20030605Technical Hearing - Day 2.pdf

60503V~1.txt
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HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701

1 BOISE, IDAHO, THURSDAY, JUNE 5, 2003, 9:30 A.M.
2
3
4 COMMISSIONER KJELLANDER: Well, good morning, and
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5 we'll go back on the record for day two of our hearings. And
6 when we left off yesterday Mr. Gannon was presenting his case,
7 and Mr. Gannon, when we left yesterday there was some question
8 as to whether or not you would have three or four additional
9 individuals who would be placed onto the stand today with
10 regards to their testimony, and do we have an update on that?
11 MR. GANNON: Yes, Mr. Chair. Yes, Mr. Chair. We
12 will have three witnesses -- Dennis McManamon, Joel Sales, and
13 Carolyn Boyce -- and Carol Moyer will withdraw her testimony
14 but submit it as public comment. She works at Blue Cross out
15 in Eagle and there was just time problems and work logistics.
16 COMMISSIONER KJELLANDER: When you describe it as
17 public comments, you mean as if it were sent in the door as a
18 letter. Correct?
19 MR. GANNON: Yes.
20 COMMISSIONER KJELLANDER: Is there any comment
21 from any other parties to the case?
22 MS. HOBSON: No objection.
23 MR. STUTZMAN: None.
24 COMMISSIONER KJELLANDER: Okay. So then we will
25 do that, and that will then become part of the public comments
594

HEDRICK COURT REPORTING SALES (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 section of the case.
2 All right, Mr. Gannon, if you'd like to call your
3 next witness.
4 MR. GANNON: Would call Joel Sales.
5 COMMISSIONER KJELLANDER: Mr. Sales, you'll need
6 to go up to the little box up there and get comfortable, and
7 Commissioner Smith will swear you in.
8 COMMISSIONER SMITH: I'm over here. Raise your
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9 right hand.
10
11 JOEL SALES,
12 produced as a witness at the instance of the Intervenor, being
13 first duly sworn, was examined and testified as follows:
14
15 COMMISSIONER KJELLANDER: Before you get started,
16 we just need to make sure your microphone is on. Is there a
17 little red button on a microphone there?
18 THE WITNESS: We have no red.
19 COMMISSIONER KJELLANDER: We can help you out
20 with that.
21 THE WITNESS: Okay.
22 COMMISSIONER SMITH: (Indicating.)
23 COMMISSIONER KJELLANDER: We're the State:
24 We can easily find red.
25 THE WITNESS: Super.
595

HEDRICK COURT REPORTING SALES (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 DIRECT EXAMINATION
2
3 BY MR. GANNON:
4 Q. Please state your name for the record.
5 A. Joel Thomas Sales.
6 Q. And you might spell your last name --
7 A. S-A-L-E-S.
8 Q. And have you filed or have we filed direct
9 testimony on your behalf in this case?
10 A. Yes.
11 Q. Have you had a chance to review that direct
12 testimony?
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13 A. Yes.
14 Q. And do you have any changes or corrections to
15 make to that at all?
16 A. I don't.
17 Q. Do you believe the questions, that if these
18 questions were asked to you today under oath, that your answers
19 would be the same?
20 A. Yes.
21 MR. GANNON: And we will offer Joel Sales's
22 testimony into the record and ask that it be spread.
23 COMMISSIONER KJELLANDER: Without objection then,
24 we'll spread the testimony of Mr. Sales across the record as if
25 read.
596

HEDRICK COURT REPORTING SALES (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 (The following prefiled direct testimony
2 of Mr. Sales is spread upon the record.)
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597

HEDRICK COURT REPORTING SALES (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor

1 (The following proceedings were had in
2 open hearing.)
3 MR. GANNON: Thank you, Mr. Chair, and we will
4 turn it over to cross-examination.
5 COMMISSIONER KJELLANDER: Okay. Let's begin with
6 Qwest.
7 MS. HOBSON: Thank you.
8
9 CROSS-EXAMINATION
10
11 BY MS. HOBSON:
12 Q. Good morning, Mr. Sales.
13 A. Good morning.
14 Q. You're testifying in this case, as I understand
15 it, because Counsel for the Intervenors asked you to do so. Is
16 that right?
17 A. Correct.
18 Q. We have previously marked -- we have previously
19 marked a document as No. 31 down here in the lower left-hand
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20 corner. Can you find that up there in your -- up there in the
21 little box?
22 A. I have it.
23 Q. Do you recognize that document?
24 A. Yes, I do.
25 Q. You helped Mr. Gannon prepare these Responses to
603

HEDRICK COURT REPORTING SALES (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 Qwest's Data Requests on your behalf. Is that correct?
2 A. Yes, it is.
3 MS. HOBSON: I would move the admission of Qwest
4 Exhibit No. 31.
5 COMMISSIONER KJELLANDER: And without objection,
6 we would --
7 MR. GANNON: Except for the objections that are
8 in the Answers to Interrogatories.
9 COMMISSIONER KJELLANDER: Correct.
10 So with that noted then, we will admit Exhibit
11 No. 31.
12 MS. HOBSON: Thank you.
13 (Qwest Exhibit No. 31 was admitted into
14 evidence.)
15 Q. BY MS. HOBSON: Mr. Sales, I understand that the
16 phone system that you have at your current employer, Lloyd
17 Lumber, is a deregulated large phone system. Is that right?
18 A. Yes, as well as I'm aware, yes.
19 Q. Do employees at Lloyd Lumber use cell phones?
20 A. Yes, we do.
21 Q. Do you use a cell phone at your work?
22 A. Yes.
23 Q. But you're not speaking on behalf of Lloyd
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24 Lumber. Is that correct? You're here to tell us about your
25 experiences?
604

HEDRICK COURT REPORTING SALES (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. That's correct.
2 Q. On page 5 of your testimony, you indicated that a
3 cell phone is -- I think these are your exact words -- very
4 necessary in your industry. Why do you say that?
5 A. Well, we're out in the field a lot in
6 construction, and without a cell phone, we would have
7 communications with customers in our office.
8 Q. At your home, you have a line that's dedicated to
9 your fax machine. Is that right?
10 A. On our land line phones?
11 Q. At your home?
12 A. At my home, yes.
13 Q. And I believe you also testified in your prefiled
14 testimony that you access the Internet through your cable
15 company?
16 A. Yes, we do.
17 Q. Through Cable One?
18 A. Yes.
19 Q. But in addition to your fax line and of course
20 your cable, you also have a phone line for voice calling, a
21 wireline for voice calling?
22 A. Yes.
23 Q. Okay. And you have wireless service at home. Is
24 that right?
25 A. Yes, we do.
605

HEDRICK COURT REPORTING SALES (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
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 1 Q. Do you have a single line or a family plan?
2 A. We have a single line.
3 Q. I understand from your testimony -- or, I'm
4 sorry -- from your Responses that are depicted on Exhibit 31
5 that your wireless provider is AT&T and that you have an
6 unlimited air time, voicemail, and call forwarding package. Is
7 that right?
8 A. I did have at the time of the questions. We kind
9 of changed that.
10 Q. Have you? Okay.
11 Isn't it also true that your long distance
12 calling is free under that plan, or was free under the plan
13 that you had at that time?
14 A. Correct.
15 Q. Now, you say on page 5 of your testimony that
16 cell phones are very important for a teenager. Why did you say
17 that?
18 A. So that we can keep contact on them. If they
19 have trouble and need a ride home, we're able to pick them up
20 right away.
21 Q. So your teenager is carrying a cell phone and you
22 use the cell phone to keep track of where he or she is?
23 A. Yes, we do.
24 Q. Now, you mentioned you had a son -- I think it's
25 a son -- somebody named Kyle who is returning from college?
606

HEDRICK COURT REPORTING SALES (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. Yes.
2 Q. Is that a boy?
3 A. Yes, it is.
4 Q. You never know anymore with these names.
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5 Does Kyle have his own cell phone?
6 A. Yes, he does.
7 Q. And he uses that while he's at college, does
8 he?
9 A. Yes, he does.
10 MS. HOBSON: I believe that's all I have.
11 COMMISSIONER KJELLANDER: Thank you, Ms. Hobson.
12 Mr. Stutzman.
13 MR. STUTZMAN: No questions.
14 COMMISSIONER KJELLANDER: Are there questions
15 from members of the Commission?
16 MR. GANNON: I have one question, Mr. Chair.
17 COMMISSIONER KJELLANDER: You do get redirect.
18 MR. GANNON: Okay.
19
20 REDIRECT EXAMINATION
21
22 BY MR. GANNON:
23 Q. Mr. Sales, when you and I were teenagers, did we
24 have any kind of phone available for us to use other than the
25 land line?
607

HEDRICK COURT REPORTING SALES (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. No.
2 Q. And when we -- when -- I believe you went -- you
3 went to college for a period of time?
4 A. I went to vocational type for union, journeyman
5 carpentry.
6 Q. When we went to college, did we have a -- did we
7 have a cell phone that we could use?
8 A. No.
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9 Q. And when you went to college, did you have your
10 own personal land line or did you share it with other roommates
11 or students?
12 A. We shared.
13 Q. And would you consider the cell phone usage in
14 that context as a student, and referring to our teenage years
15 and as students, would you consider that cell phone to be a --
16 something that is used in conjunction with a land line and not
17 a replacement for the land line?
18 A. Correct. It's a convenience.
19 Q. Okay.
20 MR. GANNON: I don't have any further questions.
21 COMMISSIONER KJELLANDER: Thank you, Mr. Gannon.
22 Mr. Sales, you may be excused, and thank you for
23 your testimony.
24 THE WITNESS: You're welcome.
25 (The witness left the stand.)
608

HEDRICK COURT REPORTING BOYCE (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 COMMISSIONER KJELLANDER: Mr. Gannon, if you
2 could call your next witness?
3 MR. GANNON: I would call Carolyn Boyce.
4
5 CAROLYN BOYCE,
6 produced as a witness at the instance of the Intervenor, being
7 first duly sworn, was examined and testified as follows:
8
9 DIRECT EXAMINATION
10
11 BY MR. GANNON:
12 Q. Please state your full name for the record.
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13 A. Carolyn Marie Boyce.
14 Q. And in connection with this case, have you filed
15 testimony --
16 A. Yes, I have.
17 Q. -- that's been prepared?
18 And have you had a chance to review your
19 testimony?
20 A. Yes, I have.
21 Q. And do you have any changes or corrections that
22 need to be made to your testimony?
23 A. No.
24 Q. If I asked you the same questions today as if
25 you were sworn under oath, would your answers be the same?
609

HEDRICK COURT REPORTING BOYCE (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. Yes, they would.
2 Q. Do you have an exhibit to your testimony and the
3 listing of the --
4 A. Of the CPA firms, yes.
5 Q. And is that exhibit something you acquired
6 through and have personal knowledge of?
7 A. Yes.
8 Q. What exhibit number is that? It's attached to
9 your testimony?
10 A. Is that --
11 Q. I believe it would be Exhibit 204?
12 A. Okay. Exhibit 204.
13 Q. Okay.
14 MR. GANNON: We will -- we will offer Ms. Boyce's
15 testimony and ask that the -- and exhibit -- and ask that it be
16 spread upon the record.
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17 COMMISSIONER KJELLANDER: Without objection,
18 we'll spread the direct testimony of Ms. Boyce across the
19 record as if read, and also admit Exhibit 204.
20 (The following prefiled direct testimony
21 of Ms. Boyce is spread upon the record.)
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610

HEDRICK COURT REPORTING BOYCE (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor

1 (The following proceedings were had in
2 open hearing.)
3 (Intervenor Exhibit No. 204, having been
4 premarked for identification, was admitted into evidence.)
5 COMMISSIONER KJELLANDER: And I believe you're
6 ready to tender your witness then for cross, and why don't we
7 begin then with Qwest.
8 MS. HOBSON: Thank you.
9
10 CROSS-EXAMINATION
11
12 BY MS. HOBSON:
13 Q. Good morning, Ms. Boyce.
14 A. Good morning.
15 Q. I understand that you are testifying here this
16 morning because Mr. Gannon contacted you and asked you to do
17 so. Is that right?
18 A. Yes, that's correct.
19 Q. And you are a customer of Qwest?
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20 A. I am.
21 Q. You indicated in your testimony that you cannot
22 operate your business without what you term rollover service.
23 Do you remember that part of your testimony?
24 A. Yes.
25 Q. Did you know that rollover service is a separate
615

HEDRICK COURT REPORTING BOYCE (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 service from your land line?
2 A. I know that I pay extra for it, yes.
3 Q. And did you know that the price that you pay for
4 rollover service is not regulated by the PUC?
5 A. No, I did not know that.
6 Q. You also indicated in your testimony that DSL
7 service is -- I think these were your words -- absolutely
8 essential to the use of -- to your use of the tax materials
9 that you get from the Internet. Do you remember that
10 testimony?
11 A. Yes.
12 Q. And DSL service is also a separate service from
13 your land line. Isn't that true?
14 A. I also pay extra for that, yes.
15 Q. And were you aware that the Commission does not
16 regulate the price of your DSL service?
17 A. No.
18 Q. Ms. Boyce, if you look on the podium right to
19 your left there, or maybe you have it in front of you, a
20 document that's been marked 32, this is Qwest Exhibit 32, this
21 document says Carolyn Boyces, but your name is Boyce,
22 B-O-Y-C-E. Isn't that right?
23 A. Oh. Yes.
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24 Q. I just want to make sure I wasn't misspeaking.
25 Anyway, do you recognize this document.
616

HEDRICK COURT REPORTING BOYCE (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. Yes, I do.
2 Q. And you helped Mr. Gannon prepare these Responses
3 on your behalf?
4 A. I did.
5 MS. HOBSON: I would move the admission of
6 Exhibit 32.
7 COMMISSIONER KJELLANDER: And with the same
8 objection raised by Mr. Gannon --
9 MR. GANNON: Right.
10 COMMISSIONER KJELLANDER: -- in relationship to
11 the Interrogatories, we would have Exhibit 32 admitted.
12 (Qwest Exhibit No. 32 was admitted into
13 evidence.)
14 MS. HOBSON: And that's all I have. Thank you.
15 COMMISSIONER KJELLANDER: Thank you.
16 Let's move now to Mr. Stutzman.
17 MR. STUTZMAN: No questions.
18 COMMISSIONER KJELLANDER: Are there questions
19 from members of the Commission?
20 COMMISSIONER SMITH: No.
21 COMMISSIONER KJELLANDER: Redirect.
22 MR. GANNON: I just had one question.
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617

HEDRICK COURT REPORTING McMANAMON (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
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 1 REDIRECT EXAMINATION
2
3 BY MR. GANNON:
4 Q. Ms. Boyce, are you testifying here today as a
5 representative of the CPA accounting industry in order to
6 advise as to what the needs are of CPAs and similar
7 professionals?
8 A. Yes.
9 MR. GANNON: That's all the questions I have.
10 COMMISSIONER KJELLANDER: Thank you.
11 We appreciate your testimony, and you're excused.
12 Thank you.
13 (The witness left the stand.)
14 COMMISSIONER KJELLANDER: Mr. Gannon, if you'd
15 like to call your next witness?
16 MR. GANNON: Call Dennis McManamon.
17
18 DENNIS McMANAMON,
19 produced as a witness at the instance of the Intervenor, being
20 first duly sworn, was examined and testified as follows:
21
22 DIRECT EXAMINATION
23
24 BY MR. GANNON:
25 Q. Please state your full name for the record.
618

HEDRICK COURT REPORTING McMANAMON (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. Dennis McManamon.
2 Q. And would you spell that for the court reporter?
3 A. M-C, capital M-A-N-A-M-O-N.
4 Q. And in connection with this proceeding, have you
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5 filed -- have we prefiled testimony --
6 A. I did.
7 Q. -- your testimony?
8 And do you have any changes or corrections you
9 wish to make to your testimony?
10 A. I don't.
11 Q. Do you believe that if I asked you the questions
12 in the prefiled testimony today and you were sworn under oath,
13 would your answers be the same?
14 A. Yes.
15 Q. Okay.
16 MR. GANNON: We offer Dennis McManamon's
17 testimony, ask that it be spread on the record, and release him
18 for cross-examination.
19 COMMISSIONER KJELLANDER: Without objection then,
20 we'll spread the testimony -- direct testimony -- across the
21 record as if read, and tender him for cross-examination, and
22 let's begin again with Ms. Hobson.
23 MS. HOBSON: Thank you.
24 (The following prefiled direct testimony
25 of Mr. McManamon is spread upon the record.)
619

HEDRICK COURT REPORTING McMANAMON (Di)
P. O. BOX 578, BOISE, ID 83701 Intervenor

1 (The following proceedings were had in
2 open hearing.)
3
4 CROSS-EXAMINATION
5
6 BY MS. HOBSON:
7 Q. Good morning, Mr. McManamon.
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8 A. Good morning.
9 Q. I hope I pronounced that right.
10 A. You did good.
11 Q. You're testifying here because Mr. Gannon called
12 you and asked you to do so. Is that correct?
13 A. That's correct.
14 Q. Are you testifying on behalf of Awnings
15 Unlimited?
16 A. No.
17 Q. Okay. But that is your current employer?
18 A. That's -- yes, uh-huh.
19 Q. You have four cell phones that you use at the
20 company. Is that right?
21 A. That's right.
22 Q. You and the other employees use these?
23 A. That's right.
24 Q. One for each employee?
25 A. Uh-huh.
624

HEDRICK COURT REPORTING McMANAMON (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 Q. And as I understand it, when you described what
2 you have at the office there, you indicated that you had a line
3 that was dedicated to your fax machine?
4 A. Uh-huh.
5 Q. And you also said that you had a line that was
6 dedicated to DSL?
7 A. Uh-huh.
8 Q. And I thought you said that you had three lines
9 that you used for voice calling that were in rotation?
10 A. Right, that's correct, uh-huh.
11 Q. And do you also have a land line that's dedicated
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12 to your credit card machine?
13 A. Yes, uh-huh.
14 Q. So you have a total of six lines at Awnings
15 Unlimited?
16 A. Right, uh-huh.
17 Q. Do you understand that DSL is a service separate
18 and apart from the land line itself?
19 A. I didn't know that, no.
20 Q. And you don't pay the bills at Awnings Unlimited,
21 do you?
22 A. No.
23 Q. In your testimony, you say that your land line
24 system at work is part of a phone system that has four
25 locations. Where are those other locations?
625

