02397 1 BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION 2 COMMISSION 3 In the Matter of the Pricing ) Proceeding for Interconnection, )DOCKET NO. UT-960369 4 Unbundled Elements, Transport and ) Termination, and Resale ) 5 -----------------------------------) ) 6 In the Matter of the Pricing ) Proceeding for Interconnection, )DOCKET NO. UT-960370 7 Unbundled Elements, Transport and ) Termination, and Resale for ) 8 U S WEST COMMUNICATIONS, INC. ) -----------------------------------) 9 ) In the Matter of the Pricing ) 10 Proceeding for Interconnection, )DOCKET NO. UT-960371 Unbundled Elements, Transport and ) 11 Termination, and Resale for ) VOLUME 18 GTE NORTHWEST INCORPORATED ) Pages 2397 - 2847 12 -----------------------------------) 13 14 A hearing in the above matter was held at 15 8:00 a.m. on July 18, 1997, at 1300 South Evergreen 16 Park Drive Southwest, Olympia, Washington before 17 Chairman SHARON L. NELSON, Commissioners RICHARD 18 HEMSTAD and WILLIAM R. GILLIS and Administrative Law 19 Judge TERRENCE STAPLETON. Also present was the 20 Commission's economic advisor DAVID GABEL. 21 22 23 24 Cheryl Macdonald, CSR 25 Court Reporter 02398 1 The parties were present as follows: 2 GTE NORTHWEST INCORPORATED by RICHARD E. POTTER, Associate General Counsel, 1800 41st Street, 3 (5LE) Everett, Washington 98201 and JOHN WILLIAMS, MARK AUSTRIAN, and BRIAN FARLEY, Attorneys at Law, 4 3050 K Street NW, Suite 400, Washington D.C.. 5 U S WEST COMMUNICATIONS, INC., by EDWARD SHAW and LISA ANDERL, Attorneys at Law, 1600 Bell 6 Plaza, Room 3206, Seattle, Washington 98191 and JOHN M. DEVANEY, Attorney at Law, 607 14th Street NW, Suite 7 800, Washington, D.C. 20005-2011. 8 AT&T COMMUNICATIONS, by DANIEL WAGGONER and MARY E. STEELE, Attorneys at Law, 2600 Century 9 Square, 1501 Fourth Avenue, Seattle, Washington 98101 and SUSAN D. PROCTOR, Attorney at Law, 1875 Lawrence 10 Street, Suite 1575, Denver, Colorado, 80202. 11 MCI COMMUNICATIONS and MCImetro, by BROOKS HARLOW, Attorney at Law, 4400 Two Union 12 Square, 601 Union Street, Seattle, Washington 98101 and ROBERT W. NICHOLS, Attorney at Law, 2600 Broadway, 13 Suite 200, Boulder, Colorado 80302. 14 FRONTIER TELEMANAGEMENT and SHARED COMMUNICATION SERVICE, INC., by SARA SIEGLER MILLER, 15 (via bridge), Attorney at Law, 2000 NE 42nd, Suite 154, Portland, Oregon 97213. 16 UNITED TELEPHONE COMPANY OF THE NORTHWEST 17 and SPRINT CORPORATION, by SETH LUBIN, General Counsel/Secretary, 902 Wasco Street, Hood River, 18 Oregon 97031. 19 WITA, by RICHARD A. FINNIGAN, Attorney at Law, 2405 Evergreen Park Drive SW, Suite B-1, Olympia, 20 Washington 98501. 21 TRACER, by ARTHUR A. BUTLER, Attorney at Law, 601 Union Street, Suite 5450, Seattle, Washington 22 98101-2327. 23 24 25 02399 1 APPEARANCES (Cont'd.) 2 THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION STAFF, by GREGORY J. 3 TRAUTMAN and SHANNON E. SMITH, Assistant Attorneys General, 1400 South Evergreen Park Drive Southwest, 4 Olympia, Washington 98504-0128. 5 FOR THE PUBLIC, ROBERT MANIFOLD, Assistant Attorney General, 900 Fourth Avenue, Suite 2000, 6 Seattle, Washington 98164. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 02400 1 I N D E X 2 WITNESSES: D C RD RC EX 3 ZEPP 2402 2403 2531 2543 2526 4 2405 2546 2530 2520 2551 2541 5 2524 6 DITIRRO 2558 2559 2585 2590 2582 7 DODDS 2587 2588 2718 2725 2715 2596 2726 8 2601 2603 9 2655 2703 10 EACHUS 2729 2730 2762 11 2742 2745 12 2758 13 VITZTHUM 2774 2780 14 FREYE/GUDE 2782 2784 2831 2788 15 2798 2818 16 EXHIBITS: MARKED ADMITTED 17 162 2402 2553 18 163 2402 2553 164 2558 2559 19 165 2558 2559 166 2558 2582 20 167 2558 2588 168 2558 2588 21 169 2558 2588 170 2558 2727 22 171 2558 2727 172 2558 2641 23 173 2558 2641 174 2558 2728 24 175 2558 2728 25 02401 1 I N D E X (Cont'd.) 2 EXHIBITS: MARKED ADMITTED 3 176 2558 2728 177 2558 2728 4 178 2558 2728 179 2558 2728 5 180 2558 2728 181 2558 2728 6 182 2558 2771 183 2558 2771 7 184 2558 2771 185 2558 2772 8 186 2558 2772 187 2558 2772 9 188 2558 2772 189 2558 2772 10 190 2558 2772 191 2558 2772 11 192 2558 2772 193 2558 2773 12 194 2558 2773 195 2558 2782 13 196 2558 2782 197 2558 2783 14 198 2558 2783 199 2558 2783 15 200 2558 2783 201 2558 2793 16 202 2558 2793 203 2558 2793 17 204 2846 2846 18 19 20 21 22 23 24 25 02402 1 P R O C E E D I N G S 2 JUDGE STAPLETON: Let's be on the record. 