COMMISSION In the Matter of the Pricing ) Proceeding for Interconnection, )DOCKET NO. UT-960369 Unbundled Elements, Transport and ) Termination, and Resale ) -----------------------------------) ) In the Matter of the Pricing ) Proceeding for Interconnection, )DOCKET NO. UT-960370 Unbundled Elements, Transport and ) Termination, and Resale for ) U S WEST COMMUNICATIONS, INC. ) -----------------------------------) ) In the Matter of the Pricing ) Proceeding for Interconnection, )DOCKET NO. UT-960371 Unbundled Elements, Transport and ) Termination, and Resale for ) VOLUME 9 GTE NORTHWEST INCORPORATED ) Pages 209 - 226 -----------------------------------) A pre-hearing conference in the above matter was held at 9:10 a.m. on July 8, 1997, at 1300 South Evergreen Park Drive Southwest, Olympia, Washington before Administrative Law Judge TERRENCE STAPLETON. The parties were present as follows: GTE NORTHWEST INCORPORATED by RICHARD E. POTTER, Associate General Counsel, 1800 41st Street, (5LE) Everett, Washington 98201 and JOHN WILLIAMS, MARK AUSTRIAN, and BRIAN FARLEY, Attorneys at Law, 3050 K Street NW, Suite 400, Washington D.C. Cheryl Macdonald, CSR Court Reporter APPEARANCES (Cont'd.) SPRINT COMMUNICATIONS COMPANY, L.P., by CAROL MATCHETT, Attorney at Law, 1850 Gateway Drive, Seventh Floor, San Mateo, California 94404-2467. U S WEST COMMUNICATIONS, INC., by EDWARD SHAW and LISA ANDERL, Attorneys at Law, 1600 Bell Plaza, Room 3206, Seattle, Washington 98191 and JOHN M. DEVANEY, Attorney at Law, 607 14th Street NW, Suite 800, Washington, D.C. 20005-2011. AT&T COMMUNICATIONS, by DANIEL WAGGONER, Attorney at Law, 2600 Century Square, 1501 Fourth Avenue, Seattle, Washington 98101 and SUSAN D. PROCTOR, Attorney at Law, 1875 Lawrence Street, Suite 1575, Denver, Colorado, 80202. MCI COMMUNICATIONS and MCImetro, by BROOKS HARLOW, Attorney at Law, 4400 Two Union Square, 601 Union Street, Seattle, Washington 98101 and ROBERT W. NICHOLS, Attorney at Law, 2600 Broadway, Suite 200, Boulder, Colorado 80302. FRONTIER TELEMANAGEMENT and SHARED COMMUNICATION SERVICE, INC., by SARA SIEGLER MILLER, (via bridge), Attorney at Law, 2000 NE 42nd, Suite 154, Portland, Oregon 97213. UNITED TELEPHONE COMPANY OF THE NORTHWEST and SPRINT CORPORATION, by SETH LUBIN, General Counsel/Secretary, 902 Wasco Street, Hood River, Oregon 97031. WITA, by RICHARD A. FINNIGAN, Attorney at Law, 2405 Evergreen Park Drive SW, Suite B-1, Olympia, Washington 98501. TRACER, by ARTHUR A. BUTLER, Attorney at Law, 601 Union Street, Suite 5450, Seattle, Washington 98101-2327. THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION STAFF, by GREGORY J. TRAUTMAN and SHANNON E. SMITH, Assistant Attorneys General, 1400 South Evergreen Park Drive Southwest, Olympia, Washington 98504-0128. APPEARANCES (Cont'd.) FOR THE PUBLIC, ROBERT MANIFOLD, Assistant Attorney General, 900 Fourth Avenue, Suite 2000, Seattle, Washington 98164. P R O C E E D I N G S JUDGE STAPLETON: Let's be on the record. This is a pre-hearing conference in the matter of the pricing proceeding for interconnection, unbundled elements, transport and termination and resale in docket Nos. UT-960369, 960370, 960371. Today's date is Tuesday, July 8, 1997. We are convened in Olympia, Washington before Administrative Law Judge Terrence Stapleton. We have marked final testimony in anticipation of the first panel witnesses to appear, and those exhibit numbers will be read into the record when we convene for evidentiary proceedings. At this point in time, are there any procedural matters that the parties wish to raise before we take a recess prior to coming back and beginning the evidentiary phase of this proceeding? Mr. Nichols. MR. NICHOLS: We do have one preliminary matter. We mentioned it in the pre-hearing conference, and that is the status of the oral deposition of Mark Wingate. That is a part of what U S WEST has labeled as Exhibit C-3. For the record, MCI has no objection to the use of or the admission of the first part of C-3 which are the data responses of MCI. We do have an objection to use of the oral deposition of Mr. Wingate, and if I might state what those reasons briefly now are. JUDGE STAPLETON: Please. MR. NICHOLS: There's several grounds for that. They depend on a few preliminary facts. First of all, Mr. Wingate is not a witness in this proceeding. He is a nonwitness deponent. U S WEST had the opportunity to subpoena him as a witness, but chose not to do so. This deposition initially MCI objected to. The Commission ordered that it go forward with certain limitations and without ruling on its eventual admissibility as evidence in the hearing. The deposition was delayed several times through no fault of either party. There was a family emergency in GTE's attorneys's situation one time, and at any rate the deposition was not taken until the 26th of June. The final preliminary matter is that the parties agreed, the attorneys agreed on the record in the deposition that the deponent would