. Controller s organization with responsibility
for overseeing the accounting for traffic compensation between carriers, including
inter and intrastate access and local service products such as UNEs. This includes
accounting for the payments to access providers, such as Qwest, and international
carriers for use of that provider s network.
Please briefly describe your educational background.
I am a Certified Public Accountant as well as Certified Management Accountant
with an MBA from Farleigh Dickenson University in 1993 and Bachelor of
Science degree from Kean University in 1987. As a CPA, I am required to take
continuing professional education annually.
Please briefly describe your work experience.
Beginning July 1987, I worked for the State of New Jersey as an auditor. I then
spent a year as an internal auditor for First Atlantic Bank Corp. After leaving
First Atlantic Bank Corp., I began work for AT&T Corp. My total career with
Nagrosst. Di-
AT &T Communications of
the Mountain States, Inc.
II.
AT&T spans over 16 years in the accounting department performing various
functions. My first role with AT&T was as an assistant manager responsible for
consolidations and eliminations of inter-company transactions. Since that time I
have held positions with a wide variety of responsibilities ranging from revenue
accounting and recognition to accounting policy, including writing the schedule
of authorizations. For the past four years I have had my current responsibilities.
What is the purpose of your testimony?
My testimony is offered to describe the services AT&T Communications of the
Mountain States, Inc., purchased from Qwest Corporation ("Qwest") in Idaho
during the time period from November 1 2000, through December 31 , 2005, as
well as variations ofthis timeframe. For ease ofreference, I will refer to AT&T
Communications of the Mountains States, Inc., as "AT&T." I also discuss the
amount AT&T would have saved if given the opportunity to take the same 10%
discount on the services it purchased from Qwest that Qwest gave to certain other
carriers.
AT &T'S COMPLAINT GENERALLY
Are you generally familiar with AT&T's complaint against Qwest in this
proceeding?
Yes. I understand that the Minnesota Public Utilities Commission found that
Qwest offered at least two competitors of AT&T (McLeodUSA and Eschelon)
secret discounts in undisclosed interconnection agreements. I understand that
McLeod and Eschelon essentially enjoyed a 10% discount on all the services they
Nagrosst. Di-
AT &T Communications of
the Mountain States, Inc.
III.
purchased across the Qwest territory, including in Idaho. AT&T was not given
the opportunity for and did not receive a similar deal in Idaho or in any of the
Qwest in-region states. AT&T's complaint is based upon these deals.
What is AT&T asking the Commission to do in this case?
I am not an attorney or offering a legal opinion, but it is my understanding that
AT&T's position it that because AT&T , under its interconnection agreement with
Qwest" should have had an opportunity to opt into these discount agreements but
was prevented from doing so by Qwest, AT&T is asking the Idaho Commission to
award it relief as is proper and explained in AT&T's complaint.
AT&T'S PURCHASE OF SERVICES FROM QWEST
What services did AT&T purchase from Qwest in Idaho during the
November 2000 through December 2005 time frame, roughly the original
term of the agreement between Qwest and Eschelonf
Throughout that time frame AT&T purchased wholesale local services and
intrastate switched and private-line access services from Qwest.
During that same time frame, did AT&T purchase similar services across the
Qwest 14-state territory?
Yes, it did.
Do you know the approximate total amount AT&T paid Qwest across its 14-
state territory for those services during the November 2000 through
December 2005 time frame?
. The secret discount agreements between Qwest and Eschelon and Qwest and McLeod discussed herein
are the same agreements discussed at length by Mr. Deanhardt in his direct testimony.
Nagrosst. Di-
AT&T Communications of
the Mountain States, Inc.
Yes, as indicated in confidential Exhibit Nagrosst - 76 , which shows AT&T's
relevant aggregate purchases from Qwest by month, for the November 2000
through December 2005 timeframe, it was CONFIDENTIAL INFORMATION
BEGINS () END CONFIDENTIAL
INFORMATION related to intra-state access and local traffic with the balance
being paid for inter-state access services.
How much did AT&T pay Qwest in Idaho for the services it purchased
during that same time frame?
The attached confidential spreadsheet, Exhibit Nagrosst - 76, details the amount
AT&T paid to Qwest for intra-state access and local wholesale local services for
each relevant month in Idaho. From November 1 2000, to December 31 , 2005
AT&T paid to Qwest CONFIDENTIAL INFORMATION BEGINS (
) CONFIDENTIAL INFORMATION ENDS for intra-state access and local
traffic.
Had AT&T received a 10% discount on the services it purchased in Idaho
from November 1 2000, through December 31 2005, how much money
would it have saved?