3 Today's date is July 18, 1997. We're convened in 4 Olympia, Washington for a continuation of the pricing 5 proceeding in docket Nos. UT-960369, 960370, and 6 960371. At this time we'll swear the next witness. 7 Whereupon, 8 THOMAS ZEPP 9 having been first duly sworn, was called as a witness 10 herein and was examined and testified as follows: 11 JUDGE STAPLETON: Ms. Proctor, I have 12 marked for identification as Exhibit 162 the direct 13 testimony of Dr. Thomas Zepp dated March 28, 1997 and 14 as Exhibit 163 the rebuttal testimony of Dr. Zepp 15 dated April 25, 1997. 16 MS. PROCTOR: Thank you, Your Honor. 17 (Marked Exhibits 162 and 163.) 18 19 DIRECT EXAMINATION 20 BY MS. PROCTOR: 21 Q. Will you please state your name and address 22 for the record. 23 A. My name is Thomas M. Zepp. My address is 24 1500 Liberty Street Southeast, Salem, Oregon. 25 Q. And you're appearing on behalf of AT&T and 02403 1 MCI today; is that correct? 2 A. Yes. 3 MS. PROCTOR: Your Honor, you've marked as 4 exhibits the direct and rebuttal testimony of Dr. 5 Zepp, the direct testimony being Exhibit 162, and the 6 rebuttal testimony being Exhibit 163. We will make 7 Dr. Zepp available for cross-examination. 8 JUDGE STAPLETON: Thank you. Commission 9 staff, questions for the witness? 10 MS. SMITH: No. 11 JUDGE STAPLETON: Mr. Manifold, questions 12 for the witness? 13 MR. MANIFOLD: Just a couple. 14 15 CROSS-EXAMINATION 16 BY MR. MANIFOLD: 17 Q. Dr. Zepp, you've been in the hearing room a 18 lot the last couple of weeks? 19 A. Yeah. 20 Q. You've heard discussion about 21 facilities-based and nonfacilities-based competition? 22 A. I have. 23 Q. Do you have an opinion about whether or not 24 there can be price constraining competition for local 25 exchange service in the absence of facilities-based 02404 1 competition? 2 A. There will be some constraint, the 3 potential for some constraint but not as much as if we 4 were to have facilities-based competition. If we do 5 not have facilities-based competition and we do the 6 pricing correctly there would tend to be pressure on 7 the retail portion of whatever retail component, if 8 you will, of the prices. The wholesale portion or 9 whatever is being allowed to be charged for the 10 wholesale portion, of course, should be either imputed 11 or borne by everybody, but there would tend to be 12 portion on the retail portion. That would include 13 pressure on management to do a better job, if you 14 will, and other ways of trying to minimize those 15 retail reg costs. 16 Q. To the extent that there are services sold 17 at avoided costs, would it be correct that there will 18 only be pressure on the cost at which those are made 19 available to the extent that other competitors can 20 provide those themselves or through other entities? 21 A. I'm sorry, I didn't follow that, Mr. 22 Manifold. 23 Q. I think I've been contaminated. Let's talk 24 about an unbundled network element instead. If the 25 loop is priced at a certain level, would it be the 02405 1 case that there will be no pressure on that price 2 absent there being some alternative way to provide 3 that service? 4 A. Yes. 5 MR. MANIFOLD: Thank you. 6 JUDGE STAPLETON: Mr. Butler. 7 MR. BUTLER: No questions. 8 JUDGE STAPLETON: Ms. Anderl. 9 MS. ANDERL: A few. 10 11 CROSS-EXAMINATION 12 BY MS. ANDERL: 13 Q. Morning, Dr. Zepp. 14 A. How are you? 15 Q. Fine. How are you? 16 A. Okay. 17 Q. I'm Lisa Anderl representing U S WEST, and 18 I have actually quite a number of questions for you. 19 I think we're going to talk mostly about nonrecurring 20 charges and about your criticisms of the U S WEST 21 RLCAP model, but before we do that, why don't you tell 22 me the capacity in which you're appearing today on 23 behalf of AT&T and MCI. Are you here as their 24 economic witness? 25 A. No. 02406 1 Q. Are you here as an engineering expert? 2 A. I am not. 3 Q. Are you here as a specialist in OSS 4 systems? 5 A. No. 6 Q. Are you here as their policy expert, a 7 policy witness? 8 A. I am not. 9 Q. Why don't you describe for me how you view 10 your role and the purpose of your testimony on behalf 11 of these two parties. 