have the ability to sign the document, and I believe under relevant Washington rules he has 30 days to do so. Mr. Wingate has not reviewed this material, and has not signed the deposition, so my first ground for denial of use of this deposition is that it is not yet -- they have not followed the rules. I'm not going to stand on that somewhat technical ground, but move on to a suggested solution to my problem. Let me explain the problem first briefly. The problem is this. The entire matter is of questionable relevance to this hearing in that the deposition pursued individual information about costs, et cetera, of MCI's construction activities in Washington state. These construction activities have to do with two SONET rings and transport between that, which were originally constructed as a part of MCI's cap service but not its local service but now it's used as local service. That's very different than what the Hatfield model is modeling. Hatfield model is modeling long-range forward-looking costs of construction of the U S WEST or GTE or other incumbent carriers in construction activities. So we begin with questionable relevance. Second, there's potential real problem with the use of this procedure, I feel. And this procedure is the use of known party depositions without calling a witness, and I am in particular concerned with one of the attachments to this deposition which is a list of numbers, and I think it's attachment 2. It's a list of numbers with a number of feet and a number of -- and a dollar figure associated and some averages. The deposition was not -- did not explore exactly what those numbers mean. If those numbers come into this record they will be various and sundry unexplained matters of cost and construction activity which originally had not much to do with this hearing at all, but because we don't have a witness here to put that in context it's really quite highly prejudicial. The witnesses that this is apparently attempted to be brought in with have not seen this deposition. I barely had a chance to read it before we had the hearing here. So that brings me to my proposed solution. I don't have a problem, because I don't want to belabor this, in putting in depositions like this, putting in this deposition as it exists, waiving my concerns as long as we don't cross-examine witnesses with it. We can brief the issues. U S WEST can pull whatever they want out of this deposition. I will have the opportunity to pull whatever I want out of the deposition, and the record is what the record is. Otherwise, I will object to its use as the way that AT&T tells me that it's going to use it, which is that they're going to examine Dr. Cornell and other people -- I'm sorry, U S WEST is going to use it. They're going to examine these witnesses in the first panel who don't know anything about this, have said repeatedly that the costs that MCI obtains to build its much smaller network, some five miles actually constructed by MCI over the past three years, is of no relevance to what the Hatfield model does and takes us off into this potentially long-winded discussion about irrelevant material that I don't have any witness here to put in context, and that's not my fault. U S WEST has chosen not to call the witness. If U S WEST wanted to explore this kind of material they should have called this person as a witness. So I will dodge the concerns by just putting it in at the end if we don't belabor this record by cross-examination on it. Otherwise I object on relevancy and on fairness grounds. JUDGE STAPLETON: Ms. Anderl. MS. ANDERL: Thank you, Your Honor. A couple of things here. One is I think we need to consider this deposition for what it is, which is essentially a response to the eight or ten or twelve data requests that we propounded back in April. MCI stiffed us on those data responses and said you're going to depose our witness, get the answers there. Now, clearly these data request responses would be admissible if MCI had deigned to answer them. They didn't. They said, see the deposition. We said, fine, we'll see the deposition and we did and we attached it now as part and parcel of the data request responses. I think it's totally appropriate to come in that way, and in fact we are continuing to pursue with MCI additional data request responses wherein they promised that they would supplement those responses if in fact all the answers were not forthcoming in the deposition, and all of them were not forthcoming. I think the issues that Mr. Nichols raises are maybe twofold. One is the question of relevance and the other is the question of the nonwitness deponent. With regard to relevance I think that that is the issue that was argued back in April when we moved to compel the deposition and MCI objected to that. U S WEST prevailed and was allowed to take the deposition. I believe that the question of whether or not this information was going to have any bearing on this proceeding was resolved then. If