For the relevant services, AT&T and would have saved CONFIDENTIAL
INFORMATION BEGINS ()CONFIDENTIAL INFORMATION
ENDS for intrastate access and local traffic.
N agrosst. Di-
AT &T Communications of
the Mountain States, Inc.
How much did AT&T pay Qwest in Idaho for the services it purchased
during the November 2000 through December 2003 time frame, roughly the
original term of the agreement between Qwest and McLeod?
As demonstrated in the attached confidential spreadsheet, Exhibit Nagrosst - 76
from November 1 2000, through December 31 , 2003 , AT&T paid to Qwest
CONFIDENTIAL INFORMATION BEGINS () CONFIDENTIAL
INFORMATION ENDS for intra-state access and local traffic.
Had AT&T received a 10% discount on the services it purchased in Idaho
from November 1 2000, through December 31 2003, how much money
would it have saved?
AT&T would have saved CONFIDENTIAL INFORMATION BEGINS
) CONFIDENTIAL INFORMATION ENDS on intra-state
access and local services.
How much did AT&T pay Qwest in Idaho for the services it purchased
during the November 2000 through June 2002 time frame, the actual term of
Qwest's agreement with McLeod?
As demonstrated in the attached confidential spreadsheet, Exhibit Nagrosst - 76
from November 1 , 2000, through June 30, 2002, AT&T paid to Qwest
CONFIDENTIAL INFORMATION BEGINS (CONFIDENTIAL
INFORMATION ENDS for intra-state access and local traffic.
Nagrosst. Di-
AT &T Communications of
the Mountain States, Inc.
Had AT&T received a 10% discount on the services it purchased in Idaho
from November 1,2000, through June 30, 2002, how much money would it
have saved?
AT&T would have saved CONFIDENTIAL INFORMATION BEGINS (
) CONFIDENTIAL INFORMATION ENDS for intra-state
access and local services.
Please describe how you arrived at the amount AT&T purchased from
Qwest in Idaho.
I reviewed the payments AT&T made to Qwest for services rendered to AT&T
from November 1 , 2000, to December 31 , 2005; the payments were categorized
by state by month for inter-state and intra-state access and local traffic.
determine the savings AT&T would have received had it been given a 10%
discount, for the time frames listed above, I multiplied each relevant category -
intra-state and local - by 10%.
If you were to add interest to the amount AT&T would have saved, how
much interest would that be?
The interest that AT&T would receive on the discount amount for the services
that AT&T purchased from Qwest during the November 1 , 2000, to December 31
2005 timeframe is CONFIDENTIAL INFORMATION BEGINS (
CONFIDENTIAL INFORMATION ENDS. The interest that AT&T would
receive for the discount amount on the services that AT&T purchased from Qwest
during the November 1 2000, to December 31 , 2003 timeframe is
Nagrosst. Di-
AT&T Communications of
the Mountain States, Inc.
IV.
CONFIDENTIAL INFORMATION BEGINS () CONFIDENTIAL
INFORMATION ENDS. The interest that AT&T would receive for the discount
amount from the services that AT&T purchased from Qwest during the November
2000, to June 30 , 2002 time frame is CONFIDENTIAL INFORMATION
BEGINS () CONFIDENTIAL INFO RMA TI ON ENDS.
Please describe how you arrived at that amount.
First I calculated the 10% discount off payments AT&T made to Qwest for the
purchase of intra-state access and local traffic for each month and then applied
5% simple interest or 18% annually to the 10% discount amount. The interest
was calculated from one month after the service period until the end of June 2007.
Why did you use 1.5% interest rate?
Section 3 of the Agreement for Local Wireline Network Interconnection and
Service Resale between AT&T and Qwest (U S West) in the State of Idaho for the
relevant time period sets forth the payment provisions, including late payment
charges. Exhibit N agrosst - 77. Pursuant to this section, if AT&T pays the billed
balance on time, but the amount of the billed balance is reasonably disputed by
AT&T, and it is later determined that a refund is due AT&T, interest shall be
payable on the refunded amount in the amount of 1.5% per month.
CONCLUSION
Does this conclude your direct testimony?
Yes.
Nagrosst. Di- 7
AT&T Communications of
the Mountain States, Inc.
Idaho Public Utilities Commission
Office of the Secretary
RECEIVED
AUG 1 6 2007
Bolss, Idaho
EXHIBIT
NAGROSST -
CON FIDENTIAL
File! !~t
. .