12 A. With respect to nonrecurring costs? 13 Q. (Nodding head). 14 A. I view my role as being one of looking at 15 the economic principles, I guess, if you will, with 16 respect to nonrecurring costs. Also the appropriate 17 way of conducting those nonrecurring cost studies 18 whether we're dealing with cost onsets or transaction 19 costs, and I have discussed some of the general 20 criticisms I have of the way the models are being 21 presented and constructed notwithstanding that Ms. 22 Petti has addressed the more specific underlying 23 engineering aspects that support the testimony that 24 I've given. So that's with respect to nonrecurring. 25 As far as cost models are concerned, I've 02407 1 been asked to look at a number of U S WEST cost 2 models. The only ones I really discuss are RLCAP, the 3 switching model and the transport model, the latter 4 two briefly. My task has been to look at RLCAP and 5 discuss how RLCAP provides estimates, RLCAP in 6 conjunction with the annual cost factor model, WIN 7 PC3, and discuss that with the individuals that have 8 been doing the Hatfield presentations, both the 9 designers of the model and also the witnesses, to 10 provide a comparison to the economist as to why 11 Hatfield, in my view, anyway, is a better model of the 12 two. 13 Q. You're trained as an economist; is that 14 right? 15 A. Yes. 16 Q. And am I correct that you are not here 17 directly supporting the Hatfield model but rather just 18 providing a comparative analysis between Hatfield and 19 RLCAP? Let me just withdraw that question and 20 rephrase it. You weren't on the Hatfield support 21 panel, were you? 22 A. No, I was not. I am, however, supporting 23 the model as you've indicated. 24 Q. Okay. Talking about nonrecurring costs and 25 charges, is it fair to say that your criticisms of 02408 1 U S WEST's proposed nonrecurring charges are based in 2 part on your conclusions that U S WEST's OSS systems 3 and its network are not the least cost forward-looking 4 efficient technology? 5 A. Yes, that's true. 6 Q. Given your testimony earlier that you are 7 neither an engineer nor on OSS expert, are you relying 8 in part at least for your conclusions on Ms. Petti's 9 testimony regarding the appropriate network 10 architecture and the appropriate OSS? 11 A. Yes. I should expand, however, that as far 12 as my testimony is concerned I also address the fact 13 that even -- possibly the easiest way to say it as I 14 view the nonrecurring costs that we are seeing in this 15 docket that are being presented, on the one hand we 16 have some backward looking type studies, which I 17 believe are basically the U S WEST studies. There 18 could then be other studies that deal with 19 nonrecurring costs associated with what you're doing 20 now, so I certainly would comment about those as well. 21 And then the most important thing for this 22 record is what the nonrecurring costs are that we 23 should be looking at when we're looking at 24 forward-looking costs. So really all three things are 25 a part of my testimony. 02409 1 Q. But in terms of this part for the 2 assumptions regarding forward-looking network and the 3 OSS that is appropriate to use in a forward-looking 4 network, you're relying on Ms. Petti's testimony to 5 support that, aren't you? 6 A. To some extent, yes. Also, I've seen some 7 of the studies -- also before Ms. Petti began 8 providing testimony I had seen some of those studies 9 myself earlier. For example, the Best of Class study 10 that was mentioned yesterday, it shows for customer 11 transfers that the cost would be somewhere between 12 zero and 45 cents. I've actually reviewed those 13 studies myself. 14 Q. Is that the Bell South study that was 15 mentioned? 16 A. Bell South was one of the companies 17 examined in that study. Bell South happened to be the 18 Best of Class. There were a number of other RBOCs 19 that were in that study as well. 20 Q. Are you also relying on Dr. Mercer and Mr. 21 Fassett in support of your opinion as to what the 22 appropriate looking network construct would be in a 23 forward-looking environment? 