HEDRICK COURT REPORTING McMANAMON (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 A. There's two locations: One in Meridian and one
2 in Salt Lake.
3 Q. Oh, okay. Do you know whether the bills for your
4 service go to Meridian or -- your service in Meridian goes to
5 Meridian or do they go to Salt Lake?
6 A. Salt Lake.
7 Q. Who is the provider for the phone system itself?
8 Do you know who that is?
9 A. The phone system --
10 Q. Uh-huh.
11 A. -- is AT&T phone system that we own ourselves.
12 Q. Okay. And were you there when that system was
13 put in?
14 A. No.
15 Q. Have you been party to any discussion on behalf
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16 of Awnings Unlimited about looking for alternatives to the land
17 line service itself?
18 A. No.
19 Q. Okay. On -- I'm sorry. On the podium, you
20 should find a document that has the No. 33 in the lower
21 right-hand corner. Do you see that?
22 A. Uh-huh.
23 Q. Do you recognize that document?
24 A. Uh-huh.
25 Q. These are Responses that I assume you helped
626

HEDRICK COURT REPORTING McMANAMON (X)
P. O. BOX 578, BOISE, ID 83701 Intervenor
 1 Mr. Gannon prepare on your behalf?
2 A. Right.
3 MS. HOBSON: I would move the admission of
4 Exhibit 33.
5 COMMISSIONER KJELLANDER: And Mr. Gannon?
6 MR. GANNON: Same objection.
7 COMMISSIONER KJELLANDER: Okay. Then we will
8 admit with the same objections Exhibit No. 33 into the record.
9 (Qwest Exhibit No. 33 was admitted into
10 evidence.)
11 Q. BY MS. HOBSON: And I have no further questions.
12 Thank you for your testimony.
13 COMMISSIONER KJELLANDER: Thank you, Ms. Hobson.
14 Are there questions from Mr. Stutzman?
15 MR. STUTZMAN: No questions.
16 COMMISSIONER KJELLANDER: Questions from members
17 of the Commission?
18 Redirect?
19 Thank you, sir. We appreciate your testimony.
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20 (The witness left the stand.)
21 COMMISSIONER KJELLANDER: And, Mr. Gannon, does
22 that complete your witness list?
23 MR. GANNON: It does. It does, Mr. Chairman.
24 COMMISSIONER KJELLANDER: Okay. Well, thank you
25 very much.
627

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Ready now to move forward to Mr. Stutzman, the
2 Deputy Attorney General representing Staff, if you'd like to
3 call your first witness.
4 MR. STUTZMAN: Thank you, Mr. Chairman. Staff
5 would call Wayne Hart, please.
6
7 WAYNE HART,
8 produced as a witness at the instance of the Staff, being first
9 duly sworn, was examined and testified as follows:
10
11 DIRECT EXAMINATION
12
13 BY MR. STUTZMAN:
14 Q. Good morning, sir. Would you please state your
15 name for the record?
16 A. Wayne Hart.
17 Q. And how are you employed?
18 A. I'm employed as a telecommunications analyst with
19 the Idaho Public Utility Commission.
20 Q. In that capacity, did you prepare and prefile
21 testimony with some exhibits attached in this case?
22 A. Yes, I did.
23 Q. And was that testimony filed -- or, filed on
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24 March 19th of this year?
25 A. I believe it was.
628

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And it included -- did it include Exhibits 101
2 through 111?
3 A. I believe that's the case.
4 Q. Okay. After you filed your testimony and
5 exhibits on March 19th, did you subsequently file revised
6 Exhibits 101 and 102?
7 A. Yes, I did.
8 Q. And when did you file those exhibits?
9 A. I believe it was May 22nd.
10 Q. As a result of the changes that you made in those
11 exhibits, did you also have changes to your testimony?
12 A. Yes, I did.
13 Q. And did you file revised testimony on May 22nd as
14 well?
15 A. Revised pages to the testimony, I did.
16 Q. Okay. And what pages were included in that
17 revision?
18 A. I believe it was 9 through 13 or 14. I can't
19 remember. I'd have to look at it again.
20 Q. Besides the changes in the revised testimony and
21 exhibits, do you have any other changes to your testimony as
22 prefiled?
23 A. Yes, I do. On exhibit -- confidential Exhibit
24 101 in the methodology section, I indicate that I used the
25 minutes between 7:00 and 9:00 for peak. I actually used the
629

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
Page 21
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 1 minutes between 6:00 and 9:00.
2 Q. You talking 6:00 a.m., should say 6:00 a.m.
3 rather than 7:00 a.m. on Exhibit 101?
4 A. Yes, and that would be all four pages in the
5 methodology, the first paragraph.
6 Q. Are there any other changes to your testimony or
7 exhibits?
8 A. No.
9 Q. If you were asked the same questions today as
10 contained in your testimony as revised, would your answers be
11 the same?
12 A. Yes, they would.
13 Q. Thank you, Mr. Hart.
14 MR. STUTZMAN: Mr. Chairman, I would ask that we
15 spread the testimony as revised by Mr. Hart on the record as if
16 read, and admit Exhibits 101 through 111 on the record.
17 COMMISSIONER KJELLANDER: And without objection,
18 we would spread the direct testimony of Mr. Hart across the
19 record as if read, and admit Exhibits 101 through 111.
20 (The following prefiled direct testimony
21 of Mr. Hart is spread upon the record.)
22
23
24
25
630

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff

1 (The following proceedings were had in
2 open hearing.)
3 (Staff Exhibit Nos. 101 through 111,
Page 22
60503V~1.txt
4 having been premarked for identification, were admitted into
5 evidence.)
6 MR. STUTZMAN: Thank you, Mr. Chairman. Mr. Hart
7 is available for cross-examination.
8 COMMISSIONER KJELLANDER: Let's move first to
9 Ms. Hobson.
10 MS. HOBSON: Thank you.
11
12 CROSS-EXAMINATION
13
14 BY MS. HOBSON:
15 Q. Good morning, Mr. Hart.
16 A. Good morning.
17 Q. Mr. Hart, would you agree that wireless carriers
18 employ two-way interactive switched voice communications in the
19 seven exchanges that are the subject of this matter?
20 A. I would agree with that as part of the function
21 they provide.
22 Q. It's Staff position, isn't it, that two products
23 do not have to be identically priced to be competitive, so long
24 as they are similar enough that a customer can choose one
25 without a significant economic -- significant difference in
672

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 economic cost? Isn't that your position?
2 A. I believe that they don't have to be identical.
3 I think that the -- every individual customer is going to have
4 different reasons for why they choose whichever service, and so
5 I think the Commission can choose the range or the difference
6 that they think would be competitive.
7 MS. HOBSON: At this time, I would like to hand
Page 23
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8 out a series of exhibits that have been previously marked as
9 Qwest Exhibits 43 through 55. I realize that that's leaving
10 some gap, but we will come back to the gap numbers. So if
11 we can take just a minute to hand those out, one to the witness
12 and parties and so on?
13 MR. SHERR: May I approach?
14 COMMISSIONER KJELLANDER: Yes.
15 When you say a "gap" --
16 MS. HOBSON: In I believe that the last number
17 that we had for the Data Responses was 38. There are going to
18 be some other --
19 COMMISSIONER KJELLANDER: There's not a gap
20 within 43 through 55?
21 MS. HOBSON: No.
22 COMMISSIONER KJELLANDER: Okay. That's what I
23 wanted to know.
24 MS. HOBSON: While we're getting these around, I
25 will indicate for the record that these exhibits consist of
673

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Responses that Qwest received from Staff in the various rounds
2 of Discovery in this case. Qwest has simply copied them so
3 that they appear on a single sheet of paper where that is
4 possible because we're not admitting entire sets of Data
5 Responses, and so each Response appears either on a single page
6 or if it's long enough takes more than a page, but those pages
7 should be stapled together.
8 And it's also my understanding that with my
9 representation for the record that Qwest has done nothing other
10 than simply recopy these Data Responses, that Staff is willing
11 to stipulate to their admission.
Page 24
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12 MR. STUTZMAN: That's correct.
13 COMMISSIONER KJELLANDER: So then without
14 objection, the request then is to admit a series of Exhibits 43
15 through 55.
16 MS. HOBSON: Yes. Thank you.
17 (Qwest Exhibit Nos. 43 through 55, having
18 been premarked for identification, were admitted into
19 evidence.)
20 Q. BY MS. HOBSON: Mr. Hart, I would like you to
21 look at Exhibit 43 for just a minute. Did you prepare this
22 Data Response?
23 A. I did.
24 Q. Okay. In that Response -- or, in that question,
25 you were asked if two services had to be identically priced in
674

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 order to be competitively priced, and you answered, did you
2 not, no.
3 Would you read the answer, please?
4 A. No. Two services are competitively priced if
5 they are similar enough that a customer can choose either one
6 without a significant difference in economic cost. That
7 comparison is difficult to make in this case because of the
8 different pricing structures for wireless and wireline
9 services, the difference in functions between the two services.
10 Mr. Hart did not attempt to identify a specific dollar or
11 percentage differential threshold. Mr. Hart's position that
12 two services are not competitively priced is simply based on
13 the magnitude of the price differences identified by his
14 analysis.
15 Q. Thank you. Is that still your position, by the
Page 25
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16 way, on competitive price?
17 A. Yes, it is.
18 Q. Would you agree with me that what constitutes a
19 significant difference in cost is, to some extent, up to the
20 customer paying the cost -- or, paying the price?
21 A. Yes, I would.
22 Q. And do you believe that the Commission can or
23 should set a fixed percentage or a fixed dollar difference and
24 create a standard and say any difference that's greater than
25 that is not price competitive?
675

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. I don't think that would be appropriate, but I'll
2 let the Commission make whatever choices they want.
3 Q. Do you -- or, you agree, don't you, that the
4 Commissioners should take into account customer behavior and
5 customer responses to pricing offers, that they should take
6 those things into account in determining whether something
7 constitutes a competitive price?
8 A. As I understand, should they take into account
9 what people actually do in the market. I think that's a very
10 important consideration and evidence that the Commission should
11 look at.
12 Q. All right.
13 A. The fact that only three percent of the customers
14 have replaced it I think is very important evidence the
15 Commission should consider.
16 Q. Where do you get that number, that three
17 percent?
18 A. I think I got it from Qwest testimony. It's also
19 in an FCC report.
Page 26
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20 Q. Isn't the number, in fact, three to five
21 percent?
22 A. It may be.
23 Q. And you don't have any independent survey
24 information for -- specific to Idaho to indicate what
25 percentage have actually switched?
676

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. No.
2 Q. Could be higher, could be lower?
3 A. Could be. That's the best information that's
4 available.
5 Q. Okay.
6 A. I assume Qwest doesn't have any either.
7 Q. In any event, you attempted to make an actual
8 dollar-and-cents comparison for the pricing levels of wireless
9 and wireline service by creating your Exhibit 101, didn't
10 you?
11 A. I tried to provide some illustrative examples.
12 Q. And Exhibit 101 shows your calculations as to the
13 differences in the prices of various plans as they compare to
14 Qwest's regulated measured and flat-rated service. Is that
15 right?
16 A. That's correct.
17 Q. And your Exhibit 102 does the same thing, only
18 there you assume the customers have a certain amount of toll
19 usage and you attempt to find plans that cover toll usage. Is
20 that the difference between 101 and 102?
21 A. Yes, it is.
22 Q. And I believe you just a moment ago indicated
23 that you had previously filed a version of testimony and a
Page 27
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24 version of exhibits -- of Exhibit 101 -- that were different
25 than the ones that have been admitted to the record at this
677

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 point?
2 A. That's correct.
3 Q. Is that correct?
4 Isn't is it also true that the changes that you
5 made in the testimony related to the pricing differentials --
6 to the written testimony?
7 A. I'm not sure that I understand your question.
8 There was a significant change to the price numbers that I had
9 in my exhibits and also referenced in my testimony, so if
10 that's what you were asking, yes, there was a big difference.
11 Q. There's a big change in the numbers?
12 A. Yes.
13 Q. And you also changed Exhibit 101?
14 A. Yes.
15 Q. And didn't those changes in your calculations all
16 serve to reduce the differentials and the prices between
17 wireline and wireless service?
18 A. Yes, they did.
19 Q. Okay.
20 MS. HOBSON: We're going to have to have another
21 one of those awkward moments where we pass out some exhibits.
22 I've previously marked for identification Exhibit 35, 36, 37,
23 and if we could have those circulated at this point? If we may
24 both approach, maybe we can do this a little more quickly,
25 Mr. Chairman.
678

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
Page 28
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 1 COMMISSIONER KJELLANDER: Yes.
2 MS. HOBSON: For the record, you will note that
3 Exhibits 36 and 37 are not only on yellow, they are on very
4 yellow paper. This is what Kinko's had available to us last
5 night in this size. The yellow does indicate that the
6 documents are confidential, and I'm going to try to confine
7 questions that disclose confidential information on the record
8 to a narrow part of the proceedings, but I would ask those that
9 have not signed the Protective Agreement in the room to please
10 avoid looking at the bright yellow pages.
11 COMMISSIONER KJELLANDER: It's not your request
12 at this time to have the room cleared of people who have not
13 signed it?
14 MS. HOBSON: It is not my request.
15 COMMISSIONER KJELLANDER: Thank you.
16 COMMISSIONER SMITH: You need an assistant like
17 Weldon has.
18 MS. HOBSON: I know. I know.
19 COMMISSIONER KJELLANDER: So the color yellow
20 isn't representing --
21 MS. HOBSON: It is not indignant of anything.
22 It's all Kinko's had.
23 Q. BY MS. HOBSON: I apologize for that interval.
24 First, let's talk about what's previously been marked as
25 Exhibit 35. That's a work paper that you provided to Qwest in
679

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 the Discovery, and it reflects the information you gathered
2 about wireless plans and that you used in preparing Exhibits
3 101 and 102. Isn't that correct?
4 A. Yes, it is.
Page 29
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5 Q. And confidential Exhibit No. 36, if you can stand
6 to look at it long enough, is work -- a work paper calculation
7 for your original Exhibit 101. Is that correct?
8 A. I haven't had a chance to really look at all the
9 numbers, but probably.
10 Q. Would you accept that, subject to check?
11 A. I'll accept that, subject to check.
12 Q. And Exhibit No. 37 is the same thing, only it
13 relates to your exhibit -- your revised Exhibit 101. Is that
14 right?
15 A. I'll -- subject to check, yes.
16 Q. Finally, I'm sorry again, I should have had this
17 one handed out at the same time. I'm going to hand you what
18 has previously been marked as confidential Exhibit No. 41.
19 MR. SHERR: Can I approach?
20 COMMISSIONER KJELLANDER: Yes.
21 Q. BY MS. HOBSON: And to try to keep this moving a
22 little more quickly, I will represent to you that Exhibit 41 is
23 another one of your worksheets that you provided to us recently
24 in Discovery.
25 A. I believe it is.
680

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. So with these exhibits that we've just handed
2 you, you are accepting, subject to check, that these are, in
3 fact, your work papers. Is that correct?
4 A. Yes.
5 MS. HOBSON: I would move the admission of
6 Exhibits 35, 36, 37, and 41 at this time.
7 COMMISSIONER KJELLANDER: And without
8 objection --
Page 30
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9 MR. STUTZMAN: Well, I don't have an objection,
10 Mr. Chairman, other than subject to Mr. Hart's ability to
11 confirm that these are what they are. Otherwise, there's no
12 objection.
13 MS. HOBSON: That's satisfactory.
14 COMMISSIONER KJELLANDER: Okay, duly noted. Then
15 so with that caveat, then we will admit Exhibits 35, 36, 37,
16 and 41.
17 MS. HOBSON: Thank you.
18 (Qwest Exhibit Nos. 35 through 37, and 41,
19 having been premarked for identification, were admitted into
20 evidence.)
21 Q. BY MS. HOBSON: Now, you will agree with me, will
22 you not, that in order to do dollars-and-cents comparison
23 between wireline and wireless service, you have to make some
24 assumptions in order to do that?
25 A. Too many.
681

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. Too many assumptions?
2 A. Yes.
3 Q. One of those assumptions is basically how much
4 people are going to use the phone. Isn't that correct?
5 A. It's very important for the pricing of cell
6 service.
7 Q. And that's because some wireless carriers charge
8 for use, at least during certain hours?
9 A. Yes.
10 Q. And another assumption that you had to make as
11 what is relevant use, what use is counted, what uses are going
12 to be counted for purposes of making this comparison. Isn't
Page 31
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13 that true?
14 A. Yes.
15 Q. And, of course, the one too that is controversial
16 in this case is whether or not customers are using the
17 telephone -- the wireless telephone or the wireline
18 telephone -- to access the Internet, for example, data uses?
19 A. That's certainly an issue in this case.
20 Q. And in your analysis for Exhibits 101 -- well,
21 we'll just stick with 101 for a moment -- you counted all use,
22 whether it was data related or not. Is that correct?
23 A. I was not aware of any way to remove data and I
24 had no reason to remove data. That's the way people currently
25 use their phone.
682