nothing else the deposition is relevant insofar as it has impeachment value with regard to what the MCI and AT&T witnesses say are the forward-looking least cost practices and expenses that are incurred in placing a network for local service. I think you have a couple of witnesses for AT&T and MCI who say, you know, the Hatfield model is supposed to model the forward-looking least cost costs even of a new entrant, that no new entrant would incur costs greater than U S WEST would incur. They would find a cheaper way to do it. To the extent that Hatfield's -- I'm sorry -- MCI's witness indicates that his practice in real life in placing a network in a competitive industry has been different from what Hatfield models, that's certainly valuable for impeachment purposes. I suppose we could have attempted to call Mr. Wingate and subpoena him. I was told by MCI's local counsel that they would not comply with such a subpoena since Mr. Wingate was out of state, and the subpoena powers, of course, are only going to extend within the borders of the state. Further, U S WEST had already asked for leave to add additional witnesses and had been denied that request. I certainly didn't think that there was any avenue for me to actually call Mr. Wingate as a witness. Finally, with regard to the delay, we had originally scheduled this deposition for June 11. We would be only one or two days short of the 30 days had we taken that deposition then. That was moved off of June 11 at the request of MCI's counsel. We didn't have any problem with that. We still don't have any problem with that. The deposition has been out there and taken for almost two weeks. If MCI did not request an expedited transcript and distribute that to its witnesses in this proceeding as something that might have some bearing for them, that really shouldn't be my problem and is certainly not grounds to keep it out. Thank you. MR. WAGGONER: Your Honor, if I might be heard before Mr. Nichols since there's a somewhat related issue that will be arising and I thought I would just get it all in front of you. We took the deposition of two construction managers for U S WEST, a Ms., I think, Severich and a Mr. Goff, and we're happy with those depositions just to place them in the record as Mr. Nichols had indicated. I believe U S WEST has essentially -- their position is that they would not stipulate to the admissibility of those depositions of their in state employees as long as MCI does not similarly stipulate, so that's kind of the related nature of this issue. As to these two witnesses, they are the two state construction managers of U S WEST. They are in state employees. They were depositions taken pursuant to notification to U S WEST that they should designate an employee with responsibility for construction in the state. So we believe that they are highly relevant, and that admitting them into the record will advance quickly this Commission's inquiry. Thank you. JUDGE STAPLETON: Ms. Anderl, would you like to address that as well, please. MS. ANDERL: Only to add that in fact the MCI deposition was exactly the same thing, the request that the company designate somebody with in state -- local network construction knowledge. JUDGE STAPLETON: Can you describe for me what Exhibit 2 to the deposition is, where this document came from. MS. ANDERL: I'm sorry. That was a document -- and maybe Mr. Devaney might speak to that a little more because he was actually present at the deposition. Apparently, as I understand, it was a document brought by the deponent with him to the deposition with his notes on it, and when we learned that he was referring to it to respond to questions, we asked that it be made a deposition exhibit. MR. DEVANEY: Your Honor, the data requests that led to the deposition specifically asked for MCI to provide information on placement costs, and in preparation for the deposition the deponent, Mr. Wingate, conducted some research of placement costs here in Washington, and as he was testifying in the deposition he had in front of him his notes indicating MCI's placement costs in putting this plant into place here in Washington, and therefore I had it marked as an exhibit during the deposition, and in fact did ask him some questions about it. And I guess one point of clarification. To the extent that MCI did not question Mr. Wingate about those notes, they certainly could have done so. I did so to the extent I thought was appropriate for U S WEST's interests. If MCI had desired to add more to the context of those notes it had every opportunity to do so during the deposition. JUDGE STAPLETON: Did you wish to add anything? MR. NICHOLS: Very brief response. First of all, I won't add any further discussion of the unnecessary use of the word "stiffed" and a few other unprofessional characterizations of what went on here, but I do note it. Second, with regard to whether this is really continuation of document requests, I think that the data requests