24 A. Yes, I'm relying on that. 25 Q. Can you describe for me what analysis you 02410 1 have done, if any, that might support a conclusion 2 that the TMN architecture discussed by Ms. Petti is in 3 fact a least cost alternative in a forward-looking 4 environment. Have you analyzed the costs of 5 installing TMN? 6 A. I have not. 7 Q. Would you agree with me, Dr. Zepp, that the 8 Telecommunications Act entitles U S WEST to recover 9 the reasonable costs it incurs to provide unbundled 10 elements, resale services and interconnection? 11 A. Yes, I do. And, of course, I would point 12 out that the reasonable costs are the forward-looking 13 costs. They may not -- they may or may not be the 14 costs that you incur on an embedded basis. 15 Q. And if there are nonrecurring costs in that 16 environment -- and we'll get to that in a minute -- 17 would you agree that how those costs are recovered is 18 to some extent a pricing question whether they're 19 recovered in nonrecurring charge or folded into a 20 recurring rate? 21 A. Yes. 22 Q. Do you consider your expertise to extend to 23 being able to render an opinion on the appropriate 24 pricing decision in connection with a legitimately 25 established nonrecurring cost? 02411 1 A. I don't understand what a "legitimately 2 established nonrecurring cost" is. 3 Q. I guess I was trying to take a shorthand 4 way of asking you to assume for me that we both agree 5 that there is a nonrecurring cost that's been 6 identified to your satisfaction in connection with 7 provision of an unbundled element. 8 A. I don't agree necessarily that there are 9 any nonrecurring costs on a forward-looking basis. 10 Q. I understand that, and that's the purpose 11 of the hypothetical is to ask you to assume something 12 that you perhaps don't agree with. So could you 13 assume that? 14 A. If you're asking me to assume something 15 that's wrong -- 16 MS. ANDERL: Your Honor -- 17 JUDGE STAPLETON: Something I believe you 18 do not agree with, Dr. Zepp. 19 A. Something that I do not agree with, okay. 20 Q. Are you with me? 21 A. You're asking me to assume that there is a 22 positive cost of some type. 23 Q. Right. 24 A. Now what? 25 Q. Do you agree that the decision as to how to 02412 1 recover that cost, either through a nonrecurring 2 charge or folded into a recurring charge, is a pricing 3 question? 4 A. In a traditional regulatory setting I guess 5 you would say it's a pricing question. I think, 6 though, that when we're in the environment that we're 7 in here it's probably a question as to what a market 8 would allow to be done, which you may call that a 9 pricing question, but if we're really dealing with 10 what a market might allow to happen, it may not be a 11 pricing question at all. It may just be something 12 that the market allows you to do or not do. 13 Q. And if the Commission in its order in this 14 case were trying to replicate what the market were 15 allowing you to do, it would be a pricing question for 16 the Commission, wouldn't it? 17 A. In that instance, yes. 18 Q. And are you here to offer an opinion in 19 your capacity as an economist as to the appropriate 20 way to recover that nonrecurring coast, in other 21 words, whether to price it as a nonrecurring charge or 22 fold it into a recurring rate? 23 A. I'm here, and I have offered in my 24 testimony an opinion that what a market would normally 25 allow to be done is that those nonrecurring costs in 02413 1 most competitive instances would tend to have to be 2 included in the recurring charges. 3 Q. Are there any economic principles that 4 should be followed in the recovery of these costs, any 5 general guiding principles that we should have in 6 mind? 7 A. I guess none other than costs should -- the 8 pricing in some way should reflect cost causation. 9 Q. Thank you. You've explained in your 10 testimony why you think the Commission should -- well, 11 let me back up to a minute. As I understood your 12 testimony, maybe I read this incorrectly, but I 13 understood your testimony to recognize that there may 14 be legitimate, albeit small, recurring costs incurred 15 in connection with the provision of either resold 16 services, interconnection, or unbundled elements; is 17 that correct? There may be legitimate nonrecurring 18 costs incurred by -- 19 A. You said recurring a minute ago. You mean 20 nonrecurring. 21 Q. Nonrecurring. 22 A. I'm sorry, can you repeat the question. 