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. Okay. And so had you attempted to or had you, in
2 fact, backed out data use, contrary to your assumption as to
3 what should be done, but had you done that, the differentials
4 that you depict on your Exhibit 101 would be smaller, wouldn't
5 they?
6 A. Yes. Mr. Teitzel's exhibit does that and those
7 numbers are smaller.
8 Q. Another assumption that you had to make when you
9 were making price comparisons was that you wouldn't include any
10 value for any features that might be included in wireless
11 plans. Isn't that correct?
12 A. Yeah, I have no evidence that consumers place a
13 value on that, and each consumer is going to place a different
14 value if they do use them, so I thought it was appropriate that
15 since Mr. Teitzel had identified them in his -- or Lincoln; I
16 can't remember which -- had identified them earlier, I thought
Page 32
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17 it was important for the Commission to see an example that
18 didn't have it in there.
19 Q. Mr. Teitzel's exhibit was filed in rebuttal to
20 your exhibit, wasn't it?
21 A. There was some pricing information in the
22 original.
23 Q. I believe in Dr. Lincoln's testimony?
24 A. It may have been.
25 Q. There were plans that were offered that were
683

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 shown to be illustrative?
2 A. Yeah.
3 Q. And that may have also been in other Qwest
4 witnesses' testimony, and that's what you were responding to?
5 A. Correct.
6 Q. The three levels of --
7 A. Correct.
8 Q. -- potential use of cell service?
9 A. Uh-huh.
10 Q. Okay. So you didn't include then any value for
11 any additional features that may be included in wireless plans,
12 just so we're clear, in your analysis?
13 A. That's correct.
14 Q. And had you done so, contrary to your assumption
15 as to how it should have been done, that would have also
16 reduced the differential, would it not?
17 A. As with any other advantage or whatever that a
18 customer buys for their phone, yeah.
19 Q. And you don't dispute the testimony that
20 Mr. Teitzel presented here, do you, that on average, customers
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21 do buy services, the majority of them do buy additional
22 features in addition to their wireline service?
23 A. I don't have any reason to dispute those numbers.
24 Q. Okay. Now, if we look at your revised
25 Exhibit 101, you provided an explanation there as to how you
684

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 prepared that exhibit, and that, except for your change that
2 you made this morning, didn't change between the first version
3 of 101 and the second 101. Isn't that true?
4 A. I don't believe it did.
5 Q. Now, first thing that you did, as I understand
6 it, is that you relied on subscriber line usage data.
7 That's -- we call that SLUS or SLUS data. Is that correct?
8 A. That's correct.
9 Q. And that was presented to you or provided to you,
10 I guess I should say, by Qwest in response to a Discovery
11 Request?
12 A. That's correct.
13 Q. And you used the year 2002?
14 A. That's the information most recent that you've
15 provided.
16 Q. Okay. And using that data, you attempted to
17 calculate the peak and offpeak minutes. Isn't that right?
18 A. That's correct.
19 Q. And that's important because wireless carriers
20 tend to charge only for peak minutes?
21 A. The availability of the wireless plans or the
22 various wireless plans that are available, many of them do
23 include unlimited minutes for offpeak, so the primary
24 determinant on which plan you should buy for my analysis looked
Page 34
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25 like the number of peak minutes that you wanted, and that's why
685

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 I chose to look at that.
2 Q. And, again, and the reason you look at that is
3 because carriers don't charge for offpeak minutes?
4 A. Some plans don't charge for offpeak minutes.
5 Those are included in the base price. I won't say they don't
6 charge, because they do get -- they don't charge extra.
7 Q. All right. Fair enough.
8 So the wireless carriers that -- let me put it
9 another way.
10 The more hours that are included in peak minutes,
11 the more you are likely to be charged. Is that correct?
12 A. Yes.
13 Q. And, of course, the lower the number of peak
14 minutes, the lower your bill is going to be?
15 A. That's correct.
16 Q. Now, I had understood until this morning that you
17 had chosen the interval between 7:00 a.m. and 9:00 p.m. as the
18 peak period by looking at wireless carriers and what they
19 actually use as their peak and offpeak hours. Was that -- was
20 I just wrong about that?
21 A. No, I had done that, and the -- they don't all
22 use the same. And when I originally set up my spreadsheet, I
23 started with AT&T starting with the "A"s and AT&T uses a 6:00
24 to -- actually, a 5:59 I think it is for 90 one-time period,
25 and so I set it up using 6:00. There were a few others.
686

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
Page 35
60503V~1.txt
 1 Frankly, AT&T, Verizon, and U.S. Cellular, and I believe Edge,
2 all use 6:00 to 9:00. The other carriers that charge by peak
3 use 7:00 to 9:00. So I had intended to change it to 7:00 to
4 9:00 just to be more conservative, and when Mr. Teitzel's
5 numbers and my numbers didn't come out the same, I went back
6 to -- back to find out why they didn't and found out I had
7 actually used the version that had the 6:00.
8 Q. Wasn't, in fact, that an error on your part? I
9 mean, didn't you intend to use 7:00 to 9:00 until Mr. Teitzel
10 told you yesterday that you had mistakenly used 6:00 to 9:00
11 p.m.?
12 A. That's correct, but I have looked into that, and
13 as I indicated, three of the carriers do use 6:00 and those
14 three represent almost two-thirds of the subscribers in Idaho,
15 so I'm not sure that that's really an error.
16 The other thing is I looked at the differences
17 that that would make in Exhibit 101 and it only changes none of
18 the plans that I would have picked. I mean, the difference --
19 frankly, the amount of usage between 6:00 and 7:00 a.m. is
20 pretty small, and so the number of minutes that it changes is
21 very insignificant. The only places that it changes any of the
22 results had I used the 7:00 to 9:00 are in the Sprint plans
23 where they just didn't have a plan big enough and so I had to
24 add extra minutes to it.
25 Q. Nonetheless, that decision to use 6:00 to 9:00
687

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 instead of 7:00 to 9:00 increases the differential, doesn't it,
2 if you had used 7:00? Even though the difference may not have
3 been great, it would have overall made the differential
4 smaller?
Page 36
60503V~1.txt
5 A. It would have made the number of minutes very
6 slightly smaller. That would not have changed the costs for
7 most of the plans, with the exception of --
8 Q. Well, now, wait just a minute. Excuse me, but in
9 your Exhibit 101, you didn't make a determination for each
10 carrier as to what its peak plan did, did you? You just used
11 your overall assumption of whatever peak minutes were and
12 applied it to every plan?
13 A. That's correct.
14 Q. So it would have made the differential smaller
15 had you brought down the peak period by an hour?
16 A. Last night I went through and made the
17 calculations based on what the actual carriers' peaks are and
18 it would not have changed the plan had I used their peak for
19 anyone other than Sprint.
20 Q. So you are providing new testimony today from the
21 stand about calculations that you made last night that you
22 haven't shared with us before. Isn't that correct?
23 A. I'm explaining the impact of looking at the
24 difference between the two peak numbers that we have, yes.
25 Q. Okay. I would like you to look at your testimony
688

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 at page 11, if you would, please.
2 MR. STUTZMAN: Direct or rebuttal?
3 THE WITNESS: I only have direct.
4 MS. HOBSON: I think he only has direct.
5 THE WITNESS: That was page 11?
6 Q. BY MS. HOBSON: Yes, uh-huh.
7 A. Which of these is -- is this the mike?
8 COMMISSIONER KJELLANDER: Yes.
Page 37
60503V~1.txt
9 THE WITNESS: Okay.
10 Q. BY MS. HOBSON: On that page at lines 13 through
11 23, you say that the information upon which your analysis that
12 is Exhibit 101 is based only provided -- talking about the SLUS
13 data, I assume -- only provided local originating minutes, and
14 if the customers did have terminating or long distance usage,
15 they would have incurred minutes that would have increased
16 wireless costs, increasing the difference between wireless and
17 Qwest's costs even more. Is that right? Is that what you
18 testified?
19 A. That's basically what I said.
20 Q. In fact, didn't you, in your calculations,
21 actually double the originating minutes when you made your
22 analysis?
23 A. Yes, I did. I think Mr. Teitzel and I both
24 doubled minutes.
25 Q. And, in fact, that is reflected on Exhibit No. 37
689

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 in Column D --
2 A. Yes.
3 Q. -- is it not, line 6 and 7, and 17 and 18 --
4 A. Yeah.
5 Q. -- so on?
6 Okay. So that statement in your testimony is
7 just not accurate when it comes to determining minutes, isn't
8 it? The differentials wouldn't have increased because you
9 already fixed that problem by doubling the SLUS data.
10 A. In that specific part of the testimony I'm
11 referring to those carriers -- I'm referring to the results for
12 those examples that have zero usage reflected. There were
Page 38
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13 three or four cases where the illustrative example, the data,
14 came out with zero minutes. And that's kind of an anomaly of
15 the data. I don't think that a customer will really frequently
16 have zero minutes. And so I'm just pointing out that, you
17 know, if you've got zero minutes, because of my analysis and
18 the limitations of the data that I have, this is somewhat of an
19 anomaly.
20 Q. Excuse me. Where does it tell me if I look on
21 pages 10 and 11 of your testimony that you're talking about an
22 anomaly and not your confidential Exhibit 101?
23 A. I think if you look at line 11, the case with no
24 local usage.
25 Q. So your testimony is that -- is what, that if I
690

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 have no local usage, then if you double no local usage, you get
2 something?
3 A. No. What I'm saying is that because of the
4 artifact of the data for those customers with no -- if you
5 really, truly have no local usage, if you have no originating
6 and no terminating, then the results in that analysis would be
7 representative for your costs.
8 Q. Uh-huh.
9 A. But if you do have usage and you just didn't have
10 any originating, then the results aren't illustrative. You
11 would have had costs and you would have possibly have had to
12 have chosen a higher priced plan.
13 Q. So in fact then, your testimony on page 11 is not
14 intended to give the Commission or me the impression that
15 Exhibit 101 is in any way conservative with regard to any class
16 of customers in usage that is beyond the anomalous class of
Page 39
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17 people that appear to have no outbound traffic. Isn't that
18 right?
19 A. My intention was only to address those that have
20 zero usage with that statement. I was not referring to those
21 that do have usage.
22 Q. Okay. Now, while we're on the subject of
23 doubling subscriber line usage, you were here yesterday when
24 Mr. Teitzel was testifying about the fact that he used 1996
25 data to avoid counting dial-up Internet access, for example.
691

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Do you remember that testimony?
2 A. I was here.
3 Q. And the numbers that you used for 101, as we've
4 already discussed, include usage that could be attributed to --
5 it includes all usage, including whatever usage would be
6 attributed to dial-up access. Isn't that correct?
7 A. That's correct.
8 Q. If the customer uses his phone to access the
9 Internet, isn't that an outgoing usage only?
10 A. Typically.
11 Q. And yet you doubled the number of all minutes,
12 including those that you assumed are being used for Internet
13 access. Isn't that true?
14 A. I did.
15 Q. And doesn't that assumption serve to increase the
16 differential and make wireless appear more expensive compared
17 to wireline service in your analysis?
18 A. It may. I'm not under -- I mean, it's been a
19 traditionally used viewpoint in the industry that originating
20 and terminating are close enough to the same that you can use
Page 40
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21 them. I've not seen any data that says that's changed.
22 Q. But ISPs don't call their customers.
23 A. Correct.
24 Q. So there's not going to be any inbound data usage
25 associated with Internet?
692

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. I'm not going to say that.
2 Q. Well, can you give me examples of it?
3 A. Yeah. My Idaho City office for the newspaper
4 calls me and transmits data to me.
5 Q. Your Idaho City office for the newspaper?
6 A. I own a newspaper. We have offices in Idaho City
7 and offices in my house.
8 Q. I see.
9 A. They transmit data to me. Many businesses
10 transmit data back and forth.
11 Q. Correct. But that's not dial-up Internet access,
12 is it?
13 A. No, but it's data usage.
14 Q. I believe my question was limited to dial-up
15 Internet access.
16 A. I didn't hear that limitation.
17 Q. Would you please look now at your revised
18 Exhibit 101 and that part of the exhibit -- I'm sorry, that
19 part of the exhibit that relates to the flat-rate low usage
20 business customer?
21 A. I have that.
22 Q. Now, would you also look at your Exhibit 37?
23 A. I have that.
24 Q. And would you look at Column N, line 64 on the
Page 41
60503V~1.txt
25 exhibit, and that requires you to turn the page?
693

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. Yes.
2 Q. I'm sorry, I think I have the wrong line. I'm
3 actually looking at line 70. Would you look at line 70,
4 please?
5 A. I have that.
6 Q. So Column N is the flat-rated bottom quintile
7 customer. Right?
8 A. That's correct.
9 Q. And haven't you subtracted rather than the
10 flat-rated business rate at line 70, haven't you subtracted for
11 your differentials the measured business rate?
12 A. Yes, I did.
13 Q. Is that an error?
14 A. No. In all of these analyses, I assumed that the
15 customer was being rational in finding the cheapest plan that
16 they could find. If you've got zero usage, originating usage,
17 the preferred alternative would be measured service, not flat
18 rate.
19 Q. But how can -- excuse me. How can -- why isn't
20 that a measured usage customer over here in this column?
21 A. Frankly, that's a conservative assumption had I
22 used -- well, actually, it's not a conservative assumption.
23 Oh, well.
24 I just felt that that was the appropriate way to
25 make the analysis.
694

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. So even though you purport on Exhibit 101 to be
Page 42
60503V~1.txt
2 comparing flat rate customers, you're not giving Qwest the
3 benefit, if you will, of its flat rate. You're assuming the
4 customer really isn't flat rated, that he's going to be buying
5 a cheaper service, for purposes of creating your
6 differentials?
7 A. Since I'm relying on, you know -- the assumption
8 is that I'm choosing the cheapest plan available for this
9 customer for the wireless, I chose to use the same assumption
10 for the wireline.
11 Q. Okay. Where is that -- how would we know that
12 unless we looked at your backup?
13 A. I guess you wouldn't know that unless you looked
14 at my backup.
15 Q. It doesn't show up anywhere in your testimony or
16 on Exhibit 101, does it?
17 A. Probably not.
18 Q. Okay. Would you please stay then with Exhibit 37
19 for a minute, and bearing that -- having that exhibit in front
20 of you, one of the key calculations that you made for your
21 analysis was the average length of time or what is called hold
22 time. Isn't that correct?
23 A. That's correct.
24 Q. And you figured that out for the categories of
25 flat business -- at least I thought you'd figured it out for
695

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 flat business -- measured business, flat residence, and so on.
2 Isn't that correct?
3 A. I did.
4 Q. Now, you would agree with me, won't you, that
5 hold time is very important because the SLUS data you got was
Page 43
60503V~1.txt
6 the number of calls, right, calls per hour?
7 A. That's correct. I did not have hold times
8 available to me.
9 Q. Okay. So you had the number of calls per hour
10 from the SLUS data and you knew what the average call -- if you
11 knew what the average call length was, then you could determine
12 how many minutes there were in each hour. That's what you were
13 trying to do?
14 A. That's what I was trying to do.
15 Q. And, of course, if you knew where those minutes
16 fell, in which hours, then you knew which ones were peak?
17 A. Correct.
18 Q. So the average hold time was a big driver in the
19 overall estimate of cost for the three usage levels for both
20 classes of service?
21 A. Yes, it is.
22 Q. Now, I understand that you got the average hold
23 time. When you performed the calculation, you did that by
24 using the median number of calling. Isn't that right?
25 A. I did.
696

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And that's what shows on your exhibit?
2 A. Yes.
3 Q. 101?
4 A. Yes.
5 Q. Okay.
6 MS. HOBSON: I'm now going to ask that we pass
7 out some additional exhibits.
8 MR. SHERR: May I approach?
9 MS. HOBSON: These have been previously marked as
Page 44
60503V~1.txt
10 Exhibit 38, 39, and 40.
11 THE WITNESS: The one exception to that is for
12 the measured business. Because the median in that case was
13 zero usage, I made an assumption of three minutes.
14 Q. BY MS. HOBSON: Again, since you have Exhibit 38
15 in front of you, I will represent to you that Exhibit 38
16 constitutes a page of the Data Response that Qwest provided to
17 you. It was confidential Attachment B, and this is just one
18 page. This page happens to relate to flat business. Can you
19 confirm that that appears to be what that is?
20 A. Okay.
21 Q. And I will also add so that you don't become
22 concerned, we have added two columns to this particular
23 document that didn't appear on this page of confidential
24 Exhibit B.
25 A. Okay. Thank you. I was not recognizing this.
697

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And for purposes of identification, the two
2 columns that I will represent to you that Qwest added to the
3 exhibit have been highlighted on your copy with a pink box. Do
4 you see that pink box?
5 A. I see that.
6 Q. Okay. Now, in your analysis on Exhibit 101 and
7 supported by Exhibit 37, you got an average hold time for flat
8 rated business of six minutes per call. Is that correct? I
9 think that's Column D, line 25?
10 A. Yes, it is.
11 Q. And I would suggest to you that if you had used
12 the average number of calls as opposed to the median number of
13 calls, you would have gotten a different result. Do you
Page 45
60503V~1.txt
14 dispute that?
15 A. I don't dispute that. I did not make that
16 calculation.
17 Q. Okay. Well, directing your attention to
18 Exhibit 38, again, as I said, I would represent to you that
19 this is a page of the 2002 SLUS data to which Qwest has added
20 additional columns. I would like you to look at that first
21 column and see if you can confirm -- and, of course, you can
22 either take your time now or you can take it subject to
23 check -- but the first column depicts a mathematical average of
24 the spread of calls in each group. So in other words, for that
25 second line where the spread was one to 15 calls, the number
698

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 "8" has been put in the second column.
2 MR. STUTZMAN: Mr. Chairman, we haven't seen this
3 before, Mr. Hart hasn't seen these numbers before. He's not
4 the person that can identify them. Maybe -- maybe we could
5 take a short break and discuss this, and see if we have an
6 objection or not.
7 COMMISSIONER KJELLANDER: I think that's more
8 than appropriate. A break would be in order. And if you can
9 use that time frame to benefit you in terms of figuring out
10 what documents are in front of you, that would be fair.
11 At this point, it would be the Commission's
12 intent to take about a ten-minute break. Would that be
13 sufficient? We'll go off the record.
14 (Recess.)
15 COMMISSIONER KJELLANDER: And we'll be back on
16 the record. Before we left, there was some clarification that
17 needed to be made with one of the proposed exhibits.
Page 46
60503V~1.txt
18 Mr. Stutzman, you've requested a short recess.
19 Would someone bring us up to speed on where we're at?
20 MR. STUTZMAN: Yes, Mr. Chairman. Exhibit 38, I
21 think we have a better understanding of it now, and I'm
22 assuming that more information will come in about the columns
23 that have been added and at that point I assume it will be
24 offered into evidence, and I don't think Staff would have any
25 objection to that.
699