speak for themselves, and you will notice that the ones, two and three, which they claim still are of particular concern to them, are asking for the identification of all independent contractors used by MCI, and that's where MCI said, well, if you take a deposition and get that information you get the information. We're not saying that it's relevant to this hearing. And in fact they took the deposition and there wasn't any information on those two topics, so this is really not a continuation. To the extent it's a continuation, it's a continuation that didn't lead anywhere. But I'm not trying to be technical about this. There's a very confusing piece -- one particular confusing piece of information which is this deposition Exhibit No. 2. It's got all kind of numbers on it that were only briefly discussed in the deposition at all, that were the notes of the witness, and I can tell you my estimate of what's going to happen in cross-examination today if you allow this to be used in cross, this particular part, and that is an attempted impeachment of Hatfield people on some of these numbers which there's no context for those numbers. There's no explanation of what average costs actually are averaging, and the record will be extremely confusing. I think the simplest way is to put in the deposition, even including this at the end. Otherwise I would like to have particularly the deposition Exhibit 2 not included. Finally, of course, the argument over whether to have a deposition is not the same argument as to whether or not it's appropriate to be entered into the record. Despite the fact that everybody is handing out everything in the kitchen sink there is a difference between discovery and hearing. No further comment. MR. DEVANEY: Your Honor, can I respond briefly to this Exhibit 2? I will do it very quickly. The numbers to which counsel is referring, I specifically took Mr. Wingate through each of those numbers and asked him to explain them, so I'm slightly perplexed at the suggestion that these numbers were not explained during the deposition. In fact, I specifically questioned about them and Mr. Wingate explained them. JUDGE STAPLETON: On the record during the deposition? MR. DEVANEY: Yes. MR. NICHOLS: And that's fine. I don't object to the part of the deposition in which he did that. JUDGE STAPLETON: All right. I'm going to rule that the company may not use this deposition for cross of the witnesses on the Hatfield model. The Commission has resolved the question of whether or not this is relevant. We had oral argument here in this room on whether or not this information is relevant. It will come into the record but in terms of using these numbers to impeach Hatfield witnesses or to cross Hatfield witnesses does not seem to me to be productive, and it seems to me to in fact confound not only the witnesses but the bench in dealing with the cross-examination of the prefiled testimony that was submitted by the witnesses who are going to appear here today. So I don't find that this will add anything to the record. I don't think it will be relevant to get into the issues, the numbers, et cetera, that appear in the deposition with the witnesses who are not -- perhaps have not even read the deposition. So I am going to rule that it will not be used for the purposes of crossing any of the witnesses who will appear next on the Hatfield model. MS. ANDERL: But it is admitted, Your Honor? JUDGE STAPLETON: It will be admitted. (Admitted Exhibit C-3.) MR. DEVANEY: Your Honor, can I ask a clarifying question? You spoke of the numbers in the deposition. There are statements in this deposition about MCI's construction practices, what they -- JUDGE STAPLETON: I think the deposition will go in for the purpose which the Commission wanted that information taken. The deposition represents that, the Commission's determination that this kind of information ought to properly be before the Commission. The Commission can put whatever weight it needs to it, can make a decision on its own about whether or not it conflicts with the way the Hatfield model proponents are constructing their cost studies and we will use it for that purpose. MR. DEVANEY: Thank you. JUDGE STAPLETON: Do we need to resolve -- is there still an outstanding issue on the depositions of the two construction people? MR. WAGGONER: I would certainly propose to employ the same technique as to those depositions unless U S WEST has an objection. JUDGE STAPLETON: Can we put those depositions into the record, please. MS. ANDERL: Yes. I wasn't aware that we were discussing those at this moment except that Mr. Waggoner had wanted to raise it as a potential issue. JUDGE STAPLETON: Where do those come up in the proceeding? MR. WAGGONER: They will come up with regard to U S WEST's cost model. JUDGE STAPLETON: Let's bring it up at that time, please. Let's take a ten minute break and then come back and be prepared to go on the record, please. (Pre-hearing adjourned at 9:30 a.m.)