23 Q. I don't know. I will try. I read your 24 testimony to say that you did accept that there may be 25 legitimate nonrecurring costs associated with the 02414 1 provision of interconnection, unbundled elements and 2 resold services. 3 A. Yes. 4 Q. Can you give me an example of what you 5 think some of those costs might be? 6 A. Well, I think first it's important to 7 clarify the difference between what I've called cost 8 onsets and potential transactions costs. 9 Q. Right, and thank you for that 10 clarification. Could we talk now just about what I 11 think you mean as the true nonrecurring costs, as 12 you've identified them, which are the transaction 13 costs; is that right? 14 A. Yes, I'm not talking about the cost onset 15 costs at all. 16 Q. Let's talk about the transaction costs 17 then. 18 A. Okay. 19 Q. Can you give me some examples of what you 20 think are examples of legitimate transaction costs 21 that an incumbent might incur? 22 A. For customer transfer there may be some 23 very small costs associated with using computers like 24 the Best of Class study we were discussing. It could 25 be as low as zero, it could be as high as 45 cents, 02415 1 depending upon what's ultimately being done. We know 2 today by the Best of Class study that there's no 3 reason for it to be any higher than 45 cents, so as we 4 move forward and the electronic interfaces improve, as 5 -- we should certainly expect that number to go down 6 also. That would be an example. 7 Q. What about a service order or a new 8 customer charge? 9 A. As I understand, on a forward-looking 10 basis, with electronic interfaces, those would be 11 minimal. As far as U S WEST is concerned if it's a 12 new entrant placing an order there, of course, would 13 be costs that AT&T or MCI or another new entrant would 14 incur to actually do the order, but as far as the 15 incumbent LEC is concerned it would just be the new 16 entrant's computer talking to your computer, and once 17 that's established, those costs should be minimal. 18 Q. Any other examples you can think of other 19 than the customer transfer charge? I'm sorry, did you 20 answer? 21 A. I don't know. What else would you like to 22 talk about? 23 Q. What about service order that required a 24 customer premises visit by a technician? Do you think 25 that that customer premises visit by a technician 02416 1 might be an example of a nonrecurring cost? 2 A. Yes. It should not, however, be rolled 3 into the charge being imposed on every order. If it 4 actually is incurred then that's -- and then I would 5 assume that the new entrant would have the option of 6 doing something else. I'm not exactly sure how that 7 will work out. 8 Q. So is it your opinion that at least the 9 customer transfer charge and perhaps a customer 10 premise visit or site visit by a technician are two 11 examples of nonrecurring costs that should be 12 recovered in nonrecurring charge -- nonrecurring 13 charges? 14 A. I don't think they should be recovered in a 15 nonrecurring charge. 16 Q. Oh, you don't? 17 A. You had just asked me if potentially there 18 was a nonrecurring cost, and if we go forward with a 19 model like the Hatfield model where the recurring 20 expenses are based upon past ARMIS data, you know, 21 ARMIS data already includes both recurring and 22 nonrecurring costs. So to the extent that that 23 relationship continues into the future, you're already 24 going to be recovering the nonrecurring costs by 25 imposing that type of a recurring charge, and of 02417 1 course as the Hatfield model is updated over time, 2 that becomes more and more accurate as we're moving 3 forward, as these new services are being provided. 4 So there certainly is no reason to impose a 5 separate nonrecurring charge if you're already 6 recovering those costs by the recurring charges that 7 are being imposed. You just don't need to do it. 8 Q. If -- the Hatfield model as it's run for 9 this proceeding is based on 1995 ARMIS data, isn't it? 10 A. I believe that's correct. I'm not certain. 11 Q. Was U S WEST providing unbundled network 12 elements in 1995? 13 A. No, I don't think so. 14 Q. Probably not? 15 A. Probably not. 16 Q. How would the ARMIS data from 1995 include 17 nonrecurring costs associated with the provision of 18 unbundled network elements if U S WEST wasn't 19 providing them in 1995? 