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 COMMISSIONER KJELLANDER: All right. Well, thank
2 you.
3 And I believe then we're ready to go back to
4 Ms. Hobson, and if you could proceed.
5 MS. HOBSON: Thank you, Mr. Chairman.
6 Q. BY MS. HOBSON: Mr. Hart, before we go back to
7 these exhibits, I -- you know, you take a break and you think
8 of another question, and I guess I wasn't clear what -- if we
9 have in evidence whatever it was that you consulted last night
10 and this morning to determine which carriers had which peak
11 periods. Do we have your work papers that would tell us
12 that?
13 A. No, we do not.
14 Q. What is it that you did? Did you do something
15 yesterday or this morning?
16 A. I calculated using the peak periods, I came up
17 with the percentages, which basically were the same as
18 Mr. Teitzel's percentages.
19 Q. Well, no, excuse me. I think you misunderstood
20 my question. It was probably too broad. I'm just asking what
21 did you do to determine what each carrier has designated as its
Page 47
60503V~1.txt
22 peak period, because I don't think that's --
23 A. I checked their Web site.
24 Q. You checked their Web sites this morning?
25 A. Yes, last night.
700

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. Or last night. Very good. Thank you.
2 Now, I want to get back to exhibits. I think we
3 were looking at Exhibit 38, and I had represented to you that
4 there were two columns that Qwest added to what was otherwise
5 the Data Response. The first was the mathematical center of
6 the two spreads, the range that appears in that column labeled
7 Call Group; and then the second added column, which appears as
8 the fourth column on the Page is simply the mathematical result
9 of multiplying that number by the numbers that appear in the
10 middle column. Can you dispute that or do you dispute that
11 that's what that shows?
12 And at the bottom of the page there is a number
13 in a box, and I'm trying to avoid disclosing confidential
14 numbers so hopefully we can talk about this, and that number
15 is, I will represent to you, the mathematical total of the
16 numbers that appear in the column above that.
17 A. Subject to check, it's fine.
18 Q. Okay. Thank you. And now I'll direct your
19 attention to Exhibit 39, and can you confirm for me that
20 Exhibit 39 is another page of the SLUS data that was provided
21 to you by Qwest, this one depicting the call distribution?
22 A. It looks familiar.
23 Q. Okay. And, again, this is for flat-rated
24 business customers?
25 A. Uh-huh.
Page 48
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701

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And Qwest has added a total line on this page at
2 what would be line 24. Is that correct?
3 A. Looks that way.
4 Q. And do you -- will you accept subject to check
5 that the grand total that appears over there in the far
6 right-hand column in a box is the mathematical total of those
7 various columns?
8 A. I would accept that, subject to check.
9 Q. So if we take the total on Exhibit 38, which is
10 calls, and the total on Exhibit 39, which is minutes, and you
11 simply divide one by the other, the mathematical result appears
12 at the bottom of the page as an average minutes per call in
13 that box of 2.90. Is that correct?
14 A. That assumes that there's linearity between the
15 call groups and how that -- how the distribution within each
16 call group is, and so you're making an assumption there when
17 you come up to your total number of calls.
18 Q. You are assuming, are you not, that as a simple
19 mathematical average of the spreads, that's the only assumption
20 you're making?
21 A. You're assuming it's linear and so an average is
22 representative.
23 Q. Okay. If you would look now at Exhibit 40, you
24 can see again that Exhibit 40 is this -- is a page I will
25 represent to you that has been excerpted from your -- what
702

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 we've marked as Exhibit 38, your backup exhibit?
Page 49
60503V~1.txt
2 A. It looks vaguely familiar.
3 Q. Okay. And instead of the average call hold time
4 that you used of six minutes, we have simply inserted the
5 average that's determined on Exhibit 39, using mathematical
6 averages. Do you see that?
7 A. I see that.
8 MS. HOBSON: Was there -- I'm sorry, did I --
9 COMMISSIONER SMITH: Just to be precise, an
10 average is not a median, so I think it's the median, not the
11 average, if I'm understanding your question.
12 MS. HOBSON: If fact, I was trying to avoid using
13 the mathematical terms, Madam Commissioner, but I believe that
14 we are referring to the mean and that Mr. Hart --
15 COMMISSIONER SMITH: The mean is the average.
16 MS. HOBSON: Is the average and that's what I'm
17 referring to. Mr. Hart's analysis relied on a median, and our
18 analysis that we're going through relies on an average or mean.
19 COMMISSIONER SMITH: Maybe it will become
20 clearer.
21 MS. HOBSON: Hopefully, it will.
22 Q. BY MS. HOBSON: On Exhibit 40, we have then
23 substituted the number 2.9 for the 6.0, and then we have made
24 the same calculations that you did; that is, that we have used
25 that times the number of calls that you came up with on your
703

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 spreadsheet. Is that correct?
2 A. Yes.
3 Q. And what does that do to the total number of
4 chargeable minutes for your median and top 20 percent flat
5 rated business customer?
Page 50
60503V~1.txt
6 A. Well, I haven't really -- I don't have all of
7 them in front of me to look at, but since you're cutting the
8 average minutes by a little bit more than half, I'm assuming it
9 cuts the total minutes by more than half.
10 Q. And, of course, had you used that assumption --
11 that is, had you used the mean rather than the median -- you
12 would have had roughly half as much usage for your flat-rated
13 business customer?
14 A. If your calculation is an appropriate way of
15 doing the analysis, then, yeah, that's what the numbers would
16 have been.
17 Q. And instead, you used the assumption that the
18 median was the more appropriate usage rather than the mean?
19 A. I didn't know if the -- your method of
20 calculating the average, number one, I didn't think of it.
21 Number two, I still have some reservations about it.
22 We have to make assumptions. I assumed that the
23 median was accurate. That was the best information available
24 to me at the time, so that's what I used.
25 Q. And, therefore, using the methodology that you
704

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 used, that calculation intended to increase the differential
2 making wireless appear actually in this case twice -- not
3 twice, but considerably more expensive than it would have done
4 had you used the average, the mean?
5 A. There was an increase of minutes between these
6 two methodologies and so it would have resulted in a higher
7 cost plan.
8 Q. Okay. Or higher differential?
9 A. Higher differential too.
Page 51
60503V~1.txt
10 Q. And that was depicted -- the higher differential
11 is what you see on your Exhibit 101?
12 A. Correct.
13 Q. Okay. I want to direct your attention now to
14 Exhibit 102, and this exhibit, as I understand it, purports to
15 show the differential between Qwest prices and wireless plans
16 that provide an average amount of toll. Is that correct?
17 A. I think it represents the difference between
18 using a wireline for an average user with the average amount of
19 toll, using a wireline for all of your toll versus using a
20 wireless for all of your use. Complete substitution in both
21 cases, assuming average call volumes as I had them, as I
22 determined them.
23 Q. Okay. And once again, as on Exhibit 101, you had
24 to make a number of assumptions?
25 A. Certainly did.
705

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And one of the big ones, of course, is how much
2 toll the customers use?
3 A. That's correct.
4 Q. And you have not broken this down by flat and
5 measured service usage at this point, have you?
6 A. No, I did not have information to be able to do
7 that.
8 Q. So here, you are assuming that a low-usage,
9 measured residence customer uses the same amount of toll as a
10 high-usage, flat-rated customer. Is that correct? Everybody
11 uses the same?
12 A. This analysis is only for flat-rated customers, I
13 think. Yeah. Measured usage is so small and I didn't have
Page 52
60503V~1.txt
14 numbers to be able to calculate that, so this is strictly flat
15 rated.
16 Q. This is strictly flat rated? There are no
17 measured customers in here?
18 A. I won't say there are no measured customers in
19 here, because the usage data that I have is for total
20 customers, but considering that measured is less than one
21 percent of the usage, I think that's an insignificant.
22 Q. Okay. But nonetheless, the data that you used
23 was not broken down by flat or measured, so by definition,
24 you've got measured customers in this analysis?
25 A. To the extent that they would have impacted the
706

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 numbers in the total toll usage, yeah.
2 Q. Well, they were apparently significant enough
3 that you've put them on page -- on Exhibit 101, so I'm just
4 pointing out that they're also included on Exhibit 102.
5 A. I think there's a difference between showing what
6 the price examples would be and looking at their impact on the
7 calculations. The impact on the calculation is negligible.
8 It's certainly not -- when they represent less than one percent
9 of the customers, their usage would be far less than that,
10 that's far from the weakest link in that calculation.
11 Q. I'm not disputing that. I'm just trying to get a
12 picture of who it is that you're talking about here, and you've
13 devoted half of each page of Exhibit 101 to measured customers.
14 I guess I'm hearing now that they're not a very significant
15 part of the population of customers, in your estimation. Is
16 that right?
17 A. Well, what you're saying is correct. I'm not
Page 53
60503V~1.txt
18 saying that they're not significant. What I'm saying is their
19 impact on this calculation is insignificant.
20 Q. Okay. But to the extent they use toll, they're
21 in here too, in Exhibit 102?
22 A. Yes.
23 Q. Okay. And I understand that you got your toll
24 usage numbers by the line on the access minutes from the State
25 Universal Service Fund manager to determine how many minutes of
707

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 intrastate toll per Qwest -- well, how much intrastate toll
2 Qwest customers use. Is that correct?
3 A. Yes.
4 Q. Okay. And isn't it true that then you determined
5 the ratio between business and residence customers by using FCC
6 data on the relative amounts of toll revenue that is
7 received?
8 A. Yes.
9 Q. So to the extent that either business or
10 residence customers as a group get better toll plans, for
11 example, take advantage of volume calling and so on and so
12 forth, that wouldn't give you a particularly accurate
13 representation of what their actual usage is, would it?
14 A. I acknowledge that the -- to the extent that
15 that -- revenues are different than actual minutes, yeah,
16 that's a discrepancy in the analysis. It was the best
17 information I had available at the time.
18 Q. Looking at your footnote to 102, you assumed that
19 customers would pay ten cents a minute for intrastate calls and
20 15 cents a minute for -- I'm sorry, that was interstate calls,
21 ten cents interstate calls, 15 cents for intrastate calls.
Page 54
60503V~1.txt
22 Those would be your assumptions. Is that correct?
23 A. That's correct.
24 Q. And, of course, had you assumed that customers
25 paid more than that, then the differentials would have
708

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 looked -- would have been narrower and wireless would have
2 appeared more attractive in your analysis. Isn't that
3 correct?
4 A. And conversely, if I had assumed that they would
5 have gone to Costco and bought a three-cent card, it would have
6 been a whole lot less.
7 Q. If you assume all of them were buying their toll
8 on Costco cards, then the differential would have looked
9 worse?
10 A. Yeah.
11 Q. Okay. I would like to direct your attention now
12 to what has previously been marked as confidential Exhibit
13 No. 42, and that one has been previously provided or
14 distributed, I should say, in the room. Do you have that in
15 front of you?
16 A. I do.
17 Q. This, I will represent to you, is confidential
18 Attachment A to Qwest's Response to Staff's Interrogatory 17
19 and its Fourth Set of Data Requests to Qwest. Can you confirm
20 that that's what that appears to be?
21 A. It does not look familiar to me.
22 Q. You have not reviewed this document previously.
23 Is that correct?
24 A. That's correct.
25 COMMISSIONER KJELLANDER: Mr. Hart, is your
Page 55
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709

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 microphone on?
2 THE WITNESS: Nope. Sorry.
3 MS. HOBSON: And, excuse me, Commissioner Smith,
4 your Exhibit 42 is up here on the rail.
5 COMMISSIONER SMITH: Thanks.
6 Q. BY MS. HOBSON: Did you participate in the
7 propounding of Discovery Requests to Qwest?
8 A. I may have seen this before. I certainly didn't
9 study it well enough that it's familiar to me is all I'm
10 saying.
11 Q. Okay. I direct your attention to page 3 of
12 Exhibit 42, and I would -- this number is confidential, but I
13 would ask you if you could confirm that the number that appears
14 in the far right-hand column on Exhibit 42 appears to be the
15 toll -- average toll revenue received by Qwest for business
16 customers?
17 A. I see a heading that would indicate that's a
18 logical interpretation.
19 Q. You don't have any reason to dispute me if I
20 represent that to you?
21 A. No.
22 Q. And isn't it true that -- now, again, this is
23 intrastate. Isn't it true that that number is significantly
24 larger than your intrastate assumption for toll usage, toll --
25 or, toll revenue?
710

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. Yes, it is.
2 Q. And this, I will represent to you, Exhibit 42 is
Page 56
60503V~1.txt
3 what Qwest receives. That would be a relevant analysis for
4 purposes of 101, would it not?
5 A. Possibly. There are plans out there that
6 provide, you know, rates that are significantly lower. I chose
7 to use 15 cents and ten cents as what I considered to be a very
8 conservative assumption as to what customers would have to
9 pay.
10 Q. But Exhibit 42 shows you what, in fact, customers
11 do pay, at least as --
12 A. I acknowledge that customers are not rational.
13 Q. And, likewise, on page 4 of Exhibit 42, if you
14 look at the first shaded line on the first third of the page,
15 you see a res intra only total, and in the far right-hand side
16 column you see a number that's nearly --
17 A. I lost where you are.
18 Q. I'm on the fourth page -- I'm sorry, maybe it's
19 the third page -- the last page, in any event, of Exhibit 42.
20 I'm looking at a shaded line --
21 A. Okay.
22 Q. -- that appears on the top third of the page and
23 it's labeled res intra only, and you see a number there. That
24 is close to twice what your assumption was for what residence
25 customers were paying for toll. Is that true?
711

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. For intra or inter?
2 Q. For intra.
3 A. It's nowhere near twice.
4 Q. Oh, I'm sorry, you're right. Your right. It is,
5 however, significantly larger?
6 A. It is larger.
Page 57
60503V~1.txt
7 Q. Okay. And, again, had you used the data provided
8 by Qwest as to what customers were actually paying as opposed
9 to your assumptions, the differentials on Exhibit 102 would be
10 smaller. Is that correct?
11 A. Yeah, that's correct. But as I pointed out, I
12 was trying to find the least-cost way and I used what I
13 considered to be a very conservative number where, I mean, I'm
14 very aware that there are a lot less expensive plans for, you
15 know, toll than 15 cents. So I felt that was a very
16 conservative assumption.
17 Q. Well, it was a conservative assumption in that it
18 made the differentials look worse than the actual numbers,
19 wasn't it?
20 A. Not if you're talking about what could a consumer
21 actually achieve in the market.
22 Q. So Exhibit 101 is intended to show not what
23 customers actually do, but what they could achieve if they were
24 rational customers using --
25 A. Well, it's clearly the case, because customers
712

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 are not substituting wireless for wireline, so this is all a
2 what-if sort of analysis.
3 Q. They're not doing that for toll?
4 A. That isn't what I was analyzing.
5 Q. I think on Exhibit 102 we are talking about toll,
6 aren't we?
7 A. We're talking about the total cost including
8 toll, because 101 only looks at just for local service, it
9 doesn't look at any toll costs. 102 looks for the substitution
10 including some toll costs.
Page 58
60503V~1.txt
11 Q. Okay. Let's talk about Exhibit just 102 for a
12 minute. Isn't it true that you also assumed on Exhibit 2 (sic)
13 that all toll minutes by your calculations, what average
14 customers use, are peak toll minutes?
15 A. Yes, I did.
16 Q. And had you -- do you have any reason, any
17 empirical evidence, to support the notion that customers' local
18 calling falls into peak and offpeak, but their toll calling
19 only falls into peak?
20 A. No.
21 Q. So that assumption tended to increase the
22 differential, did it not, between wireline and wireless and
23 makes wireless look more expensive?
24 A. Yes, it does. I think that the number of minutes
25 that we came up with for toll was so small and the purpose of,
713

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 as I stated in my testimony, toll usage based on that analysis
2 was so insignificant, that buying one of the plans that
3 includes free long distance is not a wise decision if your toll
4 usage isn't that very -- isn't that large.
5 Q. Okay. Well, let's talk about that for a minute.
6 I would like to direct your attention to page 9 of your
7 testimony and look at lines 13 through 20.
8 A. Okay, I have nine. Now, which lines were they?
9 Q. Lines 13 through 20.
10 A. Okay.
11 Q. There, we are at this point in your testimony, if
12 I understand it, we are not talking about toll?
13 A. Correct.
14 Q. We are talking about a measured usage customer
Page 59
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15 who is looking at T-Mobile's least expensive plan at 19.95?
16 A. Correct.
17 Q. And you have compared that with the Qwest
18 measured rate, and you've determined that there is a $3.50
19 differential?
20 A. Yes.
21 Q. So it's -- the wireless plan is $3.50 a month
22 more expensive than Qwest's measured residential rate of 16.51,
23 and you conclude on lines 19 and 20: I don't believe that to
24 be competitively priced.
25 Is that correct?
714

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. That's correct.
2 Q. Okay.
3 A. In my experience on the complaint lines, people
4 who are buying the measured service, particularly the
5 low-income customers, every dollar counts. So to them, $3 a
6 month, or $36 a year, is important.
7 Q. Well, I want you to again look at your -- well,
8 first, would you look at Exhibit 35, which was your comparison
9 of wireless plans?
10 A. Okay.
11 Q. And that T-Mobile plan that you're talking about
12 at 19.95, that is called the National Basic Plan, isn't it?
13 MR. STUTZMAN: What page are you on?
14 MS. HOBSON: Well, I gave my exhibit away, so --
15 Am I hearing something?
16 COMMISSIONER SMITH: 28.
17 MS. HOBSON: 28. Thank you.
18 THE WITNESS: Yes, it is.
Page 60
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19 Q. BY MS. HOBSON: Okay. And that plan, according
20 to your Exhibit 35 on page 28, provides 60 anytime minutes?
21 A. Yes, it does.
22 Q. Okay. And if we look back on your Exhibit 20 --
23 or, 37 -- do you have that in front of you? I'm sorry. If you
24 look at Column E, line 20, you assume that a median flat-rated
25 customer only has 36 minutes. Is that right?
715