IAT "I bAt-tC Page I of
100008: 0110 USW ATT AGREEMENT WITH LINKS
States: 10
. ILEG-RBOG: US West (n/kla Owest Corporation)
GLEG: AT&T (pre-merger)
Signed: 8/12/1998
Filed: 7/11/1998
Approved: 9/15/1998
Archived
Negotiated
NewEntrant
Files:
01 10 USW ATT AGREEMENT WITH LINKS
0210 USW ATT Price list
0310 USW ATT Signatures
10 Owest-ATT Amendment No.Description: 10 Owest-ATT Amendment No, 1 Approval Order
Interconnection Agreement - US West/AT&T. 10/19/00
Amendment No.1 filed 11/13/00 and 1/25/01 Amendment No, 10 Owest-A IT Amendment No.
1 Approval Order. Amendment No.2 added 7/20/01.
Amendment No.3 added 10/28/02. 10 Owest-ATT Amendment No.
IdahQP-rUblitkUWi~i?e, ~mjssL9&n
cmtjc.e:-o',1t~~~c.re~fY /
RJ~_:G::E~iV:~q . o
11 f1 ?Jm17
Boise.
Nagrosst, G. - Exhibit 77
Case No. QWE-O6-
AT &T Communications of
The Mountain States, Inc.
http://www.1ga.att.comlfcas/ica/FileListaspx71O=10ooo8 3/14/2006
AGREEMENT
FOR LOCAL WIRELINE NETWORK INTERCONNECTION
AND
SERVICE RESALE
Between
AT&T Corp.
and
U S WEST Communications, Inc.
in the State of Idaho
TABLE OF CONTENTS
RECITALS
SCOPE OF AGREEMENT
OEFINITIONS
1. General Provisions
2. Most Favored Nation Terms and Treatment
3. Pavment
4. Taxes
5. Intellectual Property
6. Severability
7. Responsibilitv for Environmental Contamination
8. Branding
9. Independent Contractor Status
10. Referenced Documents
11. Publicity and Advertisinq
12. Executed in Counterparts
13. Headinqs Not Controllinq
14. Joint Work Product
15. Survival
16. Effective Date
17. Amendment of Aqreement
18. Indemnification
19. Limitation of Liabilitv
USWCIAT&T Interconnection Agreement - Idaho
Page
07/27198
Page 18
After there is a final court determination interpreting Section 252(i) of the Act, the Parties
agree to revise this Section to reflect such interpretation
Payment
In consideration of the services provided by US WEST under this Agreement, T& T shall
pay the charges set forth in Attachment to this Agreement. The biFfing procedures for
charges incurred by A T& T hereunder are set forth in Attachment to this Agreement.
Amounts payable under this Agreement, unless reasonably disputed, are due and payable
wffhin thirty (30) days after the date of WESTs invoice or within twenty (20) days
receipt of the invoice, whichever is later. If the payment due date is not Business Day, the
payment shall be made the next Business Day.
late payment charge of 5% applies to all billed balances, not reasonably disputed, which
are not paid wffhin the applicable time period set forth in Section above. To the extent
T& T pays the billed balance on time, but the amount of the billed balance is reasonably
disputed by AT&T, and, it is later determined that refund is due AT&T, interest shall be
payable on the refunded amount in the amount of 1.5% per month. To the extent AT&T
pays the billed balance on time, but the amount of the billed balance is reasonably disputed
by T& T, and, it is later determined that no refund is due T& T, no interest shall be payable
on the disputed amount.
3.4 Late payment charges shall not be used as a credit" to deposit, if any, without the express
approval of WEST.
Unless specified otherwise in this Agreement, U WEST shall bill all amounts due from
T& T for each resold service in accordance with the terms and conditions as specified in
the U WEST tariff.
Taxes
Any federal, state or local excise, sales, or use taxes (excluding any taxes levied on income)
resulting from the performance of this Agreement shall be borne by the Party upon which the
obligation for payment is imposed under applicable law, even if the obligation to collect and
remit such taxes is placed upon the other Party. Any such taxes shall be shown as separate
items on applicable billing documents between the Parties. The Party so obligated to pay
any such taxes may contest the same in good faith, at its own expense, and shall be entitled
to the benefit of any refund or recovery, provided that such Party shall not permit any lien to
exist on any asset of the other Party by reason of the contest. The Party obligated to collect
and remit taxes shall cooperate fully in any such contest by the other Party by providing
records, testimony and such additional information or assistance as may reasonably be
necessary to pursue the contest. To the extent sale is claimed to be for resale tax
exemption, the purchasing Party shall furnish the providing Party proper resale tax
exemption certificate as authorized or required by statute or regulation by the jurisdiction
providing said resale tax exemption. Failure to timely provide said resale tax exemption
certificate will result in no exemption being available to the purchasing Party during the
applicable reporting period.
Intellectual Property
07/27/98
12 Per Third Order, at pp. 1-
USWC/AT&T Interconnection Agreement - Idaho