20 A. It would do it in exactly the way I just 21 explained. Let me offer it to you this way. Let's 22 say that the ARMIS data includes both the recurring 23 and the nonrecurring costs. Let's say it has $3 worth 24 of recurring costs and one dollar of nonrecurring 25 costs. In the numerator we're putting in $4 worth of 02418 1 costs. That $4 worth of costs is being divided by 2 some investment in the denominator. 3 So if you're using that ratio to determine 4 on a forward-looking basis what those costs are you're 5 not just recovering the $3 in recurring expense. 6 You're also automatically incurring a dollar -- you're 7 going to be recovering, if you will, a dollar of 8 nonrecurring because you've used that past 9 relationship between that ARMIS account and the 10 investment. 11 So you're already going to be recovering, 12 if you will, even if this investment -- even if this 13 particular unbundled element has never been provided 14 before. It may well be that you recover too much or 15 you may recover too little. It depends upon what the 16 nonrecurring activity is relative to the recurring 17 activity, but you're going to be recovering already on 18 average what's been going on in the past. 19 So you could over recover and you might 20 under recover, but there's no reason, for me anyway, 21 ex ante, looking at this, to expect that you're not 22 going to be fully recovering those nonrecurring costs. 23 And then as I indicated in my previous answer, as '96, 24 '97 and '98 data become available, as these unbundled 25 elements are actually being provided, you're going to 02419 1 get increasingly accurate data, and so you will find 2 opportunity that -- so that the relationship between 3 the recurring and nonrecurring will become stronger 4 and stronger and you're going to have an even better 5 less biased, if you will, or less uncertain 6 over recovery or under recovery of those nonrecurring 7 costs. So there's no problem at all using 1995 data. 8 Q. Can you give me an example of a specific 9 unbundled network element or element of 10 interconnection and how that's reflected in the 1995 11 ARMIS data? 12 A. Let's pick an unbundled loop element, which 13 after we make the calculation in Hatfield I believe 14 the cost is somewhere around $10 or 11. In that $10 15 or $11 part of that is going to be the expenses that 16 came out of the ARMIS data on a forward-looking basis. 17 Q. And if those expenses are 1995 expenses and 18 U S WEST was not providing network elements in 1995, 19 how do those expenses reflect nonrecurring costs that 20 might be incurred in the provision of the unbundled 21 network element of the loop? 22 A. Let's say that -- and I'm sorry I don't 23 have that data, but if the Hatfield model has, let's 24 say, $1.60 per line, and these expenses, let's say, 30 25 cents of that was a result of current activities or 02420 1 1995 activities, if you will, that created 2 nonrecurring costs. So if in 1995 we had 30 cents 3 worth of nonrecurring costs for every $1.60, then for 4 the unbundled element you're going to be recovering 30 5 cents a month for every -- in relationship. 6 It's a relative thing. It's a ratio thing, 7 and like I say, you may over recover or you may under 8 recover as a result of that, but you certainly are not 9 going to be -- the fact that you're recovering 10 something new does not mean you're not going to be 11 recovering the nonrecurring costs. It's a ratio 12 thing. 13 Q. You talk in your testimony about how 14 typically competitive markets do not allow providers 15 to recover nonrecurring costs in nonrecurring charges, 16 and you give the example of banks that waive monthly 17 fees; is that right? 18 A. I do. 19 Q. Can you think of an example where the 20 market, which would be a competitive market, allows a 21 business to impose and recover nonrecurring charges? 22 A. There may be some. I can't think of one 23 right now. 24 Q. Do you think that the provision of 800 25 service is a competitive service, 800 number service 02421 1 in telecommunications? 2 A. I would -- yes. 3 Q. Dr. Zepp, we introduced yesterday an 4 exhibit identified as 159, and