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. Correct.
2 Q. Okay. So under this plan, they get a few more
3 minutes, they get 24 minutes more than you assume, on average,
4 they use. Is that correct?
5 A. That's correct.
6 Q. And those 24 minutes could be used for long
7 distance calling, could they not, under this plan?
8 A. If we were assuming this was an average month and
9 they were to have -- some months they would use more and they
10 wouldn't be available. That's one of the very conservative
11 points of this analysis.
12 Q. But I think you and I agree that we had to make
13 assumptions, and your assumption is that it's going to be 36
14 minutes of local calling and this is the plan, and so there are
15 24 minutes left over that could be for long distance?
16 A. For illustrative purposes on this customer,
17 that's what we're using.
18 Q. Let's assume just for the purposes of this
19 discussion that we have such a customer someplace in Idaho?
20 A. Okay.
21 Q. When you combine the advantage of the safety and
22 the convenience of the mobility of the cellular service, and
Page 61
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23 the fact that this customer now has access to nationwide long
24 distance for this albeit 24 minutes, don't you suppose that
25 some customers might actually find that that $3.50 differential
716

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 makes those two plans competitive rather than noncompetitive?
2 A. They may. They may have other reasons that they
3 wouldn't for if they want an extension, they want to use data,
4 you know. They're going to make value judgments on all of the
5 things that are available, all of the services that a line
6 provides, and they're going to make those choices.
7 Q. And they could make choices with regard to that
8 particular plan that means that plan is a good choice for them
9 and they find that competitive. Isn't that true?
10 A. I think there would be a few customers that might
11 do that. I think you have like 1,000 measured customers. And
12 so the average one of those is going to be a pretty small
13 sample, and I think there's going to be a large share of those
14 that are going to say no. So there's a few people out there
15 that fit a niche that might find a plan. I don't deny that
16 there's going to be a few niche customers that will be able to
17 find wireless as an alternative, but I don't believe that's a
18 significant number.
19 Q. But under your assumptions that you, yourself,
20 have drawn, what this customer wants is 36 minutes of local
21 calling. Right?
22 A. Yeah.
23 Q. Okay. And all I'm asking is that for $3.50 more,
24 a hypothetical customer who gets mobility and 24 minutes of
25 nationwide toll might find -- may or may not, and I would
717
Page 62
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HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 submit to you you don't have any empirical call data one way or
2 the other --
3 A. Nor have I seen any empirical data from Qwest.
4 Q. -- might find that to be a competitive plan?
5 A. Some people might find it competitive.
6 Q. Actually, I wanted to step away at this point
7 from these details of the analysis, because I think you've
8 agreed with me that it is very, very difficult to do these
9 apples to apples comparisons, these dollars to cents
10 comparisons, because the plans are different, the usage periods
11 are different, and then you have to take into account
12 customers' usage patterns and their preferences. Isn't that
13 all correct?
14 A. Yeah, you know, the analysis is extremely
15 different. There's lots of assumptions that they have to make
16 and we've got some illustrative examples out here. Mr. Teitzel
17 has done the same. They show that depending on where you fit,
18 whatever, in some cases, there may be a plan that is relatively
19 close. In other cases, it's a no-brainer.
20 Q. In fact, in some cases there are plans that are
21 cheaper. That's what the analyses show, isn't it?
22 A. I believe that's the case.
23 Q. Yeah. It seemed to me though -- as I said, I
24 wanted to step back and talk to you a little bit more
25 philosophically -- it seems to me if we dwell too much on the
718

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 individual details you pointed out that customers, there are
2 only 1,000 of them, so if we spend too much time with the low
Page 63
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3 or median use measured customer with this one plan assumption,
4 I might be getting too far into the details and missing the big
5 picture?
6 A. I think if you look at the big picture, you have
7 to look at the median and large customers because that's better
8 than half of them, and for the majority of those customers
9 there isn't a competitive advantage.
10 Q. And so that's my point. Your bottom line is that
11 in your opinion, wireless service is not competitively priced
12 with Qwest basic local exchange service, however it is that the
13 Commission defines that term?
14 A. That is my opinion.
15 Q. But Staff doesn't disagree, do you, that there
16 are roughly 600,000 wireless access lines in the state right
17 now?
18 A. I don't disagree with that number.
19 Q. And Staff doesn't dispute that at least some
20 number -- you told me earlier someplace between three and five
21 percent -- have actually substituted wireless service for
22 wireline service?
23 A. I don't dispute that that could be the case.
24 Q. Okay. And you don't dispute Qwest's testimony,
25 do you, that wireless subscribership is growing in Idaho at a
719

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 rate of roughly 25 percent a year?
2 A. I don't dispute that wireless is growing. I do
3 dispute that they're using it as a substitute.
4 Q. Okay. And I assume that you have to accept what
5 Mr. Chattin said yesterday and what Ms. Herrick told us
6 yesterday, that even since they filed their testimony, they
Page 64
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7 both added wireless access lines for their households?
8 A. So have I.
9 Q. So we've got three live customer examples right
10 here in front of us of people that have added wireless.
11 Okay?
12 A. Uh-huh, as a complement in all cases, not as a
13 substitute.
14 Q. Now, if you are assuming that they're not
15 substituting and tell me you are, then you have to assume,
16 don't you, that they are paying for both their wireline service
17 and their wireless service?
18 A. Yeah.
19 Q. They're paying both of these bills?
20 A. Yes.
21 Q. It's not a question of a differential?
22 A. That's correct.
23 Q. Okay.
24 A. They're using them for different functions. The
25 values and the attributes for the one are worth paying for.
720

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And in addition to that, in some cases we've
2 heard a couple of customers testify that they're also paying
3 for a cable modem access to the Internet?
4 A. Yeah, some people define that need for high speed
5 enough that it justifies the expense. The majority of Idahoans
6 don't, possibly because they don't have that option yet.
7 Q. Right. Right. On the cable, I will grant you.
8 On the wireless though, at least for the seven
9 exchanges, we agree that -- that most customers have a
10 wireless -- they can buy wireless if they want to?
Page 65
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11 A. Agree.
12 Q. Okay. So doesn't all of that, the fact that
13 there are 600,000 Idaho customers buying it, and your
14 assumption that they're buying it on top of whatever they're
15 paying for wireline in most cases, doesn't that show that
16 wireless service is affordable?
17 A. You're asking whether -- that's not the issue in
18 this case. The fact that 600,000 people are buying it I think
19 is irrelevant. Are they using it as a substitute I think is
20 the issue.
21 Q. But that wasn't my question. Again, you know,
22 we've been instructed that we're not going to argue --
23 A. Of the 600,000 that are buying it, they're buying
24 it for the attributes that it provides, not for its attribute
25 as a substitute. They're buying it for its mobility, and that
721

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 mobility is important to them.
2 Q. Where is your empirical study that shows us that
3 that's why they're buying?
4 A. I don't think it takes anything -- I don't think
5 that's a -- requires an analysis. I think that it's clear that
6 that's why people are paying for two.
7 Q. That's your opinion as to why they're paying?
8 A. Well, I think there's pretty good market data to
9 indicate that too.
10 Q. Well we're going to talk about the market data in
11 just a minute, but my question to you is the fact that they're
12 paying for wireline and wireless at the same time, in your
13 estimation, doesn't that show you that Idaho customers find
14 wireless service to be affordable?
Page 66
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15 A. I'm assuming they wouldn't buy it if they didn't
16 think they could afford it. Some of them might get surprised
17 with some bills.
18 Q. They're actually finding it sufficiently
19 attractively priced that it's growing, even by your
20 estimations. Isn't that true?
21 A. I'll accept that it's growing.
22 Q. And while Staff quibbles with how the questions
23 were worded, Staff really doesn't dispute that Dr. Lincoln
24 conducted a survey in which 50 percent of residence customers
25 agreed that they could solely rely on wireless service for
722

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 their household needs, and more than 30 percent of business
2 customers who said the same thing for their businesses?
3 A. I won't dispute that those are the results that
4 Dr. Lincoln came up with.
5 Q. And that's before you add the "unsure"s and the
6 "don't know"s and the "no"s, and all of that. That's just what
7 his data showed. Right?
8 A. That was what his analysis showed.
9 Q. Okay.
10 A. On a very narrowly-worded survey, those are the
11 results he obtained.
12 Q. And likewise, doesn't Dr. Lincoln's survey show
13 that 43.5 percent of residence customers and 41.5 percent of
14 business customers said that the price of wireless service is
15 either less than or about the same as traditional service?
16 MR. STUTZMAN: I'm going to object to this line
17 of questioning. I think the survey is in, it speaks for
18 itself. I don't know that there's anything to be gained by
Page 67
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19 testimony.
20 MS. HOBSON: That's my last question on that
21 point, so I think Mr. Hart has made some very broad statements
22 about what he understands the empirical data to show, so I'm
23 just testing that assumption.
24 COMMISSIONER KJELLANDER: Mr. Stutzman.
25 MR. STUTZMAN: Well, if Counsel is done.
723

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 MS. HOBSON: Well, he hasn't answered my
2 question. Assuming that he does --
3 MR. STUTZMAN: I'll withdraw.
4 COMMISSIONER KJELLANDER: Mr. Hart, if you could
5 answer?
6 THE WITNESS: I have particular problems with
7 that question, because I think that people were comparing an
8 apple and an orange. They were comparing the price of wireless
9 as they use it today as a complement with the price of their
10 wireline as they use it today. They were not comparing
11 wireless as a substitute and what it might cost if they were to
12 replace it. I think that question was worded very improperly.
13 Q. BY MS. HOBSON: So, again, you quibble with the
14 way the survey or you dispute the way the survey was worded,
15 you don't have your own survey, and the fact is that customers,
16 at least for whatever they meant by that, said they thought
17 that they were priced the same or less?
18 A. If it really is competitive, and if it really
19 does provide the same services, why aren't people switching?
20 The market, I think, is the best evidence we've got. If
21 there's only three to five percent of the people that have
22 substituted, that tells me that it is not competitive, that it
Page 68
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23 is not either priced right or isn't functionally equivalent.
24 People aren't doing what you're saying they're doing. The
25 market is the best results that we have. I think it's much
724

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 more effective to look at that of what people are actually
2 doing than some narrowly-worded survey.
3 MS. HOBSON: Mr. Chairman, I understand
4 Mr. Hart's frustration that the Commission should look at the
5 market and the market is the answer, but I don't believe any of
6 the last remarks were responsive to my question and I ask that
7 they be stricken.
8 COMMISSIONER KJELLANDER: Mr. Stutzman.
9 MR. STUTZMAN: Counsel invited the response,
10 Mr. Wayne -- or, Mr. Hart was trying to respond honestly to the
11 question that was asked, and I think the answer should stand as
12 it was given.
13 MS. HOBSON: Mr. Chairman, my question was about
14 the surveys, what customers responded on the survey, and
15 Mr. Hart has given us the benefit of his views on -- his views.
16 COMMISSIONER KJELLANDER: I think that the
17 Commission's probably in a good position to put appropriate
18 weight on it, so to strike it at this point I think would be
19 perhaps not the right approach to go, but I certainly do note
20 your objection and we'll offer it the appropriate weight at the
21 appropriate time.
22 MS. HOBSON: Thank you, Mr. Chairman.
23 Q. BY MS. HOBSON: We've talked a lot about what is
24 competitively priced. Let's talk about effective competition
25 for a minute, and I think you've got some views on that. But,
725

Page 69
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HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 would you agree with me that to have effective competition, we
2 don't have to have a competitive choice for every single
3 customer?
4 A. I would agree that you don't have to have
5 100-percent universal competitive choices.
6 Q. And do you have a percentage in your mind as to
7 what you do have to have?
8 A. Nope.
9 Q. Okay.
10 A. I have percentages in mind that I think are
11 clearly not there, and that would be the three to five percent
12 range that we have.
13 Q. You've heard a -- we've heard a lot in this case
14 about Internet access and fax machines and key systems, but do
15 you dispute the Qwest testimony that when it sells a Title 61
16 line today, it doesn't know whether a customer is going to use
17 it for voice or for fax or what it's going to use it for?
18 A. Oh, I don't dispute that.
19 Q. Okay. And so if Qwest is going to raise prices
20 for people that use lines -- if Qwest was intending to raise
21 prices just for people who use their wireline for fax, they
22 wouldn't be able to do that, would they? Qwest wouldn't be
23 able to do that, would they, isolate the fax customers from the
24 voice customers?
25 A. If there are enough customers who had a reason
726

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 that makes them a captive customer for which this is not a
2 realistic alternative, then Qwest has monopoly power and they
3 can raise rates and do it profitably.
Page 70
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4 Q. Mr. Hart, that wasn't my question. My question
5 was Qwest can't isolate fax customers.
6 A. I misunderstood your questions. It cannot
7 isolate.
8 Q. Okay. And whatever Qwest does if it is to be
9 deregulated with the price of Title 61 lines, it's going to
10 have to do whatever that is in the face of the fact that
11 roughly three out of four customers also use wireless at least
12 for voice today in Idaho. Isn't that true? Isn't that Qwest's
13 market reality?
14 A. Three out of four customers have a wireless
15 phone. I won't say that they use it as -- you know, whether
16 it's a significant use for their voice or not.
17 Q. But they have it and that's Qwest's market
18 reality today?
19 A. Uh-huh. It's also the reality that they haven't
20 replaced it.
21 MS. HOBSON: Thank you. That's all the questions
22 I have. I would move the admission of all of the exhibits that
23 I have previously marked that have not been admitted at this
24 point.
25 COMMISSIONER KJELLANDER: So you can't remember
727

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 the numbers either? Okay.
2 MS. HOBSON: No. Well, I can try. I have --
3 COMMISSIONER KJELLANDER: Without objection,
4 we can take that up. Is there any objection to the exhibits
5 that were presented?
6 MR. STUTZMAN: No, Mr. Chairman.
7 COMMISSIONER KJELLANDER: Yes.
Page 71
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8 MR. STUTZMAN: No objection.
9 COMMISSIONER KJELLANDER: Okay. So those
10 recently-submitted exhibits will be admitted into the record --
11 MS. HOBSON: Included in that number, for those
12 of you that were paying attention early on and then lost the
13 train, were Exhibits 43 through 55 which were merely the Data
14 Responses that we didn't --
15 COMMISSIONER KJELLANDER: And we had previously
16 admitted those.
17 MS. HOBSON: Yeah. We didn't discuss those in
18 any detail. Thank you.
19 COMMISSIONER KJELLANDER: Thank you for the
20 clarification.
21 (Qwest Exhibit Nos. 38 through 40, and 42,
22 having been premarked for identification, were admitted into
23 evidence.)
24 COMMISSIONER KJELLANDER: And, Mr. Hart, I don't
25 think you can leave yet.
728

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 THE WITNESS: Oh, that's right. I apologize.
2 COMMISSIONER KJELLANDER: Nice try.
3 Mr. Gannon, have you had an opportunity yet?
4 MR. GANNON: No. Thank you. Thank you,
5 Mr. Chair.
6
7 CROSS-EXAMINATION
8
9 BY MR. GANNON:
10 Q. Mr. Hart, do you know -- yesterday, we
11 discussed -- I discussed with Mr. Teitzel the number of
Page 72
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12 residential business lines and -- residential lines and
13 business lines in these six exchanges. Do you know the number
14 of business lines or the approximate percentage of business
15 lines which have at least one or more multiple lines used in
16 conjunction with that line?
17 A. You asked me that question and I looked at
18 Qwest's 2002 annual report, and under the category Res One Line
19 was a number that was approximately 50 percent of the number
20 res multiline or multi -- I can't remember exact phrasing, but
21 it was a category that I assumed to be more than one line at
22 the same location. So I would estimate that about 50 percent
23 of the business customers subscribe to more than one line at
24 that location.
25 Q. So if there's approximately 25,000 business
729

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 customers, about 12,500, roughly, would have one or more lines
2 that -- would have more than one line in use?
3 MS. HOBSON: I'm sorry, is there -- is there a
4 place in the record where we have established what the number
5 of business customers is?
6 MR. GANNON: Yes. I believe Mr. Teitzel
7 indicated there were 25,000 business lines, and that
8 Dr. Lincoln I believe in a footnote in his testimony.
9 MS. HOBSON: I'm sorry. I needed the
10 clarification, and I guess I don't have an objection.
11 COMMISSIONER KJELLANDER: Mr. Gannon, proceed.
12 Q. BY MR. GANNON: And I believe yesterday
13 Mr. Teitzel indicated there were approximately 55,000 multiple
14 business lines -- that would be business lines -- in addition
15 to the 12,500?
Page 73
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16 A. Okay.
17 Q. So, therefore, out of the total business lines,
18 approximately 67,500 of the roughly 80,000 business lines are
19 tied up into multiple line systems. Would that be accurate?
20 MS. HOBSON: Excuse me. I am going to interpose
21 an objection at this point. Mr. Teitzel is in the room and I
22 have clarified for the record that Mr. Teitzel's use of the
23 25,000 line number was subject to check. He has not been able
24 to check that. I mean, I'm not suggesting that it's not
25 accurate, but to the extent that we're relying on Mr. Teitzel,
730

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 he was accepting it subject to check and we are not prepared to
2 confirm that at this moment.
3 COMMISSIONER KJELLANDER: Mr. Gannon.
4 MR. GANNON: I would certainly be willing to
5 defer to Mr. Teitzel checking that figure to make sure it's
6 accurate, and if Counsel wants to advise us when he'd be able
7 to do that and get back to us, I guess it's in annual reports
8 or somewhere readily available. I believe also Dr. Lincoln
9 testified in his testimony that he was given approximately that
10 many lines in connection with conducting this small-business
11 survey.
12 COMMISSIONER KJELLANDER: I guess just as the
13 Chair, one question that I have is that in terms of purposes of
14 cross-examination and the testimony that Mr. Hart has
15 sponsored, how does this tie in so that I can be on the same
16 page?
17 MR. GANNON: I think that it may be. I don't
18 think it ties in specifically, but it was a question that I
19 wanted to get or it was information I wanted to get into the
Page 74
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20 record because I thought it was important in determining that
21 Mr. Teitzel didn't know and Mr. Hart did know, and as I
22 understand the Rules, I can't call Mr. Hart as my witness. And
23 so basically I just wanted to get that into the record because
24 I thought it was very important, because if you've got half
25 your small-business customers with multiple line systems, I
731

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 think we've pretty well established that the multiple line
2 systems cannot use a cell phone, and therefore, we can -- to
3 operate.
4 MS. HOBSON: Mr. Chairman, if I may, I believe
5 that what we're seeing here is an effort to provide additional
6 direct testimony through cross-examination of a witness's
7 prefiled testimony. I don't believe that's appropriate and I
8 believe that Mr. Gannon had the opportunity to send Data
9 Requests had he needed that information from Qwest.
10 COMMISSIONER KJELLANDER: Mr. Gannon, I'm
11 inclined to concur with the objection just raised by
12 Ms. Hobson. As far as the purposes of cross-examination are
13 laid out at least within the guidelines of the Commission, it
14 seems to be outside the boundaries as far as the way that we
15 deal with it here since it's not evidence that's supported and
16 we don't have a direct tie-in, and I would hate to get
17 information into the record that may or may not be something
18 that Mr. Hart can actually stand behind given that opportunity.
19 So I think we're going to sustain the objection and request
20 that you move forward.
21 MR. GANNON: Okay. That's the objection to my
22 last question, which --
23 COMMISSIONER KJELLANDER: Yes.
Page 75
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24 MR. GANNON: Okay. That's all the questions I
25 have, Mr. Chairman.
732

HEDRICK COURT REPORTING HART (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 COMMISSIONER KJELLANDER: Thank you, Mr. Gannon.
2 Okay, let's move to members of the Commission.
3 Commissioner Hansen.
4
5 EXAMINATION
6
7 BY COMMISSIONER HANSEN:
8 Q. Mr. Hart, I just want to get something clarified
9 here. If you are correct in your testimony that effective
10 competition has not been established, am I correct that on
11 page 41, line 1 through 4 -- on page 41, line 1 through 4 --
12 you are saying that the biggest problem you see in deregulating
13 those rates until sometime after effective competition has
14 become established is an increase in Qwest rates for basic
15 local exchange service in these seven exchanges, as well as
16 exchanges not included in this case? Is that correct?
17 A. I think that that's -- the difficulty associated
18 with deregulating before there is effective competition is that
19 Qwest would be able to abuse their monopoly position, and
20 that's typically done by raising rates.
21 Q. Is that the only danger you see if we were to
22 deregulate and actually find out later that there were not
23 effective competition?
24 A. Well, I think that the other thing that a
25 monopoly can do is prevent competition from ever developing.
733

HEDRICK COURT REPORTING HART (Com)
Page 76
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P. O. BOX 578, BOISE, ID 83701 Staff
 1 So I think that would be another risk associated with
2 deregulating too soon.
3 Q. What about Qwest's commitment to not increase
4 rates through 2004: Does that eliminate this problem then?
5 A. Maybe it's because I'm getting a little older,
6 but 18 months is an awfully short time frame to me. I don't
7 think that we will have effective competition in 18 months.
8 There was a lot of speculation that we'd have it within a
9 couple years in 1996 and it hasn't happened. We've had, you
10 know, going on eight, nine years now since then, and it's
11 barely getting underway. I think that we don't know what the
12 future is going to bring in terms of competition. Putting a
13 time frame on it now, especially since we're going into a
14 recession with the industry as hammered as it is, I think it's
15 just inappropriate to put a time frame on it.
16 At the end of 18 months, you know, maybe there
17 will be effective competition, and if so, Qwest can come back
18 and ask again, but I don't think it's appropriate for us to
19 say, well, we're going to have competition and make that bet
20 that it's going to be -- there will be effective restraints
21 after 18 months. I just don't think that's responsible.
22 Q. One other question I'd like to ask you and
23 your -- just to get your opinion on it: In your opinion, is
24 there only -- is there a difference in the state of Idaho in
25 competition? In this particular case, Qwest is asking for
734

HEDRICK COURT REPORTING HART (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 seven exchanges, that they're saying that there is effective
2 competition there. Is there a difference, in your mind,
3 between these seven areas they have identified than the entire
Page 77
60503V~1.txt
4 service area that they have?
5 A. In terms of is wireless available in those areas
6 and are customers buying wireless lines in those areas, the
7 majority of their case, I don't really see that much of a
8 difference.
9 Will there be probably more pockets where it
10 isn't covered, probably, but in terms of where the majority of
11 the customers live, I don't really see that big of a difference
12 between the areas in these seven exchanges and those in the
13 other exchanges.
14 COMMISSIONER HANSEN: Thank you. That's all the
15 questions I have.
16 COMMISSIONER KJELLANDER: Commissioner Hansen, no
17 further questions.
18 Commissioner Smith.
19 COMMISSIONER SMITH: Just a couple of areas.
20
21 EXAMINATION
22
23 BY COMMISSIONER SMITH:
24 Q. I guess I'll try and pick up on maybe where
25 Commissioner Hansen was, but my question was a little
735

HEDRICK COURT REPORTING HART (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 different.
2 In reading the Statute, it says we're to cease
3 regulating basic local exchange rates in a local exchange
4 calling area upon this showing that effective competition
5 exists throughout the local exchange calling areas. And the
6 Application is for seven exchanges. But as I've listened to
7 the evidence, it doesn't seem like anybody has addressed it on
Page 78
60503V~1.txt
8 an exchange-by-exchange basis, and I can see that you could
9 view it two different ways. You could look at it as seven
10 exchanges, or you might look at it as three local calling
11 areas: The Boise, Nampa, Caldwell, Meridian as one; Twin Falls
12 as one; and Pocatello and Idaho Falls as one. But they didn't
13 do that either.
14 So, I'm just wondering, am I just supposed to
15 assume that Twin Falls is just like Boise, Nampa, Caldwell, and
16 Meridian; and that Pocatello and Idaho Falls are just like
17 Twin Falls and Boise, Nampa, Caldwell, and Meridian; and that
18 that penetration and is that reasonable? Is that -- seems to
19 me that unless I've looked at it exchange by exchange as the
20 Statute asks me to do, I haven't done my job.
21 A. I think that that is one of the weaknesses of
22 Qwest's case, that they have not done an exchange-by-exchange
23 analysis as is required by the Code. I don't know whether
24 there is a difference or not. I mean, from my viewpoint, there
25 isn't a difference because they haven't shown it anywhere, but
736

HEDRICK COURT REPORTING HART (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 I don't think they -- I think they clearly haven't shown it in
2 any exchange.
3 Q. My other question is back on your page 9 where
4 you had quite a discussion with Ms. Hobson on this T-Mobile
5 plan and your personal assessment that 3.50 -- approximately
6 3.50 a month more expensive is not a competitively-priced
7 service, and I think you agreed with Ms. Hobson that a customer
8 might disagree with your conclusion and find that that was a
9 competitive price. Is that right?
10 A. A customer may disagree with me. I think a lot
11 of people disagree with me at times.
Page 79
60503V~1.txt
12 Q. And it occurred to me that you might agree with
13 me that the customer would find it noncompetitive for a whole
14 bunch of reasons: They wanted extensions, they like the
15 privacy of a land line as opposed to a mobile phone, they want
16 to keep the same phone number they have had for 20 years, and
17 they like having a directory listing. So an individual
18 customer could go either way on that issue, couldn't they?
19 A. I think they could.
20 Q. So what's the Commission supposed to do with this
21 finding that they are competitively priced local services? I
22 mean, it's obvious we can't go customer by customer and total
23 up how many think it is and how many think it isn't. I mean,
24 so how are we supposed to approach that part of the test if
25 customers on an individual basis could go either way?
737

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. I think we have to look at how the market is
2 treating it; how are customers actually responding in the
3 market; are they replacing their wireline service with wireless
4 service in sufficient numbers that that is a credible,
5 effective competition. And in my views, the marketplace has
6 spoken very wisely that they value all the attributes, they
7 compare the apple and the orange, and they say, I don't want
8 mixed fruit, for the majority of cases. A narrow niche market
9 is doing it.
10 Q. Actually, it seems to me they're saying they do
11 want mixed fruit.
12 A. Yeah, I guess you're right.
13 Q. They want apples and oranges, and they're not
14 willing to give up one for the other?
15 A. Correct.
Page 80
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16 COMMISSIONER SMITH: Thank you, Mr. Chairman.
17 COMMISSIONER KJELLANDER: Thank you. Let's move
18 to redirect.
19 MR. STUTZMAN: Thank you, Mr. Chairman. Just a
20 few questions.
21
22 REDIRECT EXAMINATION
23
24 BY MR. STUTZMAN:
25 Q. Mr. Hart, you were asked about the assumptions
738

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 you made in trying to do a price comparison, and you indicated,
2 I think, that you tried to be conservative in those
3 assumptions. Is that correct?
4 A. That's correct.
5 Q. First of all, why did you try to be
6 conservative?
7 A. Well, I think if you wanted to make a case that
8 wireless is too expensive, it's extremely easy to do if you
9 made assumptions that way. I think the Commission needs a
10 realistic view and for the benefit of the doubt of Qwest, I
11 took what I felt to be a very conservative approach, and I
12 think even under that conservative approach, for most cases
13 wireless is not competitively priced.
14 Q. Okay. In what way or what assumptions were you
15 conservative in your approach?
16 A. I think by far the most conservative approach or
17 assumption made by either Mr. Teitzel or I is that customers
18 are going to buy based on their average. If you look at the
19 cost of going over your plan's allotment, you really get hard
Page 81
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20 with extra -- hit hard with extra usage fees. So most
21 customers don't buy for the average month, they buy for their
22 peak month. So in reality, customers are going to be buying
23 plans at a lot higher than what we used for average minutes.
24 And so I think that that is, by far, the most conservative
25 assumption made to use average rather than perhaps peak.
739

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Because at 40 and 45 cents a minute, even ten, 20 minutes can
2 really add up and make the cost of a plan a lot higher to where
3 you want to go to some of the higher plans.
4 The most outlandish numbers in the analysis were
5 when the company didn't offer a plan with that many minutes so
6 I had to add dollars to cover the excess minutes. That's when
7 you get into the $400 a month bills. And, you know, it doesn't
8 take very many of those before a customer would say, Hey, I
9 want a plan with more minutes. So that was, by far, the most
10 conservative assumption.
11 Q. Okay. Thank you. I want to ask you about the
12 three to five percent substitution figure. Is there any
13 evidence in this case that that figure is valid in any of these
14 seven exchanges in Idaho?
15 A. It's a nationwide number. That's the only thing
16 we have.
17 Q. There's no specific evidence in this case that
18 three to five percent of the wireless customers in the
19 Twin Falls exchange, for example, have dropped their wireline
20 service?
21 A. Not to my knowledge.
22 MR. STUTZMAN: Thank you. That's all I have,
23 Mr. Chairman.
Page 82
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24 COMMISSIONER KJELLANDER: Thank you.
25 I think at this point what we'll do is break for
740

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 lunch. The intent would be to be back here at
2 1:15. If I'm correct, I think, Mr. Stutzman, you have one
3 remaining witness.
4 MS. HOBSON: Excuse me, Mr. Chairman, may I be
5 indulged with a few more recross questions that were inspired
6 by the remarks or the questions of the Commissioners?
7 COMMISSIONER KJELLANDER: Without objection.
8 And I know that you will save your objection
9 based on the question that's asked.
10 MR. STUTZMAN: Right.
11 COMMISSIONER KJELLANDER: Please proceed.
12
13 RECROSS-EXAMINATION
14
15 BY MS. HOBSON:
16 Q. Mr. Hart, a moment ago Mr. Hansen asked you if
17 there was some concern other than raising rates, and you
18 indicated that if there is monopoly power, Qwest might prevent
19 competition from developing. Do you recall saying that?
20 A. Yes.
21 Q. Isn't it the case that this Commission has
22 determined through the 271 case that Qwest markets are fully
23 open to competitors?
24 A. At the time of that determination and based on
25 the constrictions in the 271, yes, but that doesn't mean that
741

HEDRICK COURT REPORTING HART (X)
P. O. BOX 578, BOISE, ID 83701 Staff
Page 83
60503V~1.txt
 1 that would be the same if you were -- for the future.
2 Q. How would prices -- how would deregulation of
3 retail rates to end users affect things like, for example, UNE
4 pricing or adherence to SGAT provisions or any of those things
5 that the Commission has already made a determination on?
6 A. I think that question would probably be better
7 addressed by our other witness. All I know is that one of the
8 things that a monopoly can do is keep competition out.
9 Q. But hasn't your Commission until its Order has
10 been changed, has been revisited, hasn't your Commission
11 determined that Qwest's market is open to competitors?
12 A. That's a past tense. I think that one of the
13 things that a monopoly can do is squash what limited open
14 competition there is.
15 Q. If Qwest were to increase rates for its retail
16 services, as you postulate it would, wouldn't that encourage
17 competitors to come in and price compete with Qwest?
18 A. I don't know the answer to that. It might. It
19 might make it so that they could find a margin in there, but
20 I'm not sure that that's the case.
21 Q. That would be a pro-competitive force rather than
22 an anti-competitive force, wouldn't it?
23 A. As one of the actions that Qwest could take, yes.
24 MS. HOBSON: Thank you. That's all I have.
25 COMMISSIONER KJELLANDER: Any redirect from that,
742

HEDRICK COURT REPORTING HART (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Mr. Stutzman?
2 MR. STUTZMAN: Well, just one if I might. Thank
3 you, Mr. Chairman.
4
Page 84
60503V~1.txt
5 FURTHER REDIRECT EXAMINATION
6
7 BY MR. STUTZMAN:
8 Q. If I understand the question right, is raising
9 rates by Qwest a competitive advantage for competitors? Is
10 that your understanding of the question, Mr. Hart?
11 A. I think she was asking is that a competitive
12 advantage for a CLEC.
13 Q. It wouldn't necessarily be a benefit to customers
14 though?
15 A. I don't think most customers would consider
16 increased rates a benefit.
17 MR. STUTZMAN: Thank you. That's all I have.
18 COMMISSIONER KJELLANDER: It would still be our
19 intent then to return at roughly 1:15 and pick up. I believe
20 we have one more witness, and I think we might actually be able
21 to get through that today. I might be overly optimistic, but
22 we'll give it our best shot. And so we'll go off the record
23 for now, and, Mr. Hart, you are dismissed.
24 (The witness left the stand.)
25 (Noon recess.).
743

HEDRICK COURT REPORTING JOHNSON (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 COMMISSIONER KJELLANDER: Well, good afternoon.
2 We'll be back on the record, and just as sort of a heads-up to
3 Qwest, we would like to bring up Mr. Schmit upon the conclusion
4 of the testimony or the testimony provided by the last witness
5 for Staff, so just want to give you some advance warning so
6 that you didn't take off.
7 MR. SHERR: Thank you.
8 COMMISSIONER KJELLANDER: Great. So let's move
Page 85
60503V~1.txt
9 forward then. I believe we're ready for Mr. Johnson, Staff's
10 last witness.
11 MR. STUTZMAN: Yes, Mr. Chairman. Staff calls
12 Dr. Ben Johnson, please.
13
14 BEN JOHNSON, Ph.D.,
15 produced as a witness at the instance of the Staff, being first
16 duly sworn, was examined and testified as follows:
17
18 DIRECT EXAMINATION
19
20 BY MR. STUTZMAN:
21 Q. Would you please state your name for the
22 record?
23 A. Ben Johnson.
24 Q. And how are you employed?
25 A. I'm a consulting economist with a firm in
744

HEDRICK COURT REPORTING JOHNSON (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Tallahassee, Florida.
2 Q. And were you retained to assist the Commission
3 Staff in this case?
4 A. Yes.
5 Q. And in that capacity, did you prepare and prefile
6 direct testimony dated March 19, 2003?
7 A. Yes, I did.
8 Q. Does that consist of approximately 48 pages?
9 A. Yes.
10 Q. Do you have any changes to make to your
11 testimony?
12 A. A few typographical errors I would like to
Page 86
60503V~1.txt
13 correct.
14 On page 19 at line 18, at the end of that line,
15 the citation is wrong and should be replaced with a different
16 document. That document is capital STF02-029TS1,
17 Attachment A.
18 And on page 26, at line 15, in the middle of the
19 line where the word wireless "services" appears, the word
20 "services" should actually be "service," in the singular.
21 And on page 28 at line 7, the word "wireless" in
22 the middle of that line should actually be "wireline."
23 And finally, on page 33, at line 8, let me just
24 tell you I need to add two words. The easiest way to explain
25 it is I'll just read how it should read. So it should read:
745

HEDRICK COURT REPORTING JOHNSON (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 "Customers a lot more than" and need to insert
2 "it costs other customers." So the word -- words "it costs"
3 need to go before the word "other" and after the word "than."
4 And those are the only corrections I'm aware of.
5 Q. Okay. Thank you. Did you have any exhibits to
6 your testimony?
7 A. I have an appendix that contains my
8 qualifications, and I believe that's all, if I recall
9 correctly.
10 MR. STUTZMAN: Mr. Chairman, perhaps we should
11 identify that as Staff Exhibit No. 112.
12 COMMISSIONER KJELLLANDER: Noted.
13 (Staff Exhibit No. 112 was marked for
14 identification.)
15 Q. BY MR. STUTZMAN: Dr. Johnson, if I asked you the
16 same questions as contained today on the witness stand, would
Page 87
60503V~1.txt
17 your answers be the same?
18 A. Yes, they would.
19 MR. STUTZMAN: Mr. Chairman, I'd move to spread
20 the testimony of Dr. Johnson on the record, and admit Exhibit
21 No. 112 in the record.
22 COMMISSIONER KJELLANDER: And without objection,
23 we would admit the direct testimony of Mr. Johnson, spread the
24 cross as if read, and admit Exhibit 112.
25
746

HEDRICK COURT REPORTING JOHNSON (Di)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 (The following prefiled direct testimony
2 of Dr. Ben Johnson is spread upon the record.)
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Page 88
60503V~1.txt
21
22
23
24
25
747

HEDRICK COURT REPORTING JOHNSON (Di)
P. O. BOX 578, BOISE, ID 83701 Staff

1 (The following proceedings were had in
2 open hearing.)
3 (Staff Exhibit No. 112 was admitted into
4 evidence.)
5 MR. STUTZMAN: Thank you. And Dr. Johnson is
6 available for cross-examination.
7 COMMISSIONER SMITH: Thank you. Let's start with
8 Ms. Hobson. Maybe we won't start with Ms. Hobson. Mr. Sherr.
9 MR. SHERR: Thank you, Mr. Chairman.
10
11 CROSS-EXAMINATION
12
13 BY MR. SHERR:
14 Q. Good afternoon, Dr. Johnson.
15 A. Good afternoon.
16 Q. I'm Adam Sherr with Qwest. As a preliminary
17 matter, do you see before you on the stand a packet of
18 exhibits? Those have been marked as Exhibits 56 through 66?
19 A. Yes.
20 Q. Okay. And I'll represent to you that these are
21 Staff Data Request Responses, Responses to Qwest
22 Interrogatories or Requests for Production. Do you recall
23 Qwest serving Interrogatories and Requests for Production on
Page 89
60503V~1.txt
24 Staff in this case?
25 A. Yes.
796

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And did you help prepare Responses to some or all
2 of those?
3 A. Yes, I assisted in the preparation.
4 Q. Okay.
5 MR. SHERR: Mr. Chairman, I would move for the
6 admission of these exhibits, Exhibits 56 through 66. I believe
7 that Staff is willing to stipulate to them.
8 MR. STUTZMAN: I have no objection.
9 COMMISSIONER KJELLANDER: Without objection then,
10 we would admit Exhibits 56 through 66.
11 (Qwest Exhibit Nos. 56 through 66, having
12 been premarked for identification, were admitted into
13 evidence.)
14 Q. BY MR. SHERR: Dr. Johnson, I'd like you to look
15 at what's now been marked as Exhibit 112 that was Appendix A to
16 your testimony, and specifically at page 7. Are you there?
17 A. I am now.
18 Q. At lines 12 through 13, I read that you state: I
19 have undertaken extensive research and analysis of various
20 aspects of utility regulation.
21 Did I read that correctly?
22 A. Yes.
23 Q. When you say that you have undertaken extensive
24 research, does that include literature review type research or
25 empirical survey based research?
797

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
Page 90
60503V~1.txt
 1 A. Both.
2 Q. Okay. And how many empirical survey based
3 research studies have you conducted?
4 A. I'm not really sure of the exact number, and it
5 depends in part on what you mean by survey-based, but the one
6 example that immediately comes to mind is a fairly intensive
7 effort at analyzing public or consumer perceptions concerning
8 measured telephone service that we did some years back in which
9 I helped formulate the appropriate questions and develop the
10 survey design and sampling design and so forth.
11 There are many other instances in which I would
12 be reviewing data and survey type data would be included in
13 that but was not actually developing the data myself. So it
14 would be more common to have been reviewing studies than to
15 develop them myself.
16 Q. Okay. But you have, just to make sure that I'm
17 clear, you have designed some survey-based studies?
18 A. Yes.
19 Q. Okay. Have you designed and conducted a survey
20 based study to evaluate whether wireline basic local exchange
21 service and wireless services are complements or substitutes?
22 A. No.
23 Q. Prior to this case, have you provided expert
24 testimony in any case in which wireless services or wireless
25 technology were at issue?
798

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. Not directly, no.
2 Q. Have you ever been employed as a network engineer
3 or technician with a wireline telephone company?
4 A. No.
Page 91
60503V~1.txt
5 Q. How about for a wireless telephone company?
6 A. Same response.
7 Q. Would it be fair to state that the various
8 opinions you offer in this case regarding functional
9 equivalence of wireless and wireline basic local exchange
10 service are based on your general knowledge, as opposed to any
11 hands-on experience in the wireless industry?
12 A. I'm not sure exactly what you mean by the latter
13 part of your phrase, so I don't know if that would be fair or
14 not.
15 Q. Okay.
16 A. I think I've already stated that I haven't worked
17 for a wireless carrier, unless to the extent you're simply
18 amplifying on that I agree with you, but certainly I have
19 personal hands-on experience using wireless products and
20 observing other people using wireless services.
21 Q. Okay. I want to talk to you about your
22 definition that you set forth in your testimony of "functional
23 equivalence." Could you please take a look at page 9 of your
24 testimony?
25 A. Okay.
799

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. And starting on line 16, I believe you define
2 "functional equivalence" this way: Accordingly, for two
3 services to be functionally equivalent, these services need to
4 be virtually identical with respect to their functional
5 attributes, those characteristics of the service which relate
6 directly to the purpose for which service is especially fitted
7 or used.
8 Did I read that correctly?
Page 92
60503V~1.txt
9 A. Yes.
10 Q. And is that your definition of "functional
11 equivalence"?
12 A. Yes, that's the core definition. I think I've
13 elaborated on that elsewhere in the testimony, certainly taken
14 into consideration a wide variety of things beyond that core
15 definition, but that's a good summary of the definition that I
16 think is helpful here.
17 Q. Thank you. And as you sit here today, are you
18 aware of any other state Commission that has adopted your
19 definition of "functional equivalence"?
20 A. No, and I'm not aware of any state Commissions
21 that have adopted any other definition. As far as I know, to
22 the best of my knowledge, the issue has never been resolved or
23 litigated by state Commissions.
24 Q. So are you asking the Commission to be the first
25 to adopt your definition of "functional equivalence"?
800

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. I wouldn't state it that way. What I would state
2 is that I think the Commission, for the first time, is being
3 asked by Qwest to interpret the Statute and determine the
4 extent to which the facts either do or do not confirm that
5 wireless service is functionally equivalent to local service,
6 basic local exchange service, and in so doing, they may need to
7 define "functionally equivalent" or they may decide they don't
8 need to define it, but I'm not specifically asking them to
9 adopt any particular definition of those terms.
10 Q. So you're not necessarily asking or suggesting
11 that the Commission adopt the definition that you've set forth
12 on page 9 of your testimony?
Page 93
60503V~1.txt
13 A. I wouldn't be at all troubled if they chose to,
14 but no, I haven't asked them to do that. As I saw it, it was
15 helpful to first establish for the Commission my way of
16 thinking about the issue before I went into my analysis of the
17 facts and how I thought those facts related back to the concept
18 of effective competition and this concept of functionally
19 equivalent. But ultimately, it's the Commission's decision as
20 to what these terms mean and not my decision.
21 Q. So might it be reasonable for the Commission to
22 adopt a different definition of "functional equivalence"?
23 A. I don't recall there being any other alternative
24 definition being put forward. There was some -- maybe I've
25 just forgot it, but my recollection is there was some testimony
801

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 about sort of suggesting a very different way of viewing that
2 issue, but I don't recall it being stated in terms of an
3 alternative definition.
4 Q. Okay. But that really wasn't my question. You
5 just stated that you haven't necessarily suggested that the
6 Commission adopt your definition. I'm just trying to confirm
7 that it may be reasonable for the Commission to adopt a
8 different definition of that term. Those would seem to go
9 together.
10 A. Certainly the Commission, in its expertise, could
11 adopt its own definition. All I was trying to convey is I
12 don't think in the record there's an alternative definition for
13 them available to choose, but certainly they have the expertise
14 to develop their own definition if they felt that's helpful.
15 Q. Thank you. I'd like to ask you a couple
16 questions about Dr. Lincoln's research in his testimony, if you
Page 94
60503V~1.txt
17 could please look at page 10 of your testimony. Are you
18 there?
19 A. Yes.
20 Q. Okay. Starting on line 4, you criticize
21 Dr. Lincoln. I will read this again: However, the survey --
22 and here you're talking about Dr. Lincoln's survey -- did not
23 directly ask customers whether they considered wireless and
24 wireline services to be functionally equivalent, nor did it
25 explore this issue indirectly by probing deeply into consumer
802

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 attitudes with respect to these services.
2 Did I read that correctly?
3 A. Yes.
4 Q. Upon reading Dr. Lincoln's December 17, 2002,
5 testimony, did you design and conduct a survey which did
6 directly ask Idaho customers whether they considered wireless
7 and wireline services to be functionally equivalent?
8 A. No, I didn't think that was necessary, nor was I
9 asked to do that by the Commission Staff.
10 Q. And did you -- how about a survey to explore this
11 issue indirectly by probing deeply into consumer attitudes with
12 respect to these customers?
13 A. The same response. Certainly, a party could
14 attempt to rely on opinion survey as a form of evidence to
15 submit to this Commission. It's not the most typical form of
16 evidence submitted and there is nothing about this particular
17 situation that struck me as suggesting it would be a
18 particularly useful form of evidence.
19 Put another way, it's not simply the fact that
20 his survey was flawed and doesn't ask the right questions and
Page 95
60503V~1.txt
21 doesn't probe deeply enough into all these very important
22 issues that go to the heart of whether or not equivalency
23 exists, but also the question of it's just two steps removed.
24 You get into this question of is the Commission supposed to be
25 ruling on the reality of whether they are functionally
803

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 equivalent or whether people are knowledgeable enough to
2 realize that they are not or that they are. So probing that
3 question indirectly through surveys is not the most obvious way
4 to deal with the issue. It's a costly alternative and it's not
5 one that I recommended to the Commission Staff that they
6 engage.
7 Q. Did you discuss this possibility with Mr. Hart?
8 A. No.
9 Q. I don't believe I understood the previous
10 response. I understood the "no," but the previous response.
11 Did you -- are you testifying that customers' perception is not
12 important in determining whether two products are functionally
13 equivalent or competitively priced?
14 A. No, I haven't said that. It's conceivable that
15 customer opinions would be relevant and useful, but it's hard
16 to visualize a situation in which they would be the primary or
17 only evidence of concern to the Commission. I think the
18 Commission primarily needs to be dealing with reality, and only
19 secondarily dealing with perceptions. The survey I refer to
20 earlier dealing with measured service was one of those unusual
21 instances in which probing into consumer attitudes became very
22 important because there had been sort of a long-standing debate
23 as a matter of policy whether customers should be shifted from
24 flat rate service to measured service, and in trying to resolve
Page 96
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25 that issue, that didn't go away and hadn't for some time.
804

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Probing into consumer attitudes and understanding
2 why they rejected the measured product and why it had such a
3 small buy-up rate became very helpful and I think did, in fact,
4 help resolve that issue, and the ultimate conclusion being we
5 should not force consumers onto a measured product. They
6 prefer the safety and the lack of risk of a flat-rated product.
7 They prefer the freedom to call all they wanted. And to push
8 customers onto a measured product was contrary to the public
9 interest, I believed, and so that was one of those exceptions.
10 To put a lot of emphasis on it here is not, in my
11 mind, a good use of resources, but I'm not taking the extreme
12 position that it would be of no value to the Commission.
13 Q. And you would agree with me, would you not, that
14 whether or not you agree with the analysis done, that Qwest has
15 provided evidence of both reality and perception in this
16 case?
17 A. I don't think the evidence they presented is
18 terribly helpful in either case, and I think I reach different
19 conclusions from that evidence.
20 As to perceptions, we have found some instances,
21 one example being the cross-examination in the last day or two
22 of some of these customers who have been on the stand, and we
23 do find that they do not realize some services are unregulated
24 that are, in fact, unregulated. They apparently have the false
25 perception that they are protected and prices are regulated by
805

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
Page 97
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 1 this Commission. So we do have some evidence of the gap
2 between reality and perceptions.
3 In the case of the survey evidence, it just
4 doesn't probe deeply enough to really understand the
5 perceptions.
6 Q. Doctor --
7 A. First level of question, and that's about it.
8 Q. Let me interrupt you. My question was simply has
9 Qwest provided in this case evidence -- whether or not you
10 agree with it and at this point I don't need you to tell me if
11 you agree with it -- Qwest has provided evidence of both
12 reality and perception in this case?
13 A. I've given you one example of perception that was
14 brought out through cross-examination. You utilize consumer
15 perceptions about what is regulated and what isn't.
16 And as to reality, yes, there's been some hard
17 data presented and we do have some facts as to usage levels in
18 reality and as opposed to hypothetically and so forth, so, yes.
19 Q. In your written testimony, can you point me to
20 any place that you point to or cite a survey based -- any
21 survey based research regarding the issue of functional
22 equivalence?
23 A. I'm not aware of any survey research going to
24 that question. I don't consider Dr. Lincoln's research to
25 actually go to that question and I'm not aware of any other
806

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 surveys.
2 Q. And I asked you about in your testimony. Is
3 there anything in your testimony?
4 A. Needless to say, it wouldn't be in my testimony
Page 98
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5 if I wasn't aware of it, so I'm not aware of it and there isn't
6 any in my testimony.
7 Q. Okay. Thank you. Couple of questions about
8 competitive pricing. If you could look at page 32 of your
9 testimony, please?
10 A. Okay.
11 Q. In reading from line 21 on that page: These
12 services typically have different pricing structures which
13 makes it difficult to make an apples to apples comparison
14 between particular wireline services and particular wireless
15 offerings.
16 Did I read that correctly?
17 A. Yes.
18 Q. And that "these services" referenced at the
19 beginning is wireline and wireless?
20 A. Yes.
21 Q. Must two services have identical pricing
22 structures to be price constraining on one another?
23 A. No.
24 Q. Moving ahead to page 34, starting -- rather than
25 clogging up the record with my reading, if you could read to
807

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 yourself page 34, line 21, to page 35, line 15, I'd like to ask
2 you some questions about that.
3 A. Okay.
4 Q. Thank you. As I read that, I summarized it in my
5 mind as follows and I want to see if I got this right: You
6 discuss here the difficulty of evaluating what is competitive
7 pricing or what is competitively priced because each consumer's
8 needs and preferences is unique. Is that a fair summary?
Page 99
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9 A. Say that again.
10 Q. Sure. That you find it difficult to evaluate
11 competitive pricing because each consumer's needs and
12 preferences is unique. Is that at least part of what you said
13 here?
14 A. Maybe, but that's not what jumps out at me as
15 what's going on here.
16 Q. We can ignore this then. Would that be a
17 statement that you would agree with, that --
18 A. One of the difficulties involved in these types
19 of comparisons is how to deal with the heterogeneity of
20 customer usage patterns, and that heterogeneity primarily is a
21 problem due to the technical attributes and pricing structure
22 of the wireless side of the comparison.
23 Q. Is it your testimony then that two services are
24 competitively priced with one another only if every last
25 consumer would find them to be competitively priced?
808

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 A. No, that's not my testimony, but to understand --
2 it is a complex issue. The core problem is well stated by -- I
3 think it was Dr. Lincoln basically said that in his
4 understanding of what needs to be done here -- the page 8, he
5 says, at line 22, the purpose of this Statute -- this is
6 Dr. Lincoln -- is to withhold price deregulation until it is
7 clear that Qwest could not unreasonably raise prices for a
8 captive customer base.
9 And I agree with him in that regard that the
10 focus of the attention needs to go to the ability to raise
11 prices for a captive customer base, and, thus, you cannot
12 simply look at the average and you cannot simply look at the
Page 100
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13 majority. You have to consider whether there is a significant
14 subgroup of customers who would effectively be captive and
15 would lose protection from monopoly power in the event the
16 conclusion were reached that deregulation was appropriate under
17 the Statute.
18 So that's why significant minority pockets or
19 what he calls a captive customer base is an important
20 consideration. You can't simply look at the average or can't
21 simply look at the majority and reach a conclusion of, well,
22 for 70 percent of the customers, they can save money. Well if
23 there's 30 percent who would lose money and would be captive to
24 Qwest because of their characteristics, then there's a serious
25 problem in dealing with the question of deregulation.
809

HEDRICK COURT REPORTING JOHNSON (X)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 Q. So, two services could be competitively priced
2 even if only a segment of the population considered them to be
3 so?
4 A. For some submarkets or markets, there might be
5 competitive pricing taking place where two services might be
6 competitively priced. For other markets, they may not be.
7 Simple example may be high usage customers might find they have
8 no alternative to Qwest wireline service, whereas low use
9 customers might conceivably, under some set of facts, conclude
10 that there's a competitive -- from competitive point of view,
11 they can go look at this other service and not have to pay much
12 more than they pay.
13 Q. So was that "yes," with explanation?
14 A. I can't recall your question was structured in
15 the way it would be "yes" or "no," so I apologize for that.
16 Q. Thank you.
Page 101
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17 MR. SHERR: Believe it or not, I have no further
18 questions at this time.
19 COMMISSIONER KJELLANDER: Mr. Sherr.
20 Let's move now to Mr. Gannon.
21 MR. GANNON: I have no questions.
22 COMMISSIONER KJELLANDER: Thank you, Mr. Gannon.
23 Let's look to members of the Commission. Do you
24 have any questions?
25 COMMISSIONER SMITH: Well, I should, shouldn't I?
810

HEDRICK COURT REPORTING JOHNSON (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 COMMISSIONER KJELLANDER: I believe we're ready
2 to move then to --
3 COMMISSIONER SMITH: I guess I do.
4 COMMISSIONER KJELLANDER: Waited just long
5 enough.
6
7 EXAMINATION
8
9 BY COMMISSIONER SMITH:
10 Q. Dr. Johnson, you were in the hearing room earlier
11 today when I asked some questions of Mr. Hart?
12 A. Yes.
13 Q. I'm trying to recall them now.
14 A. Okay.
15 Q. It was on the pricing issue and the fact that as
16 regards any individual customer, something could look
17 competitive or not.
18 A. Yes.
19 Q. And so how is the Commission, in your mind, to
20 address this issue of the competitively priced part of the
Page 102
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21 Statute?
22 A. I think there's several ways.
23 Q. And you just said we can't use averages or
24 whatever, so what are you supposed to do?
25 A. Well, there's several ways you could look at it.
811

HEDRICK COURT REPORTING JOHNSON (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 One way -- and you might choose to use several things rather
2 than to have to pick one. One way of looking at it would be if
3 the evidence showed that for, say, 97 percent of all customers
4 there is a wireless option that would save them money, and
5 assuming you've dealt with your functional equivalence issues,
6 then you could conclude that by the fact that they could save
7 money, that implies that it's competitively priced. In other
8 words, if it's less, that is sort of a sufficient, although not
9 necessary, condition to reach that conclusion.
10 If you have, on the other hand, a situation where
11 it is significantly less than that where you know you have
12 large pockets of customers for whom there's a problem, then the
13 next issue you'd have to deal with would be or another way of
14 looking at the problem is to test for what is happening in the
15 marketplace, whether Qwest is, in fact, responding to wireless
16 pressures. Are they, for example, now throwing in the various
17 features with local service because they're reacting to the way
18 the wireless industry is structured because there's so much
19 competition going on they're being pressured into conforming
20 their pricing pattern to this rival.
21 We don't see that evidence, but if you did, if it
22 emerged over time, that might suggest a change in facts that
23 they are now being competitively priced. In other words, this
24 term can be thought of in a couple ways. You can think of it
Page 103
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25 from a consumer's point of view, but you can also think of it
812

HEDRICK COURT REPORTING JOHNSON (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 from the provider's point of view. Are they behaving as if
2 this is a competitive price that they have to be aware of and
3 deal with.
4 That's Coke price in reaction to Pepsi and vice
5 versa. Even though there are some customers for whom one
6 flavor or the other is so preferred that they would never
7 switch, there are enough customers, I believe, but arguably the
8 evidence might show, there are enough customers who are willing
9 to swing back and forth that they end up being priced pretty
10 similarly, neither one of which can just go off on its own and
11 decide to charge whatever it feels like. And that if Pepsi is
12 running a lot of promotions of certain -- 12-packs for a
13 certain price, whatever, you'll eventually see Coke doing that
14 too. They won't allow their market shares to shift
15 dramatically over time. They do pay attention to it. So you
16 can potentially have data brought to you showing that that is
17 the way they're behaving.
18 But there would be another key component for this
19 concern about captive customers which is is price
20 discrimination starting to happen; are they finding ways to
21 raise prices or maintain higher prices for, say, very high use
22 customers and only cutting prices for those where the wireless
23 alternative is attractive, in which case, arguably, you do not
24 have effective competition.
25 So, again, two basic choices there. You can look
813

HEDRICK COURT REPORTING JOHNSON (Com)
P. O. BOX 578, BOISE, ID 83701 Staff
 1 at just the raw data, is one cheaper than the other; and the
Page 104
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2 other possibility is looking at behavior in the marketplace.
3 Q. It does occur to me that we can't know your final
4 scenario unless the Commission didn't regulate basic local
5 rates?
6 A. Well, I don't agree with that. There's much
7 opportunity for Qwest to act as if it were subjected to
8 competitive pressures under the current environment.
9 Q. That's true.
10 A. Whether it is is another question, but for
11 example, you have six and above. Are they reacting in that
12 market already?
13 Similarly, they can do advice filings. They
14 could submit to you a request to raise one price and lower
15 another and have their reason why they felt they needed to in
16 response to competition. You might allow it. If you did allow
17 it, then you would see what happened in the marketplace.
18 So there are opportunities well short of this. I
19 think that this is sort of the final step in the road when you
20 completely deregulate basic local.
21 COMMISSIONER SMITH: Thank you, Mr. Chairman.
22 COMMISSIONER KJELLANDER: Move now to redirect.
23 MR. STUTZMAN: I have no questions, Mr. Chairman.
24 COMMISSIONER KJELLANDER: Thank you.
25 Mr. Johnson, we appreciate your testimony and
814

HEDRICK COURT REPORTING SCHMIT (Com)
P. O. BOX 578, BOISE, ID 83701 Qwest
 1 presence here.
2 THE WITNESS: Thank you.
3 COMMISSIONER KJELLANDER: And as we mentioned
4 when we came back from lunch, the Commission would like to
5 recall Mr. Jim Schmit.
Page 105
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6 And, Mr. Schmit, we'll let Mr. Johnson leave
7 first so there's no conflict up in the box. And just as a
8 reminder, you've already been sworn in, so we don't have to go
9 through that again.
10 (The witness left the stand.)
11
12 JAMES M. SCHMIT,
13 recalled as a witness at the instance of Qwest Corporation,
14 being previously duly sworn, resumed the stand and was further
15 examined and testified as follows:
16
17 COMMISSIONER KJELLANDER: Are you set or as set
18 as you think you are?
19 THE WITNESS: Yes.
20 COMMISSIONER KJELLANDER: All right. Are there
21 questions from members of the Commission? Commissioner Hansen.
22
23
24
25
815

HEDRICK COURT REPORTING SCHMIT (Com)
P. O. BOX 578, BOISE, ID 83701 Qwest
 1 EXAMINATION
2
3 BY COMMISSIONER HANSEN:
4 Q. Well, I wanted to give you the opportunity to
5 have the last say.
6 A. I appreciate that.
7 Q. Well, earlier, I failed to ask when you were on
8 the stand does Qwest believe that effective competition in
Page 106
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9 Idaho from wireless exists only in the seven exchanges in which
10 you seek price deregulation?
11 A. I can tell you, Mr. Hansen, Commissioner Hansen,
12 that I have only evaluated that from the standpoint of the
13 seven exchanges.
14 Q. Why didn't you look at your entire -- all of your
15 exchanges and if this is good for, in your mind for seven, why
16 isn't it good for all your exchanges?
17 A. I think that's a good question. We spent a lot
18 of time thinking about how we brought this case forward. The
19 simple answer is there is nothing magical about limiting it to
20 these seven. But the more complex answer is there were a
21 number of factors that went into that decision.
22 First of all, these seven are our largest
23 exchanges. They are the seven exchanges in Idaho that have
24 20,000 or more access lines. They have been heavily targeted
25 by wireless providers. In no case is there less than six
816

HEDRICK COURT REPORTING SCHMIT (Com)
P. O. BOX 578, BOISE, ID 83701 Qwest
 1 wireless providers; and I'm not suggesting it takes six to be
2 effective, but we felt like the presence of six was
3 substantial.
4 It's also true that I believe these seven
5 exchanges represent all of our wire centers that are in zone
6 one for purposes of unbundled loops whose prices have been
7 deaveraged, so we felt that that provides an addition to
8 wireless competitors, an additional regulator on our ability to
9 change prices in a competitive marketplace.
10 And then, finally, I really -- what I did, not
11 having been here when you did the Burley case, is I went back
12 to the Burley case and looked at the Commission's Order, the
Page 107
60503V~1.txt
13 Commission's Decision in that case, as well as the Staff's
14 testimony, and tried to use that as a road map for what the
15 next logical step was in how we should proceed and whether or
16 not we should ask for the whole state or seven exchanges or one
17 or something in between. And there were some significant --
18 what I thought significant -- guideposts to us in that Decision
19 and in the Staff's testimony.
20 For example, the Commission determined that a
21 market share test was not required. Staff said, in fact, that
22 it was the percentage of customers that had a choice that was
23 the single most important factor for the Commission to
24 consider.
25 In the case of six wireless competitors
817

HEDRICK COURT REPORTING SCHMIT (Com)
P. O. BOX 578, BOISE, ID 83701 Qwest
 1 essentially blanketing all seven of these exchanges, felt like
2 we had a good match.
3 And, finally, the issues we've heard over
4 functionally equivalent, well, I recognize we ultimately backed
5 away from our wireless advocacy in Burley. The Commission
6 Staff raised none of the functional equivalency issues that
7 have been raised in this case with regard to wireless. In
8 fact, they essentially agreed with our definition of "basic
9 local exchange service," with the exception of enhanced 9-1-1.
10 So I felt like the combination of all of those
11 factors together, limiting this to seven exchanges was putting
12 forth a very reasonable, straightforward case for this
13 Commission to be able to make what I felt would be a fairly
14 simple Decision.
15 Q. Do you think that customers in these seven
16 exchanges would benefit from deregulation?
Page 108
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17 A. I do.
18 Q. Then let's just take an example. What's the
19 difference between the Pocatello exchange and the Blackfoot
20 exchange? They're communities that are close together.
21 Blackfoot's fairly large, it's probably just a little under
22 20,000 population or in that neighborhood. If they see their
23 neighbors all of a sudden see an advantage in the
24 telecommunication business, they're going to be asking why they
25 weren't included. What would you say?
818

HEDRICK COURT REPORTING SCHMIT (Com)
P. O. BOX 578, BOISE, ID 83701 Qwest
 1 A. Commissioner, if you were to Order us to
2 deregulate these seven exchanges plus Blackfoot, I wouldn't
3 object, but I know that wasn't the answer you were looking for.
4 You've actually asked the exact same question
5 that was asked by one of the few participants in the public
6 workshops, and that was in Pocatello. This happened to be a
7 City Councilman from Firth asked why not -- why not the whole
8 state.
9 We had to start somewhere. I did not feel like
10 this Commission would be ready to look at a Petition to
11 deregulate the entire state. I had to cut it off somewhere.
12 And because of the above reasons that I mentioned, this seemed
13 like a logical cutoff point.
14 Q. Maybe I missed the first, but just to go back,
15 then are you saying that you're not sure that effective
16 competition exists throughout all your exchanges in the state
17 from wireless competition, or are you saying it does?
18 A. I am saying I have not looked at the specific
19 question, the specific presence of wireless competition, beyond
20 these exchanges.
Page 109
60503V~1.txt
21 Q. Okay. Thank you.
22 COMMISSIONER HANSEN: That's all I have.
23 COMMISSIONER KJELLANDER: Commissioner Smith.
24 COMMISSIONER SMITH: Thank you.
25
819

HEDRICK COURT REPORTING SCHMIT (Com)
P. O. BOX 578, BOISE, ID 83701 Qwest
 1 EXAMINATION
2
3 BY COMMISSIONER SMITH:
4 Q. Just one following up: As you explained the
5 lessons that you thought came from the Burley case and in
6 looking at the Statute, there are actually two different ways
7 an incumbent can seek approval for what you're doing, and one
8 is that actual competition from a facilities-based competitor,
9 which is what the Burley case was. And this, to me, is totally
10 different. I mean, "functionally equivalent" wouldn't have
11 even come up in that case because that's in the second test,
12 which is where we're at today. So I think maybe that might
13 explain why some of the things that were in the Burley Order or
14 weren't in the Burley Order are here.
15 A. I understand some of what I mentioned is the
16 guidepost for the Order.
17 Q. Right.
18 A. Other of what I mentioned was in Staff's
19 testimony. And in the Burley case, we actually filed, as I
20 understand it because I was not here at the time, both under A
21 with the overbuild that Project Mutual was doing, and B with
22 the presence of wireless competition, and in fact, Staff
23 addressed wireless competition in their testimony. That's what
24 I was referring to.
Page 110
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25 Q. Right. I guess my recollection is that somewhere
820

HEDRICK COURT REPORTING COLLOQUY
P. O. BOX 578, BOISE, ID 83701
 1 Q. along the line, if wireless was ever there, it
2 dropped off fairly quickly and wasn't part of what the
3 Commission decided.
4 A. I believe that is true, but it was addressed by
5 Staff in their direct testimony.
6 COMMISSIONER KJELLANDER: Are there further
7 questions?
8 If not, have an opportunity for redirect.
9 MS. HOBSON: No redirect, thank you.
10 COMMISSIONER KJELLANDER: Okay. Thank you.
11 Well, Mr. Schmit, I believe that we are finally
12 done.
13 THE WITNESS: Thank you.
14 COMMISSIONER KJELLANDER: I promise not to call
15 you back again this afternoon.
16 THE WITNESS: You have my cell phone number.
17 COMMISSIONER KJELLANDER: No, I don't.
18 (The witness left the stand.)
19 COMMISSIONER KJELLANDER: Okay, I believe that
20 exhausts our witness list for today. And are there any other
21 matters that need to come before the Commission before we
22 adjourn this hearing?
23 MR. GANNON: Mr. Chair, I just have a complete of
24 Exhibit 211.
25 COMMISSIONER KJELLANDER: It included all four
821

HEDRICK COURT REPORTING COLLOQUY
P. O. BOX 578, BOISE, ID 83701
Page 111
60503V~1.txt
 1 pages?
2 MR. GANNON: Yes. It actually has five, five
3 pages.
4 COMMISSIONER KJELLANDER: All right. And those
5 have been distributed to the appropriate parties?
6 MR. GANNON: Correct.
7 COMMISSIONER KJELLANDER: Okay. Good.
8 MS. HOBSON: Mr. Chairman, Qwest would like the
9 opportunity to Brief this case.
10 COMMISSIONER KJELLANDER: Is there any objection
11 to Briefs?
12 MR. STUTZMAN: Well, Mr. Chairman, I guess I
13 won't object. I will note that the primary legal issue has
14 significantly been Briefed, but with that said, we have no
15 objection to Briefs.
16 COMMISSIONER KJELLANDER: Okay. Probably should
17 establish some kind of time line for these Briefs, shouldn't
18 we? 2004?
19 MS. HOBSON: What Qwest would like to suggest is
20 that when the transcript is completed, that the parties have
21 two additional weeks following that to file Briefs. And what
22 we think would work best, unless Staff is willing to agree not
23 to respond -- or Mr. Gannon, for that matter -- what we think
24 would work best is to have two simultaneous rounds so that all
25 issues are met.
822

HEDRICK COURT REPORTING COLLOQUY
P. O. BOX 578, BOISE, ID 83701
 1 COMMISSIONER KJELLANDER: Two simultaneous
2 rounds? Two separate, simultaneous rounds?
3 MS. HOBSON: Yes, so that all parties file a
4 Brief in the first round, and then all parties respond to each
Page 112
60503V~1.txt
5 other in a rebuttal round.
6 COMMISSIONER KJELLANDER: Okay. Now, the only
7 thing that I would like to state as Chair in terms of the time
8 line, I know that occasionally we get accused of regulatory
9 lag, and I would just like to point out that it's not Staff in
10 this instance that's seeking the Posthearing Briefs and the two
11 simultaneous rounds and waiting for this material to arrive.
12 So should that ever become an issue in some future proceeding,
13 please note that this was not at our request.
14 I feel better now.
15 MS. HOBSON: Good.
16 COMMISSIONER KJELLANDER: Okay. Is there
17 anything else that needs to come before us?
18 And the parties will arrange what they consider
19 to be the dates then. You'll get together once the transcript
20 is in to figure out what that second simultaneous brief filing
21 will be?
22 MR. STUTZMAN: Yes, Mr. Chairman. Perhaps what
23 we can do, because I'm not sure I'm entirely comfortable with
24 just the two weeks following the transcript, maybe we can work
25 it out amongst ourselves and apprise the Commission of the
823

HEDRICK COURT REPORTING COLLOQUY
P. O. BOX 578, BOISE, ID 83701
 1 filing dates.
2 COMMISSIONER KJELLANDER: So then you'll come to
3 some Agreement or Stipulation then with regards to those
4 filings and submit that to the Commission?
5 MS. HOBSON: All right. Thank you, Mr. Chairman.
6 COMMISSIONER KJELLANDER: Okay. Great.
7 Is there anything else that needs to come before
8 the Commission?
Page 113
60503V~1.txt
9 If not, then I appreciate all the parties'
10 patience and willingness to keep many of their comments brief.
11 I realize this could have extended into a very lengthy period
12 of time. The fact that we were done by two o'clock on the
13 second day actually does surprise me, and so I do appreciate
14 everybody's willingness to move this thing forward. I know I
15 had a bet with you we'd be done by noon yesterday; I was overly
16 optimistic. Things seem to have moved forward and we
17 appreciate the effort put into developing the record.
18 Since there is nothing further to come before the
19 Commission, we are adjourned.
20 (The hearing adjourned at 2:00 p.m.)
21
22
23
24
25
824

HEDRICK COURT REPORTING AUTHENTICATION
P. O. BOX 578, BOISE, ID 83701
 1 AUTHENTICATION
2
3
4 This is to certify that the foregoing is a
5 true and correct transcript to the best of my ability of the
6 proceedings held in the matter of the Application of Qwest
7 Corporation for deregulation of basic local exchange rates in
8 its Boise, Nampa, Caldwell, Meridian, Twin Falls, Idaho Falls,
9 and Pocatello exchanges, Case No. QWE-T-02-25, commencing on
10 Wednesday and Thursday, June 4 and 5, 2003, at the Commission
11 Hearing Room, 472 West Washington, Boise, Idaho, and the
12 original thereof for the file of the Commission.
Page 114
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13 Accuracy of all prefiled testimony as
14 originally submitted to this Reporter and incorporated herein
15 at the direction of the Commission is the sole responsibility
16 of the submitting parties.
17

18

19 ___________________________________________
WENDY J. MURRAY, Notary Public
20 in and for the State of Idaho,
residing at Meridian, Idaho.
21 My Commission expires 2-5-2008.
Idaho CSR No. 475
22

23
24
25
825

HEDRICK COURT REPORTING AUTHENTICATION
P. O. BOX 578, BOISE, ID 83701
Page 115